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3 IMPORTANT NEW REPORTS ON THE NOT-FOR-PROFIT SECTOR

THE 2017 GLOBAL TRENDS IN GIVING REPORT RELEASED; 2017 NFP GOVERNANCE & PERFORMANCE STUDY; AND ATO’S REPORT ON IMPROVING THE CLIENT EXPERIENCE AND ENGAGEMENT WITH THE NFP SECTOR

 
Dr Matthew Turnour        Mark Fowler

In this Not-for-Profit Update we cover the following recent Reports:

  1. 2017 Global Trends in giving Report Released (‘Global Trends Report’);
  2. NFP Governance & Performance Study (‘AICD Report’); and
  3. Australian Tax Office (ATO) NFP Research: Improving the Client Experience and Engagement with the NFP Sector (‘ATO Report’).

The Global Trends Report focuses on how donors prefer to give. The AICD Report focuses on how NFPs are governed and their performance trends from a director’s and executive’s perspective, whilst the ATO Report focuses onhow NFPs are operated in view of how the ATO can better improve its engagement with the sector.

We provide a brief summary of the key findings of each Report below.

1. GLOBAL TRENDS IN GIVING REPORT RELEASED

The Global Trends Report, conducted by the Public Interest Registry and Nonprofit Tech for Good, is a survey of over 4,000 donors in 95 countries. The findings are therefore helpful in understanding worldwide trends in giving and the surprisingly influential role that technology plays.

 The Global Trends Report finds:
- 45 percent of donors give to NGOs located outside of their country of residence.
- Donors worldwide prefer to make financial contributions online, which is a conclusive generational sentiment as well – 62 percent of millennials and 59 percent of Gen Xers and Baby Boomers, respectively, prefer online giving.
- Of online donors, 42 percent cite social media as the tool that most inspires them to give; of these donors, 62 percent list Facebook as most inspiring channel, followed by Twitter (15 percent) then Instagram (10 percent).
- Donors most trust websites and email addresses that use the .org (72 percent), .edu (7 percent), and .ngo (6 percent) domains.
- Social media is listed by millennials (33 percent) and Gen Xers (28 percent) as the tool that most inspires giving, while Baby Boomers list fundraising events (24 percent) as most inspirational.

The amount of donors giving overseas, although not a figure specific to Australia, may and should have significant impacts on future tax policy with regards to donations.

Some of the key findings particular to Australian and Oceania include:
- Gen Xers are the largest group of donors.
- 39 percent of donors in this region identify as politically moderate and 75 percent are female.
- 70 percent of donors in this region attend fundraising events, the highest frequency of all regions, yet 66 percent say Facebook is the most influential in their giving, more than other survey respondents worldwide.

It is therefore evident that the effective use of technology and social media platforms is key to engaging donors in the years to come. NFPs should pay close attention to how their online presence can and does affect their perceived credibility and ability to attract potential donors.

The full report can be accessed here.

2. AICD REPORT: NFP GOVERNANCE & PERFORMANCE STUDY

The Australian Institute of Company Directors (AICD) released the 2017 NFP Governance and Performance Study on 6 September 2017. The Report is based on survey results and focus groups of directors and executives of NFPs.

The key findings, as summarised by AICD, are as follows:

Culture front of mind but low on the agenda
- More than 70% said they would be very likely to recommend their organisation as a good place to work to family and friends.
- 52% said culture had not been formally on their board agenda in the past 12 months.

Risk management sophistication varies
- On balance, more directors felt their organisation was taking on too little (36%), rather than too much risk (20%).
- Only 41% of respondents said their board had a formal risk appetite statement.

Financial sustainability remains an issue
- Half of directors reported profit margins below inflation (2%)

Reputation taken for granted?
- 86% of directors rated the importance of their reputation as highly important.
- Only 41% of respondents said reputation is formally considered by the board and management when making all strategic and operational decisions.

There are a number of upcoming public presentations, along with a complimentary webinar for members on 20 September 2017. Details of these presentations and the full report can be accessed here.

3. ATO REPORT: IMPROVING THE CLIENT EXPERIENCE AND ENGAGEMENT WITH THE NFP SECTOR

The ATO recently undertook research to help them better understand the different types of NFPs, their characteristics, behaviours and needs. The ATO’s Report, conducted by EY Sweeney, was released on 19 July 2017. The findings were based on data collected from online surveys of NFPs and further in depth interviews with NFPs.

The Report makes interesting findings as to the apparent longevity and sophistication of a majority of NFPs. The Report found that the majority of NFPs:

- are mature – have been in operation for more than 20 years. This means they have often developed knowledge and systems that allow them to manage their tax affairs, and as a result feel more confident navigating the system.
- are established – they are operating business-as-usual. One in four NFPs are “expanding” (operating for several years and looking to expand size or purpose of organisation). A small proportion of NFPs are in the start-up, growing or exiting phases.
- are small – most have less than five paid employees, with 40% having no FTE employees. As a result they have to rely on the skills of volunteers for management of their tax obligations.

The Report further found that, for the majority of NFPs, volunteers and employees involved in managing tax affairs:
- Are longstanding employees / volunteers – have managed the tax affairs for their organisation for more than five years, resulting in higher levels of confidence.
- Have no formal qualifications – do not have formal accounting, finance or legal qualifications, but are university educated.
- Tend to be a little older – are aged 50 years or above and as a result are often conscious of the importance of finding a successor for their role.

The ATO has indicated that they will use the findings to:

- determine the level of sophistication of each of the segments with the NFP sector;
- develop a clear profile and understanding of NFP’s lifecycle and when they do and need to interact with us and other agencies;
- identify how to improve our products, communication channels and how to interact with segments within the NFP sector; and
- determine the level of tailored engagement needed for each segment.

The full report can be accessed here.

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