Ms Clarke's achievement was recognised at the NSW Women of the Year Awards presentation on Wednesday off the back of 2016 International Women’s Day the previous day.
She says after she overcame the “shock” of the announcement, she appreciated being acknowledged.
“Aboriginal women are the heart of the work that is going on in our communities,” she told NITV News.
Ms Clarke works as the Chief Executive Officer of the Burrun Dalai Aboriginal Corporation, which provides Indigenous children living out of home in Macleay and Nambucca Valley with Indigenous foster care.
She says Burrun Dalai works to “keep our children on their country, to keep them connected with their community, and to keep them connected with their family - and to strive at all times to have them restored to family because that is actually what should be happening.”
As of June 2014, Aboriginal and Torres Strait Islander children made up 35 per cent of children in out of home care across Australia, according to the Australian Institute of Family Studies.
Indigenous children comprise just over 5 per cent of the population.
Aboriginal Affairs Minister Leslie Williams, who presented Ms Clarke with her award, says: “We know that, as has been said by Dana in her [acceptance] speech, that there is an over-representation of Aboriginal people not only in terms of the children in care, but also in justice and in the health system and so on.
“So we need leaders to show the community that there is a way forward and I think people such as Dana are doing such a magnificent job of doing that."
Ms Clarke says Australia needs more out-of-home Aboriginal home care agencies such as Burrun Dalai, and its hard for government services, such as the Department of Family and Community Services, to attract Aboriginal carers because of its “reputation” within the Indigenous community.
"We're going to have all of our kids in care if we don’t do something about that."
“We need more agencies like ours,” she says.
“We can continue to put kids in care until the cows come home, but that won’t change the current situation.
“We’re going to have all of our kids in care if we don’t do something about that.”
Ms Clarke believes Indigenous out-of-home care helps children grow up healthily because it understands and fosters their culture, something the wider community cannot provide.
“We have been around for 60,000 years at least, and we are the oldest surviving culture on this earth,” she says.
“Our culture is so important to us, our connection to the land and our connection to the spirits of the land. And that’s very different [to the wider community].
“Our kinship system – that’s particularly different from the larger, wider community – how do we perceive family and who do we see as family.”
For young Aboriginal women, Dana Clarke has this message: “Recognise who you are, know your strengths, you’ve been here, your people have walked this land for 60,000 years and you continue to walk this land.
“Wear that like a badge of honour. You can be anything you want to.”
Finalists of the NSW Aboriginal Women of the Year Award included Kirstie Parker, Rhonda Bradley and Nikita Ridgeway.
Jennifer Armstong was awarded the NSW Premier's Award for Woman of the Year for providing unwanted toiletries to women in need such as those experiencing domestic and family violence.