Sean Barrett, head of the Origin Energy Foundation, and Sam Sayers, CEO of the Australian Scholarships Foundation, reflect on the importance of the not-for-profit sector investing in its people and the challenges of embedding professional development. 

It has taken more than a decade, but the message is beginning to get through to leaders in the not-for-profit sector – invest in your people. Now funders and the public need to catch up.  

Today more is expected of the NFP sector. More in terms of performance. More in terms of social impact. 

But while more is expected, this is not necessarily accompanied by more financial and other resources. In fact, the opposite. 

The solution to this conundrum was suggested by the Productivity Commission in its 2010 landmark report into the NFP sector. It pointed out that leadership capacity can determine the success or failure of an NFP and argued for greater investment in training and development for the sector’s leaders. 

To test this hypothesis the Origin Energy Foundation set about pursuing two related initiatives. 

The first initiative was putting half-a-million dollars into funding a wide range of scholarships for leaders of the sector. These scholarships were administered by the Australian Scholarships Foundation. After administering over 4,000 scholarships to the sector their research shows that 90 per cent of these NFP scholars would not have had the opportunity to study without a scholarship, yet 93 per cent noted improved job performance. 

Secondly, the Origin Energy Foundation funded Learning For Purpose, a report from the Centre for Social Impact. This major piece of research, which took three years, showed a marked improvement in performance where people skill themselves up. It found that money invested in training and developing leaders of community organisations benefited the individual, the organisation, and resulted in better support for their clients. 

Now we have the results of the CEO survey conducted by PwC showing upskilling is becoming a priority and vital to future success of their organisations. According to PwC, “NFP leaders also say upskilling programs have super-charged workforce productivity helping them to do more with less in a resource-constrained sector.”  

We now face three challenges to embed professional development in the sector. 

Challenge one: Changing public perceptions.  

Currently many value the emotional over the rationale. Because funding and donations are often directed at front-line service delivery, there is a perception that money spent on training is wasteful and makes organisations appear less efficient. However, the Australian Scholarship Foundation argues that “improved leadership and management capability is the critical difference in creating effective and efficient NFPs”.  

We would be horrified if a doctor, pilot, or teacher of our children, did no more training and development after graduating; did not keep up with new development and best practice. Yet if NFP leaders were to spend on training and development they are often subject to public criticism for “wasting” money. 

Challenge two: Funders have to review their rules.  

Many program and philanthropic funders are reluctant to fund “capacity building” such as training and development. They insist that every dollar goes towards the mission – goes towards feeding the hungry, housing the homeless, aiding the sick and protecting children.  

This is illogical. Successful businesses and organisations invest in themselves and their people; invest in productivity gains, and future sustainability. Yet the same principles are not acceptable for charities and other NFPs. They are expected to meet growing demand and increasing external complexity with shrinking budgets, as if they have access to a “magic pudding”. 

Challenge three: Help for the helpers. 

The CSI UWA Learning for Purpose report highlighted unequivocally that investments in learning and development lead to improvements in efficiency and productivity. Leaders in the NFP sector need to challenge funders to expand funding scope to include support for staff and organisational development, not just fund programs. The report reviewed the impact of investing in governance training for hundreds of NFPs, and was able to evidence the economic return on investing in development, noting that for each dollar spent on governance capacity building, there appears to be an average positive return of about $6. That would seem to be a powerful positive economic return. 

If we can address these challenges, then those in need of support in our communities will be better served by a NFP sector working smarter, not necessarily harder. 

This article was first published in Pro Bono news in October 2021.