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Sustainable Funding and Contracting with the Not-for-profit Sector Initiative

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As part of its initial role, the Partnership Forum was responsible for overseeing  the implementation of the Sustainable Funding and Contracting with the Not-for-Profit Sector Initiative (the Initiative).

The Government of Western Australia announced the Initiative as part of the 2011-2012 Budget to support a sustainable not-for-profit (NFP) sector and to ensure that the Government pays a fair and appropriate price for the community services it funds and purchases from the not-for-profit community sector.

The Initiative involved a number of reforms, including a $604 million investment in the not-for-profit) community sector between July 2011 and June 2015 through the phased roll out of additional funding for existing community service contracts (Components I and II).

This investment occurred alongside the implementation of the Delivering Community Services in Partnership (DCSP) Policy which was introduced to change Government agencies' approach to purchasing (funding and contracting) community services from the not-for-profit community sector.

Component I and II Funding

Component I funding sought to increase funding for existing community services contracts at a flat rate across-the-board, to enable existing contracts to be set at fair and sustainable prices.

Through the Sustainable Funding and Contracting with the Not-for-Profit Sector Initiative, funding was allocated for a 15% upfront
across-the-board price adjustment for eligible service agreements with not-for-profit organisations for the delivery of community services. Component I was effective from 1 July 2011 and was applied to 982 eligible service agreements across 494 not-for-profit organisations.

The Partnership Forum monitored the implementation of Component I and received quarterly updates from the Department of Treasury on the status of the roll-out through each Government agency. The Forum also provided advice regarding any related issues that Government agencies and not-for-profit organisations were experiencing, and actions being taken to address concerns that were raised.

A second funding injection of approximately $117 million, equivalent to an average increase of 10% across eligible contracts, was rolled out from 1 July 2013 over a two-year period. This funding, termed 'Component II', was made available as community services contracts were reviewed and aligned with the DCSP Policy.

Component II was different to Component I in that it targeted funding based on the level of funding stress being experienced by
not-for-profit community organisations, rather than increasing funding at a flat rate across-the-board as occurred in Component I.

Delivering Community Services in Partnership Policy

The Delivering Community Services in Partnership (DCSP) Policy was launched in July 2011 as part of the Sustainable Funding and Contracting with the Not-For-Profit Sector Initiative. The DCSP Policy applies to all State Government agencies that provide funding for,     or purchase community services from, not-for-profit community organisations.

Developed by the Partnership Forum, the DCSP Policy focuses on:

  • the nature of the relationship between the Government and the not-for-profit community sectors;
  • the correct use of grants and contracts, to ensure that Government funding and contracting practices for community services are fair, transparent and consistent; and
  • reducing the administrative burden experienced by not-for-profit community organisations when contracting with Government agencies.

A key aspect of the DCSP Policy is a transition to outcomes based contracting. This enables a move from Government agencies prescribing inputs and outputs in contracts for community services, to instead focusing on achieving outcomes determined in partnership with not-for-profit community organisations. The focus on outcomes is intended to enable flexibility for not-for-profit community organisations to design more innovative community services in partnership with Government agencies and service users.

The DCSP Policy also outlines the need to reduce the administrative burden experienced by not-for-profit community organisations when contracting with Government agencies, including through the standardisation of tendering documentation and guides, and contract terms and conditions.

To embed the DCSP Policy into Government procurement practice, the Partnership Forum supported the establishment of Funding and Contracting Services (FaCS) in the WA Department of Finance. Since 2011,  FaCS has provided leadership, guidance and support to both Government agencies and not-for-profit community organisations on the principles and application of the DCSP Policy and good practice community services procurement.

Please follow the links below for more information regarding:

Funding and Contracting Services

The Delivering Community Services in Partnership Policy

Evaluation of the Sustainable Funding and Contracting with the NFP Sector Initiative