It found 31% of respondents were currently members of both for-profit and not-for-profit boards, but the manager of the not-for-profit division of the AICD, Phil Butler, thinks the true figure is likely to be higher.
“Our estimate is that it would probably be over 50% of our membership,” he told LeadingCompany today. “If you looked across Australia you would see it’s extremely common for people in executive management roles to also have roles as directors in not-for-profits.”
Four in five (86%) of corporate directors are not paid for their not-for-profit board positions.
The most common motivation for accepting these positions is a desire to ‘give back’, Butler says. Directors often choose boards in areas they have a particular interest in – whether in education, sports or the arts – or those in which they feel they can make a significant contribution in skills, networks and experience.
When it comes to corporate governance, the legal responsibilities of not-for-profit directors are often broadly similar to those placed on for-profit directors, with small variations on matters such as use of volunteers, workplace health and safety and fund-raising. Fiduciary duties remain the same.
There are complications depending on how a not-for-profit is registered.
With incorporated associations, Butler explains, they fall under the relevant state or territory legislation.
But with companies limited by guarantee, the federal corporations act applies, as do any relevant state or territory legislation.
Most not-for-profit directors spend 23.4 hours per month their commitments, which works out to 35 working days a year. “It’s a very large time commitment,” Butler says.
Not-for-profits extend invitations to corporate directors out of a desire to broaden the experience of their board. “For example, Butler says, “I’m on the board of an arts organisation in Canberra, not from any great insights I might have into artistic or musical talents, but for my broader perspective into general business, management, and a rigorous assessments of risks.”
The report found not-for-profit directors spent most their efforts (29%) on developing strategy, 20% on reviewing performance, and 15% on funding issues. Executive remuneration typically takes up only 3% of a not-for-profit director’s time – a figure that has likely skyrocketed for MLC’s directors in recent weeks.
Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
