Delivering the three Cs: how governance is vital for NFP success

Thursday, 27 April 2017

Bodo Mann photo
Bodo Mann
Group Executive Advisory, Australian Institute of Company Directors

    Good governance underpins the success of a not-for-profit organisation. There are three crucial attributes – the three Cs – that excellence in governance give to an NFP, explains Bodo Mann, AICD Group Executive Advisory.

    Enhance your organisation’s governance performance2:46

    What are the three Cs?

    In the environment that not-for-profits operate – funding pressures, regulatory changes and the constant day-to-day exigencies – it can be easy to neglect the importance of governance to an organisation achieving its mission. There is often not enough time for an organisation’s Governing Team to examine how their governance structures, protocols and talent are supporting the work the NFP is doing. And yet governance from the board level all the way through the organisation underpins NFP success. Governance is too important to an NFP’s long-term flourishing to be an afterthought.

    There are three crucial attributes – the three Cs – that excellence in governance give to an NFP.

    1. Confidence

    If the Governing Team has the right skills, knowledge and experience, it gives them the confidence to deal with the challenges that NFPs face. Whether its financial management, dealing with crises, or assessing risk, having the right training and preparation gives board and management of an NFP the confidence that they will be able to steer the organisation to success.

    2. Credibility

    The credibility of governance systems is fundamental to an NFP being able to receive funding from governments, raising money from donors and winning the trust of other stakeholders. Lacking appropriate governance checks and controls is therefore a threat to an NFP’s survival. Whatever the good intentions of those involved in the NFP, without good governance, the organisation will not be able to gain traction and in the worst cases could be setting itself up for catastrophic failure.

    3. Culture

    It is a myth that culture is an intangible that an organisation cannot work at. Strong organisational cultures start with the directors and cascade down to management then to the rest of the organisation. A culture that rewards people’s dedication to mission, where there is an ethic of teamwork, a commitment to integrity and an openness to new ideas will lead to an NFP succeeding. It sounds simple but can only happen through honestly assessing organisational culture and by consistently rewarding the behaviour the organisation is seeking to encourage.

    Achieving the three Cs

    Recognising the importance of the three Cs to the NFP sector achieving its goals and continuing its vital work in the community, the Australian Institute of Company Directors recently formally launched its Advisory business unit.

    The Advisory unit offer two distinct services to assist NFPs in strengthening their governance and gaining the benefits in confidence, credibility and culture that come with it.

    The AICD’s Advisory unit has designed programs to advance governance and leadership development, including briefings, eLearning sessions, and sophisticated experiential in-house courses. The tailored programs equip NFP Governing Teams with the skills and capabilities they need to make the right calls for their organisation.

    The AICD also provides a three-phase consulting service to NFP boards. There is a diagnostic phase, which identifies underlying root causes of governance issues; a blueprinting phase where key NFP stakeholders are engaged and plans are developed for putting suitable governance structures in place; and then in the final phase the AICD provides practical solutions, guiding the NFP through implementation of the governance strategy. The AICD can provide this consulting service to NFPs in parts depending on what particular need that organisation has at the time, or can engage with an NFP long-term over all three phases.

    The AICD has worked with many NFPs in addressing particular governance problems they have been experiencing. The Advisory unit has helped NFPs on discrete issues like improving the quality of board papers to assessing the skills mix of a board, as well as systemic transformations that rewrite governance structures and policies for entire organisations.

    The work the AICD has done in this area has put NFP clients on a sure footing, equipping them with the confidence, credibility and culture they need to deliver on their missions.

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