AICD: NFP Governance Study 2025/26
For Australia’s not-for-profit (NFP) sector, the approach to governance has completely evolved with the latest AICD Not-for-Profit Governance and Performance Study revealing the sector at a crossroads: while 84% of directors feel their organisations are effectively achieving their purpose, the workload and complexity of the role have never been higher.
The 2026 landscape is one of purpose-led resilience. The NFP sector is proving it can handle the pressure, but the margin for error is shrinking. By focusing on tech-literacy, climate readiness, and a healthy organisational culture, NFP boards can ensure their mission doesn't just survive but thrives in an uncertain world.
The study highlights that being a director now requires far more than passion; it requires a high-tech, risk-aware, and strategically agile mindset.
Here are the four key shifts every NFP leader needs to know.
The Tech Tipping Point: Cyber and AI
In 2026, technology is a front-and-centre governance risk. The study shows that nearly 1 in 5 NFPs experienced a cyber incident in the past year, with social services and healthcare being hit the hardest.
- Boards can no longer delegate cybersecurity entirely to IT. It is now a core fiduciary duty to protect sensitive client data.
- While daily AI use is still under 10%, three-quarters of directors see its potential to boost productivity and client services. The challenge for 2026 is moving to safe implementation.
From Compliance to Climate Governance
Climate change is no longer just for environmental charities. The 2026 study highlights a growing governance gap: while 74% of boards discuss Environmental, Social, and Governance (ESG) issues, over half have yet to take concrete steps to address climate risks.
Expectations are also shifting. Stakeholders, including donors and regulators, increasingly expect NFP boards to embed climate risk into their broader risk management frameworks. In 2026, sustainability refers to the planet as much as it does to the balance sheet.
Remuneration
One of the most steady trends over the last 15 years is the rise of the paid NFP director. The proportion of paid directors has nearly doubled over the past decade, particularly in large-scale human services and health sectors.
The increased complexity, time commitment, and legal liability are leading more boards to discuss director remuneration to attract and retain the necessary skills rather than voluntary roles.
Culture
Perhaps the most significant takeaway from this year’s research is that culture starts at the top. Strategy might set the direction, but culture determines if the organisation actually gets there.
The study encourages boards to look beyond filtered management reports. In 2026, effective boards are:
- Observing frontline environments during inductions.
- Monitoring hard indicators such as staff turnover.
- Ensuring the board's own dynamics, the balance of voices and the ability to challenge constructively, reflect the culture they want to see in the organisation.
