Pro Bono Australia and Grant Thornton Australia partnered to undertake a public national study to help understand whether today’s Not for Profit boards have the necessary financial literacy skills to guide their organisations through the challenges and changes ahead.
The survey was targeted at governance body members of Not for Profit organisations and their senior management. A total of 1,065 people completed the survey across small, medium and large Not for Profit organisations. The findings were published in June 2015.
With the Not for Profit sector experiencing a period of such unprecedented change, organisations are increasingly reliant on strong governing bodies (referred to throughout as ‘boards’) to guide them through the accompanying uncertainties and challenges. To provide the best support to their organisations, boards have an obligation to make sound commercial decisions – they need to be financially literate.
In this report we explore the results of the survey and consider whether organisations have an appropriate level of financial literacy to meet the needs of their organisation today and into the future. We also look at how organisations are working with their boards to ensure they achieve an appropriate level of financial literacy.
Two clear themes emerged from our analysis of the survey responses:
- When asked whether they believed their board had the right level of financial literacy to meet the current needs of their organisations, 59% believed they did. While this level could be improved on, of real concern is that when respondents were asked the same question in relation to future needs, only 40% believed their boards had the right skills. The reality is that the sector changes underway won’t be reversed and organisations must ensure they are equipped to manage them.
- The survey indicated that one of the tools organisations can use to bridge the knowledge gap is director education. Analysis of the responses showed that where there was a focus on director education, the level of financial literacy was assessed by respondents as higher than average.
Areas found to improve director financial literacy, and therefore areas that Not for Profit boards could focus on included:
- Evaluation of financial literacy during the director selection stage.
- Including financial training in director induction programs.
- Evaluations that assess board needs.
- Ongoing director education programs.
A word from the experts
"These findings will help Not for Profit organisations to address the gaps" Simon Hancox - National Head of Not for Profit
"The need for sophisticated business skills, finance and investment knowledge in Not for Profit organisations is imperative" Karen Mahlab AM, Founder and CEO, Pro Bono Australia