The Netherlands Olympic Committee and Sport Confederation: A Winning Model for Incentivizing Good Management Practices in National Sport Federations? Michael Pedersen

There are several strategic reasons for national sport federations to establish good management practices. A critical one is ensuring the continued ability to attract funding, not least in a situation where providers of funding increasingly worry about cases of bad governance and the extent to which existing management practices enable sport federations to spend their funds adequately, effectively and efficiently.

This ninth contribution of mine for iSportconnect’s expert column on sport governance offers perspectives on the case of the Netherlands Olympic Committee and Sport Confederation. The contribution focuses on how national sport federations in the Netherlands are being incentivized to establish good management practices and especially how their compliance with mandatory minimum criteria for good governance is now a prerequisite for receiving funding. The contribution also offers some challenging questions for sport leaders to consider, as they start the process of modernizing their governance standards for the future.

My tenth contribution is going to be published in the middle of January 2014. It will offer perspectives on the case of Canada’s Not-for-profit Corporations Act with a focus on the change of laws and regulations as another means of incentivizing national sport federations to go through governance modernization.

Ensuring national sport federations’ continued ability to attract funding is a critical strategic reason for establishing good management practices

There are several strategic reasons for national sport federations to establish good management practices. As outlined in my 2^nd contribution on the business case for good governance in sport good management practices not only create the foundation for further developing sport. They also create the foundation for building trust, performance and growth into the future.

Ensuring national sport federations’ continued ability to attract funding is particularly critical. With a growing number of recent and current cases of bad governance in the media, providers of funding worry more than ever about the extent to which existing management practices enable sport federations to spend their funds adequately, effectively and efficiently. Responses so far include sponsors having expressed concerns in public. They also include sponsors having terminated contracts prior to expiration or even having sued a sport federation for loss of commercial value. Also, some governments and national umbrella sport federations have responded by tying eligibility for future funding to criteria related to good governance.

Good management practices in sport in the Netherlands: From a voluntary code to mandatory minimum criteria

Good management practices in sport have been high on the agenda of sport in the Netherlands for quite a few years. After assessing 26 national sport federations and the need for modernizing governance standards, a voluntary code on good governance in sport was put in place in 2005. The voluntary nature of the code encouraged national sport federations in the Netherlands to ensure compliance with 13 recommendations on good governance or explain why they decided not to do so for certain recommendations.

In 2008, however, it was decided to translate the voluntary code into mandatory minimum criteria for good governance. Accordingly, as of 2011 national sport federations have had to comply with 17 mandatory minimum criteria for good governance as a prerequisite for receiving sport funding from the Lottery in the Netherlands.

National sport federations must comply with 17 mandatory minimum criteria for good governance to receive sport funding from the Lottery in the Netherlands

To be eligible for sport funding from the Lottery in the Netherlands, national sport federations must comply with all of the following 17 mandatory minimum criteria for good governance:

1. Evaluate good governance initiatives in annual report
2. Benchmark governance measures every second year (self-evaluation)
3. Clearly describe governance model
4. Use terms of reference for board and board members
5. Apply rules to address conflicts of interest
6. Limit terms in office for board members to a maximum of 12 years
7. Organize an annual meeting at least once a year
8. Put in place a management statute
9. Centralize governance authority to prevent autonomous internal entities
10. Have a long-term strategic plan
11. Clearly describe the planning and control cycle
12. Put in place risk management and adequate procurement rules and procedures
13. Meet financial stability ratios
14. Subject annual report to audit by an accountant
15. Put in place specific regulations concerning sexual intimidation, doping, equality and discrimination, complaints and a disciplinary code
16. Ensure that all individual members are aware of and comply with federation membership rules
17. Provide all individual membership registrations once a year

A system is in place to ensure that national sport federations comply with the mandatory minimum criteria for good governance. It is based on a combination of self-evaluations by the sport federations and audits by the Netherlands Olympic Committee and Sport Confederation. Accordingly, boards of national sport federations in the Netherlands are required to provide the Netherlands Olympic Committee and Sport Confederation with a self-assessment against the 17 mandatory minimum criteria for good governance once a year. Self-assessments are subject to scrutiny by the Netherlands Olympic Committee and Sport Confederation. It audits the self-assessments on a thematic basis.