Society is changing rapidly and directors’ understanding of the changing context and drivers of future business are key to embracing and integrating a truly adaptive mindset.
Whilst, there are a range of factors and trends that come into play to create the environment of uncertainty that we face today; the following key drivers go some way to explaining the emergent operating context for directors. Some of the key drivers of change are the:
- Increasing number of millennials progressing from operations and middle management into senior management and leadership positions
- Greater community and stakeholder expectations of transparency and communication of data around impact, management and performance
- Rise of the social enterprise business model in Australia as an alternative to the traditional not-for-profit business model
- Emergence of artificial intelligence (AI) and platforms into the not-for-profit sector as a means to leverage big data and streamline decision-making
The above trends are all stakeholder-driven and emergent drivers of change for future-focussed not-for-profits. They offer insights into what opportunities and challenges are emerging, that enable positive change for not-for-profits, and what strategic levers may be pulled to reap the benefits.
1. Millennials as employees and clients
Millennials prioritise purpose over profit in terms of how they make decisions in purchase and employment decisions. This bodes well for the not-for-profit sector, which can position itself to take advantage of the fact that 77% of millennials have a strong affinity for the charitable sector, being involved in a charity or good cause.
This strong association between millennials’ altruism and a sense of purpose has led many of the top companies in Australia to invest heavily into corporate volunteering programs in the last few years.
Volunteering opportunities and further not-for-profit opportunities have enabled millennials to feel empowered, impactful and purposeful in their roles at work. Given that these are all key drivers of employee engagement and job satisfaction, they are linked to productivity and strong outcomes.
Giving programs enhance employee engagement, which positively impacts hearts and bottom lines” – Naomi Barson
Millennials are also likelier to be more interested in understanding a not-for-profits’ mission and purpose and seeing active measurement of social impact and outcomes created.
As volunteers they are likely to place a premium on gaining experience at developing some of the enterprise skills of today, including networking, collaborating, stakeholder engagement, creativity and entrepreneurship.
Key Tip: Become familiar with how millennials see the world and create a strong sense of purpose and social impact to attract and retain them.
Today and moving into the future, the community expects greater transparency and accountability as to how resources are utilised. To this end, ChangePath- an online charity navigator, recently reported that nearly 30% of Australia’s top 900 not-for-profits are not transparent.
Recent research published in the Australian Communities Trends Report found that the top considerations for a charity that an Australian donor is likely to support are:
- That the organisation is registered as a charity (72%), and
- That there is transparency around the reporting of admin costs (71%)
Transparency in this context means a strong commitment to measuring and reporting on social impact, sustainability and outcomes as well as full disclosure and breakdown of administrative costs. This is a core part of developing a truly ‘outcomes-focussed’ culture.
As a donor, the only information you can find is financial information, and that tells you precisely nothing,” – Caroline Fiennes
A growing interest in transparency and accountability has been accompanied by a rise in adherence to reporting aligned to the sustainable development goals (SDGs), social impact measurement and reporting and sustainability reporting using the Global Reporting Initiative.
Social impact and outcomes reporting has become more common, with many annual reports now including an ‘our impact’ or ‘our community impact’ section. Doing so allows improvement on the traditional annual report, to accounting for contribution to community and social value creation.
Given the public sector, philanthropy and business shift toward outcomes measurement and social impact measurement as a key funding criteria, reporting on social impact is now core business for not-for-profits.
Key Tip: Ensure priority is placed upon social impact, outcomes measurement and sustainability reporting as this will allow for greater funding and investment opportunities
3. The rise of the social enterprise
The rise of the social enterprise in Australia and globally has demonstrated a viable alternative business model to not-for-profit. Some of the best-known social enterprises in Australia such as Thank You Water, STREAT and Who Gives a Crap could be characterised as highly entrepreneurial and disruptive not-for-profits.
An alternative is that a number of not-for-profits have spawned social enterprise arms to support their existing funding models. This is the case with Melbourne City Mission (MCM), who spawned CQ Consulting, a corporate diversity consulting arm to support MCM’s operations.
Social enterprises have become increasingly attractive to government and businesses as a way to make procurement decisions, whilst also having a positive social or environmental impact.
The Victorian Government has pioneered ‘social procurement’ as a method to prioritise working with social enterprises that deliver mandated social outcomes and has also delivered the recent Social Enterprise Strategy to help build the social enterprise eco-system.
What business entrepreneurs are to the economy, social entrepreneurs are to social change. They are the driven, creative individuals who question the status quo, exploit new opportunities, refuse to give up, and remake the world for the better.” – David Bornstein
Key Tip: Consider how social enterprise models might give your organisation a comparative advantage or an alternative revenue stream.
4. Understanding the role of tech/AI in driving strategy
A final and key factor driving how our work will change is the emergence of artificial intelligence (AI) and technological advances in driving strategy and creating value. Those with the ability to develop and master and work with the best algorithms and AI systems will have a significant advantage in the work era to come.
First there was big data, now we have live dashboards monitoring, interpreting and giving us live reporting and feedback on our impact and outcomes. This increasing reliance on technology is also reflected in the attitudes of givers and not-for-profits, with many preferring to take a ‘charity bypass’, and to schedule their giving online through website interfaces.
The next phase is creating and implementing algorithms that learn how to make better recommendations over time to support not-for-profit directors’ decision-making. Blackbaud are pioneering some of this work in Australia, with an AI platform and tool that processes big data and uses predictive analytics and AI algorithms to provide real time recommendations to not-for-profit decision-makers.
Further developments are likely just around the corner, with Elon Musk and Peter Thiel having recently launched Open AI, the world’s first not-for-profit AI research company in late 2015.
The greatest benefit of the arrival of artificial intelligence is that AIs will help define humanity” – Kevin Kelly
You can imagine a time when measuring social and environmental impact to beneficiaries will be live and increasingly accurate and reported in forms that make sense to all relevant stakeholders.
Future advances might include AI tools that provide recommendations as to what grants and opportunities not-for-profits should pursue, based on AI calculated likelihood of success and consideration of all other potentially relevant factors.
Key Tip: Consider how big data, predictive analytics and AI might impact on your organisation and how they could provide greater insights and inform strategy development.
Above I’ve given a brief outline of 4 key drivers that will influence future business. Not-for-profit directors will find these drivers becoming increasingly prominent in the not-for-profit operating context over the next few years.
Future-focussed strategic planning should carefully consider how the rise of millennials in senior management, expectations of greater transparency, the rise of social enterprise and technology and AI may influence strategic outcomes. This will enable considered action to be taken to make the most of these emergent opportunities and challenges.
Change is the law of life. And those who look only to the past or present are certain to miss the future – John F. Kennedy”