When good intentions are not enough
When any person or group starts a non-profit organisation, they do it with great enthusiasm and altruistic passion to make a difference. There’s nothing to fault such intentions but whilst they’re caught up in the moment of making a difference one area that’s often neglected is financial management.
This is backed up by a recent statement by the Department of Social Development (DSD) that says only half of the more than 250,000 registered non-profit organisations are compliant with legal requirements. Whilst they may have sufficient initial funding to run their organisations, there are no controls or expertise in place in terms of financial management. The result is likely to be the early demise of the organisation, as is seen time and again in a country that desperately needs such help.
When we speak of NGO and NPOs these can be as small as a granny running a daycare centre in Alexandra Township, to an old age home in the Eastern Cape or a sanctuary for ex-cart horses. They are all great causes and are often initially well supported but unless they’re run as businesses, they may find their funding soon disappears.
So why is there so much financial mismanagement in this field? It’s perhaps not surprising when you look at the makeup of such organisations, often run by medical people, clergy or teachers – all highly-skilled professionals in their fields but not always used to running businesses or employing the right qualified personnel to run such projects.
The make-up of a board
It’s one thing to have names of board members on a letterhead but quite another to have those members play a relevant and useful role in the organisation. For instance, in the running of a school where facilities need to be maintained, you would need a practical person, as well as the obvious financial, legal and human resources members – which wouldn’t necessarily be old boys. One needs to look at the activities of the non-profit you have started or are considering and make a list of skills which would be useful based on these activities. Once you have this list, you then construct your board members ensuring as far as possible that amongst the board members you have a combination of business acumen and activity-based acumen.
Another common mistake when convening a board is having too many members, sometimes the old adage of less is more rings true. This is often only realised when it comes to decision making. It’s a good idea to perhaps nominate three people who are put in charge of making day-to-day decisions. This will speed up decision making, instead of waiting for every member’s consent.