Reflections on the For-Purpose workforce: JBWere 2021 Cause Report

Last month, JBWere published its?2021 New Zealand Cause Report ?that analyses the environment in which for-purpose (charities and not-for-profits) organisations operate. This report provides great visibility to the sector and is one of the few pieces of research that takes an in-depth and sector wide view.?It helps organisations further understand their subsector, and benchmark themselves against others so they can be better informed.?

Authored by JBWere New Zealand’s Head of Philanthropy, John Morrow, and senior research consultant, John McLeod,?it?builds on findings from the?2017 New Zealand Cause Report? as well as the 2005?Johns Hopkins University ?research commissioned by Philanthropy NZ.

JBWere believes that a robust for-purpose sector is essential for strong communities and for enabling Aotearoa New Zealand to flourish.??

Doing more with less

The report found that, in the current environment, for-purpose organisations are doing more for less, operating on tighter margins, and are facing greater uncertainties.

The full sector’s income growth rate over the last decade averaged seven percent per annum with average expenses increasing at the same or slightly higher rate which is keeping operating surplus at or below 10 percent

The impact of this is that there is little room to improve overall resilience and to explore innovation. This has been heightened by Covid with many NFP’s and charities having to dip into reserves to continue operations.

However, the impact of Covid-19 was not felt evenly:?Event-heavy sectors like Sport and recreation, and Arts, culture and heritage saw many of their organisations suffer a 50 percent or more decline in revenue.

Social services were hit hard with higher demand for services and yet restrained by existing resources, contributing to fatigue and a lower morale amongst staff who are having to pivot numerous times to keep in sync with varying alert level restrictions.?

If community groups are in good health then they can be highly active – serving with what they have, but for those that are lean, the last 18 months have been exhausting going from crisis to crisis with compounding effects.

?The challenges of Covid-19 have, for many, accentuated constraints, but at the same time, innovation and rapid transformation (such as automating certain services) is transpiring.?There are learnings to be gleaned and examples to be followed through this broad and diverse sector.

Are charity registrations slowing down?

The 2017 NZ Cause Report noted the large number of charities in New Zealand compared to the general population.?A decade ago, there were more charities per capita in Aotearoa than any other country and a growth of about 10% each year.?In 2017 there were 21,519 registered charities for a population of 4.79 million or roughly 1 in every 40 Kiwis serving on a charity board.?JBWere challenges the sensibility of this in light of the increasing compliance requirements of boards, the likely duplication of energies, incomes and assets and the potential public confusion and commensurate donor fatigue.??

There is a palatable awakening to governance being enhanced through broad diversity with genuine beneficiary representation, so boards are actively seeking more representative voices at the board table now.?

The latest report shows numbers of?new annual registrations for community organisations?are still growing, but at a much slower rate (roughly 3% new registrations). With just under 300 charities deregistered, there are 23,848 financially-reporting charities for a New Zealand population of 5.1 million. The slowing down is seen more in the Arts, People with disabilities, and Education than other subsectors.

There are already discussions of deploying greater use of shared back office approaches and services, driven by improved technological skills and tools, plus the bottom line imperatives. However, when organisations are in crisis mode, it is challenging to look beyond tomorrow and, importantly, communities must remain empowered and not bear the brunt of gaps of service. We acknowledge that many small to medium charities do not have the bandwidth for looking beyond survival to strategic collaboration or even mergers in the current environment.?Raising the bar on the current charity registration process could include probing if the proposed new entity is replicating services and/or delivering to a section of the community underserved.

Labour force shifts to gig economy

While the report notes that some sectors, such as Health and Education, (noting much of their significant workforce is funded by government), have seen a shift towards a more skilled full time workforce,?the report shows there are far more sub-sectors with a larger part-time workforce than full-time.?The report comments on the shift in other parts of the labour force towards the gig economy.?

Once only familiar territory for freelancers, with an increasingly unstable economic environment, the labour force is heading more towards short-term projects and contract and temporary work that is attractive to a growing portion of the workforce, but also might be an entry into an organisation for a job-seeker and therefore a lower-risk for the employer.

While some might benefit from the flexibility of participating in the gig economy, it could be problematic in the for-purpose sector where engagement needs to feel meaningful.?Maintaining the culture and commitment to the organisational mission can be a challenge if the labour force becomes overly diffuse and transactional.?Translating the gig economy to the for-purpose economy might not be the best blanket solution for charities where much of the work is relational, long term, and often needs face-to-face contact. Alongside the advancements of digital platforms and tools, the gig economy model can open up new possibilities provided it is in service to the beneficiaries and drives the need to be fair and inclusive.?

We are hearing more and more about ‘The Great Resignation’ – an international phenomenon that has moved from anecdotal to mainstream reporting in the last few months.?In August alone, 4.3 million Americans quit their jobs, so the numbers are impossible to ignore and the trend will invariably impact on New Zealand’s job market. Professor Jarrod Haar of AUT suggests it is already happening. In his?recently-released AUT?Wellbeing@Work ?nationwide study, he notes that the primary reason workers are leaving their jobs are for new job opportunities – not just more pay from some, but for more personal development, or more ‘making a difference.’

The Covid pandemic seems to have accelerated the movement toward purpose and to more meaningful ways to work. In these times, more people appear to be reassessing their values, more aggressively protecting their time and considering how they can better align their work to a cause that they are passionate about.?Indeed,?these soft drivers in Kiwi’s resigning suggest this phenomenon may offer the greatest recruiting opportunity in recent times for charities and the wider for-purpose sector.??

For-purpose organisations that can help skilled people from other sectors easily transition, and that uphold a positive and empowering culture in the workplace are perhaps best suited to capture this new wave of disenchanted talent?

At the same time, retaining good staff requires employers in the organisations to address, more than ever, job satisfaction. Flexible work conditions are becoming more prevalent.?The for-purpose sector has increasingly recognised this, hence we see a transference of weight from full-time employees to greater numbers of part-time staff.

Volunteerism in a pandemic

Volunteerism is an area that contributes $4 billion dollars per annum in value to New Zealand’s GDP – with 9 out of 10 organisations relying solely on volunteer services. Sport, by far, has the greatest number of volunteers, followed by Religious activities.?But with lockdowns, social distancing rules and limited face-to-face contact, volunteering numbers have declined.

Covid brought about interesting changes in the profile of the volunteer workforce.?A few years ago there was a visible decline as people were staying in paid roles longer and therefore unavailable or over-stretched to donate their time.?More recently, there is a changing trend of different age and geographic demographics.?Some of this is a reflection of some older volunteers withdrawing due to their concerns about vulnerability to Covid, but the pandemic has also seen a new wave of volunteers across different age groups.?A shift toward episodic volunteering (one-off and micro-volunteering – task-focused work that is finite and fits within people’s busy lives) will need to be carefully worked into resource plans for organisations that are volunteer-reliant as greater coordination will be required.

?Reflections for our workforce

• Can policies be adapted to keep talent engaged and avoid the workplace pitfalls that are leading to the ‘Great Resignation?’?How can organisations relieve the level of anxiety about job security?
• Can support be given to help workers reschedule their days and set expectations to better separate work from home responsibilities, and to prioritise the workload??
• Are there good mission-driven policies and processes in place to help ease a highly skilled worker from another sector into the for-purpose sector and provide a structurally cohesive experience for them??
• Can the operating model adapt to the changing trends in volunteerism?

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About JBWere Philanthropic Services?

Working with charitable and other for-purpose clients has been a key cornerstone of the growth and history of JBWere over its 181 years of existence.

As the leading provider of philanthropic and investment management advice to the for-purpose sector in New Zealand and Australia, we serve a broad range of purpose-driven organisations, institutions, corporations, families and individuals across a wide range of cause areas.

The multi-disciplinary Philanthropic Services Team, established in 2001, is a key differentiator of the JBWere approach and distinguishes our ongoing commitment to not only assist our clients by meeting their fiduciary obligations to prudently manage their assets, but also help them deliver on their mission.?

The mission of the JBWere Philanthropic Services team is ‘inspire and support our clients to create lasting positive impact.’