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- The strongest NFP boards succeed not through compliance alone, but through deep understanding of the communities, services and workforce that underpin their mission.
- Leaders argue that governance quality depends on staying close to end users, investing in workforce capability and setting standards beyond minimum regulation.
- The broader lesson for boards is that organisational quality is built through culture, workforce investment and clear accountability..
The boards that thrive in the NFP sector tend to share something straightforward – a deeply intimate understanding of the ecosystem they operate in.
Not in a theoretical sense, but in a practical, lived way, where the organisation, its purpose and its people are tightly connected to the reality of delivery on the ground.
That proximity is often framed as something unique to NFPs, but it shouldn’t be. Instead, it should be viewed as a governance lesson that translates far beyond the sector.
Because while NFPs naturally sit closer to their end users, the real advantage is not proximity alone, it is understanding and the trust that flows from it. That is what determines whether organisations can scale effectively in any part of the economy.
Dr Martin Laverty, CEO of Aruma (a major for-purpose disability service provider) says the starting point is clarity about demand and discipline in staying close to it.
He advises organisations: “Know exactly who your service product or support is targeted at and get to know that segment of the market.”
From there, he argues, directors cannot afford to operate at arm’s length from the people they serve.
“Directors should intimately know the segment they’re heading towards.”
In a direct challenge to compliance-driven governance, Laverty says: “Regulatory and standards should not be driven by the lowest common denominator requirement of your regulator or in multiple regulators. Set a standard above that and work towards it.”
Meeting minimum standards, he suggests, is not the same as building organisations that actually perform.
The workforce sits underneath everything
If understanding demand sets direction, the workforce determines whether anything meaningful is actually delivered.
For Emeritus Professor Deb Brennan AM, non-executive director at Goodstart Early Learning, that has become the central governance issue in a sector under increasing scrutiny following serious failures reported in parts of early childhood education.
“You can’t regulate your way to safety,” says Brennan. “What you have to do is invest in your workforce. You have to be getting the very best people you can.”
That investment is not just recruitment, she says, but structure, expectation and long-term commitment.
“I’ve been really struck with the absolute centrality of workforce quality [within Goodstart], providing career paths in a field that’s traditionally a very underpaid and undervalued area of work and linking that to our central goals, which are around children’s outcomes.”
The advice Brennan gives to other organisations is relatively simple – that workforce conditions and impact outcomes are inseparable. Namely, you cannot fix one without addressing the other
Governance maturity changes the relationship
If workforce and demand define delivery, governance maturity determines how well organisations hold both together.
Heather Watson MAICD, chair of Children’s Health Queensland, says the relationship between boards and management needs to evolve as organisations grow.
“If I reflect on some of the organisations I’m involved in, when an organisation is at perhaps a more immature level, early development, there’s a much closer link between the role the board plays and [the one] management plays,” she says. “As you mature, you have to become much clearer about the board’s role, how you’re exercising that board’s role, and the separation of management’s role.”
That separation, she says, is not about creating distance. Instead, it’s about clearly defined responsibilities. When that line is blurred, decision making slows and accountability weakens, particularly under pressure when decisions must be made quickly and cleanly.
The ultimate goal is confidence that each part of the organisation is doing its job and doing it well.
“You can’t comply your way to quality,” says Watson.
Across the three perspectives, the message for all organisations is consistent – strong governance is not about ticking compliance boxes. It comes down to whether organisations genuinely understand their service users, invest properly in the workforce delivering the work, and draw clear lines between board and management as they grow.
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