How to unlock power of S'pore non-profits

SINGAPORE'S non-profit sector is growing up as local non-profit organisations (NPOs) gradually evolve away from reliance on public funds and fill a critical gap, providing education, social services and healthcare to an expanding number of people in need.

But as they mature and become more independent, NPOs are also gaining a better understanding of what limits their impact. A fundamental issue: making charitable donations and volunteering is still relatively novel to many in Singapore. Also, NPOs' future success depends on recruiting and accepting help from the private sector as well as on professionals' willingness to step up.

Last year, Bain & Company - in collaboration with the Centre for Non-Profit Leadership (CNPL) - conducted its second survey of Singapore's NPOs, generating valuable insights into the state of non-profits and the best strategies to unlock their full power.

Four years after our initial 2010 survey, we find NPOs have made strides in key areas. But the sector's expansion is jeopardised by three major challenges: attracting the talent required to sustain expansion goals; tackling a leadership crunch resulting from uneven management and board succession processes; and addressing insufficient disclosure and transparency about organisations and their impact, which undermines private sector confidence and contributions.

A giving nation taking root

In the past decade, Singapore has seen a rise in the number of non-profits along with the donations needed to support them. The country now has nearly 600 Institutions of Public Character (IPC), non-profits that are approved to receive tax-deductible donations.

Still, our analysis of Singapore's non-profit sector identified crucial issues. For example, private sector participation is relatively untapped, for both pro-bono work and donations. Advances in volunteerism and donations haven't been matched with an equal rise in the numbers of talented individuals making themselves available to serve either as NPO executive directors or board members. Also, a few major charities dominate fundraising. And funding is polarised: although education non-profits account for just over 5 per cent of all registered charities, they raised more than 60 per cent of total receipts, according to Commissioner of Charities figures.

How non-profit leaders rate themselves

NPO leaders are increasingly aware of where they fall short and are devising ways to improve. In our survey, they gave themselves high marks for their clear vision and decision-making abilities, but admitted they need to make strides in attracting talent, enabling leadership succession, and improving disclosure and transparency: their three biggest concerns.

Tackling these issues means moving away from the traditional model where non-profits largely served as government contractors. The evidence shows that as long as organisations are viewed as having strong links to the government, they'll continue to face hurdles.

The first challenge is to recruit quality talent below the executive director level. Little has changed since the 2010 survey. Over a third of respondents say they still struggle to attract new blood in a vibrant job market where they must compete with rising salaries in both the private and non-profit sectors. However, retention no longer ranks as a major issue.

The most effective NPOs attract and retain talent with an integrated strategy. Boys' Town invests heavily in staff training and skill development. The organisation offers candidates several incentives to join the staff: on-the-job training helps new hires become certified social workers, and a company-wide training plan enables staff to reach their career goals. As a result, Boys' Town is able to help more youth-in-need.

A second challenge is establishing an effective leadership succession plan at the senior management and board level. Half of the respondents say their organisations lack such a plan. Most boards are dominated by those recommended for the job by other members, and they also have long tenures, staying for an average of 5.5 years, according to a survey by Credit Suisse, CNPL and the National University of Singapore Business School. Both factors contribute to an absence of fresh points of view and critical board-level skills.

To address the leadership crunch, Persatuan Permudi Islam Singapura, also known as the Singapore Muslim Women's Association, adopted a structured approach to board and leadership succession. For example, it proactively plans board renewal and uses broad networks to recruit new members. The NPO finds that greater disclosure in the evaluation process has made it easier to recruit and retain board members.

A final challenge is making financial information and donor impact more transparent to improve investor confidence and encourage volunteers. Only 48 per cent of surveyed non-profits publicly disclose their financial statements or annual reports, according to Credit Suisse, CNPL and NUS Business School.

Children's Cancer Foundation (CCF) routinely communicates with its donors and discloses financial information. Fundraising partners are regularly informed about fundraising policies and CCF is fully accountable to all its donors with its strong level of corporate governance and financial management. These have helped boost donor confidence.

Similarly, Food from the Heart's longstanding commitment to transparency has enabled it to boost its fundraising as well as recruit more volunteers: advances that have resulted in increased food distribution for Singapore's less fortunate. An annual summary of activities and an independent audit (detailed in its annual reports) ensures both reliable financial accounting and documentation for tax deductions - all of which build trust with its large, diverse and growing group of donors and partners.

Creating a community for non-profits

These lessons from leading non-profits take on a new urgency as they brace for a boom in demand. Economists caution that the rapidly greying labour force threatens to dramatically slow the country's economic growth over the next two decades - and more Singaporeans will need non-profits' help.

The country's non-profits must maintain a strong leadership capable of advancing organisations to the next level of professionalism. An important piece of the puzzle is within their reach. Singapore's private sector, with one of the world's most highly trained workhorses, offers a ready pool of talent. It is more than capable of helping NPO boards gain the leadership skills required to evolve and scale up.

NPOs will need to recruit a thriving community of advisers from the private sector, and also induce the best and brightest to work for non-profits. Their contributions will prove invaluable in making NPOs more professional and creating an environment that helps attract top talent with fresh ideas for everything from decision-making to funding to the use of social media.

When Singapore's non-profit community mirrors the expertise and sophistication of its world-class private sector, it will be prepared to meet any challenge - and unleash non-profits' full power.