For government over a number of years, the Australian not-for-profit sector in Australia has delivered vital services to the broader community. As such, in the last few years the not-for-profit sector has also become intrinsically involved in sundry government reforms.The level of government reform in areas where many not-for-profit organizations operate, such as health, aged care, disability and community-housing, has been substantial.The threshold moment, appears to be the publication of the Productivity Commission’s report, The Contribution of the Not-for Profit Sector, in 2010, after which there has been significant reform activity
There are often fiscal and prudential benefits that governments expect to achieve through reform, especially as government is frequently the primary funder of many not-for profit service providers. In some cases, reform is designed to create a more competitive environment in which not-for profit organizations operate.The Federal Government’s introduction of the National Disability Insurance Scheme (NDIS), for example, will potentially have a major effect on the competitive environment of service providers by realigning the avenues by which they will be funded.Other reforms directly influence the governance of not-for-profit organizations such as the introduction by the Australian Charities and Not-for-profits Commission (ACNC) of its Governance Standards Guidance in August 2013. In many other cases, however, the impact on governance is a consequential, but no less impactful, part of the reform process, and this is acutely the case where reform places personal liability on the shoulders of the officers and directors of the relevant organization.
In understanding why this is happening, it is important to highlight some key linkages.Firstly, there is significant support for the rationale that governance is related to performance in for-profit organizations, whilst research similarly demonstrates that governance theories used to better understand governance for for-profit organizations are equally relevant for not-for-profit organizations.Accordingly, there is likely to be benefit in not-for-profit organizations embracing for-profit management approaches designed to improve performance.The interaction between government and the not-for-profit sector has also continued to grow, with government reforms having an increasing impact.
Nevertheless, it is important to recognize that there are fundamental differences between not-for-profit organizations and for-profit organizations, meaning the convergence will not apply uniformly throughout the not-for-profit sector.