WHAT ASPIRING DIRECTORS SHOULD KNOW ABOUT THE NOT-FOR-PROFIT SECTOR
It’s easy to forget, in the often chaotic and cut-throat world of business, that all corporate organisations exist in society with the permission of that society. Most entities, in my experience, understand this, and take seriously the concept of corporate social responsibility. Some companies fund initiatives or activities with a social benefit out of a genuine desire to help their community, and others do it more with a mind to protecting their brand and bottom line. Either way, hopefully the benefits are widely felt.
I believe companies have a responsibility to go further than this, and in my view, directors should contribute their time and skills to the not-for-profit sector. How, then, should existing directors and those aspiring to governance get on a non-for-profit board, and then deliver what those organisations need?
1. Decide what you want. If you’re going to invest your time and expertise in a not-for-profit, you will work hard for little financial return, so you need to care. Ask yourself what you’re passionate about, and then look at the decent-sized charities making a difference in that field.
2. Direct is best. Not-for-profits have big objectives and there’s never enough money, so they will not spend to recruit a director through executive search channels, and their networks are much smaller than those of corporate organisations. If you want a board position, make a direct approach to the chair. Invite the chair for a coffee and explain that you want to make a difference to the not-for-profit sector. Leave no doubt as to your interest, capability and availability.
3. Curate the paperwork. When you meet with the chair, leave a two-page CV – the briefer the better – and a cover letter that states your availability and expertise. When you tailor your CV to the director role, show your understanding of three things:
- a. What the not-for-profit is trying to do
- b. What its issues are
- c. How you can fix those issues
Remember that when you talk to anyone at a corporate board level, you are dealing with a person with a short attention span and no time, so don’t make work for them and do be clear how you can help them.
4. Do your homework. If you’re going to be successful in the not-for-profit sector, ask how well a given organization is chaired and how much the chair is committed to the cause. Not-for-profit is risky because you live hand-to-mouth, so look at the liquidity and cash cover, and work out how long the organisation can run without further donations. The Charities Register is an adequate start but financials are not up to date, so you will have to do thorough due diligence.
5. Be prepared to graft. A not-for-profit directorship is more work than an equivalent role at an ordinary corporate. A not-for-profit will lean on its directors a lot more because it is unlikely to have a substantial executive group. This sector is good to gain experience in because it runs very lean and while you’re adhering to important principles of governance, financially you will always be on a knife-edge.
6. Understand your responsibility. In a not-for-profit that’s well run, you’ll have directors giving commentary on operational, financial and other matters in a way that wouldn’t happen in a corporate. In a not-for-profit you’re taking money from the public on a daily basis, so the onus is on you as a director to ensure it’s being spent properly.
By Dr John Peebles, Director, John Peebles Associates Ltd
Published in New Zealand Management Magazine August 2017