Supporting Your Board to Meet the Challenges of the Future
Monday, 17th August 2015 at 12:19 pm
Not for Profit boards require enhanced business, financial and investment skills to navigate the new challenges around the changing regulatory environment, according to independent assurance, tax and advisory firm, Grant Thornton which offers a checklist for financial competency.
The past decade has seen increasing pressure being placed on directors of Not for Profit organisations in dealing with the changing regulatory environment.
Whether it be understanding the impact of consumer-directed funding, dealing with lower returns from traditional investments, establishing social enterprises or exploring Impact Investing as a new funding source, boards are facing challenges they haven’t previously encountered. And in most cases their work is on a voluntary basis in their spare time.
To navigate these challenges, Not for Profit boards require enhanced business, financial and investment skills.
In our recent report Not for Profits – Are you ready for the future, Grant Thornton Australia, together with Pro Bono Australia, we surveyed whether organisations possessed the necessary financial literacy – and the results showed there is still some way go. Of the 1065 survey respondents, only 40 per cent believed their board had the requisite skills to address the financial challenges of the future.
For organisations who believe their board lacks skills, or are unsure regarding their board’s competencies, some simple steps can be taken:
1. Complete a skills needs analysis. All organisations are different and there is no standard list of necessary skills. A good place to start is with your strategic plan, both medium and long term. Consider where the plan is taking you rather than where you currently are or where you have been. If a change is needed in the way you operate, either voluntarily or mandatorily, what skills are necessary to successfully implement that plan?
2. Complete a skills inventory. As well as having a clear understanding of what skills your board requires, you need to understand the skills they currently possess.
Working with the board to understand their current strengths and weaknesses can be uncomfortable and some organisations find it beneficial to use an external facilitator. As part of this process it is important to have established the minimum level of financial literacy your organisation requires for a board member.
3. Design and implement a plan to address the weaknesses identified. The primary tool here is a quality training program; however, in some instances it may be necessary to look outside the organisation.
In developing the plan, it’s important to prioritise actions. Not all weaknesses need to be addressed immediately. In fact some responses, e.g. appointing new board members who possess the required skills, engaging subject matter experts to advise the board or developing a training program, will take time to properly implement. Ensure, also, that the action plan aligns with the strategic plan so that the skills currently lacking are in place when the need arises.
Undertaking these simple steps, together with the ongoing monitoring of the alignment of the organisation’s needs with the board’s skills, will ensure that your board is equipped to guide your organisation through the challenges and uncertainties of the future.
About: Grant Thornton is one of the world's leading organisations of independent assurance, tax and advisory firms. Grant Thornton Australia has more than 1,100 people working in offices in Adelaide, Brisbane, Cairns, Melbourne, Perth and Sydney. We combine service breadth, depth of expertise and industry insight with an approachable “client first” mindset.