Millions Go Down the NFP Compliance Drain - Report

Co-author of the Report Dr Julie Nyland says the dollar outcome, while not surprising is still a conservative calculation of the cost of complianace for the Australian Not for Profit sector.

The research found that:

·       85% of organisations in the survey were undertaking duplicate multiple standards assessments and compliance reports against quality or service standards.

·       The average of reported staff time spent was 290 hours per organisation annually, or almost two months annually just to assess and report on standards compliance.  Many more hours are required to complete the work required to achieve compliance.

·       The estimated annual cost across the human services community sector: is between 2.7 – 3.5 million hours or conservatively $87m – $105m. This is the cost for community organisations alone.

The report says that there is also a substantial cost to Government which is yet to be quantified.

Dr Julie Nyland says while the compliance requirements may be irritating and frustrating for human services NFPs, and a poor use of human energy, it is Government money that is being spent and subsequently wasted.

In addition to the requirement to comply with particular standards as part of Government funding, organisations are also required to submit detailed reports on activities,
performance and outcomes as part of the funding agreement

For small organisations, the vast majority had multiple standards to assess themselves against and comply with, as well as multiple activity, performance and outcomes reports.

• Over 60% of organisations funded by State/Territory governments completed over 5 specific or separate reports on activities, performance and outcomes in an
average year. The comparable figure for those organisations receiving Commonwealth funds was 40%.

• For small and micro organisations over 50% completed more than 5 specific or separate reports on activities, performance and outcomes in an average year.

• Large and very large organisations were likely to have more reports, which is to be expected given the higher income level, however the load across micro, small and medium is still significant where between 50–80% of organisations undertook more than 5 specific or separate reports on activities, performance and outcomes in an average year.

• 21% of organisations undertook between 8–20 specific or separate reports on activities, performance and outcomes in an average year.

• More than 13% of organisations undertook over 25 specific or separate reports on activities, performance and outcomes in an average year.

For organisations that have multiple standards, the above costs of standards assessment and compliance reporting are estimated to represent only a fraction of the total cost.

• Over 70% of small organisations surveyed spend more than $5,000 annually to meet standards assessment and compliance reporting requirements
• More than half of all small organisations surveyed were spending over $10,000 annually
• 5% of micro and small organisations spent over $50,000 annually
• Almost all medium, large and very large organisations spent over $10,000 annually
• One organisation reported spending one third of its income on meeting standards assessment and compliance reporting
• Almost two thirds of those spending above $50,000 reported spending well over $100,000 with one organisation advising recent standards assessment and compliance reporting changes had cost the organisation over $400,000

The report says that while the Commonwealth Government has taken steps to reduce regulatory impact on community organisations with the proposed establishment of the Registrar for Community and Charitable Purpose Organisations, it has yet to address the even greater cost caused by bureaucratic duplication of quality and service standards.

It says that with over 50 sets of quality service standards applying to various types at community services across the country, many funded organisations are subject to multiple sets of standards.

Despite the volume of work this has generated for both Government and community organisations alike the costs have never been quantified.

The report says with the community sector facing an historic equal pay test case and the Commonwealth Government warning that any wage increases “would likely come at the expense of other Government funded services” there is an urgent need to address this waste and free up significant funds and service hours for families in need, children and the most disadvantaged.

The report has been handed to the Federal Government and a question has already been raised with the NSW Parliament regarding the issue of the impact of compliance costs on the community sector. A response from NSW Minister, Prue Goward is expected in mid-July.

The full Report called The Cost of Quality Services Standards: Assessment and Compliance Reporting for the Not for Profit Sector can be downloaded at www.managementsupportonline.com.au