The path of the river changes: Adapting NGO governance for the times
Amy Thomson looks at governance structures in NGOs and why and how to change them. Amy is a Senior Consultant at MartinJenkins and a board member for Amnesty International New Zealand.
The river’s path to the sea is constantly changing. The river’s banks erode over time, shifting its path. New rocks or debris brought downstream can also divert the path of the awa. Changing weather patterns can reduce its flow to a trickle, or increase it to a flood.
Like the river, your organisation needs to adapt to its surroundings. When your institutional arrangements are a good fit, they’ll enable you to do the right things in the right way and achieve results consistent with your kaupapa. If the arrangements are no longer working, they can become a real obstacle.
As governance positions go, being a board member for an NGO tends to be seen as entry-level. The truth is often quite different: NGOs can be focussed on solving “wicked problems” in situations where it’s hard to show you’re having an impact and the need for credibility is high.
Having been both a long-time member and now a board member of a charity, I know how difficult the challenges can be – both the external and the internal structural ones. In this article I’ll look in particular at governance challenges, and draw on the expertise of some of my colleagues here at MartinJenkins about how to adapt your organisation to your surroundings.
NGOs are grappling with new volunteering patterns and tight competition for funding
The patterns of volunteering are eroding the traditional banks of the NGO river. The days when people were active members of the same organisation for decades may be behind us. Now, volunteers are often focussed on short-term projects they’re passionate about and that affect their and their family’s future. The demands on their time also tend to be greater now. This all makes it harder for organisations to attract new volunteers, particularly from younger generations and diverse cultures.
Our NGOs also face major funding challenges. The charitable sector in Aotearoa is highly competitive, with more than 28,000 charities in 2020 – three times as many as the UK on a population basis. Organisations that rely on philanthropic funding face a tight, competitive market.
The challenge of raising funds is compounded for many NGOS by having aging assets that are difficult and expensive to maintain. When you’re living hand to mouth as an organisation, you prioritise meeting operating costs over modernising and maintaining assets and systems. It’s a dilemma, because investing in modernising systems can be a key way to reduce costs and set the necessary platform for new, more efficient ways of doing what you do.
Fragmented, complicated governance can create uncertainty and stymie action
But on top of those common, largely external challenges, some NGOs also have governance structures that don’t meet their current needs. It can often be because the structures have evolved organically, led by people who are passionately committed but don’t necessarily have a full understanding of governance structures.
Often organisations that begin successfully at grassroots level can rapidly outgrow their early governance arrangements and operating model. This happens particularly when an organisation’s size and complexity reaches a tipping point, with many different local branches and different local governance set-ups.
That can lead to decision-making bottlenecks, and confusion over roles and responsibilities between the local and national level, or between staff and governance bodies. It can also result in inconsistent approaches to service delivery, or different service mixes in different regions.
The wrong structure may mean unnecessary legal requirements
Another problem with governance arrangements that don’t quite fit is that you may be subject to technical legal requirements that impose a big administrative burden. Of course, some legal obligations you just have to comply with, but NGOs also have some choices when it comes to structures, and the nature of your obligations may depend on those choices.
For example, organisations that are incorporated under the new Incorporated Societies Act 2022 have to meet some new technical requirements, including filing an annual return and having documented dispute-resolution procedures.
These changes will help protect members of incorporated societies, but they may also be burdensome for your organisation or create risks. Before reregistering your organisation under the new Act, it’s worth considering whether your current legal arrangements are fit for purpose.
Some legal forms may be a better fit for your organisation’s kaupapa than others. For example, a number of New Zealand charities are registered as limited liability companies – think Sanitarium, and also Workbridge, which recently moved its services to a new company. That makes sense for the type of services Workbridge provides, which are also often provided by for-profit companies. However, the company form would make less sense for a charity that doesn’t have trading at the core of its kaupapa and that relies on philanthropic donors – who may be wary of donating to a company.
CHANGING THE PATH OF THE AWA: SOME TIPS FROM THE EXPERTS
I talked to two senior colleagues who work in NGO governance and management, Richard Tait and Joanna Collinge, to get the benefit of their expertise on designing and implementing governance arrangements that fit.
Richard and Joanna have helped a range of NGOs design a strategy and operating model that fits the organisation’s long-term vision and supports it to be sustainable. Joanna was also a Co-Chair of Oxfam Aotearoa and the Governance Committee Chair of Oxfam International, where she led a reform of the governance arrangements.
Be deliberate about the voices around your governance table
For your organisation to be credible, it needs to be, and be seen to be, connected to and a real part of the communities you serve. It’s no longer enough to be simply “doing good works”.
Richard and Joanna emphasised to me that an organisation’s governance structures need to reflect that connectedness. Of course, you should have the necessary technical and governance skills, but it’s also vital that diverse voices from your communities are represented at the governance table. The make-up of your board and committees needs to reflect your communities.
It can be helpful to begin building the pipeline of governance talent before spaces open up, and there are a range of ways to do that.
Bring the grassroots along on the journey
Richard and Joanna also emphasised that in adapting your governance arrangements it’s important to first acknowledge the passion of the people working at the grassroots and their strong sense of connection to the organisation’s kaupapa. Grassroots members will have a big investment in the organisation and may feel some anxiety and sense of loss when changes are made.
A shift to a more centralised structure can be particularly confronting. National organisations need to strive for common direction, priorities, and service standards, and this can create tension with people working locally in governance or service delivery. They may see the shift as giving up some autonomy and the organisation becoming less responsive to the local community.
How you bring the members along on the journey is important, and there are a range of options for this – from surveys and workshops, through to a codesign approach for a shared vision.
In a previous article, Richard used the “shifting the elephant” analogy to describe the three essential elements for bringing people along on a change process – dissatisfaction with how things are now, a clear vision of how things could be, and a clear picture of the first concrete steps towards the vision.
Adapt to contemporary volunteering patterns
When choosing the right governance and institutional form for your organisation, consider the impact of modern volunteering patterns and what you can do to encourage volunteering.
For example, can you do this by designing discrete “projects”? Is a membership-based structure still appropriate? What would make volunteering for your organisation or causes more attractive?
Monitoring and measuring impact is important
It’s also important to invest in monitoring and measuring the impact your organisation is having, so you can maximise your impact with limited resources.
This will support your organisation to be sustainable and – if you rely significantly on government or philanthropic funding – protect that income stream. It will also help keep your activities in line with your strategy so that you aren’t just doing something because, for instance, a funder has asked for it, or it just “seemed like a good idea”.
Again, bring your local actors along on the journey as you monitor and measure your impact. And do it carefully, as some people may have passion projects that you’ll need to be sensitive to.
Change your path progressively
Finally, my colleagues Richard and Joanna advised that you shouldn’t try to make all your changes at once. Instead, decide what changes are going to be essential to take the organisation in the right direction, and then add on functions and resources over time as revenue allows.
This will depend a lot on your circumstances. For example, if there’s been long-term underinvestment in core business systems then this might be the place to start, even though not particularly glamorous. Or you may need to first bolster your revenue-generating functions, as a means to securing financial stability – which will then enable you to improve your services or coverage.
The river whose path changes gradually over time allows a thriving ecosystem to maintain its hold and continue to develop – it will be the same for your organisation and its work. Through not trying to do too much too fast you’ll be able to nurture your organisation and its people through the change process and towards a more sustainable future.