It is becoming increasingly clear that not-for-profit organisations are not immune from demands for more accountable, transparent and consultative boards.
Dozens of high-profile cases have in recent years brought to prominence the issue of questionable corporate governance practices and companies acting contrary to public expectations. So what is meant by these 21st Century governance buzz-words? In the community group context being accountable, transparent and consultative means:
- Being answerable or responsible for the community group's results, including its successes and failures;
- Being responsible for the community group's decisions and actions;
- Ensuring information about the group (including operations, procedures, financial status, directions, etc.) is clear and available on request.
- Ensuring information about the board (including members' profiles and interests and board decisions) is clear and available on request.
- Being willing to ask stakeholders and other relevant individuals and groups their view of a particular issue, strategy or direction and to take into account their views before a decision is made or action is taken.
Why you should become a more accountable, transparent and consultative board
There are a number of reasons why your board should strive to achieve greater levels of accountability, transparency and consultation.
- Greater effectiveness
Firstly, it will help to make your organisation more responsive to your stakeholders – and this is crucial if you are to become a more effective and successful organisation. Greater efficiency and therefore effectiveness will also likely result from better governance as it necessarily involves "putting the house in order." Your group is also likely to benefit from the new perspectives and ideas that arise from being more in tune with the needs and views of your stakeholders.
- Greater respect
Few good governance processes for not-for-profit organisations are mandated by law or regulation. However, there are very real rewards for those groups that put them in place anyway. Significantly, having accountability, transparency and consultation process in place will win you the trust and respect of those who take good governance seriously – in particular, governments and businesses. And that can put you ahead of the pack when it comes to competing for grants, donations and other forms of support.
- Greater trust
Community support is imperative for the continued existence and success of any community group. Those who take their responsibility for good governance seriously are far more likely to receive the esteem of the public.
- Preparation for the future
Overseas experience and some initial moves locally would seem to indicate that greater regulation of Australian not-for-profit organisations is increasingly likely. Laying the groundwork for better governance procedures now will help your group to easily adjust to any future governance requirements that may arise.
How your board can become more accountable
There are several practical measures that your board can put in place to ensure your organisation becomes more accountable:
- Undertake an independent financial audit at least once a year and act promptly to resolve any concerns that are raised.
- Avoid conflicts of interest and deal with them promptly and properly when they do arise.
- Ensure all board members understand their roles and responsibilities and carry them out to the best of their abilities.
- Ensure all board members understand state and federal regulations and laws that affect your organisation and your board.
- Keep good records of all financial transactions, as well as board decisions and actions.
- Put in place a complaints procedure to give interested parties the opportunity to voice any concerns they may have.
- Put in place a whistleblowing process to ensure internal problems can be uncovered and dealt with.
- Ensure your organisation has procedures in place to deal with media inquiries. Under no circumstances respond to a media inquiry with "no comment".
- Regularly send funders (and other relevant organisations or individuals) updates on funded projects. Keep a close eye on how grants money and other donations are being spent.
- Make sure your board has in place – and importantly, is guided by – clear policies and procedures to ensure decisions are consistent and can be shown to be such.
How your board can become more transparent
There are several practical measures that your board can put in place to ensure your organisation becomes more transparent:
- Publish a regular newsletter to provide updates about the organisation.
- Compile and publish an annual report, including details of the activities your group has undertaken in the past year and financial statements. Send it to interested parties (members, donors, funders, service users, etc.) and ensure it is available to others on request.
- Put in place an "interest register" that details all of the personal and business interests of current board members – particularly those that could lead to a potential or real conflict of interest. Make information contained in the register available to anyone who asks.
- Ensure your group is responsive to requests for information. Be prompt and polite when such requests are received.
- Have on hand and ready to hand out information about your group and your board including:
- Board minutes (excluding confidential reports and discussions)
- The organisation's mission and vision statements
- Details about the organisation's programs
- Board members' CVs
- Auditor's reports
- Open board meetings to the public or to members where possible to ensure procedures and processes are subject to scrutiny. Consider setting aside time for questions and answers from the floor.
- Use your website to publish information about your organisation and your board – but provide it in hard copy as well (not everyone has access to the internet.)
How can my board become more consultative?
There are several practical measures that your board can put in place to ensure your organisation becomes more consultative:
- Put in place a diversity strategy to ensure that the views of your stakeholders are adequately represented on the board.
- Establish a communications strategy to ensure that board decisions are explained and widely known. This can be as simple as setting aside a corner of your organisation's newsletter to provide a "board update".
- Seek input from stakeholders when key decisions are being contemplated or a change in direction is being considered. Do this by:
- Holding members' meetings or public meetings to allow the board to explain its current thinking and to provide the opportunity for feedback.
- Carrying out a survey of members to ascertain their views.
- Make a commitment to carry out an annual survey of stakeholders to find out how they think the organisation is performing in key areas. Publish the results of the survey in your newsletter and on your website. Ensure you include the bad parts – but outline how you plan to address any perceived problems.