NFP Resource readers recently participated in a survey of the NFP Sector. The results have recently been published by Grant Thornton. (Thanks to Barry Baker of Grant Thornton)
The Executive Summary reads:
“The 2022 Not for Profit sector report paints a picture of an agile industry bending with the winds of change, but it also reveals a breaking point is on the horizon for many organisations.
This report will give you insights into the opportunities the current climate presents and where the major challenges lie. We covered six key areas of the sector:
- Legislative changes
- Governance and strategy
- Risk management
- Team, people and volunteers
- Funding and financial sustainability sources
Here’s a snapshot of what survey participants told us.
Many organisations do not yet have a strong grasp of all upcoming legislation, what’s required and the implications – particularly those impacted by the replacement of the Incorporated Societies Act and proposed changes from the recent release of the Charities Act Review. There is a very real possibility of exposure to risk if these entities don’t brush up on their responsibilities – and quickly.
|Governance and strategy|
Many NFPs have the right number of Board members and provide them with relevant training. Board members are also more likely to be paid now than in past surveys. Regular strategic planning is taking place, but engagement with wider stakeholder groups is low. This means some NFPs are overly insular in their decision-making and planning, and they’re missing important opportunities for valuable input from others.
Many NFPs are doing too little business continuity planning or failing to share their business continuity plans. This is surprising given the sector has been operating in a fast changing environment for several years. Events like pandemics, changing demographics and economic shocks are common and ongoing. Having said that, we have seen some improvement in NFPs’ overall risk management focus, with most maintaining, at a minimum, a risk register. Like most things, something is better than nothing – progress not perfection.
There’s some strong spending on digital platforms, but the rewards from these efforts are at risk of being thwarted for the alarming number of organisations who have neglected to invest enough in cyber security. Although unthinkable, charitable organisations are seen as fair game for cybercriminals. Resolving a cyberattack can be a long and costly process which can be minimised by putting the right protections in place.
|Team, people and volunteers|
NFPs are doing a great job of adapting to suit employees’ and volunteers’ work habits, including flexible hours, working from home and extended annual leave. The historic environment when passion made up for shortfalls in remuneration to full market levels is changing. NFP employees are starting to demand market salaries. This can mean the sector loses many good people to the commercial sector which is particularly problematic in today’s tight labour market and rising living costs.
|Funding and financial sustainability sources|
Most NFPs are fiscally responsible and carry enough cash reserves to get them through the tough times. However, all organisations need to be aware of the recent Charites Act review which signal an intense focus on reserves and what they are used for. Although there appears to be some risk aversion in terms of new sources of funding, the research revealed setting up a trading operation or social enterprise is becoming increasingly popular in the sector with many organisations already active in this space or seriously considering this in the future.”
The Report can be downloaded here