Gone are the days when the not-for-profit sector could explain itself by saying: “We are good people doing good things”.
Today more is expected of the sector. More in terms of performance. More in terms of social impact.
But while more is expected, this is not necessarily accompanied by more financial and other resources.
The solution to this conundrum was suggested by the Productivity Commission in its 2010 report into the Not-for-Profit sector. It pointed out that leadership capacity can determine the success or failure of an NFP and argued for greater investment in training and development for the sector’s leaders.
To test this hypothesis we set about pursuing two related initiatives.
The first initiative is putting half a million dollars into funding a wide range of scholarships for leaders of the sector. These scholarships are being administered by the Australian Scholarships Foundation.
Secondly, we funded Learning For Purpose, a report from the Centre for Social Impact. This major piece of research, which took three years, has shown a marked improvement in performance where people skill themselves up. It found that money invested in training and developing leaders of community organisations will result in better support for their clients who are often those most in need.
Learning For Purpose is a beginning; a catalyst for a discussion that could be a game changer if we are willing to confront the challenges posed to: Our perceptions of NFPs; how funders distribute money; and how decision makers in the sector set priorities.
Challenge 1 - Changing public perceptions.
Currently we value the emotional over the rational. Because funding and donations are often directed at front-line service delivery, there is a perception that money spent on training is wasteful and makes organisations appear less efficient. However the Australian Scholarships Foundation argues that “improved leadership and management capability is the critical difference in creating effective and efficient NFPs” and this report backs that up.
We would be horrified if a doctor, pilot, or teacher of our children, did no more training and development after graduating; did not keep up with new developments and best practice. Yet if NFP leaders were to spend on training and development they are often subject to public criticism for ‘wasting’ money.
Challenge 2 - Funders have to review their rules.
Many program and philanthropic funders are reluctant to fund ‘capacity building’ such as training and development. They insist that every dollar goes towards the mission, goes towards feeding the hungry, housing the homeless, aiding the sick, protecting children.
This is illogical. Successful businesses and organisations invest in themselves and their people; invest in productivity gains, and future sustainability. Yet the same principles are not acceptable for charities and other not-for-profits. They are expected to meet growing demand and shrinking budgets as if they have access to a ‘magic pudding’.
Challenge 3 - Help for the Helpers
Leaders in the NFP sector need to use this report to push back when their attempts at improving efficiency and productivity through training and development are criticised, or they are refused funding. According to the report: “For each dollar spent on capacity building, there appears to be an average positive return of about six dollars.” That would seem to be a powerful positive economic return.
If we can address these challenges then the needy in our communities will be better served by a NFP sector working smarter, not necessarily harder.
Sean Barrett is the Head of the philanthropic Origin Foundation.