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IoD insights about not-for-profits from the 2019 Director Sentiment Survey.
Just over half (51%) of IoD members serve on not-for-profit boards. Their workload and level of responsibility has increased markedly over recent years in line with increased compliance obligations and challenges facing the sector including:
Irrespective of size the expectations for boards working in the not-for-profit sector are similar to other sectors. Our 2019 Director Sentiment Survey (undertaken in association with ASB) found that the majority of not-for-profit boards were focusing on the future and assessing how they can strengthen their organisations.
They regularly discussed innovation and strategic opportunities (85%), how they can operate more effectively (76%), long-term value creation and their role as stewards of the organisation (79%), boards composition/renewal and the skills/ experience they need now and for the future (81%).
These are areas that all boards should be discussing and it’s encouraging that they are regularly on the agenda of many not-for-profit boards in New Zealand.
However, the Survey also found areas where not-for-profit boards needed to focus to help make their organisations stronger and more resilient in the future.
For example, just 56% of not-for-profit boards had discussed crisis management plans in the previous 12 months. With the COVID-19 lockdown upon us, that 56% may be glad that they did.
This article highlights four key focus areas for NFP boards and shares some ideas on how to improve outcomes.
Just 48% of boards had discussed workplace bullying in the past 12 months, while just 26% had discussed sexual harassment.
The board’s role in governing organisational culture has been in the spotlight in recent times with increased scrutiny of the way that boards assess and monitor culture. The majority of not-for-profit directors were consciously and actively setting the tone and modelling their values for organisational behaviour (70%), and monitoring and regularly discussing the culture of their organisation (77%).
However, just 48% of boards had discussed workplace bullying in the past 12 months, while just 26% had discussed sexual harassment.
Having the processes and systems in place to allow cultural issues and misconduct to be reported is critical to ensuring that management is aware of potential issues. This includes ensuring that the organisation has whistleblowing policies and speak-up provisions in place. However, just 25% of not-for-profit boards agreed that they had discussed whistleblowing and how the organisation makes speak-up provisions effective in the last 12 months.
Further to this, just 47% had received comprehensive reporting from management about ethical matters and conduct incidents, and the actions taken to address them. Having the right information from management is vital
to allow the board to effectively assess and monitor culture and all boards should take time to consider what information they need and whether their board is receiving comprehensive reporting from management regarding culture and conduct.
Points for boards to consider:
Climate change is part of the governance landscape now and climate-related risks are increasingly being considered by organisations of all sizes across all sectors. Just over a quarter of not-for-profit directors (27%) said their board was engaged and proactive on climate change risks and practices in their organisations. The majority (75%) said their board considers environmental and social issues are very important to their business.
Demonstrable sustainable practices may become increasingly important when securing funding and donations in the future.
Points for boards to consider:
Cyber-attacks are a real and constant risk facing organisations globally. However, less than a quarter (21%) of not-for-profit directors thought their board had a clear picture of the organisation’s overall cybersecurity strategy and how it relates to industry best practice. While just 34% said their board regularly discusses cyber-risk, and are confident that their organisation has the capacity to respond to a cyber-attack or incident.
No organisation is immune to cyberattack. It is vital that all boards regularly discuss cyber-risk and what they can do to build cyber resilience. This has become increasingly important as more organisations shift to remote working due to COVID-19.
Points for boards to consider:
Data governance and privacy should be a priority for all boards, not only because of the considerable harm beaches can have, but also to prepare for the introduction of new privacy legislation, expected in 2020. However less than half (48%) of not-for-profit directors agreed that their boards regularly discussed data governance and the use of data analytics to drive performance and strategic opportunities. Further to this, only 34% agreed their board receives comprehensive reporting from management about data breach risks and incidents, and the actions taken to address them.
It is vital that all boards ensure that there are processes, systems and frameworks in place to effectively oversee the data practices of the organisation, including the collection, storage and use of data. In addition to this, taking time to think about how the organisation can get the most value out of accessible data can lead to new avenues of value creation.
Points for boards to consider:
This article is featured in Boardroom April May 2020 issue