Benchmarking NFP boards is not the easiest task for any not-for-profit organisation. Much is being written regarding the state of NFP (not-for-profits) Board practices across the western economies. It makes for some interesting reading and provides some good comparisons and benchmarks for your own NFP board.
The latest “Leading with Intent” survey from the United States, which commenced annual collection in 1994, reflects board responsibilities across 10 leading indicators. It has some good comparisons and benchmarks you can use for your own NFP board
Benchmarking NFP Boards starts with an Evaluation
Whilst it covers the board, the chair and the CEO, it is the board evaluation which I think provides the greatest challenges if considered in the light of the substantial strategic and operational issues that Australian NFPs face over the next 10 years or so. Despite a number of social, economic and legal differences between Australia and the United States, there remain many similarities, and so it is worthwhile considering the output in this context.
Overall US NFP boards were generally better at technical tasks. For example, financial oversight and compliance rated high. However, they were less so at adaptive work related to strategy and community outreach. This measure was undertaken against a backdrop of great similarities between the two countries, namely:
- Economic challenges,
- Declining government funding
- And, continued growth in service demand.
As a moving indicator that has been measured over the last 22 years, it provides a good analysis of both improvement and decline over that period, meaning trending becomes important. In the case of financial performance of medium organisations, being those with turnover greater than $1 million but less than $10 million, the report showed:
- 53% of those surveyed improved their results,
- 38% remained the same whilst 9% had in fact deteriorated,
Those with operating budgets greater than $10 million reflected a similar profile. With exception, 36% were about the same whilst 11% reflected deterioration.
Governance as part of Benchmarking NFP Boards
Above all, in the work that I do with boards reviewing their overall governance, I use a custom designed 100-point on-line survey. It covers a range of areas:
- Various Board roles
- Internal Board processes
- Different Board behaviours
- Overall Board membership.
In conclusion, there are a number of challenging aspects of performance that I have tracked since the first use of the tool in 2010. I used this tool across a number of varying sized NFPs and noted the challenges around:
- Strategic planning capabilities,
- Board accountabilities,
- Board membership issues associated with the appropriateness of relevant skills,
- Effectiveness of relationships with the CEO
- And, mission alignment in terms of the board decision-making processes.
Above all, board reporting is proving more important in allowing NFP Boards to make good decisions. You can read this article 7 Handy Reports for Not-for-Profits to get some good examples and a great starting point.
Benchmarking NFP Boards in Australia
The overlap between US characteristics in this sector and the Australian experience appears to be at the strategy level. However, Benchmarking NFP boards in the context of the current and future challenges for Australian NFPs, this is potentially concerning. In particular, as the market and funding challenges require, in many instances, a rethink of the strategic future direction of many of these organisations. Therefore, a key question must be:
To what extent are Australian NFP boards ready to address the strategic direction of their organisations?
OPTIMUM NFP has developed a strategic planning process and board governance review mechanism. To be more specific, it responds to conditions that many have described as volatile, uncertain, complex, ambiguous and diverse. Conditions that demand your board operating at levels that inform a potentially new strategic direction.
If you want to benchmark your NFP Board, contact David Rosenbaum at [email protected] or on 0411 744 911 to arrange a no-obligations meeting. You can discuss how OPTIMUM NFP can add value to your NFP. It will ensure your Board has the skills and capabilities to adequately steer your NFP through these challenging market conditions. The experience of OPTIMUM NFP could be exactly what you need at this point in time.
About the Author
David Rosenbaum runs OPTIMUM NFP – a consultancy specialising in change management, leadership development, risk management, strategic planning and board governance practices. With executive management experience across a wide spectrum of government, commercial and nonprofit organisations, he is well positioned to value-add to the sector.
OPTIMUM NFP is currently an accredited consultant on the National Disability Services’ (NDS) Good Governance Program Panel in NSW for the delivery of consulting services to this sector.
To get you started, contact David Rosenbaum at [email protected] or on 0411 744 911 and arrange a no-obligation meeting to discuss the Action Learning Question Program and add value to your NFP by ensuring your Board has the skills and capabilities to adequately steer your NFP through these challenging market conditions. The experience of OPTIMUM NFP could be exactly what you need at this point in time.
Article first published on OPTIMUM NFP’s blog in 2016. Permission was given by the author for this article to be published here.