How Do Australians View the Leadership and Governance of the Charity Sector

Charities are at the heart of social ecosystems and play a vital role in building and sustaining flourishing communities. Yet, charities face several interlocking challenges that have only become more complex in a post-pandemic environment.

In this context, charities are grappling with increased demand for services, financial sustainability, increasing job complexity, a declining volunteer workforce and the need to re-establish relationships with donors, all in the context of sustained impacts on the mental health, well-being and resilience of charity employees and leaders.

Ultimately, addressing these challenges is the work of leadership and governance, requiring charity leaders to jointly orchestrate and create the enabling conditions to address these issues while sustaining the community goodwill and the social license to operate that charities have historically enjoyed.

What, then, is the current state of public perceptions of leadership in Australia’s charity sector? How does the charity sector compare to other institutions in the public, private and not-for-profit sectors, and what are the types of things that charity leaders can do to sustain public trust and confidence in charities?

The Australian Leadership Index-Australia’s largest study of leadership for the public interest-recently published its inaugural report of public perceptions of leadership in the charity sector. This report shows how the public views the integrity, contribution, competence and leadership of the charity sector, revealing how the sector compares with national benchmarks, and offering fresh insights into the types of things that charity leaders can do to foster public trust in the sector.

Charities are squarely located in the ‘golden quadrant’

Charities are among a handful of institutions that are positioned in the ‘golden quadrant’. Institutions in the golden quadrant are viewed as having good intentions and the ability to enact these intentions; both major drivers of public trust.

Notably, this pattern of results suggests that Australians look to institutions like charities to speak for and protect the public interest. This contrasts markedly with how the public views government institutions, which are seen to lack integrity and competence.

Charities outperform national benchmarks on all leadership metrics

The public has highly favourable perceptions of charity leadership. Not only are charities seen as showing strong leadership overall, but they are seen as performing exceptionally well in terms of leadership that supports the long-term well-being of the general public.

Since the inception of the Australian Leadership Index, charities have been among the strongest performers in terms of public perceptions of leadership for the greater good. These results affirm the status of charities, in the public mind, as among the stewards of the common good in Australia.

Charities show us what public integrity looks like

Integrity comprises several themes, such as ethics, transparency, responsibility and honest, genuine intentions. Charities perform above the national benchmark on all indicators of public integrity, especially perceived care for the community and genuine motives, which underpin public trust. Overall, these results suggest that Australians look to charities to care for the community and act in the best interests of society.

In terms of areas where there may be room to improve, the social licence of the charity sector-as indexed by its perceived legitimacy, reliability, credibility and trustworthiness-may warrant some attention.

Contribution

Contribution refers to judgements about contribution to financial outcomes, societal welfare, environment, and several other factors. Despite their challenges, charities continue to be seen by Australians as making important contributions to public value. Charities perform well above the national benchmark in terms of their contributions to the social dimensions of the public interest; namely, advancing the health, welfare and well-being of society.

However, a significant gap exists for technological innovation, with charities lagging the national benchmark. This is the only metric that charities are not essentially equal to or well above the national benchmarks of the Australian Leadership Index.

Competence

Competence comprises several themes, such as purpose, skill, efficiency, value creation, and several other factors. Charities perform above the national benchmark for competence, but its performance is more modest compared to the charity sector’s strong performance on integrity and contribution.

In the public mind, the charity sector’s strengths are its clear purpose and vision for the future. Other strengths include citizen engagement, governance and responsiveness to social needs. Presently, the public may be unsure of how charities create value for their stakeholders, which may present development opportunities for charities in 2023.

What ‘drives’ public perceptions of charity leadership?

In addition to using integrity, competence and contribution metrics to assess perceptions of the charity sector overall, these metrics can also be used to glean insights into the role these factors play in explaining public perceptions of charity leadership for the greater good.

Notably, the results reveal that although good intentions matter (integrity), the most important drivers of public perceptions of charity leadership are the ability to enact these good intentions (competence) and the outcomes of these actions (contribution).

Why these results matter to the charity sector

Overall, these results demonstrate that charities are widely regarded as among the stewards of the public interest and as demonstrating strong leadership for the greater good. This is especially apparent when charities are compared with national leadership benchmarks. In the context of not-for-profit institutions, charities are practically in a league of their own.

Our results reveal that only higher education institutions enjoy comparable social esteem. Charities are also one of only two not-for-profit institutions in the ‘golden quadrant’, which testifies to the high regard in which charities are held by Australians.

As a sector that relies so heavily on public support, these findings are of strategic importance. Unsurprisingly, the charity sector is viewed as one of high integrity that provides significant value to Australian communities and performs strongly on all drivers of leadership overall.

However, this report also indicates that they perform significantly below the national standard on public perceptions of technological leadership and innovation and at the national benchmark in terms financial contribution, creation of employment opportunities, and generation of value for their stakeholders. There is great scope for the sector to improve on these perceptions to ensure we attract the best workforce and supporter base in the future.

In addition to addressing the issues identified above, there are a host of things that charity leaders can do, individually and collectively, to sustain and enhance public perceptions of the sector’s integrity, contribution, competence, and leadership. These range from better communicating the good intentions and civic purpose of charities to ensuring that the impact of charities is detectable so that citizens and stakeholders alike can better appreciate the value created.