We recently came across an article on the NZ Institute of Directors website on the above topic. Although the article is some 8 years old, the points it makes remain germane.

NFP organisations are generally created to benefit the community or members and, as the name suggests, do not have the objective of making profits which will be distributed to shareholders/owners. The NFP sector in New Zealand includes charity, voluntary and non-government organisations.

Governance is becoming increasingly important in the NFP sector. Sometimes what starts as a small group of people working on a voluntary basis, grows to become an organisation that employs people or receives public funding. In this case it becomes important to put in place proper governance as part of being accountable for how the funds can be used …

Good governance of NFP’s has a lot of the same advantages of good governance in other sectors, that is making sure that an organisation has a clear vision and strategy and management and staff are clearly aligned to achieve it.

In the NFP environment organisations will often have what is referred to as a governing body. There are usually three officers (also called office bearers or office holders) appointed to a governing body: