NFPs Suffer from Reform Fatigue - Report

Australian Not for Profits are tired of the reform roller coaster and despite uncertainty around the charity regulator, the best NFP leaders are taking care of business themselves, according to a new report.

The report, Non-Profit Leadership – Emerging Themes by JBWere Philanthropic Services Managing Director David Knowles, is based on work with Not for Profits, State and Federal Government officials, academics, researchers and industry to determine emerging themes for Not for Profits in Australia.

According to the report, in terms of the Federal Coalition Government’s plan to abolish the Australian Charities and Not-for-profits Commission, most charities have reform fatigue.

“After years pursuing reform, years of helping to shape it and yet more years adjusting to the creation of a new regulatory environment, most charitable organisations are quite frankly ‘over it’ when it comes to the change and uncertainty of the reform roller coaster,” it said.

“Secondly, and curiously, this response may not be such a bad thing. For the best form of regulation is surely self-regulation. Or at least, effective self-regulation.

“The best charity and non-profit leaders are now telling us what they’ve always told us: if we manage ourselves well people will support us.

“Despite regulatory uncertainty, the best non-profits leaders in Australia are taking care of business themselves.

“In doing so they are putting their organisations in a position to demonstrate best practice governance. This in turn allows them to simultaneously improve their organisational effectiveness and their appeal to supporters.”

The report also reflected JBWere’s belief that a paradigm shift had occurred and Not for Profits were now competing as social enterprises in a dynamic marketplace that rewards measurable social impact.

“Non-profit leaders face challenging circumstances at the best of times,” the report said.

“Confronting a new paradigm for solving social issues is a significant challenge now facing non-profit leaders across Australia. We believe that to flourish in this brave new world non-profit leaders need to accept the game has fundamentally changed.

“Once they’ve done that they need to focus on three things: 1. Adopting a performance-based social enterprise mentality, without compromising their mission or values; 2. Measuring what they do, to prove the impact they have, and to improve what they do; 3. Elevating governance to the strategic level, to make best practice a core strength and a source of competitive advantage.”

The report said funders and supporters had higher expectations and favour organisations that could present a strong business case for support.

“They expect evidence of results as well as need and intent,” it said. “Generally speaking they also want to be more engaged in achieving and sharing results as well.

“Perhaps most significantly, funders expect non-profits to operate in a business-like (i.e. disciplined, sustainable, commercial, professional and enterprising) manner.”

The report also covered the emerging field of impact investment, however pointed out that it was disappointing that impact investment in Australia was currently synonymous with social impact bonds.

“This style of debt funding (also known as a social benefit bond) has great potential, particularly for organisations focused on issues like creating affordable housing for disabled, homeless or disadvantaged people,” the report said.

“However, we see three problems with Australia’s current fixation with social impact bonds: 1. Non-profits learning about impact investment tend to think it’s all about this one model; 2. Non-profits examining the social benefit bond model mistakenly believe government participation is an essential in any impact investment and that government should be the end player; 3. The model itself is reasonably involved, with a number of moving parts, leading non-profits to believe impact investments must be complex and perhaps ‘too hard’.”