What is good governance in a not-for-profit?

Restructuring Insights

As news of yet another debacle in an independent school (in this situation Sydney Church of England Anglican School known as Shore) is reported by the media, it would seem a deep discussion on governance – not just for independent schools but for all non-profits – is greatly needed.

It’s worth noting that a “poor internal culture” is often blamed when things go south, which begs the question: can you have good governance without good culture, and vice versa?


From my experience, governance and culture go hand in hand. When an organisation starts to de-rail, one of the first things I do when I speak with leadership is to ask about their mission statement and core values. What does the organisation stand for? Who is it designed to serve? How do staff relate to the mission and values in their daily work?

Often, we find a disconnect between the purpose of the organisation and the beliefs or actions of internal stakeholders. It may be that the organisation has been around for a long time and has lost its way, or has grown so much that it’s now difficult for anyone to connect current activities with the original purpose.

This lack of clarity almost always has an impact on culture and kicks off a vicious cycle that can be hard to break. 


Do you have a culture problem?

Building a consistently positive culture can be especially challenging in the charity sector. On the one hand, you need to be commercially-minded enough to be financially sustainable. On the other, becoming too commoditised makes it easy to forget the special purpose that catalysed the establishment of the entity in the first place.

In itself, this balancing act can create cognitive dissonance and affect culture because people don’t know how to act. When combined with constant changes in the sector – be they political, regulatory, or social – it’s clear why we’re seeing so many become sidetracked.Building a consistently positive culture can be especially challenging in the charity sector. On the one hand, you need to be commercially-minded enough to be financially sustainable. On the other, becoming too commoditised makes it easy to forget the special purpose that catalysed the establishment of the entity in the first place.

As an extension of the mission statement (“this is what we do and why”), an organisation’s values help to guide people’s actions because they say “this is how we do things here.” There must also be a serious commitment from leadership to demonstrate the values in all they do so staff has a benchmark against which to assess their own behaviour.

This is why it’s particularly damaging when leaders openly demonstrate traits that are the polar opposite of an organisation’s values. For example, your organisation may value inclusivity. But what good is that if leaders behave in a way that is blatantly exclusive?

There are many ways negative culture can manifest in a workplace, with the most common signs being:

  • Frequent bullying or harassment
  • High employee turnover
  • Difficulty attracting new staff
  • Low productivity

In dire circumstances, you may also find that negative culture spills into the customer experience resulting in a rise in customer complaints.

There is no fast or easy fix to a poor culture – it takes deep reflection, a clear strategy, and buy-in from the highest levels. But given the right frameworks (including your governance model), it is certainly achievable.


A collaborative governance model creates a collaborative culture

Sadly, we still see outdated governance models being promoted by leading bodies which can make it hard for leaders to realise that it’s actually the model that’s setting people up for failure.  A collaborative governance model creates a collaborative culture

Any governance model that favours segregation over collaboration doesn’t exactly give stakeholders the best framework for relating to one another. For example, a CEO who feels like they have the board “breathing down their neck” is more likely to become illusive or defensive. On the flip side, a cooperative approach that nurtures a culture of knowledge sharing and personal responsibility for the betterment of the collective will produce very different outcomes.

We’ve seen a recent push to provide governance training for board members in private schools in an effort to upskill people in areas such as financial literacy, strategy, and decision making.

This is a great initiative and will no doubt drive positive outcomes in the sector. However, on its own, training will not be enough to quell systemic issues that arise from outdated governance frameworks.

Only by assessing the full governance picture, and asking whether it is aiding culture through the promotion of shared accountability and collaboration, is it possible to start addressing the root causes of disharmony in an organisation.


How RSM can help

A clear mission and values, supported by an effective governance model, help to guide people in their actions and beliefs within the workplace. These ultimately lay the foundations for culture and can lead to an array of positive outcomes, such as:

  • Improved productivity
  • Greater retention
  • More harmonious relationships
  • Higher efficiency

If it feels like your non-profit has lost its way, there is help available. We can work with you to pinpoint where the issues lie and develop short and long-term strategies to turn it around. This includes engaging closely with stakeholders and seeking to better align attitudes and actions with the organisation’s mission, values, and goals.

Likewise, if you’re an established non-profit about to embark on a new journey (such as a merger or acquisition) we can support you in smoothing the way and laying strong foundations for a successful future.

For a confidential discussion, please contact Andrew Bowcher at (02) 6937 7001.

Authors

Andrew Bowcher
Partner - Wagga Wagga

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