The Role of Boards in Ensuring NPO Sustainability
Posted on 05 September, 2020 at 17:20
By Epaphras Chinyakuza
has been the buzzword in Not-for-Profit Organisations (NPOs) in recent years as
the quantum of funding for development purposes is rapidly declining.
Sustainability can be categorised into Financial, Organisational and
Programmatic Sustainability. Financial sustainability refers to the ability of
the organisation to ensure a steady flow of funds for maintaining and
continuing its work. Organisational sustainability entails ensuring the
continued proper working of the organisation and any institutions that may have
been developed as part of the organisation. The ability of the organisation to
continues its projects or programmes beyond donor support is encapsulated in
Programmatic Sustainability. These facets of sustainability have to coexist for
effectiveness. Jeanne , Masaoka, & Zimmerman (2010) state that â€œFor
non-profits, financial sustainability and programmatic sustainability cannot be
separated. Itâ€™s not enough to have a high-impact programme if thereâ€™s no
effective strategy for sustaining the organisation financially. And neither is
it enough to be financially stable: we build our organisations for impact, not
for financial stability.â€ Additionally, in order to have continued
implementation of programmes, there is need for an orderly and well instituted
organisation responsible for ensuring implementation. Boards have a critical
role to play in ensuring sustained NPO operation.
It is essential for organisations to be legally instituted to work within the jurisdictions they operate. In Zimbabwe, although organisations can operate as Charitable Trusts, Universitas or Private Voluntary Organisations (PVOs), there are various taxation, reputation and cost benefits associated with registering as PVOs. PVOs are subject to periodic monitoring by the Department of Social Welfare under the Ministry of Labour and Social Welfare and this places a burden on them to perform in ways that are impactful to the communities and hence are more likely to be sustainable. It is the responsibility of the Board of Directors to ensure that their organisations are legally instituted and are in compliance with the relevant laws and regulations. Organisations that are legally instituted are less likely to face legal dissolution by the authorities, hence can be sustained for longer. According to the Department of Social Welfare, as of March 2018, there were 1,430 organisations legally registered as PVOs and only 10% of these organisations were up-to-date on compliance with local regulations. Evidently, the majority of NPOs in Zimbabwe need to either register as PVOs or ensure compliance with set regulations.
One of the major roles of the Board of Directors is to set the long-term programmatic direction of the organisation. It is essential for the Board to be endowed with skills that can forecast the outlook of the environment that the organisation is operating in and determine the relevant focus areas that will be of most impact to the communities. This will ensure that the programmes chosen will benefit the society and in turn continue attracting support from external funders, governments and other key stakeholders. After all, NPOs are built on the relevance of the programmes to the society.
Organisations are built and maintained by competent human resource base. In order to remain relevant in a dynamic world, there is need for continued capacity building to strengthen the skills base. The Board should be able to identify capacity building areas relevant for future programming needs to ensure that they develop the required skills ahead of other organisations in this world of competition for the reduced funding pie.
The most legally compliant organisations promising to undertake programmes that might bring considerable impact to communities will not be able to see the light of day in the absence of funding for their activities. The Board is responsible for setting up strategic and financial sustainability plans with diverse income sources. Many NPOs have folded as a result of over-reliance on a single or just a few streams of income caused by Board myopia â€“ the inability to forecast the need for diversification of income sources. Instead of depending on donor funding, the strategic plans should detail how the organisation will mobilise other non-restricted sources such as fundraising, membership, private sector collaborations etc.
Effective Boards will ensure that organisations continue to operate for effective transformation of societies even during the pandemic. At KFM Consultants, we contribute to this transformation through providing financial management, governance and sustainability services. From the 23th to 25th of September 2020, we will be hosting an NGO Financial Management for Effective Transformation Workshop in order to assist organisations to survive during times of the pandemic.
Jeanne , B.,
Masaoka, J., & Zimmerman, S. (2010). Nonprofit sustainability making
strategic decisions for financial viability. San Francisco Jossey-Bass.