Not for Profits – We’re in the Business of Going Out of Business
10 September 2013 at 10:17 am
Unlike commercial organisations who hardly ever try to end their own existence, that is exactly what a good Not for Profit should strive for says former banking chief and the newly appointed chair of the Butterfly Foundation, David Murray AO.
Earlier this month I was announced as the incoming Chair of the Butterfly Foundation. The reaction to this news from most quarters was quite interesting.
The more charitably-minded congratulated me for “giving back to the community”, while others asked whether I was trying to make up for the “odium” of having been a banker.
However, neither of these views gets close to the truth. While “giving back to the community” is a well-worn trope, I believe that getting involved with a not-for-profit organisation has nothing to do with wishing to appear altruistic – at its most basic, it is a desire to see a future that is profoundly different from the present.
Unlike commercial organisations who hardly ever try to end their own existence, that is exactly what a good Not for Profit (NFP) should strive for –to ensure that the problems we are trying to address cease to exist, thus ending the need for the NFP.
In my case the reason for joining the Butterfly Foundation board is really no different to my reasons for agreeing to Chair the Future Fund – I simply wanted to see the Australia of tomorrow be a better place.
Eating disorders, the raison d'être for Butterfly, are affecting our young men and women in ever growing numbers. A Deloitte Access Economics report into eating disorders, commissioned by Butterfly, found that there were almost a million sufferers (more than 913,000) in across Australia in 2012 – with a socio-economic cost of $69.7 billion.
For me this report was the clarion call – the intergenerational success that I had worked so hard to build at Future Fund, could be undone by a devastating mental illness claiming young lives. Our economy cannot be sustained when faced with an annual “write-down” of almost $70 billion. Even more dreadful is the annual death toll – estimated to have been 1,828 in 2012 – means that we are losing people who would have otherwise lead fulfilling and meaningful lives and contributing to the nation’s prosperity.
That, in a nutshell, was my reason for signing on with the Butterfly – I wanted to create long-lasting value that will have a long-term impact. I took on the role, so that the issue we are trying to address is not at the same crisis level in 10 or even five years’ time.
But the long term starts today and has to be run well with a sense of confidence and urgency. An NFP should be run with the same high level of responsibility and accountability and integrity as a great business corporation ensuring that every single dollar raised is spent on the purposes for which it was given.
NFP boards need to drive strong governance standards because the model of going from funding grant to funding grant (the NFP version of living paycheque to paycheque) is untenable and undesirable. It should be the first priority of every NFP board to ensure financial sustainability, by utilising the business acumen present either amongst its own numbers or from outside if necessary.
If our business is trying to drive ourselves out of business, by resolving the issues that our NFP cares about, we must have good governance and commercial savvy to ensure that we have the financial stability to focus on the big issues and not have to worry constantly about where the money to keep the doors open.
This financial “independence” does not come easy, and will present most boards with difficult choices, such as becoming a fee-for-service provider or giving up some autonomy and taking on additional burdens in return for government funding.
I am fortunate to have a great group of people with me on the board and we all know that at the end of the day our decisions will have far-reaching implications for many generations to come.
About the author:
David Victor Murray AO is an Australian businessman, and the inaugural Chairman of the Australian Government Future Fund Board of Guardians, serving between 2006 and 2012, and Chair of the International Forum of Sovereign Wealth Funds. He was appointed Chair of the Butterfly Foundation in August 2013.