NFPs need to work together to survive 2024 and beyond

Our Community group managing director Denis Moriarty – the head of the social enterprise that publishes Community Directors Intelligence and has a mission to help not-for-profits – said he expects the sector is in for another tough year, yet he believes informed and well-connected leaders will be ready to meet those challenges.

He said the continued funding squeeze and a competitive environment for the nation’s 600,000 not-for-profits is likely to prompt mergers in some quarters, including among some of the nation’s bigger operators.

He said those organisations are seeking efficiencies through shared resources, leveraging technological advances such as artificial intelligence and forging collaboration on a bigger scale.

“Those able to continue operating independently – and avoid merger temptations – will still need to collaborate effectively with their sector counterparts to best achieve their missions,” he said.

“Community directors and senior staff will also need to adapt to a myriad of changing workplace rules designed by the Albanese government to improve working conditions, but with the potential side effect of reducing flexibility for NFP employers.”

“The Community Council for Australia has said more about those concerns recently, and our legal partner Maddocks has usefully summarised some of those workplace rule changes for NFPs.

“You would think that it goes without saying that NFP employers will need to protect the mental health and welfare of workers, and their conditions generally, if they want to keep their best talent.

“It wasn’t long ago that we were predicting the ‘Great Resignation’ in the wake of the covid-19 pandemic, and back then nearly 40% of workers said they were tempted to switch jobs.

“As many have forgotten about the pandemic, so too have many dropped the ball when it comes to the mental health of NFP workers.

“Until now, we’ve prided ourselves on having the best conditions and the best causes, which have drawn people to work in this sector. But, I expect there will be an exodus of people leaving the sector due to burnout and exhaustion, where organisations have failed to protect their most important resource: their people.

“One of the best things we’ve done for our own staff has been to introduce a four-day week. We’ve seen a 38% drop in sick leave and our productivity is holding up fine, as we’ve ditched unessential work (especially meetings) and projects that weren’t working. We’re learning to work differently.

“I realise it’s a tough ask for organisations, but the four-day week has been better for our health, better for our customers and better for our business. It can and does work, and I expect that more innovative NFPs will conduct their own trials in 2024.

“While I know I’m blowing our own trumpet here, I’m expecting our weekly news service, the Community Advocate will win growing acceptance as the trusted source of news for the sector. Already tens of thousands of community leaders read it every week for information about their own sector that they won’t get elsewhere.

“That publication, alongside Community Directors Intelligence, is our free contribution to the sector’s ability to be properly informed about the issues that matter.

“For example, I expect that 2024 will be the year we hear about massive cybersecurity breaches in our sector on the scale of the Optus debacle. It’s an unfortunate reality, and our news services have been keeping a close watch on this issue.

“One of the ways we’re different from mainstream news services, though, is that we’re not just there to point out the problems, but to provide the solutions in 2024.”

Training and knowledge the key to effective action in 2024

The Institute of Community Directors Australia, which publishes Community Directors Intelligence, is first and foremost a training organisation, providing NFP directors and senior staff with skills and knowledge.

Leading that training effort is Nina Laitala, whose experience in music, arts, community groups and education underpins her practical understanding of what works for smaller and growing organisations.

She told Community Directors Intelligence that when resources are tight and competition increases, “collaboration is most effective and most powerful”.

She said that employing collaboration effectively can spread limited funding and volunteer labour more effectively, while avoiding burnout. But it requires effective negotiation skills and understanding ways to work together to maximise impact.

In her commentary Seven keys to great collaboration for community leaders, Ms Laitala suggests ways of sharing resources, policies, events, funding, experts and even board members as ways of making the most of the limited resources NFPs have at their disposal.

NFPs can collaborate and compete

Lea Corbett, the founder and director of the Map Consulting Group, has a long history of policy, advocacy and board work with NFPs and governments dating from the late ’80s.

Her view is that all organisations must review their appetite for and approach to collaboration and competition.

“This is an issue that NFPs should consider. It is especially pertinent and possibly troublesome for those working in the many service sectors where marketisation [increased exposure to market forces] has taken place in recent decades. Even without government-driven marketisation, resources are always scarce and demand for services and assistance ever increasing.”

She said NFP leaders should ask themselves: Are you more likely to survive if you collaborate with other NFPs, or do you compete for market share?

Melbourne University’s Professor Mark Considine “had done a thorough job of explaining why so many NFPs feel angry and frustrated with the monumental problems these service markets have created, particularly the poor quality services and often dismal client outcomes regarded as acceptable under these models,” she said, referring to Professor Considine’s book The Careless State: Reforming Australia’s Social Services.

She said his research had found that fixing social services required service providers that were more “strongly connected through communities of practice and independent research institutions which are able to drive better results and defend higher standards” and “better client mediation and stronger voice”.

Nevertheless, Ms Corbett said when it came to a choice between collaborating and competing, “I advocate doing both.”

“NFPs should definitely compete with for-profits on the basis of demonstrable excellence in service quality, and look for opportunities to find innovative approaches to pursue your purpose, lift the quality of care and improve the lives of clients by working with other like-minded and trust-worthy NFP partners.”

Partnerships are working for leading aid agency

CARE Australia’s CEO, Peter Walton, says that for his organisation, 2024 will be characterised by a continued reset of CARE’s relationship with the people it is helping overseas.

CARE’s approach puts beneficiaries at the centre of its work.

Mr Walton described the approach as “not a hand out, but rather a hand up”, making sure that local partnerships are the default, and that telling stories about the work avoids harmful stereotypes. The shift is part of CARE’s commitment to the “Pledge for Change” supported by global charities and not-for-profits to forge stronger connections with the communities they are helping.

Its Lend with Care program, for example, provides financial support to low- to middle-income countries in the Asia-Pacific region, including Vietnam and the Philippines, where many women struggle to secure financing for small ventures.

“A loan for as little as $25 can help grow their business, and once it is up and running, the loan is repaid to the lender,” he said.

He said international non-government organisations often competed for resources, but doing so “can have the unintended consequence of weakening civil society in the countries they operate in”.

“At CARE, we want to continue our focus in 2024 on building our relationships with partner organisations across the region, to make sure they benefit from our presence and that support goes directly to them. This also means more aid money going towards real impact on the ground.”

Another aspect of this approach, he said, was telling stories about CARE’s work “in an authentic way”.

“To date, some of the stories the aid sector in Australia has told, and the accompanying imagery used, have reinforced harmful stereotypes. Our research found that not only is changing the imagery, language, and framing we use to be gender-conscious and anti-racist the right thing to do – it can also raise more funds.”

Understanding NFP finances, HR will be a key to survival

A leading thinker on the finances of the NFP sector, Professor David Gilchrist from the University of WA’s Centre for Public Value, has urged organisations to better understand their financial health. He said doing so was a prerequisite to being able to respond strategically to circumstances.

“As has always been the case, a significant challenge for the sector [in 2024] will be to remain sustainable. However, it is important to recognise what constitutes sustainability in the context of community and other services. Indeed, in relation to this sector, sustainability means being able to continue to deliver the right quantity and quality of services in the right timing”.

He also highlighted labour force issues as critical for NFPs in coming years, and suggested that organisations wanting strategies to tackle the pressure on recruitment should consider better career pathways, employer branding, focused diversity, equity and inclusion (DEI) measures, partnerships with other institutions, and improving job flexibility and renumeration offers for high-quality candidates. Those strategies also had the potential to improve volunteer recruitment and retention, including for community directors, he said.

Read more of Prof Gilchrist’s analysis here.

Good data can help organisations do more with less

Data specialist Kristi Mansfield, founder and CEO of Seer Data, said the pressures of rising inflation, rising cost of living, falling mass-market donations, tight funding and growing demands on NFPs were both a challenge and an opportunity “to explore and find solutions that will benefit our organisations longer term”.

She said artificial intelligence was at the forefront of an opportunity to improve workflows, enhance communication, accelerate education and “even generate new ideas and solutions”.

Ms Mansfield advocated employing “place-based” approaches to data intelligence to “provide new ways for organisations to do more with less”.

She explained that “targeted and specific solutions to social, economic and environmental issues enable organisations to increase their impact where it’s needed most”.

She said those solutions done well could empower the beneficiaries that organisations were supporting, and that a focus on place led to better data access, data sharing and storytelling.

Read Ms Mansfield’s recent commentary Does data deepen democracy? for more of her views on this issue.

NFPs can better prepare for any future

Futurist Paul Higgins, a past guest of Our Community’s Communities in Control conference, has suggested that for NFPs, “facing the future requires a balance between the capacity to anticipate and the capacity to be flexible and reactive as things unfold”.

In How not-for-profits can face the future, Mr Higgins suggests that organisations ask themselves how they would respond to a variety of probable and improbable scenarios, and then examine response strategies.

Organisations should consider resources, time frames, perspectives, review systems and context, he says, to properly assess their future path.

Useful resources

Strategic planning help sheets and articles