Bottom line not the only focus for NFPs

28/05/2009 - 00:00

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CHIEF executives of not-for-profit businesses speaking at the recent WA Business News boardroom forum said that balancing their community and member goals with the need to be commercially efficient was one of their biggest tasks.

Bottom line not the only focus for NFPs

CHIEF executives of not-for-profit businesses speaking at the recent WA Business News boardroom forum said that balancing their community and member goals with the need to be commercially efficient was one of their biggest tasks.

RAC chief executive Terry Agnew told the forum that communicating non-profit related objectives as value to stakeholders was difficult.

"It doesn't mean that we don't have objectives, but it's probably a broader suite and they're more complex," Mr Agnew said.

"One of the tricky things from our point of view, that we struggle with, is how do you demonstrate value to members, whether it's tangible value or it's quantified?"

Brightwater Care Group chief executive Penny Flett said not-for-profit operators in the aged care sector provided services that do not necessarily benefit the organisation's financial goals, but do help fulfil strategic objectives.

"I don't think we have trouble with identifying our objectives, it's just our objectives are more complex than in other industries," Dr Flett said

"For-profits will take the [people] they can get the most out of, for the least amount of input."

"Not-for-profits will take the tricky ones, the difficult ones, the ones that are going to cause huge complaints to the Commonwealth [government] and back, we'll take all those people, because that's what we do.

"If we don't take them they'll languish because they will not be taken by the for-profits.

"They don't take problems, they take people who are the simplest to manage."

HBF chief executive Rob Bransby said he was forced to re-evaluate his management style when he joined the health insurer after 20 years of focusing on profits at the National Australia Bank.

"I went through a massive change in process from an organisation that had one clear objective, and that was to take as much money off your customers as you possibly could, and give it to a shareholder," Mr Bransby said

"The question I was commonly asked in the transition from that environment to joining HBF was how are you handling this, and what are you doing differently?

"How do you take those spikes and horns off your head to get into this environment?"

In contrast to the short-term profit goals prevalent at stock market-listed companies, long-term objectives are key for not-for-profit groups, according to St John of God Healthcare chief executive Michael Stanford.

"We've been around for a long time, and we're planning to be around for a long time," Dr Stanford said.

"You have to try and be competitive, invest in your business and you do have a longer term objective, you're not measured by what happens next year.

"I think it means that we've both got the obligation and the luxury of making long term decisions, thinking long term, thinking of a sustainable model.

"If we're not thinking 20 or 30 years ahead about need in the community then we wouldn't be doing our job."

Dr Stanford said while being business-like was an objective for St John of God Healthcare, the executive board was also wary of public perception.

"You've got in our case a whole lot of other things that relate to perceptions and interpretations of community benefit," he said.

"We want to be a great training body and we want to do good things in the community.

"Trying to balance all of that does create some tension internally, and it does create some misunderstanding.

"People ask, 'If you're not for profit, why do you want to be efficient?'"

But in the case of superannuation providers, Westscheme chief executive Howard Rosario said legislation dictated the objectives of the company.

"In our case, for most of the people who participate in our industry, the law describes what our purpose is," Mr Rosario told the forum.

"There's no doubt there about what you have to do, but it's a very competitive industry, even with the profit for members participants.

"The whole thing about retirement savings is that it's a very long term project, but the competition makes it a 30th of June project because you've got private sector participants."

Dr Flett said some legislation made accomplishment of Brightwater's objectives difficult.

She said federal government funding had been mismanaged to the point that Western Australia was 1,500 beds short of providing a desired level of aged care.

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