Here are the funding facts NFPs need to win a better deal

David Gilchrist, director of the Centre for Public Value at the University of Western Australia (UWA), where he is also a professor of accounting, has spent more than two decades forensically examining the financial sustainability and governance of not-for-profits.

His research – comprising more than 100 industry papers – highlights the systemic challenge of funding shortfalls, caused in part by inadequate indexation.

Gilchrist has argued that the community sector should have its own indexation method, one that reflects the real increases in the costs of human services.

Fairer indexation was one of the key recommendations of the recently published Not-for-profit Sector Blueprint, a 10-year roadmap for sector reform on which Gilchrist served as an expert advisor.

The recently released Community Sector Engagement Framework commits to indexing federal grant payments to community organisations in line with rising wages, but stops short of adopting any sector-specific indexation model. Meanwhile, campaigns such as Pay What It Takes are also advocating for fairer funding.

Gilchrist is expected to release a new report in mid-March on government funding shortfalls in social services, highlighting the cost pressures threatening the sector’s ability to support vulnerable Australians.

He will present those findings at the Catholic Social Services Australia (CSSA) national conference next week.

Ahead of the conference, CSSA executive director Jerry Nockles told delegates, “For a long time, government funding and indexation models have fallen short of key economic and environmental factors … with significant consequences for sustainable social services”.

How NFPs can use the Centre for Public Value’s research

Gilchrist says there are three ways organisations can use his centre’s existing and upcoming research:

• to better understand the economics of human services work
• to advocate more effectively about the true cost of services
• to better understand the financial sustainability of NFPs.

“One thing that we could certainly do is to use that research to understand better how the economics of human services work,” he said.

“I think that's really important from service delivery perspective, it’s important from a government perspective, but it also helps organisations to advocate more effectively because they understand better how the costs associated with service delivery work and also how the funding arrangements work.”

This meant that organisation could advocate more effectively, and that ensure advocates approaching government funders were better equipped with evidence.

The centre’s research would also help groups better understand their costs, and how those costs affected financial stability in the short, medium and long term.

He said having a more fully formed understanding of not-for-profit financial sustainability would help organisations survive and would help underpin a sector-wide push for:

• an appropriate funding process such as a tender arrangement that would allow organisations to communicate with government about the true cost of service delivery

• a proper indexation model that would allow organisations to communicate costs changes and to better meet their obligations

• sufficient government funding that organisations would be able to continue operating effectively amid policy, economic or other external impacts.