One of the key leadership areas noted in the Independent Code of Governance speaks to Fundraising, sustainability and risk. It is the Board’s responsibility not only to monitor expenditures and appropriation of funds, but also to ensure that the organisation remains adequately funded; and that it will be in a position to meet its anticipated costs and commitments to employees, beneficiaries and, importantly, to SARS.
Board members should be encouraged not only to give of their time, knowledge and skills, but also, where possible, to make a personal financial contribution as tangible evidence of their commitment; and to provide support to those primarily responsible for fundraising and Advancement.
Part of the Board’s responsibility is to ensure that the organisation communicates effectively with its various stakeholders, including donors and members. Depending on the size of the organisation, the nature of its activities, and the extent of its resources, this may require periodic project and programme reports; the establishment and maintenance of a website; the publication of newsletters; and the prompt and efficient handling of correspondence and other communications, including information provided to the media.
It may also be appropriate for an NPO to recoup at least part of its expenditures through the levy of affordable fees and charges for its services. In some instances, there may be opportunities to generate income from other activities to supplement the organisation’s donation income. However, in these circumstances, there are a number of considerations which must be carefully considered. These include the following:
- Any such income-generating activity must remain secondary and not become a primary focus, to the detriment of the organisation’s public benefit purpose.
- Net profits derived from ‘unrelated’ income-generating activity are likely to be subject to tax, and must be separately accounted for and recorded.
- Board members and employees – and their relatives or friends – must be particularly careful to avoid conflicts of interest or draw personal profit in these situations.
- Such activities should never involve undue commercial risk, which may put the organisation’s financial sustainability in jeopardy.
Apart from the financial risks associated with the need for sustained funding, the Board must ensure that due consideration is given to identifying, managing, and where possible anticipating other systemic risks which may threaten the organisation’s ability to deliver on its mandate. In a large organisation this may justify the appointment of a special committee charged with responsibility for risk; but for most NPOs, issues of risk will need to be managed in a manner that is affordable and appropriate to the resources of the organisation concerned.
SOURCE: Click here to read or download the Independent Code of Governance for NPOs.
