Published: December 4, 2018
Read Time: 4 minutes
It would be hard to find a business that did not place customer-centricity as a priority and not-for-profits have in recent times started to catch on. However, customers for many not-for-profit organisations will differ from that of a for-profit organisation. For not-for-profits, the “customer” could range from the beneficiaries of the organisation, to their supporters, stakeholders, members or clients.
Customer-centricity will often require a cultural shift, and fundamental to any sort of cultural shift in this sector is an organisation’s documentation. One such way a not-for-profit organisation will document this change is through its constitution. A constitution is the formal governing document of an organisation that sets out, amongst other things:
- The organisation’s NFP purpose(s); and
- The way the governing body of the organisation (i.e. the board) makes decisions and consults with stakeholders such as customers.
One key way in which a not-for-profit can document customer-centricity is through the objects contained in its constitution. It is crucial that an organisation’s objects reflect the direction in which it wishes to head. This is because organisations are not permitted to undertake any activities beyond the ambit of the objects clause. The objects will not only dictate the activities the organisation may undertake, but also communicate the purpose of the organisation. This is particularly important if the organisation receives any tax benefits, as it may not be enjoying all the tax endorsements to which it could be entitled. For these reasons it is essential for organisations to conduct a careful review of their objects as they look to the future.
Organisations might consider whether the objects in their constitution:
- Identify in some detail the customers of the organisation;
- Specify the benefits they intend to provide for their customers;
- Outline the ways in which they intend to provide those benefits to their customers; and
- Invite involvement by their customers.
Reviewing an organisation’s objects will provide insight as to whether its customers are embedded at the core of the organisation’s mission and activities. For example, the constitution of Breast Cancer Network Australia (BCNA) encourages customer input through its objects, which are to:
- Provide a national network to allow people personally affected by breast cancer to help each other, share experiences, recognise common issues and endeavour to make improvements for themselves and others;
- Inform those affected by breast cancer through a wide range of resources, directly or through referrals; and
- Conduct programs encouraging those affected by breast cancer to play an active role in improving breast cancer treatment, and services; and
- Facilitate and assist support groups and groups for those affected by breast cancer.
BCNA was recently commended in GiveEasy’s publication, Innovation Index for the Australian Not-For-Profit Sector 2017, for placing customer-centricity as its central tenet. The emphasis on customer-centricity found in BCNA’s objects has influenced the priorities of its staff. Christine Nolan, BCNA’s CEO, said recently that ‘consumer input is critical to the success of any organisation’.
Customer-Centric Governance Structures
The way in which the governing body of an organisation makes decisions and consults with stakeholders will reveal the degree to which the entire organisational culture is directed towards its customers. As the document establishing an organisation’s governance structures, the constitution can significantly help or hinder an organisation’s cultural transformation.
Organisations are encouraged to revisit the governance structures established by their constitution and assess whether there is a clear mechanism for customer involvement. Should such an assessment reveal little or no opportunity for customer input, organisations should consider implementing progressive, even radical, structures that prioritise customer involvement. For example, organisations might consider whether it would be beneficial for their constitution to:
- Require the board to always have a customer as one of its directors;
- Require each policy established under the constitution to consider the implications on customers and customer involvement; or
- Establish a customer-membered sub-committee of the board.
As customer-centricity necessitates cultural change, an organisation’s constitution should be guiding that change. Organisations should consider whether their constitution prioritises and involves their customers and what steps can be taken to foster customer-centricity.
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At the time of writing, Vera heads up the Sydney Not-for-Profit, Human Rights & Social Impact team at Mills Oakley. Acting for numerous charities, religious and not-for-profit organisations, Vera has close to 30 years of experience in the legal profession.
In the Not-for-Profit sector, Vera focuses on constitutional reviews, mergers, governance and fundraising issues and regularly advises on ACNC and ATO endorsements. Vera has written several academic works, including a chapter within ‘Charity Law’ (2012, 2016 and 2018) published by Thompson Reuters.
Vera sits on numerous charity boards, associations and committees including the ACNC Professional User Group, the Community and Consumer Consultative Group, Cemeteries and Crematoria NSW, Everyday Justice and CatholicCare, Diocese of Parramatta.
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