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Performance vs. Philanthropy: Setting Your Priority

I have the pleasure of sitting on the board of an organisation that has two core purposes: creating a return for the shareholders and investing into the local community. These two purposes are baked into how the organisation operates: there is a cap on how much profit can be returned to shareholders and the remainder has to be invested into the local community (or retained for future organisation requirements if need be).

This situation creates a conflicting focus for the board: do we push high staff performance based on stretch KPIs; or do we focus on investing into the community and acting more benevolently (which often goes hand-in-hand with more lax staff performance requirements)?

Does it have to be an either / or situation?

I would argue that you need a focus on both performance and philanthropy.

In the past, being a not-for-profit or charity has generally equaled relaxed performance measures tied to financial outcomes and guaranteed income (usually via government funding).

There is no doubt that this situation will become less and less the norm, and that is has been changing for some time now. Government funding is being rolled back in many sectors (sports and arts being two examples) and organisations are encouraged to become ‘more commercially minded’.

For some directors – particularly those who lived through the hay-days of large and consistent government funding – this is a difficult adjustment to make and / or understand.

You can’t have one without the other.

Without staff performance against minimum KPIs that is tied to the financial results of the organisation you can’t have philanthropy. If the money isn’t there, you can’t exactly give it away (either physically or through service delivery).

Everyone across the organisation needs to be pulling in the same direction and working towards achieving its strategic goals. The over-arching targets need to be broken down to individual targets that everyone works towards. The staff can still have a sense of purpose through demonstration of how achieving their KPIs enables the organisation to create charitable outcomes.

At the end of the day, there needs to be a general acceptance, both at the board level and the staff level, that minimum staff performance objectives are required not only for ongoing organisation sustainability, but for philanthropy to be part of the organisation’s ethos.

What do you think?

Image via flickr/ThierryEhrmann

newsletter for new and aspiring company directors

March 22, 2017

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Get on Board delivers education and development courses that are open to individuals from all professional backgrounds and all types of industries (public, private, NFP, sporting organisations and clubs, etc.). Get on Board focuses on aspiring directors – those people looking to join a board in the near future – and on new directors – those who are currently in their first to fifth year of sitting on a board. Everything that we do is geared towards developing the corporate governance skills, and the business, strategic and financial acumen of new and aspiring company directors.

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