NFPs Moving From a Grant-based System to a Market-focused Environment

Australian Not for Profits will need to undertake a strategic review of their activities and business processes to deal with the total change in which services will be delivered and paid for under the National Disability Insurance Scheme, says accounting and audit expert, Russell Postle.

The introduction of the National Disability Insurance Scheme has been heralded as a major change for those Australians with a disability.

Historically, many support services for those with a disability have been delivered through charitable entities, generally funded by government grants.

However, under the new scheme, rather than government funds being provided to the charitable entities, the government funded support money will instead be directed to the disability care recipient, who will then be able to select which services they wish to obtain and who they want the provider of those services to be.

For many charitable entities the traditional service delivery model has been to provide caring disability support services where the cost of those services has determined the amount of government grants received by the charitable entity.

The recipient of the disability support services has had limited exposure to the cost of the service. Under the new NDIS charitable entities will need to move away from this model, something that has the potential to significantly impact on their operations.

Australia is not necessarily forging totally new ground in the design of NDIS – similar concept systems were introduced into the United Kingdom (UK) some twenty years ago and more recently into New Zealand. Consequently, disability service providers can look to those overseas experiences to identify some of the possible impacts following the introduction of the new system into Australia.

The UK experience has seen a major reconfiguration of those providing the services, with many charitable entities exiting the market. Today the UK providers of disability support services include charitable organisations and for-profit businesses, both large and boutique.

Interestingly, many of the new providers have identified New Zealand and Australia as locations for business growth opportunities.

Even without increased competition, Australian charitable organisations will need to undertake a wholesale and strategic review of their activities and business processes to deal with the total change in which services will be delivered and paid for.

Such a review may include asking questions such as:

Existing services

• Which services do we currently deliver?
• Which of these services are delivered using funds provided by government?
• Who are the recipients of these services?
• What is the extent to which recipients will fall under Disability Care?
• If the charitable entity has residential care facilities, will those facilities still be required into the future?

Consumer drivers

• Which services will recipients want to receive when they are the ones who select the services?
• Which of these services can we deliver?
• How will the pricing structure for those support services be determined?
• Can we deliver those services at a market competitive price?
• What new business process systems will we need to meet demand?
• What change management processes will we require to help current staff adapt?

Using this approach, charitable organisations can determine what their strategic position will be and then commence the implementation of the changes to achieve that position.

The future for these organisations in the disability support services area is undergoing dramatic change, and all participants need to understand and embrace that change so they remain in charge of their own destiny.

About the Author: Russell Postle has more than 30 years of experience covering many of the disciplines in the accounting profession, including audit, cost accounting, business valuations, corporate restructures, forensic investigations, taxation consulting, family business consulting and business advice. Combined with his personal and professional involvement in the Not for profit sector, including a Board position with the Royal Flying Doctor Service of Australia, Postle assists clients in the sector to achieve their goals in an ever changing operating environment. Russell Postle on russell.postle@bdo.com.au