The Australian Institute of Company Directors (AICD) Not-for-Profit Governance & Performance Study 2022-23 shows that the Not-for-Profit (NFP) sector is under considerable financial pressure. Profitability has continued to decline, with about 50 per cent of organisations making a loss or breaking even.
Some sub-sectors were under even more pressure, with Health and Residential Aged Care reporting only 41 per cent made a profit.
Tougher governance standards, workforce shortages and the aftermath of COVID-19 all continue to affect not-for-profit organisations and their Boards.
AICD report that directors are being required to commit more time and provide greater and more rigorous focus to the operations of their not-for-profit organisations. Almost half spent more than three days a month on their primary director role, and as many directors are on more than one board, the time commitment can be considerable.
Most NFP Directors (76%) are unpaid or only have their expenses covered, but the percentage being remunerated has grown to a survey high of 22 per cent, with an average pay rate of almost $23,000.
Other key findings of the 2022-23 NFP Governance and Performance Study:
- Merger activity has defied post-COVID 19 expectations and remains very low with only 5 per cent currently undertaking a merger and less than 20 per cent likely to have merger discussions in the next 12 months;
- Workforce planning and diversifying revenue streams are the most common priorities identified for the coming year;
- Almost half (45%) of organisations reported that governance of climate change never appears on their board’s agenda, with less than half having discussed this at a board meeting in the last year;
- Almost half (48%) of organisations either have a Reconciliation Action Plan (RAP) or are currently developing a RAP; and
- 93 per cent of respondents to the survey were confident that their management teams were making good decisions.
Download the Not-for-Profit Governance and Performance Study 2023 here.
The Australian government can play a role in easing pressure by reducing red tape and regulatory burdens. If your NFP is struggling to manage the headwinds contact better charity for a free assessment.