MA NA GE ME NT & A CCOUNT ING
Manage Risk & Enhance
Performance in the 3rd Sector
Every organisation exists to get results. This includes private, public and third sector
organisations like non-governmental organisations (NGOs), non-profits, charities,
religious groups and voluntary organisations. Enhancing performance through systematic
risk management processes especially within the third sector is often a challenge, which
differs significantly from private sector risk management techniques due to the sector’s
lack of resources and risk management expertise.
t was only until recently that the fol- poses. They are active in a wide range of hood education, healthcare, politics, reli-
low-on from the risk management areas, including the environment, humani- gion, research and sports. It is therefore a
hype in the private sector has im - tarian aid, animal protection, education, the c h alle ng e for us to obje c tive ly or ad -
pac te d pu b lic and th ird s e c to r arts, social issues, charities, early child- equately measure an organisation’s long-
organisations. As we fully understand and term impact within the sector.
appreciate that performance management To put things into perspective, third
and risk management complement each sector organisations do play an im -
other, coupled with pressures on por tant par t in any econom y.
third sector organisations to be Australia estimated in 2005
more transparent and effective that the giving of money,
in the utilisation of its fund- goods and ser vices to
ing, we can see an increase n o n - p r o f i t
in how we can objectively o rg an is atio ns by
m e as u r e th e pe r fo r - ind ivid u als and
mance and long-term im - b u s ine s s e s to tal
pac t o f th ir d s e c to r AUD11.0billion per
organisations, holding ye ar, wh ic h e x -
the m re s pons ible and cludes giving in re-
accountable for their ac- sponse to the Asian
tions (or inactions) and tsunami crisis in late
with h old ing fund ing if 2004/early 2005. In
goals are not met, taking th e US, th e r e are
them elsewhere to m ore 88,509 private founda-
e f fe c tive and e f fic ie n t tions with a total giving
organisations. o f USD 27.6 b illio n in
Third sector organisations ex - 2000, wh ils t in th e UK,
ist with the primar y objective of th e re are appro x im ate ly
supporting or actively engaging in ac- 10,900 private trusts with an an-
tivities of public or private interest without nual giving of approximately £2.0 bil-
any commercial or monetar y profit pur- lion.
September 2008 • ACCOUNTANTS TODAY 31
Manage Risk & Enhance Performance in the 3rd Sector
Tactical Risk Elements — Third Sector Organisations
Risk Element Constituents Description
Risk to Reputation, International/L ocal Standing International and local perception and standing with key
Goodwill and Donors; partners; beneficiaries; local and international stakeholders drive funding and reputation.
Branding NGOs; governments.
Support In-Country Extend of support, either financial or non-financial, given
Public; partners; communities; governments; interest b y vario u s s tak e h o ld e rs fo r th e d e live r y o f th e
groups e.g. other NGOs/INGOs, etc.; private sector. programmes or activities.
Integrity Transparency and accountability are key areas of concern
Transparency; accountability; public relations; brand/ by stakeholders within the third sector, especially in the
marketing guidelines. wake of private sector organisational scandals and collapses.
Risk to Effective Strategic Alignment Large number of organisations do not implement their
and Sustainable Programming, targeting, design; policy development, strategi