Not-for-profit directorships can hurt your corporate career, directors warned

The boards of not-for-profit organisations are often regarded as a training ground for those wishing to be commercial company directors. But would-be directors trying to break into the commercial sector should approach such appointments carefully, warned several directors at an Australian Institute of Company Directors lunch held in partnership with LeadingCompany yesterday.

“You need to look after your brand,” said Susan Oliver, chairman of Fusion Retail Brands. “Look at who else sits on the board, and be careful not to accept too many. You don’t want to be known as the not-for-profit board expert.”

It was a sentiment echoed by many at the lunch. Kathy Grigg, the current chair of CoINVEST, said the boards of small not-for-profits rarely had well-defined pathways to corporate participation.

“Another thing to be careful of in small boards is that they can blur boundaries,” she said. “They might want you to be treasurer, for example. For a new director, blurring the boundaries between executive and director in that way can be dangerous.”

When it comes to corporate governance, government boards can be a good training ground, said Kirstin Ferguson, whose board roles include Dart Energy and Queensland Workplace Health & Safety.

“My first board was a government board. We were overseeing $7 billion in assets. There was wonderful corporate governance. It was a brilliant experience.”

Goldman Sachs Australia Managed Funds director Nicole Smith said if you’re going to go on a not-for-profit board, you should be passionate about what it does.

“Don’t just use it as a means,” she said. After all, as the saga at Methodist Ladies’ College demonstrates, not-for-profit boards can very quickly become a huge commitment (a controversial sacking of a popular principal tarnished the reputation of several corporate highflyers who sat on the MLC board).

It’s hard to say no sometimes, said Ferguson, but would-be directors need to stay strong if they are offered positions on not-for-profit boards when it’s not the right step for their career. “Have confidence and faith that in time, the right thing will come along,” she said.

According to the Australian Institute of Company Directors, one in three of its members sit on both for-profit and not-for-profit boards. Most not-for-profit director roles are unpaid.

This article first appeared on LeadingCompany. Download your free LeadingCompany eBook “10 Key Considerations for Succession and Business Exits”.