Adapting and delivering to communities: Not-for-profit boards during COVID-19

The recent Deloitte report, “Past experiences, future impact” compiles insights interviews conducted with New Zealand board chairs during late 2020. It endeavours to understand the impacts of the COVID-19 crisis on their organisations and the effectiveness of board activity during that period - as well as the lessons for the future. Although the report focused mainly on commercial boards, most of the resulting themes were equally applicable in the not-for-profit (NFP) sector as well.

The impact of the pandemic

The crisis had a significant impact on charitable organisations. Two surveys conducted during the initial lockdown and pandemic response (by the Institute of Directors and United Way New Zealand) revealed that around 80% of charities in New Zealand saw their funding significantly reduced across all donor types - corporates, foundations, government, individual donations/fundraising. Other surveys such as that conducted by Philanthropy New Zealand expressed similar insights.

At the same time, the surveys reported that around 40% of NFPs experienced increased requests for support because of greater need in the community. Some of this increase related to the type of organisation – those in social services, mental health and food security experienced the greatest acceleration in demand for service.

Responding by adapting

Many NFP organisations in New Zealand run on very tight budgets, with little reserve for crises such as COVID-19. Changes to operations and service delivery adaptations were common; moving to digital ways of working and stretching every dollar became essential to ensure at least a minimum level of service. Whilst in some cases organisations were able to access the Government’s Wage Subsidy, anxiety over financial viability and the importance of serving clients were the overarching concerns during this period. 

The role of the board during this time was more important than ever to provide decision-making support and direction to management and broader stakeholders. In practice, there was less formality and more flexibility in terms of communications. Meetings were shorter and more frequent, and often focused on specific issues. An emphasis on the current financials and forecasting for the future was a key part of board discussions, including alternative scenario planning. The key to success in this context was ensuring that good governance principles were still applied but with additional flexibility being practiced by all stakeholders to meet demands.

There is no question that the current environment has led to some difficult decisions for Boards in terms of on-going financial sustainability. Some research in the UK suggests that approximately 10% of small charities may not survive the pandemic. Attributes of those organisations seeing the strongest positive outcomes across multiple measures included having some financial reserves, maintaining a strong mission and impact focus, and looking for new mechanisms or business models to deliver on the mission. 

New approaches

Digital technology is increasingly a key enabler for charitable organisations – and this was clear during periods of lockdown. Constraints accessing in-person volunteers in traditional ways during the New Zealand nationwide lockdown led to organisations using technology platforms to reach virtual volunteers and supporters, and resulted in innovative solutions, such as using applications to assist volunteers to deliver groceries to vulnerable populations. Governance and management worked seamlessly together to build relationships and create future opportunities to collaborate that could result in strengthened mission delivery.

One of the key findings of the Deloitte report was the need to build an improved level of agility and risk sophistication into business-as-usual processes. Investing in new technology to support the organisation means that the ability to make thoughtful, timely data-driven decisions will be a key enabler of success going forward.

Not-for-profit organisations met the challenge of the COVID-19 pandemic lockdowns head-on. Approaches developed during this time will stand them in good stead going forward, as there is an expectation that their support to the community will be required for some time to come.

In turn, the boards of not-for-profits can facilitate steps to build more resilient organisations – both for the communities they support in the present and the work they will undertake in future years.