Chapter 8 - Recommendations
The purpose of this report is to illustrate the dynamics of relationships between the business and NFP sectors and provide insights that will provide learnings. This research focuses on the experiences of not-for-profit organisations in working with business. It covers primarily NFP experiences in working with large businesses. These recommendations address some of this report’s findings.
The recommendations have been developed noting that the success of corporate community partnerships is rooted deeply in the unique skills that not-for-profit organisations and business bring to the table.
However, we note also the important role that governments can play, not by being party to the collaboration, but by encouraging business and NFP organisations to pursue and develop relationships, and to work to create the conditions in which those relationships can best prosper.
Recommendation 1 — Transparency through reporting
A common theme of this report is that while many NFPs benefit from working with business through community partnerships, many believe there remains a deficit in how well business and the wider community understands their goals and operations. These views are in part underwritten by some businesses believing the NFP sector lacks transparency.
Some work has been conducted into this issue, but to encourage better community and business understanding of NFPs and transparency, we recommend all NFPs adopt voluntary public reporting that has been embraced already by some entities in their sector.
A framework for reporting could be developed by a higher education institution, or by a collaboration of research centres across a number of tertiary institutions, at the request of NFP peak or sectoral organisations. The nature of reporting to be considered could involve annual reporting of progress against mission, values, strategy, financial and operational performance, corporate partnerships and government assistance (We note such reporting may be required to some degree in the future under possible approaches to regulatory harmonisation in State jurisdictions, or nationally).
Voluntary public reporting of a NFP’s operational and financial performance, policies and objectives will go a considerable way to meeting demands for transparency of information within the sector, and assist the community, including existing and potential business partners, better understand NFPs.
A checklist for minimum public reporting by all NFPs could include mission, values, strategy, financial performance (including operating ratio), key staff positions, corporate partnership policy and key relationships, donations/fundraising/revenue practice and volunteer policy and practices.
Recommendation 2 — Business contributions to NFP governance
We recommend that NFP Board governance be considered more widely by business as an integral component of CSR commitments, at all levels.
Some companies contribute already to Board governance as part of their corporate community partnerships with NFPs. The 2007 report notes that a significant motive of business engagement through governance is to broaden outlooks of business executives. While some NFP organisations have strong Boards, with business executives playing an important role ensuring robust governance, there are others that face governance challenges, and that have not effectively tapped into business experience. Small and medium NFP organisations in particular exhibit strong demand for business representatives on their governance structures.
While the focus of this report is on corporate community partnerships between NFP organisations and large corporations, we note work undertaken by the St James Ethics Centre, which has been funded by the Federal Treasury, to examine opportunities for small and medium enterprise responsible business practice, and recommend that contribution to local not-for-profit governance be part of its analysis.
Recommendation 3 — Strengthening business understanding of NFP organisations
Feedback from NFP organisations suggests considerable time is spent engaging businesses around the fundamentals of NFP organisation management and operations. We suggest that programs such as those facilitating mentoring between businesses that have successful working relationships or partnerships with NFP organisations, and businesses that have not been successful or are looking to forge closer relationships, would be of benefit to the NFP sector. Such mentoring could be facilitated and encouraged by the management of the recommended corporate community investment portal (see Recommendation 7).
We recommend also that peak business organisations consider how they can further assist strengthen business understanding of the NFP sector as a means to further encourage corporate community partnerships, possibly by encouraging higher education institutions to develop and deliver short-course professional development in NFP management for business executives.
Recommendation 4 — Skill-based employee volunteering
We recommend corporations consider orientating their employee volunteering efforts further towards placement of skilled-based volunteering with their community partners, or with other not-for-profit organisations. This could involve, concurrently, shifting employee volunteering focus to build capacity in the NFP sector via longer volunteering secondments of skilled staff.
In many cases, these arrangements will better meet the needs of NFP organisations to build capacity through skills transfer, and embedding processes and management practices through the placement of skilled corporate employees. As highlighted in this report, some NFP organisations face significant challenges meeting corporate demands for short-term volunteer opportunities.
Recommendation 5 — Regulatory harmonisation
We recommend State and Federal governments accelerate work towards regulatory harmonisation in the not-for-profit sector. Current regulatory arrangements for the not-for-profit sector are arranged on the basis of State and Territory legislation and regimes. Not-for-profit organisations face complex legislative and regulatory environments, which are made more complex when an organisation operates in more than one State. Many not-for-profit organisations are keen to see, at the very least, national harmonisation of regulations and governance arrangements across the States and Territories, and at its most ambitious, a national regime.
We recommend consideration of this matter be referred to the Council of Australian Governments.
Recommendation 6 — Directors’ liability in NFP organisations
We note that consideration has been given in recent times to establishing a new legal entity basis for NFPs, given there is a perceived difference between the exposure of boards of directors relating to liability between NFPs and corporations. The current legal status of NFPs means that directors sitting on their Board often face the same exposure to liability as if they were sitting on the Board of a private company. This situation may well be having a negative impact on the willingness of qualified and talented businesspeople to sit on NFP organisation Boards.
We recommend the Australian Government further investigate establishment of a corporate form for not-for-profit organisations, which will require accountability and stewardship, but that is less onerous on directors than the liabilities that apply to corporate boards.
Recommendation 7 — Disseminating best practice
Many NFP organisations — particularly small to medium entities — say there is a confusing array of peak groups and organisations promoting and advocating best practice NFP-business relationships and partnership opportunities.
We recommend that business and NFP organisations, including those peak groups and organisations that already working to promote best practice, jointly consider the establishment of a central clearing house for dissemination of good and best practice corporate community partnerships and collaboration (including a publicly accessible website).
We further recommend the Australian Government consider providing funds to open and manage a tender for a national provider or consortia to develop the clearing house for dissemination of best practice.
This portal for NFP organisations, small and medium enterprises and large corporations would highlight and disseminate good and best practice, and also provide guidance on issues such as partner selection, evaluation and measurement frameworks, reporting and governance. This could be particularly valuable for NFPs looking to enter partnerships who do not have to ‘reinvent the wheel’ and smaller NFPs that do not have research departments.
We further recommend that once established, and funded for three years, the portal be governed on an ongoing basis by an appropriate research centre or higher education institution, and be funded by government and business.
Recommendation 8 — Building capacity in NFP organisations and businesses
To address what many NFP organisations identified as business skills capacity issues, broaden opportunities for corporate community investment, and strengthen business and wider community understanding of the NFP sector, we recommend the Australian Government and large corporations cooperatively establish a 'Community Corps' in Australia.
Development of the Corps (a version of which was discussed also at the 2020 Summit) could be guided by an advisory group including small, medium and large NFPs. Consideration may be given to, under the auspices of the Australian Government, tendering the management of the Community Corps program to a combination or consortia of not-for-profit organisations.
This Community Corp could involve strands including: Australians, sponsored by their employer, spending six to nine months working in a NFP organisation or a number of NFP organisations; Australians working in NFP organisations, sponsored by either the Government or the placement corporation, spending six to nine months working in a corporation; Australians who are undergraduate university or TAFE students, funded by the Australian Government, and/or corporations, spending six to nine months working in a NFP organisation. The program could include an intensive theoretical and professional development module, offered at a higher education institution or centre.
Recommendation 9 — Data on the not-for-profit sector
All parties see the need for more detailed and timely data on the NFP sector including on issues around business support and community business engagement. Recognising the many and competing demands on the ABS for more frequent and detailed data we propose an increase in dedicated funding from the Australian Government and State Government budgets, and those of user agencies for enhanced collections, and for resources to facilitate integration, access and best use of the substantial administrative data that currently exists across the whole of government.
Recommendation 10 — Common tender and grant application criteria
We recommend State and Territory government departments harmonise tender and grant application criteria for monies available to not-for-profit organisations within their jurisdictions. Although unique criteria will no doubt remain necessary for individual tenders, harmonisation of standard information and administration requirements across departments in the same State would alleviate the compliance burden of grant applications on the not-for-profit sector. Such harmonisation may assist smaller not-for-profit organisations in particular. Business and governments should be cognisant of timing of budgeting and funding requirements and seek to achieve alignment of these.
We also recommend State and Territory governments aim to harmonise accountability requirements within their jurisdictions. This includes reporting. Achieving this may require central agency (Treasury or Premier and Cabinet at State level in particular) agreement on a defined number of core accountabilities and common performance indicators.
Recommendation 11 — Capacity building
We strongly recommend the continuation of support for capacity building initiatives by Australian and State governments. This should include, in part, funding initiatives on their merit from NFPs, private providers, and tertiary institutions. In this regard we note the strong support in Government, business and the NFP sector leadership for the Centre for Social Impact, including for its capacity building role. To ensure its longevity and to facilitate planning, the Australian Government should consider committing to funding the Centre for Social Impact beyond the current period, and on a similar basis.
Recommendation 12 — Network governance
We note considerable discourse taking place nationally on network governance (including at the Australian Government level within the 'social inclusion' agenda), the OECD, and in some tertiary institutions. We note also some innovations in practice involving governments, business and local communities. We recommend leadership in all sectors should explore what can be achieved by such innovative approaches. Government leadership at all levels will be required to optimise value that is achievable through these new concepts of collaboration.