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Opinion Piece in 'The West Australian'

Charities face Christmas cash crisis of their own.

Page 62 of The West Australian on Friday 19 December 2014.

Australians are givers, especially at Christmas, and chances are that you have already made your donation to one or more of our estimated 60,000 trusted charities which are coping with an unprecedented level and complexity of demand. 

What you may not realise is that the lead up to this Christmas is almost as tricky for these organisations as for the people they support.  That’s because they are awaiting the outcome of some 5000 tender applications for $800 million of social services grants, some subsectors of which were over-subscribed up to ten times.

Christmas for them is thus overlaid with the specter of services reduced or cancelled, and laid off staff.  This unhappy situation is indicative of a deeper problem that relates to the rapidly changing demands on these organisations, and the risk to them and all the social benefits they bring to our community, a problem that needs urgent action.

Because governments are under greater pressure to deliver more for less, the hazards have increased exponentially for not-for-profit organisations in the community services area, as they compete for government contracts against larger multinationals and private equity firms which have recently entered the market.

Economic fundamentalists would argue that price and value for money should be the primary drivers when you consider which applicants should be awarded government contracts.  While we acknowledge that efficiently allocating and using limited taxpayers funds is fundamental, we also believe that there is a bigger and more important picture for government to consider. 

For example when those tenders are assessed, what might be seen initially, is that the multinationals or private equity firms can deliver marginally cheaper prices. But if decisions are based solely on the fiscal bottom line the extra value add of the not- for- profits will remain unseen and be put in jeopardy.

Some people may question why this is an issue, believing that any provider can just move in to claim the space and deliver the same services. But the equation isn’t that simple. They may be able to provide roughly similar services but the first question has to be how broadly. 

The primary duty of multinational for profits and private equity firms is to their shareholders . Experience overseas, particularly in the UK, demonstrates that in a tight economic climate these companies inevitably cherry-pick where they want to deliver services and to whom.

This means that potential or existing clients in less populated areas, or those who have complex needs and are traditionally placed in the too hard basket, do miss out, and it is community sector organisations which are left to pick up the pieces.

But what isn’t acknowledged is that these same Not for Profits have successfully managed a broader geographical and service coverage, even as the dynamics of regional centres have changed, because they’ve been able support this through their streams of revenue outside of government eg fundraising and church and community support, driven by their commitment to local communities.

The history of those same community sector organisations has also created a significant investment in community assets and infrastructure.  Due to the legal requirements and altruistic nature of not-for-profits these assets are effectively held in perpetuity for community use.

Not-for-Profits also provide an excellent opportunity for long-term partnerships with private companies and others, facilitating their Corporate Social Responsibility. We see it through corporate volunteering days, community fundraising, numerous clubs, sporting groups and straight out philanthropy. Collectively this is more than just a feel-good exercise, it’s NFPs providing the social glue that enables a community to pull together.

But back to the much anticipated tender announcements we mentioned at the beginning. For the unsuccessful organisations, they will have the unenviable task of notifying staff just before Christmas of the outcomes and impact on their jobs.

Even for those who are ‘winners’, the process will be tricky. To expect successful new service providers to gear up to start the delivery of services within the mandatory 10 weeks is unreasonable. Many organisations close their services over Christmas and into January, and recruitment of new staff can be difficult.

Furthermore, service providers are often working with extremely challenging clients, and the likely transition of services to new service providers, needs to be carefully managed over a reasonable time period, as the change has the potential to significantly adversely impact clients.

What all this underlines is that we need an acknowledgment that not-for-profits in the community services area operate in a different paradigm, one that offers society a safety net of support and sense of community that money alone cannot buy.

To preserve this and make it prosper, this value adding needs to be recognized and counted equally on a new bottom line. In that way the whole community can win.

MercyCare CEO Chris Hall and CentreCare CEO Tony Pietropiccolo AM are long term leaders in the WA social service sector and co chairs of CEWA (Community Employers WA).