In Australia, the ‘not-for-profit’ sector accounts for up to 5 per cent of Australia’s Gross Domestic Product. Nationally, the sector employs almost one million people (around 8 per cent of Australia’s workforce) across myriad industries and utilises the resources of over two million volunteers each year; they in turn contribute, at least according to the Australian Charities and Not-for-profits Commission (ACNC) in 2014, to generating over $103 billion in revenue.
A not-for-profit (NFP) organisation is one that is formed to achieve a specific purpose and does not operate to return a profit to shareholders. In saying the sector is NFP, it is also true to say it is not-for-loss and any surplus funds that might be generated during any financial year are required to be applied to the organisation’s purpose. In a nutshell, the NFP sector can fairly be viewed as a whole to be ‘big business’ in anyone’s language.
The NFP sector itself can perhaps be better described more widely as the ‘charitable’ sector, which in 2014 was estimated Australia-wide to number some 60,000 registered charities. Of course, these ‘charitable’ entities are by no means a homogenous unit and include some large entities such as hospitals and higher education facilities that may generate annual income in excess of $500million, so it is not appropriate to treat Australian charities as a single sector. In fact, of the almost 40,000 charities that were registered with the ACNC in 2014, 17 per cent were classed as large entities with revenue over $1million, 19 per cent were classed as medium entities with revenue between $250,000 to $1million, and 64 per cent were classed as small entities with revenue under $250,000.
The NFP sector encapsulates the whole gamut of community services including, but not limited to: education (primary, secondary and tertiary), hospital and rehabilitation services, religion, aged care, social services, research, mental health, housing, emergency relief, environmental activities, animal protection, culture and the arts and employment/training to name just a few.
Western Australia’s share of the national NFP sector is broadly in line with the national population distribution, sitting at around 10 per cent of registered charities operating in Australia. A large part of that 10 per cent is made up of organisations that provide services to the community that are brokered by government departments and/or agencies – more commonly referred to as the ‘community sector’.
In 2009/10, hot on the heels of the fall out from the global financial crisis, the community sector in Western Australia (WA) faced something of a sea change in terms of state government funding and performance measurement. The timing of this transformation to the funding of the service delivery model within the community sector (coincidentally or not, as the case may be) dovetails with a change in government at the 2008 state election.
The early indications of change in the sector came from a report handed down by the Economic Audit Committee in October 2009. The report was titled “Putting the Public First: Partnering with Community and Business to Deliver Outcomes”. Among a raft of recommendations to the operation of the public service sector and the community sector, the report made a recommendation to “Replace the existing Funding and Purchasing Community Services Policy”, with a new “Collaboration for Community” policy. This gave rise to the “Delivering Community Services in Partnership (DCSP) Policy” across the sector and the identification of a ‘Preferred Provider’ model of service delivery.
This in turn led to an announcement in the 2011/12 State Budget that funding of some 994 contracts across 16 State Government agencies would be increased by $600million over four years in two payments to the 495 NFP organisations awarded contracts to provide services to be procured by the State Government. In 2012, around 50 per cent of these organisations operated in the Perth metropolitan area, with 37 per cent in regional areas including the Peel, South West, Great Southern, Goldfields/Esperance, Wheatbelt, Midwest and or Gascoyne areas and a further 14 per cent delivering services in the remote districts of the Pilbara and/or Kimberley. What isn’t as clear however, is how many community services were de-funded at that time.
In effect, the objective of the new service delivery model was to reduce duplication and seek to improve overall outcomes for members of the public receiving services delivered in the community as a partnership between the public sector and the NFP sector. Associated with the new funding model, the big change to service delivery agencies was in the area of reporting and measurement of the service delivery with the move away from ‘outputs’ (largely quantitative) measurement to ‘outcomes-based’ measurement, which impacted on how the NFP sector reported to government agencies.
This change to the reporting process has presented areas of great challenge for the NFP sector and as might have been expected, some NFP’s have responded better than others. Challenges have included: large Vs. small organisations and resourcing capacity, availability of standardised measurement tools and terminology, availability of robust longitudinal data, demonstrating causal links between a program and its outcomes, to name just a few.
Recent analysis from the Curtin Not-for-profit Initiative, Curtin School of Accounting at Curtin University (as part of a five-year evaluation of the DCSP), indicates that in 2014 there was an increase in NFP service providers to 529 NFP organisations managing 1,586 service agreements with the State Government with an estimated total value of $1,351million in the 2013/14 financial year, forecast to rise to $1,428million in 2014/15.
The same report found that since the DCSP policy was introduced in 2011/12, some NFP’s surveyed believe the time they are spending on tender management had decreased but many believe the workload for tender management has increased over time and is still too high. NFP leaders surveyed for the Curtin evaluation continue to have mixed views on the impact of the DCSP policy with almost half disagreeing there had been a reduction in the administrative burden within their organisation.
In reality, the overall success of a change to public policy for funding services procured by government is an improvement to how the services are being delivered on the ground. In the 2015 Australian Community Sector Survey (which includes the insights and lived experience of a range of frontline community services operating in WA) conducted by ACOSS, 80 per cent of sector services reported being unable to fully meet current levels of demand. The areas of community priority were identified as being investment in affordable housing, employment, education and skills development, health and income support.
The DCSP is one element of the changes that are impacting on the delivery of community services in WA at the current time; the other is the move to individualised funding of services by the Commonwealth. Together, these two reforms are key factors contributing to why many community service organisations in the state are considering their operating environment and investigating the potential for alliances, collaborations or perhaps possible merger options with other like-minded services.
The ultimate outcome of significant service delivery change to community services however, should be to improve the services provided to those who need and/or are accessing those services to ensure people aren’t being left behind or without. So often this is something that is overlooked. Whether or not that is the case in WA in late 2016 is perhaps something that needs further consideration.
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