What it means to be well-run is the focus of a not-for-profit (NFP) research report published recently by consultancy Good Foundations in partnership with professional services firm PwC.
The report, The foundations of a well-run not-for-profit: why internal investment is critical, surveyed almost 400 senior managers within the NFP sector, and offers some valuable insights into what makes a NFP effective and well-run.
The overall conclusion of the research is that to be effective, NFPs need to invest more in internal capacity building, with only 14% of those surveyed believing this type of investment is currently adequate.
And according to those surveyed, strong leadership and good governance are the most important organisational elements to get right.
“Although leadership skills within the sector have improved considerably in recent years, especially within larger NFPs, smaller organisations are still struggling to find the right mix of business and organisational investment skills at CEO and board level,” says Richard Green, director, NGO Recruitment.
“Applying sound commercial and governance principals from the top down enables NFPs to improve revenue generation and this ultimately leads to better program delivery.”
Concerns about a lack of good governance are widespread, with the Good Foundations research also finding that over half of those surveyed would make improvements at board level over and above any other improvement. This includes the need for boards to be more balanced, more involved, more effective, better skilled and to have clearer roles and responsibilities.
5 steps to recruiting the right board
So, in practical terms, how do you make sure your board is strong enough to take your NFP forward? Based on almost 15 years of placing both volunteer and remunerated board members into NFP organisations, we’ve put together the following five steps.
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Identify key skills requirements
Firstly, identify the exact skills you require at board level. These skills should be easy to narrow down if you just take a step back and reflect on your overall purpose and vision. In general, NFP boards need a mix of talented fundraisers, treasurers, IT specialists, entrepreneurs and experts in your specific niche such as disability, housing, medical research or human rights.
“I’m constantly surprised in particular by the general lack of fundraisers on NFP boards,” says Richard. “These skills are a must-have and should be a top priority for any board.”
You then need to assess your organisation’s performance in these key areas and identify which skills are missing. According to the Good Foundations research, the most sought-after skills at board level are revenue generation, technology and marketing, so you may need to work harder to find board members with these areas of expertise.
And also keep in mind that your ideal candidate may not already have board experience, so be open to offering governance training to complete the skillsets required.
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Adhere to thorough recruitment processes
Recruiting a board member requires the same preparation and rigorous approach as any other candidate search within your organisation. Be clear about the strategic purpose of the role, the exact skills required and the responsibilities. This information then needs to be clearly outlined in a detailed brief and a compelling job description.
Make sure you’re also clear on the commitment required, such as six board meetings a year, six committee meetings a year and fortnightly contact with the chair and CEO. The clearer you are on your requirements, the easier it is to find the right person.
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Widen your search beyond existing networks
Resist the temptation to approach friends or people within your existing networks in the first instance. Having exactly the right skills at board level is crucial, so you need to look broadly across your state or territory to identify the people you know would add maximum value to your organisation.
It’s also worth identifying people who already have private sector board appointments. This is because professional board members with three or four remunerated appointments are often interested in taking on a volunteer board position as part of their portfolio.
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Consider remuneration
Although the common practice is to rely on volunteer board members, there’s a growing trend of remuneration within larger national and multinational NFP organisations. In a complex funding and regulatory environment, some NFPs are simply too big to rely on volunteers to govern an organisation with the level of responsibility and time commitment required.
If you’re struggling to find the right person, offering a remunerated position might be the way to secure the skillsets you need. But bear in mind that constitutional changes are required to be able to do so. Ultimately, you will find the right volunteer, but you will be searching in a smaller pool of candidates.
Deciding to pay board members can often be contentious and the ACNC offers some helpful guidelines: Remunerating charity board members
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Appoint an advocate
Finally, you need to appoint an advocate for the search. Someone needs to have the time to own the recruitment process through the search, interview and reference checking stages – whether it’s a CEO, board director, HR consultant or external agency. And advertising your position is not enough by itself. Research the market and draw up a shortlist of potential members to proactively target.
This advocate also needs to have an in depth understanding of your organisation’s culture and values. Taking a values-based approach to the selection and interviewing process is essential to ensure you find someone with the right cultural fit.
And make sure you identify motivations correctly – many people are keen to join the boards of NFPs as a training ground for a professional board director career. But you need someone who’s committed to your organisation and who will add value for all the right reasons.