Six dollars. That’s the huge return to not-for-profit organisations from each dollar they invest in staff training and development, according to a ground-breaking new report from the University of Western Australia’s Centre for Social Impact.

Dr Ramon Wenzel spent three years conducting field research with Australian not-for-profit organisations, including collecting data from senior executives, directors, human resource managers and board members at hundreds of organisations across Australia.

The outcome is his report entitled ‘Learning for Purpose: Researching the Social Return on Education and Training in the Australian Not-for-Profit Sector.’ It’s essential reading for leaders at all NFPs that employ staff.

“For the first time we can demonstrate on the basis of research that workforce development really works for the Australian Not-for-Profit sector”, says Dr Wenzel.

The report makes it clear that training should be seen as an essential way to fulfil an organisation’s core purpose, rather than just another overhead.

But it also reveals that currently, less than half of all NFP staff and volunteers attend one or more formal professional development activities a year.

When budgets are tight, spending more on learning may look like a luxury. But, drawn from Learning for Purpose, here are three good reasons to do it anyway:

1. Training works for individual staff

It might seem obvious that training improves performance, but Dr Wenzel reveals fresh evidence that training for NFP staff has ‘systematic, positive effects’ on the people who take part, compared with a control group. The study focused on training for ‘key competencies’ such as NFP governance, strategic leadership, and impact evaluation.

Based on four separate groups of NFP staff and board members who attended trainings and were then assessed on a variety of impacts. Across the four groups, the research found that after training, attendees:

• Regularly applied their new knowledge and skills,
• Had higher levels of role clarity
• Had higher levels of self-confidence
• Increased their understanding and ability beliefs

The conclusion? If development programs are properly designed and delivered you can expect to see a noticeable impact on the competence and confidence of your staff.

2. Training boosts your organisation’s impact

It’s not just the staff who benefit. Organisations that have formal staff development programs in place consistently outperform those that don’t.

Looking at data from across 697 Australian NFPs, the report finds that benefits of smart workforce development flow through entire organisations, and this is turn boosts organisations’ social impact.

The study finds that this happens in a number of ways:

• First, by directly helping people to do their jobs better (“facilitating organisational competence and capability”), which improves organisational performance; and
• Second, by indirectly making the organisation perform better, probably via “a range of secondary effects . . . such as staff retention, job satisfaction, work motivation etc., all [of] which positively influence organisational performance.”

As ‘Learning for Purpose’ puts it:

‘The rich data collected shows that training NFP workers facilitates better leadership, saves funds, leads to superior performance, and achieves greater well-being, which, in turn, enhances organisational viability and social change.’

3. Training boosts your bottom line, both saving and making money for organisations

The report identifies “lack of money and time” as a key challenge faced by NFPs that want to undertake staff training and development. In fact, it finds that a majority of NFP organisations don’t have a designated budget for human resource development.

But perhaps the most important finding of the research is that investing in training and development can save organisations time and money, and also contribute to better fundraising, thereby actually making money for organisations.

Analysing the impact of training on 243 governance board members from NFP organisations, the report measured the value of increased efficiency of meetings (saved time) plus increases in fundraising that flowed from the training, and compared it with the costs.

It found the effects of the training “increased profit, enlisted new funds, set strategic direction, removed and appointed CEOs, re-configured board makeup, decreased costs, saved time, and mitigated risks.”

But when compared to the costs, the direct, average financial benefit to organisations was a factor of six. That is:

“For each dollar spent on the training there has been a positive return of about six dollars that can be attributed to the gain in knowledge and skills from the training, and the resulting behaviours, decisions and their flow on effects on the organisation and its mission success.”

Unfortunately this part of the research only examined the training of board members, but the report suggests that broader training and development of staff can save organisations money through increased efficiency and productivity.

The final word goes to the report’s Author, Dr Ramon Wenzel:

People are the very lifeblood of Australian NFP organisations, as reflected by 51% of budgets being spent on labour . . . The ability of Australian NFP organisations to address many, if not most, of the pressing challenges – to achieve sustainability and create social change – hinges substantially on their people. . . The right knowledge, skills, and abilities make workers more effective in their jobs, which, in turn, facilitates organisational sustainability and success. Even minor changes in productivity and performance can have significant impact on organisational efficiency and effectiveness.

You can download the full ‘Learning for Purpose: Researching the Social Return on Education and Training in the Australian Not-for-Profit Sector’ report here, or a short summary here.