Not-For-Profit Utopia What Does It Look Like?

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2 Not-For-Profit Utopia What Does It Look Like?

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4 What is Utopia? Defined as an imagined place or state of things in which everything is perfect Sir Thomas More book Can perfection ever exist? Application in a nfp context An organisation that is legally well-structured and efficiently run so as to successfully meet its stated purposes, as much as possible Setting the bar high

5 The Blank Sheet of Paper Approach A useful way to bring a fresh perspective into an existing situation or problem If we were starting from scratch today how would we do it? Blue sky thinking an example Can help to bypass historical baggage Lots of not-for-profits have not been set up optimally Often there is a need to backtrack and/or unwind certain aspects of how they ve been established and run

6 Nfp or Not? A key, initial question! What is the underlying purpose? Profit or social aims? Or a mix of the two? A nfp form of legal structure will restrict the withdrawal of profits by members or owners throughout the lifetime and also upon wind-up There is a positioning choice and there are implications Need to be clear from the outset

7 The Emergence of Social Enterprise A social enterprise is not legally defined in Australia Can operate on either the for-profit or the not-for-profit side of the fence Blurred lines what is the underlying purpose? Many not-for-profits operate for-profit activities as part of what they do Attempts underway to create a new form of legal structure for a social enterprise a for-profit entity with social aims Some current examples

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10 Choice of Legal Structure Assuming an entity has chosen the nfp side of the fence What form of legal structure should we choose? The pros & cons of incorporation legal protection Activity-based or funding-based? Where will the organisation be operating? Company limited by guarantee Australia-wide Incorporated association state-based Need to forward-project and make the right choice!

11 Unstructured Change A side note The nfp sector is heavily regulated There are in-built impediments to starting up High levels of accountability The start-up process can be slow Administration costs Younger generation a drive to bring about social change in less structured ways Different funding models eg. crowdfunding

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13 Governance Matters A key issue once established how will the organisation be governed? Size, composition & skill mix of the board Ensuring an ongoing focus on strategy and the future, rather than just operations Board member qualifications & training Board member contributions & expectations Nfp boards are now more professional drive to keep pace with best practice

14 The Role of a Key Person Especially important for charities To build profile and public awareness Could be a board member or a supporter of the cause A person with public profile and influence A large, potential upside But also carries the risk of downside Some examples

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16 A Clear Definition of Success Good not-for-profits always keep the end goal in mind An ongoing question at board level are we on-track? How do we know if we re on-track? What does success mean to us? The definition will be different for each organisation depending on social purpose aims Importance of having clarity

17 Accountability to Stakeholders A well-run not-for-profit understands who its stakeholders are & seeks to meet their needs Most not-for-profits have multiple stakeholder groups Can include donors, volunteers, government, employees, supporters, the people it serves, etc. Clear pathways of accountability An ethical approach, values-based A transparent way of operating

18 Sustainability How long will the organisation exist for? Has this been defined? Underlying concept of sustainability The spend now vs spend later question good boards discuss this regularly What are the expectations of donors? Prevention of financial bloating Allowing for deficit budgets

19 Registrations All in Order The nfp space is heavily regulated Lots of not-for-profits have registration gaps Charity and/or DGR status Fundraising licences Tax concession entitlement income tax, GST, FBT State taxation concessions stamp duty, payroll tax Employee registrations Incorporated associations operating outside of one state Idea of regular registration reviews

20 Staff & Volunteer Mix The importance of having quality and committed management and staff can (of course) not be over-stated CEO role especially crucial no empire building Organisation workplace culture is it being created or does it just happen by chance? Are employees engaged & happy in their work? Consider all roles and the mix of staff and volunteers Good organisations regularly review and ask themselves how they are performing in these areas and they develop great cultures

21 Right Funding Model Funding drives activities A funding model for a nfp organisation typically includes a mix of grant funding, fundraising & donations, investment income and fee-for-service income A good nfp will regularly discuss their funding model mix and evaluate it Need for creativity and out-of-the-box thinking There s always new frontiers social impact bonds for example

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24 Creative Fundraising Grant funding space is very competitive Introduction of NDIS again increasing competition A crowded fundraising landscape A good not-for-profit will be ahead of the curve at least in thoughts and creativity in terms of fundraising What assets can better be leveraged? Can we re-visit the past and add in some difference? An example

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26 Robust Operational Model Need to have all of the key ingredients of good management alive and present Control over administration & overhead costs coupled with transparency Good financial controls (including budgets & forecasts) Established (and documented) policies & procedures Efficient processes (including use of IT) Embracing of new trends such as paperless offices, outsourcing of certain activities/functions, etc

27 No NFP is an Island Can a nfp organisation have a competitor? There is always a wider context that links to the organisation s purpose Partnering with other not-for-profits Partnering with for-profit businesses Openly sharing information increase in benchmarking of not-for-profits Inviting others onto the island Or building bridges!

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