Not-for-profit - Part 1

“Same as but different” seems to be the view of CIOs working in the not-for-profit sector. The same IT requirements and technology, the same review and implementation issues, but a different environment to operate under.

“I keep waiting for the 2x4 to come down on my head, but it hasn’t,” says Paula Carleton, CIO for the age and life care operation, Baptist Community Services (BCS).

The not-for-profit (NFP) sector isn’t necessarily made up of the clichéd small operations. In some cases, these are operations as large as most private sector companies. The sector — covering charities, church-based groups, cooperatives, clubs and associations — employs close to 900,000 people, and millions more volunteers. NFPs contributed $43 billion to GDP in 2006-07 (compared with the communications sector on $25 billion). Total expenditure in the same period was $70.7 billion, of which 43 per cent was for labour.

Religious organisations accounted for more than 21 per cent of all NFPs, followed by cultural and recreation organisations, which made up slightly more than 20 per cent. The sector’s reliance on volunteers is obviously a significant cost saving, and presumably would be the difference in the make-or-break of most organisations.

“NFPs have very well-focused target clientele and do not have a need to compete, especially not in social services and church operations,” says George Lymbers, CIO and director of procurement with the Sydney Diocesan Secretariat of Anglican Church Australia. “They have a need to get their message out to as many people as possible so their charters can be fulfilled.

“However, many of these organisations have normal business operations along the lines of investments, banking, insurance and health and aged care, schools et cetera that do operate in a competitive environment.”

Vince McFarlane, the Surf Life Saving Foundation’s general manager for corporate services, who heads up IT, takes it one step further: “My view is that NFPs should operate along the lines of ‘for-profits’, and benchmark themselves in a similar manner after factoring in the ‘uncommercial’ price point that they set for their services or outcomes.

“The price point of NFPs is usually purposefully below that of a commercial return, and can be zero in the case of pure service providers that are often totally government or externally funded, to reflect the needs of their clients that could not be serviced affordably by a commercial organisation.

“Both types of organisations — NFPs and FPs — should be chasing a profit, with NFPs doing so in order to enhance or extend their social outcomes rather than for the purposes of a financial return to proprietor or shareholder.”

Not-for-profit organisations still keep their eyes on the bottom line, but the focus is often quite different.

“There’s an extra focus on value,” Carleton from BCS says. “Every dollar you spend internally is one less spent on clients. Our mission and values are the heart of our organisation.”

The motivation difference of not-for-profits

Motive, and the impact it has on procurement and strategy, including IT, is where the differences start between the not-forprofit and so-called commercial sector begin to become very clear. Steve Ball, information systems manager for Amnesty International Australia, says the goal of the organisation is “to protect and defend human rights for all people”.

“It brings a different focus from the commercial objective of returning increased shareholder value,” he says. “NFPs are working towards goals that are defined by their humanitarian or environmental objectives, instead of one number on the bottom line.”

The objectives are not limited to the size of the organisation. The 65-year-old BCS has a staff of 3600 and 1000 volunteers, and an income of $200 million, making it the largest player in the aged care and life care (domestic violence, homeless, and so on) arena. It is also one of the largest NFPs in Australia. By comparison, Amnesty Australia had an income of $24 million in 2010, and while the organisation — celebrating its 50th anniversary this year — has close to 3 million supporters worldwide, in Australia it has a staff of 90.

Like BCS, it relies on a network of volunteers, who number in the thousands, but it is also proudly “a grass-roots organisation ... truly independent of government, business, religion or political groups”.

“I’ve noticed a lot of strengths at Amnesty International,” Ball says, “especially having come from the opposite end of the spectrum as the COO for an IT division at an investment bank. The team here are intrinsically motivated to collaborate on projects with human rights outcomes, and it’s amazing what can be achieved when everyone is driven to work together towards a common goal.”

Carleton takes the differences with the private sector onto an even more personal level: “I still need to unwind from my commercial organisation experience.” She was formerly general manager of IT alignment at telecommunications company, Optus. “In the commercial world, you expect the 2x4 at any moment; not so in an NFP, Christian organisation. There’s more care for the workers.”

Read Part 2 of CIO Australia’s not-for-profit series.