Board Performance and Governance in Small Not-for-profits

This study explores governance challenges in small not-for-profits (NFP), and identifies
resources and potential strategies to address these challenges. The study’s primary
motivation is that while all organisations need effective governance, small NFPs receive less
governance research and resources than their circumstances and social contribution warrant.
This study reviewed existing governance resources, and conducted several geographicallydispersed focus groups with directors and CEOs of small NFPs (less than $10 million revenue).
While the study found little research and guidance specific to small NFP governance, it also
found evidence small NFPs face distinctive governance challenges. These are not necessarily
due to different governance principles, but rather due to a different organisational context in
which governance principles are implemented. Examples include:
 Greater reliance on fewer funders, and so particular risks of financial instability, cash
flow and / or ‘funder capture’;
 Limited access to specialist financial and human resources skills, so more challenges
to implementing robust controls in these areas;
 Greater reliance on board expertise to fill gaps in operational skills or capacities, and
so greater importance of board recruitment; and
 More limited time, skills or resources for longer-term strategic planning.
The study recommends policies, research and resources more closely targeted at the needs
of small NFPs. The main recommendations are for:
1. More focus on small NFPs by policy-makers. This includes direct policy consultation
with small NFP staff, volunteers and stakeholders;
2. Dedicated governance resources for small NFPs. Resources should be affordable,
accessible and credible, with the ACNC well placed to provide these resources; and
3. Additional academic and industry research. More research needed to define small
NFPs and better understand and address their specific governance challenges.