Misconduct in NFPs: Creating a Proactive Risk and Conduct Culture

For Not-for-Profits, where community trust and funding go hand-in-hand, the consequences of workplace misconduct can be long-lasting and potentially fatal. Thinking that "it won't happen to us" doesn't guarantee that your NFP is safe – no matter its size.  

Building a proactive psychosocially safe workplace culture helps NFP organisations prevent issues before they escalate, protects their people, and ensures they stay true to their mission.

It could happen to you: the risks of overlooking misconduct

Too often, misconduct in NFPs is seen as unlikely, or something that only happens in bigger, more complex organisations. But assuming immunity from risk can be dangerous – even small, unintentional lapses can lead to serious issues that may impact the reputation and ongoing viability of the organisation. Without clear processes or a culture of accountability, red flags may go unnoticed.

What constitutes misconduct:

• Governance failures – such as breaches of duty by Board members, staff or volunteers
• Financial impropriety – including fraud, embezzlement, misuse of funds, or collusive procurement practices
• Reportable conduct – particularly relating to child protection
• Harassment or bullying – especially ongoing or repeated behaviour
• Discrimination or workplace health and safety (WHS) breaches – impacting the safety and wellbeing of staff, consumers or visitors
• Unethical or illegal behaviour – including conflicts of interest
• Breach of organisational policies – especially codes of conduct

When it comes to unintentional misconduct in NFPs, some examples we often see include undeclared conflicts of interest, improper use of funds, inadequate record-keeping, breach of confidentiality, favouritism in recruitment and secondary bullying or exclusion.

Left unchecked, even minor oversights in these areas can escalate, leading to long-lasting damage to the organisation, its people and the community it serves.

Creating a culture that sees, reports and responds to misconduct

With the real and ever-present risk of misconduct, organisations require stronger internal controls, clearer reporting pathways, and leadership that isn’t afraid to confront tough questions about culture and conduct.

It's not enough to have policies and procedures in place, even the most thorough procedures ultimately fall short without staff buy-in and management visibility. Boards and Executives must actively track tangible signals that reflect the real organisational culture. The Australian Institute of Company Directors lists the following indicators of potential organisational dysfunction:

• High employee and volunteer turnover trends, dismissal rates and reasons
• Anomalies in employee demographics, hiring practices, and promotion rates
• Less than favourable staff and employee feedback (surveys or other mechanisms)
• Internal complaints (discrimination, harassment, bullying)
• External complaints (client/beneficiary experience)
• Workplace health and safety incidents
• Inadequate completion rates of training, event attendance, internal engagement
• An increase in breach reporting, investigations by regulators
• Unfavourable findings from external assessments (e.g. cultural audit reports)

Tracking these signals is vital – but insight without action leaves organisations vulnerable. Recognising early warning signs and responding decisively is what separates resilient NFPs from those caught off guard.

This is why it is in the best interests of your organisation to create a proactive risk and conduct culture that recognises red flags early, empowers whistleblowers, embeds a respectful workplace culture and enables fraud prevention within its governance processes. This includes regular training, updated policies, and engaging trusted investigators to support independent reviews when concerns or misconduct issues arise.

How Centium can help

Centium specialises in helping not-for-profit organisations safeguard their integrity and uphold community trust. Our experienced team of independent investigators is highly regarded for managing sensitive, complex workplace and reportable conduct matters with discretion and objectivity. We understand the unique operational, funding, and governance environments of the NFP sector – and the critical importance of protecting both your people and your reputation.

Whether responding to allegations of misconduct, conducting independent workplace investigations, or reviewing organisational culture and governance processes, Centium offers practical, impartial advice tailored to your organisation’s requirements and budget. We help leaders identify early warning signs, manage risks before they escalate, and exceed regulatory requirements with confidence.

We're here so that not-for-profits can strengthen their risk and conduct culture, demonstrate accountability to stakeholders, and ultimately remain focused on delivering their mission to the communities they serve.

Explore our Workplace Investigations services or get in touch with our Director of Workplace Investigations.