Welcome to my first Board briefing of 2020.
What a start to the year, with an unprecedented bushfire season, followed by flooding in some regions and now coronavirus.
I'm conscious that many people have been directly or indirectly affected by one or more of these issues. As someone from Canberra, I've spent much of my holiday life on the south coast of NSW, so I for one, feel intimately touched and affected by what's happened. For any of you, regardless of which part of our beautiful country you are from, if you've been affected in any way, my thoughts and warm wishes are with you.
From CHOICE's perspective we're doing our best to provide helpful consumer advice and to look out for shonky business practices in these unusual times.
If you have not already seen it, you may be interested in our information on cover for bushfire damage in home and contents insurance policies. We have also offered membership fee relief for members who have been directly affected by bushfire.
Our advice on travel insurance cover for coronavirus has been widely shared online and featured in a number of media stories, and our staff will be looking for other ways to help people as the coronavirus situation evolves over the coming weeks and months.
Meanwhile at the Board meeting on 28 February, besides discussing these current issues, we covered:
- financial results for the year to date
- our program of work to ‘reimagine membership’
- organisational culture
- our investment risk appetite
- Board succession planning
Financial results for the year to date
We received a report on financial results for the year to date and a reforecast for the remainder of the financial year. You may recall that over the past three years, we have invested in growing CHOICE's capabilities in areas that are critical to our sustainability, and this has involved planned deficit budgets as we have drawn down on some of the organisation's healthy cash reserves.
We reported at the AGM in November that we're budgeting for a significantly lower deficit in 2019-20 and our reforecast indicates that we are on track to meet the budget approved by the Board.
The Board received a briefing on a large program of work to 'reimagine' what it means to be a member of CHOICE. We are extremely conscious that our current approach to membership has grown out of our early life as a magazine publisher, and whilst many of our members still value our magazine (as do we!), we have a growing pool of members who engage with us in other ways.
In recent years, other membership organisations and publishers have developed new ways of connecting with their supporters, some with great success; The Guardian's development of new reader-driven funding programs is just one example. We want to learn from the best of these examples and apply them to CHOICE.
This is a large and ambitious project, involving many teams in the organisation. It requires us to understand:
- what people most value about being a member of CHOICE
- what else we can offer that new or potential members would value
- how we can improve the way we communicate with members and involve you in our work.
Some members have already participated in research to help us understand these issues, which we appreciate.
It's such a critical initiative that it will likely stretch well beyond 2020, indeed past my tenure on the Board. Having said that, the organisation is applying agility principles which means we will continuously deliver small increments of value to members and the broader community, rather than wait till a new model of membership is perfect. It's also of such importance to our sustainability that it has Board oversight, so I will continue to report back to you on this program of work.
Boards of organisations across the world are taking a deeper interest in the culture inside their organisations, and rightly so. The banking royal commission demonstrated what can go wrong when a board does not drive a positive culture from the top. As part of our commitment to better understand the culture within CHOICE, we spent some time understanding the concept of growth mindset, which is a priority within the organisation.
Growth mindset is essentially about believing that individuals have the ability to learn and adapt, rather than believing that their skills and capabilities are fixed. By supporting staff to develop and apply a growth mindset, we hope that this will in turn help the organisation to learn, adapt and respond in what is an increasingly complex, global and competitive marketplace.
The Board spent some time discussing the research behind growth mindset and participating in a range of exercises that mirrored those used in workshops with our staff. As well as ensuring that the Board and management have a common understanding about these concepts, by going through a similar learning process to staff we hope to better align the culture of the Board with the culture within the organisation.
Our investment risk appetite
It is an important part of our role as a Board to manage the organisation's assets in a prudent manner, including cash assets. We currently have around $8.9 million in cash, of which $7.6 million is invested in term deposits at interest rates of 1.3% to 1.6%.
These cash reserves have been built up over a number of years and have allowed us to make the necessary investments to enhance CHOICE's sustainability as mentioned earlier in this update. We are still prudently holding amounts significantly above our cash reserves floor, to provide CHOICE with flexibility for the future in a rapidly changing world.
In this context, the Board has traditionally taken an extremely conservative approach to investment, restricting our cash investment to term deposits. We periodically review this approach and spent some time at our meeting discussing our investment risk appetite.
Our view at this stage is that it’s not appropriate to limit our investments to term deposits. We have ruled out higher-risk options such as hedge funds or derivatives but think that a balanced portfolio could include some low to moderate risk investments in order to enhance investment returns to CHOICE in the long term. At this stage, we have not made a decision about shifting investments – we were simply trying to define the boundaries of our risk appetite to allow management to prepare some further advice on a future investment strategy.
We will apply very careful consideration here and would welcome any feedback you may have on the general direction we are considering, and on any other issues that you think should be considered.
Board succession planning
Helen Wiseman, the Chair of our Finance, Risk and Audit Committee who will be well known to members who have attended AGMs in recent years, has flagged an intention to step down when her second three-year term ends in November.
She has given considerable notice which we're grateful for and given the importance of this role, we have started the process of finding a potential successor who will initially be invited to join the Finance, Risk and Audit Committee.
When appointed to the Board, Helen had a background as a partner with KPMG, as well as experience on a range of not-for-profit and for-profit boards. We are ideally looking for somebody with a similar level of financial skill and experience, as well as some exposure to not-for-profit organisations. This position has been advertised online, so please feel free to forward it to anybody who may be interested.
The Board will next be meeting on 3 April for our annual strategy workshop with management and I'll be back in touch with an update after that. In the meantime, I hope you'll see some of the work we are doing to promote CHOICE's 60th anniversary in the media, in CHOICE magazine and on our website, which will be rolling out over the next few weeks.
As always, I value and welcome responses, thoughts and insights from all of you so please write to me anytime.
Sandra Davey, Chair of CHOICE Board
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