The 2015 NFP Governance and Performance Study by the Australian Institute of Company Directors and Commonwealth Bank has been released. This report provides a detailed look at the many challenges that NFPs face as they work to continue to fulfill their missions and provide services that benefit all Australians.

Stability and Sustainability Concerns Remain for NFPs

As in past years, the study revealed that a key obstacle that NFPs must continue to overcome is in the areas of achieving financial stability and long-term sustainability. The study indicates that many NFPs are looking for ways to collaborate with government and other partners so that they can continue to deliver critical services despite the reduction in funding in the Federal Budget. In order to improve their financial footing in the current economic reality of reduced grants, the study found that more NFPs are turning to techniques such as improved cost management and diversifying their income streams in addition to increasing traditional fundraising activities.

Despite these difficulties, the study revealed that there is one major area that NFPs are typically outperforming for-profit organisations, and that is in the area of increasing diversity and gender balance on boards including top roles such as chairperson and director.

NFPs Leading the For-Profit Sector in Achieving Greater Gender Balance and Diversity

Despite making up over half of the population, women are still woefully underrepresented in top leadership roles in companies worldwide, and in every sector of the economy. According to research conducted in 2014 by Business Day, women make up an average of only 23% of the senior management roles in the ASIX100. The current 2015 NFP Governance and Performance Study indicates that women are having more success breaking through the proverbial glass ceiling at the nation’s NFPs, with women filling 38% of the Director roles, according to survey respondents.

Despite this sharp improvement in leadership opportunities for women in the nonprofit sector, challenges in achieving gender balance and increasing diversity and inclusiveness remain. The report also found that over 30% of NFP directors feel that their boards need more female members.

Other discouraging statistics that were uncovered in the survey include:

  • 70% of respondents stated that the majority of their boards were made up of individuals from a mainly white, Anglo-Saxon cultural background
  • 36% have few to zero indigenous people serving on their board
  • 12% reported that no one was serving on their board who had an Asian cultural background.

The survey also uncovered that there is a lack of diversity in the relative age of NFP directors and boards, with the average age of a member being 56. Less than 4% of boards have members younger than the age of 40.

According to a 2014-15 report from DDI and The Conference Board, increasing the gender balance of for-profit company boards leads to improved decision making, better outcomes, and higher performance. This conclusion is reflected by data that the top 20% of for-profit companies have 37% of their senior leadership roles filled by women. Businesses in the bottom 20% have only 19% of their leadership roles filled by women.

When for-profit companies have more women in leadership positions they outperform the companies that don’t. This fact has significant implications for the NFP sector. This data seems to suggest that NFP boards actively take steps to increase their gender balance and position themselves to have greater access to individuals with diverse viewpoints and ways of thinking. This should then help them be able to find novel solutions to the difficult challenges that NFPs now face, including how to collaborate and build partnerships with governments and other third parties to better their financial stability and sustainability.

What Steps is Your NFP Taking to Increase Gender Balance and Diversity?

In light of the new statistics, what steps will your NFP take to increase gender balance and diversity on your board and other leadership roles within your NFP?

Does your NFP have an official policy on gender balance and inclusiveness?

How diverse is the makeup of your board?

What steps is your NFP taking to increase your outreach and recruit more individuals of different backgrounds and cultures?

All great questions to ponder on this very challenging and important issue of diversity.