1. NFPs place in Society & Economy Better Boards Conference 2012 Melbourne Les Hems Director of Research Centre for Social Impact

2. The Centre for Social Impact An independent research centre & “do-tank” Collaborative DNA – 4 university partnership Operates at the intersection of the 3 sectors. Strategic engagement with: – Wide range of not-for-profit organisations & social enterprises – Commonwealth, state and local governments – Corporates including Macquarie Group Foundation, PwC, NAB, Stockland, JBWere, Corrs Chambers Westgarth Focus on social innovation / entrepreneurship / enterprise / finance / impact Focus on evidence & measurement.

3. The question (and assumptions) How can NFP boards, CEOs & senior managers develop & deliver their mandated mission? NFPs contribute significantly to society & the economy. NFPs are not fulfilling their potential. Many NFPs can be described as “permanently failing organisations” – complex /unachievable missions - where there is market & government failures. Many NFPs operate at the intersections with government and corporates to address these failures. NFPs are “interdependent”: – NFPs are an integral part of Government strategies – ‘Third Way’, ‘Big Society’ – NFPs increasingly part of corporate journey of ‘Creating Shared Value’ – economic and social value.

4. Context: Seven transformations Not-for-profit organisations: From grant dependence to long term sustainability through social enterprise (core / ancillary) Government: From short term activity/output driven procurement to long term outcome based commissioning – “payment by results / for success” Government & NFPs: shift in focus to early intervention and breaking the cycle.

5. Context: Seven transformations cont’d Individuals: From philanthropy to social impact investing Private and institutional investors: from single purpose economic return to blended return. Corporates: shift from short term shareholder value to long term creation of shared value. Financial Innovation: Financial mechanisms that blend commercial & social returns e.g. Microfinance & social impact bonds.

6. To answer the question Systematic re-focusing NFPs on delivering social impact: – Delivering long term social outcomes – Finding out what works – Investing in what works – Organisational mission sits within broader concept of social impact This requires a shift away from the focus on inputs & activities – securing funding & operational fire- fighting.

7. What is the role of the board? The stereotypical board focuses on compliance and probity, holding management accountable. Increase time spent on ‘strategy’ Are our activities the right ones to achieve social impact? Is this organisation best placed to achieve social impact? Strategic management expertise (AICD/CSI Study 2011) - but directors want to spend more time and say their boards need more strategic management expertise. Need to work more closely with CEO and senior management on strategy - board needs to own strategy.

8. The barriers Time - board time (exec & non-exec boards - pay trustees?) and CEO time (organisation structure, manager education & training). ‘Confidence’ to shift effort & resources from short term to mid & long term – recognition of the value of investing in strategy (& R&D). Access to expertise - strategic analysis - corporate and NFP specific expertise. Board members & the role of consultants / research centres. Directors are the first line of regulation. Will new NFP regulation increase amount of board time spent on compliance?

9. What do we need? Intelligence - strategic analysis requires intelligence, knowledge, information and data. Tools, templates and frameworks: – Theory of change – understand current “theory” and how to maximize social impact. Expert board members and consultants are part of the solution but the solution really needs to be ‘open source’ Systemic solution e.g. UK ‘Third Sector Foresight’ initiative http://www.3s4.org.uk/.http://www.3s4.org.uk/ An ‘education’ role of ACNC?

10. Les Hems Director of Research Centre for Social Impact l.hems@unsw.edu.au www.csi.edu.au Twitter @leshems @CSIsocialimpact