The New Rules of Engagement
In a landscape defined by heightened expectations and rapid change, the Australian Institute of Company Directors (AICD) has released a timely update to its Not-for-Profit Governance Principles in April 2024. This third edition serves as a strategic compass for NFP boards navigating an increasingly complex terrain—from sustainability and cyber risks to shifting community trust and regulatory scrutiny.
As the Hon Dr Andrew Leigh MP writes in the foreword: “Well-intentioned, well-trained and well-informed boards and directors will play a vital role.” The revised principles invite NFPs to embrace not just compliance, but courage, redefining what it means to lead for-purpose organisations in a new era.
What’s new and why it matters:
Consolidated clarity: The principles have been reduced from ten to eight, offering a tighter and more focused framework.
Culture and sustainability elevated: New principles directly address organisational culture and long-term sustainability issues, which were once peripheral, now take centre stage.
Tools for action: Practical resources, such as checklists for smaller NFPs, guidance on client voice in decision-making, and real-life case studies, bring governance to life.
Context-aware advice: The guidance recognises sector diversity, encouraging boards to apply principles flexibly and thoughtfully.
More substantial alignment with stakeholders: There is an emphasis on trust, transparency, and the need for stakeholder-centric governance.
At Pluri, we welcome this updated framework. It aligns with our belief that effective governance is infrastructure for impact. When boards lead with clarity, humility and purpose, they unlock energy across the organisation - from frontline volunteers to major donors.
We’re particularly encouraged by the inclusion of tools tailored for smaller NFPs, many of whom operate with high complexity and low resources. A checklist may seem like a small thing, but in the hands of a stretched board, it can be transformative.
Importantly, the principles honour the real-world messiness of governing in this sector.
5 Key Takeaways for NFP Leaders:
Purpose, vision and strategy must be dynamic and visible. Boards are urged to revisit and communicate these regularly to ensure relevance and impact.
Roles and responsibilities must be clearly defined. Especially in smaller NFPs, overlapping duties can blur accountability; therefore, strong documentation is essential.
Risk isn’t just a compliance issue. Scenario planning, culture of risk-awareness and proactive reviews are integral.
Sustainability is a governance issue. Environmental, financial and social sustainability must be woven into strategy, not tacked on.
Culture begins and ends with the board. Directors are now formally tasked with monitoring organisational culture, including indicators like employee engagement and volunteer satisfaction.
Why this update couldn’t come at a better time
Since the last edition in 2019, the NFP sector has weathered the shocks of a global pandemic, royal commissions, regulatory reform, and increasing scrutiny on everything from fundraising ethics to workplace culture. The sector also faces persistent challenges, including declining volunteerism, constrained funding, and rising expectations for impact measurement.
In response, the AICD has positioned governance not as a static set of obligations, but as an evolving practice of stewardship. The inclusion of culture and sustainability—traditionally seen as 'soft' or secondary—reflects a broader shift: that how we lead matters just as much as what we deliver.
It’s telling that the AICD dedicates an entire resource to helping boards embed client voices into their decision-making. This signals an important recalibration: legitimacy in the NFP sector increasingly hinges on participatory governance, not just fiduciary compliance.
Want to dive deeper?
You can read the full Not-for-Profit Governance Principles (Third Edition, April 2024) via the AICD website. It’s essential reading for board chairs, new directors, and CEOs alike.
For boards looking to embed these principles in practice, consider:
A board workshop centred on one principle per meeting
Annual self-assessment using the included governance checklists
Creating space for lived experience to inform your governance decisions
After all, when governance reflects the communities it seeks to serve, everyone benefits.
