Global trends for corporate goverance beyond 2016. If you are a not-for-profit organisation do not be complacent by saying this doesn't apply to you. Quiet the contrary. The fundamentals of governance are the same regardless of the sector. The nonprofit world is not without its scandals and governance issues and stakeholders are looking for reassurance, just as shareholder do in the corporate world
It is expected boards will face four trends over coming years. These include;
- Board effectiveness with attention being paid to independence, composition, diversity and a good understanding of roles and responsibilities.
- Greater scrutiny of the effectiveness of individual board members along with their contribution to the organisation.
- Improved transparency, accountability and assurance.
- Stakeholders being prepared to engage and intervene when there is a lack of engagement or breakdown in trust.
Wounded Warrior in USA, Kids Company in the UK, Care 4 Kids and Shane Warne Foundation in Australia and Raukura Waikato Social Services in New Zealand serve to demonstrate how easily non-profit organisations can experience the consequences of ineffective governance.
At both ends of the charity scale, boards often suffer from similar issues. People recruited to the board are often there for who they know rather than what they know. Few boards have well documented charters, they rely upon constitutions and rules rather than setting out clearly defined best practice and expectations, they fail to assess board effectiveness against any valid ratings and they fail to fully understand the role and responsibilities of the board as a whole.
These failings create uncertainty, the fail to provide stakeholders with assurance and confidence and they hold the organisation back from creating a definable social impact.