Community directors face an unprecedented burden of increased regulation, decreased funding and low community trust, according to the former commissioner of the Australian Charities and Not-for-profits Commission, Susan Pascoe.
My topic for today’s introductory presentation is “A new era for community directors.”
Nowadays, we tend to declare new eras at the release of every successive model of iPhone, but still… Things really are changing for community directors.
Let’s look at some of these changes.
Regulation is increasing
Regulation is increasing across the board, not just in the not-for-profit sector. In all sorts of areas – consumer protection, privacy, national security, tax law, OH&S, and anti-discrimination law – the government reacts to various scandals by placing extra responsibilities on citizens, on businesses, and on not-for-profits.
Despite government rhetoric about red tape reform, not-for-profits often complain about being hemmed in by increasing legislation.
Of course, governments don’t want to oppress community groups, but they do respond to public complaints that something’s gone wrong.
Regulations that demand commercial-level food production standards from church cake stalls came about because something went wrong and someone got sick and the public demanded reform. The public – that’s us – is increasingly risk-averse, and increasingly litigious, and if governments don’t act, insurance companies will. There’s no going back to the old ways of muddling through and taking-the-rough-with-the-smooth and near-enough-is-good-enough.
Privacy is increasingly an issue. In not-for-profit offices across Australia, there’s data piling up in every filing cabinet and computer, yet so many organisations have poor policies for protecting it, and little understanding of how to use it. Governments (and individuals) are growing impatient with not-for-profits that struggle to keep up with shifting standards and rules. We seem not to mind surrendering our privacy to international mega-corporations that would sell their own mothers to a glue factory, but we look suspiciously at every not-for-profit that wants us to fill out a form.
Partly, too, the new rules are put in place because not-for-profits need protection from themselves. The more trust there is in a sector, the fewer commercial protections are built in, and the easier it is to rip people off. The not-for-profit sector is the most trusted in Australia, and the most trusting, and it’s very difficult to find the right balance between encouragement of easy cooperation and protection from camouflaged predators.
One of the objects I worked towards at the ACNC was to reduce red tape, to try to cut down on some of those rules that not-for-profits have to comply with. We made some progress. But there’s still a long way to go.
As a director, it’s your job to make sure your organisation is following the rules, whether you agree with them or not.
Cost pressures are increasing
There are no restrictions on setting up a new not-for-profit group, and there is a constant stream of new entrants seeking funding – and a constant stream of organisations folding every year as well (and now for the first time taken off the list by the ACNC; they used to clog up the statistics eternally).
For those who survive, it’s hard to get funding for normal operations. Donors are reluctant to fund basic administration. They prefer new projects.
The public has been encouraged by the tabloids to believe that administration is essentially waste, and some charities have buckled to the pressure and advertise unhelpful and misleading messages such as “100% of your donations go directly to sick children”.
At the same time there are unsettling signs that donation levels are waning. The latest report on tax deductible donations from the Queensland University of Technology found that donations dropped from $3.1 billion in 2014–15 to $2.9 billion in 2015–16. The number of taxpayers making donations fell by about 600,000 people, and the average proportion of income donated fell too.
Free helpers are also becoming harder to find, and more demanding when you do find them. Today’s volunteers need more personalisation. They want to do jobs that involve and interest them, not just the ones you’ve chosen for them. This means you can tap them for higher-level skills, but it can also mean that the “dull but worthy” work doesn’t get done. And it can also can mean that it’s more work to administer a volunteer than to just do the job yourself.
So we have fewer and more demanding helpers, fewer and less generous donations, but (in many cases) increasing demand for the type of work not-for-profit organisations do – we have an ageing society with an increased care load, and fewer hands to share the load.
Part of the problem is that not-for-profits suffer from Baumol’s cost disease, named after a twentieth-century economist, William Baumol. Over the economy as a whole, productivity goes up as technology improves, and fewer and fewer people are needed to do the work. As productivity rises, salaries rise (even if more slowly).
But productivity only goes up in some sectors, and the not-for-profit sector isn’t one of them. You’ll always need four people in a string quartet, you’ll always need a teacher for every class, and you’ll always need about the same number of medical staff to a ward. The number of people remains more or less the same, but salaries have to go up to stop all the nurses going off to become app designers.
Australia is a rich nation – rich beyond the wildest fantasies of our grandparents. But our expectations have risen exponentially as well. How are we going to sort out which things are a right ? The NDIS? World-standard adventure playgrounds in all the suburbs and towns? Gold medal-winning athletes? Subsidies for opera? How do we decide which activities the government should fund, and which things are an indulgence? That battle for cash is not going to end any time soon.
As a community director, it’s your job to make sure your organisation has the resources it needs to survive and thrive. As competition increases, that task gets harder. It’s not something you can close your eyes to, or shunt off to staff to handle. You must have a strategy in place.
Privatisation is shifting responsibilities
Government has been shedding functions to the not-for-profit sector – partly because the government doesn’t want to cop the blame when mistakes occur, partly because of “steer-don’t-row” theories of management, partly because people understand that not-for-profit organisations often do a better job of community-level service delivery.
That’s all very well, but when a government function is being privatised, how can a not-for-profit organisation establish that it should get the job over a for-profit? And how do we stop not-for-profits from taking on some of the undesirable traits of businesses in order to get the contract?
As a community director, it’s your job to make sure you keep the organisation’s eyes firmly on the prize. What is your organisation’s purpose? You must keep that front and centre. You must fight hard against the urge to change shape or compromise your mission to suit current funding trends.
Greater accountability is demanded
Good intentions used to get the benefit of the doubt. That’s breaking down. Royal commissions and inquiries into religious and other institutions and the banks and the RSL show what happens when the large traditional organisations at the heart of Australian society are suddenly treated like anybody else and put under the microscope without the traditional deference.
It’s not clear, either, whether the traditional institutions are losing followers because they’re being shown up, or whether they’re being shown up because they’re losing followers (and are thus displaying weakness to the media pack). But nobody gets a free pass any more. Good intentions are no longer presumed.
If not-for-profits are treated the same way as for-profits – if they lose the benefit of the doubt – will they be able to retain the qualities that differentiate them from for-profits? What might they lose?
he problem is that Australians like volunteers but despise amateurs. It’s difficult to be on the right side of both lines.
As a community director, you would know that trust is your organisation’s most valuable asset. It can take a lifetime to build it but an instant to destroy it. You can’t afford to be complacent. You have to act at all times as if the decisions you make today may one day be on the front page of the Herald Sun – or going viral on Facebook or Twitter. You owe it to your organisation, your staff and volunteers, to your organisation’s client and funders and other stakeholders, and to the sector as a whole.
Greater diversity is expected
Australian society has become explosively more diverse very quickly, and extraordinarily more accepting.
Australian not-for-profits (much like our political parties) are often behind this trend towards diversity, not through any opposition to diversity in and of itself but because the status quo can be slow to shift. Older people have more time to volunteer; people on boards tend to stay on; the outcome has to be that many groups are run by people who grew up in the 1960s, when Australia was very different. It’s almost inevitable, too, that boards drift into recruiting from people much like themselves, even when the community is changing around them.
Most Australian not-for-profits welcome women and minorities in theory. The problem only starts if the new entrants start questioning how we’ve always done things. That’s where change bites. Are we ready to tell the men to bring a plate?
We have to be conscious of our human tendency to resist change. And we have to resolve to do better. Australian not-for-profits must go further than letting under-represented groups join them; they must let those groups change them. The board must lead this change.
I know there are complications. Many of you are operating in communities where the population itself is not very diverse. You can’t get blood from a stone. But we can all pledge to do better.
Evaluation is an increasing requirement
The buzzword we’re all coming to hear more and more is ‘evidence-based’. And that’s fair enough. You should be able to show you’re doing good in the world; you should not expect people to just take your word for it.
Your grant funder may want reassurance that its money is going to the right place. The government may want to confirm that you’re meeting the terms of your service contract. Your donors want to know that you’re using their hard-earned to good effect. They have to make choices, too, about how to manage their own resources, which are not limitless. If they’d funded some other group – and there are always other groups ready to take over – would they have done better?
The problem is that evaluation easily slides into valuation. In dollars. A commercial organisation doesn’t need evaluation, because everything it does is converted into a direct and easily comparable metric: money. With not-for-profits it’s not quite so easy. By definition, not-for-profits have values that are not monetary and thus are not comparable.
While there are many thoughtful funders, there are some who want “objective” data about subjective experience, which is like asking which is the better cheese, feta or Wensleydale? Funders may also want outcomes data that can be compared with outcomes data from the other things they fund, which is like asking whether Wensleydale is better as a cheese than Gary Ablett is as a footballer.
But not all values are commensurable. Sometimes they even conflict. This is a debate we’re still wrestling with. I know the good folk at ICDA are working hard on providing some tools to help you grapple with it as well.
Where are we now?
Those are just a few of the changes that are swirling around us, as community directors, every day.
We mustn’t play down the importance of these changes, but we have to keep them in perspective. We’re conditioned to notice and respond to things that change around us, not those that remain the same, even when those are the most important parts. Australia remains a democracy with a powerful and respected civil sector that can’t be intimidated or overridden by government. What hasn’t changed is more important than what has.
The sci-fi writer William Gibson has pointed out, “The future is already here – it's just not evenly distributed.”
Has it reached you yet?
What’s coming down the turnpike? How are you going to operate in a world where whole institutions – photography, newspapers, encyclopedias – have withered away to iPhone apps? How are you going to reach your clients, your donors, your stakeholders?
We have a governance problem at a national level. How about at the local level? Is your board up to the job? What skills are you short on? What perspectives are you short on? Do you know what you’re for? As the English politician Tony Benn said, ask yourself five questions:
- What power do you have?
- Where did you get it?
- In whose interests do you exercise it?
- To whom are you accountable? and,
- How can we get rid of you?
I will add a few more.
- How often does your board self-assess? The unexamined board is not worth having.
- How would your organisation cope with a scandal? The test for governance is when a disaster hits. It’s only when the tide goes out that you see who’s been swimming naked.
- Do you have a risk management plan – not only for your finance, but for your goals? Risk management begins with three basic questions:
- What can go wrong?
- What will we do to prevent it?
- What will we do if it happens?
- How do you assess your continuing relevance? It’s easy to lose sight of the objective when fighting for survival, and eventually to rate survival above the mission – your own, or the organisation’s. Have you planned for growth? Would you accept a merger? Are you prepared to go gently into that good night? If not, can you tell the world why?
Our schools have to educate young people to deal with a rapidly changing world. You can’t just order them to believe anything that’s written on the blackboard; they’ll have to be flexible, agile, and ready to discard anything that’s stopped working.
They have a right to expect the same of you.
Volunteers – and that includes most community directors – work for nothing, because we know we’re working for everything. What people really, really want is to know that their lives have meaning. That’s what Australian not-for-profits have to offer.