Governance is not the enemy of innovation

During August Brad Ead, head of our Outsourced Finance Manager Support attended The Third Sector Expo, the theme was Innovation for a Stronger Community. Guest speakers included World Vision CEO Tim Costello and his son Elliot, CEO of YGAP; Australian Institute of Company Directors (AICD) Managing Director John Brogden and Chief Commissioner of Greater Sydney Commission (and PM’s wife) Lucy Turnbull.

The three day expo explored innovation and governance from Australia’s leading executives in the industry. Brad has summarised the key points he has taken away from this expo below:

Innovation

In a rapidly evolving world innovation is more important than ever before. Innovation is more than just technology. Organisations and Individuals are innovating to:

  • raise funds – including via the following innovative methods: impact investing; social finance; social investment; investor concessions; improving reach of fundraising activities; pre-tax employee giving schemes)
  • work more effectively, including co-design, collaboration, partnerships, strategic alliances, mergers, refresh of Board composition
  • provide and review services to achieve their mission
  • measure impact, i.e. the outputs achieved in line with mission values
  • measuring effectiveness and reach of Marketing
  • use assets more effectively
  • continuously improve.

If done right, innovation is not a high risk. That’s right, we said not. Failure can happen, but fail fast and move on.
Innovation has to be about doing something better; gaining better outcomes. Don’t just innovate because you have an idea. Ask yourself is it going to improve or make something better? Don’t lose sight of or sacrifice core business when seeking to innovate. To be innovative, you have to create an innovative culture.

Governance

Regulation doesn’t need to slow you down, good governance can drive both organisational performance and regulation.

It was said that four out of five charities have volunteer Boards. If your Board lacks skills and expertise for a project or undertaking, consider appointing an Advisory Board containing non-board subject matter specialists.

Be wary of the Founder Syndrome – where you’ve got board members who have been there since day one. There are solutions, such as transferring them to Patron status and freeing up a spot for skill-based board members or having the board membership term clearly set within your charter.

It’s important to have a Deputy Chair if for nothing else – Chairperson succession. Your next Chairperson may not even be on the Board, so you may need to recruit them onto the Board and train them up. Consider a Nominations Committee when selecting new board members. It need only be a temporary Committee.

Bad governance includes spending your entire Board meeting on “governance” (i.e. compliance, regulatory environment, over-evaluating risk). Consider using Sub-Committees to free up Board meeting time.

These may include:

  • Audit Committee
  • Risk Committee
  • Finance Committee
  • Fundraising Committee

Be aware of how other organisations and individuals are embedding good governance into their everyday affairs and see what you can adopt. At the Expo the AICD explained that their biggest membership growth has come from the not-for-profit (NFP) sector. They have seen the NFP sector increasingly adopt the ASX Good Governance Principles and Recommendations because they are a high bar, and have worked when implemented. The Principles now advocate for a Risk Committee to be separate from an Audit Committee.

A final point from Tim Costello

In many cases money alone doesn’t solve a social problem, you have to change behaviours. And to change behaviours you have to build strong and lasting relationships.

 

Quick tip
Is your charity signed up to a workplace giving scheme? It’s not expensive to get registered with good2give.