The Third Sector Landscape
This week we’re excited to bring you the first in our series of monthly guest bloggers! Meet Malcolm Boyd, Founding and Managing Partner of Third Sector Insights, an incredible organisation bridging the gap between the corporate and third sector world.
Over to Malcolm to explain a bit more about what he does and why it’s so important.
What is The Third Sector?
This is the part of an economy/society comprising non-governmental and non-profit organisations, e.g. charities, voluntary and community groups, cooperatives, etc.
What is an NPO?
A NPO is defined, in terms of section 1 of the NPO Act, as:
“A trust, company or other association of persons established for a public purpose and of which its income and property are not distributable to its members or office bearers except as reasonable compensation for services rendered.”
The main purpose of the NPO Act is to create an enabling environment in which NPOs can flourish and to establish an administrative and regulatory framework within which organisations can conduct their affairs.
According to the South Africa Department of Social Developments Non-Profit Organisations register; there has been a significant increase in NPO registrations. By the end of March 2016, the total number of registered organisations was 155 367 since the inception of the NPO Act. This is a significant growth rate of 12.2% from 136 453 from the previous financial year, and a 80 % growth 2011/12 – 2015/2016 (82 248 NPOs).
What Problems Does The Recent Surge in South African NPOs Pose?
Although on the surface more NPOs may seem a good development for our country, 80% of South African NPO’s Directors, Trustees and Governing Body Members have received little or no governance training and aren’t aware of legislation or acceptable standards. Donations received by NPOs amount to many billions of Rands annually but these funds are mostly under the control of individuals unqualified for their roles. This is a global issue.
All NPOs whether formal or less formalized, require some form of corporate governance in place. The average board size is between 5 – 12 Directors, but at least 80% of whom have had little or no corporate governance experience or training within the Non-Profit sector. This is a large concern.
The bulk of these organisations are in need of Director and Leadership development, access to up-to-date information about the sector, clarity on their roles and responsibilities, and a good understanding of the legislature applicable to their organisations.
This is where Third Sector Insights steps in.
What does Third Sector Insights Do?
There is a serious call to action to dramatically improve the governance and effectiveness of donation management. Funds allocated to good causes have been growing substantially year on year with some $500+ billion donated annually with $100+ billion allocated to the Least Developed Countries (LDCs), mostly for Africa and Asia. But an estimated 50% of these monies are being wasted.
The problem of funds not being received by those in need due to mismanagement and in some cases corruption is not new. The key issue is that this problem is growing at a time when the need for donations and aid is also growing, and there is currently little effective action or evidence of viable solutions to these issues. No other sector suffers from such a chaotic and unacceptable situation.
Third Sector Insights is a Non Profit Trust. Our primary focus is to reduce donor risk profiles when funding NPOs, by empowering boards through governance and best practice training, and by monitoring their performance.
“Our vision is for responsible stewardship and leadership in the Non-Profit sector.”
We believe this can be achieved by creating an empowered environment for NPO Directors, Trustees and Executives to can gain access to relevant board leadership, directorship and corporate governance development.