Navigating the tightrope: Managing conflicts of interest in not-for-profits
Boards face the challenge of managing conflicts of interest. Good governance practice helps to navigate these successfully.
Simply by sailing in a new direction, you could enlarge the world - Allen Curnow
COVID-19 is having an impact on all parts of our society. Some of the most vulnerable organisations are the ones that in turn help those most in need. While business has a strong voice to advocate for assistance what about charities, NFPs and community organisations? What are the unique challenges they are facing and how might they respond to the new world we will be facing?
This is not a small sector, although it is so diverse that it sometimes lacks a unified voice. Statistics New Zealand recently highlighted data showing the monetary value of non-profit institutions at $12.1 billion in 2018. According to Charities Services, there are more than 27,000 registered charities who employ around 130,000 staff and millions of hours are given in volunteer hours each week. But the importance of this sector goes beyond the statistics – each of us will be aware of a charity or NFP that we know or support which embodies the best of us: demonstrating kindness, compassion, empathy and understanding. That is what is most needed, yet the organisations at the front lines offering it are also most at risk in this crisis.
When Allen Curnow wrote the words above in 1942 he had in mind the first explorers to New Zealand and certainly not COVID-19 and its aftermath. But perhaps this will turn into an opportunity for many organisations to reflect on their purpose and strategy and then begin to sail in a new direction too.
The good precautions in place to reduce and eliminate the spread of Covid-19 have resulted in normal fundraising grinding to a halt with a number of usual activities and new initiatives being postponed or cancelled. Uncertainty around employment is causing many donors to tighten their purse strings as well. With both fundraising and a reliance on donations being vital for many NFP organisations, this has left a financial hole to be filled.
All of this is heightened by the fact that many charities do not carry significant reserves, will not be able to access additional capital or debt easily, and will have reduced access to volunteers. The outcome is a situation that will affect the ability of many of these groups to survive, which in turn will most impact the vulnerable in our communities who they most often serve.
A letter sent in early April from a collective of charity, non-profit and community groups to the Prime Minister highlighted that such groups will be hard hit by the crisis. It suggested ways the Government could assist to alleviate some of the financial pressure that is currently being felt by many, such as an emergency stabilisation fund, special low interest loans, tax relief to incentivise donations and dedicated support to provide assistance to the unique challenges faced by the sector.
The Government has tried to offset the financial burden felt by many due to Covid-19 with a number of financial packages. This included $27 million for essential services in the social sector to ensure such services can continue to assist during the lockdown. However, for those unable to access these funds there are other options:
In these unprecedented times, it can be difficult to consider the long term, when you are just trying to get by day-to-day. However, for some entities this may be the chance to look for a reinvention. Strategic thinking is more essential than ever. What has been outmoded or part of tradition in an organisation that needs to be trimmed back or thought through?
There are a number of charities out there that aim to assist and serve with the same purpose. Has the option of consolidation ever crossed your mind? Now could be the time to merge and join forces. Consider the resources and skills that could be brought to the table if combined, and the opportunities that it could potentially bring.
It’s important to stay positive. Now is the time to consider and explore new opportunities and look at the resources that are available to you. In doing that here are some other key principles to focus on:
One thing is for sure and that is the old ways are unlikely to work in the new environment. It is the organisations which are nimble and able to look for opportunities which will survive. Doing that will likely involve sailing in a new direction, and as Allen Curnow said, that may result in an expanded world with new possibilities.
|Author: Steven Moe MInstD is an IoD facilitator, board member, and partner at Parry Field Lawyers. See Steven's profile. He hosts a weekly podcast “Seeds” theseeds.nz|