NFP Benchmarking Project Revealed

Quality back-of-house services in Australian Not for Profits require a dedicated level of investment, according to a three year benchmarking project.

A consortium of 12 Australian Not for Profits recently completed a three year project to benchmark back-of-house services within the sector.  

The NFP Benchmarking Project was established in 2011 by a partnership of 12 Victorian NFP community services sector organisations with the support of three philanthropic trusts.

The organisations range in size from approximately $10 million in organisational expenditure per financial year through to around $80 million. All of the organisations work with vulnerable and marginalised communities through family, youth, refugee and relationship services.

The three year project benchmarked the cost and quality of five back-of-house services: human resources, information and communications technology, finance, fleet and payroll.

In 2013, benchmarked organisations invested an average of $11,939 on the five benchmarked back-of-house functions. This equated to 10.5 per cent of organisational expenditure on average.

Overall, this was roughly comparable to the average benchmarks from the first and second year of the project of $10,178 (11.1 per cent of organisational expenditure) and $12,296 respectively (11.2 per cent of organisational expenditure).

The report said these changes in back-of-house expenditure represented both purposeful investments by the benchmarked organisations and also improved data quality in the third year of this project.

Across Finance, HR, Fleet and ICT, no organisation delivered services that were rated both “high satisfaction” and “low cost”.

The benchmarking project highlighted to the participating organisations that:

1.     Quality back-of-house services require a dedicated level of investment. This project has provided a robust evidence base for what constitutes a minimum level of investment in back-of-house services for the sector more broadly.

Organisations participating in the project have concluded that any investment below this minimal threshold – particularly strategic investment – is unlikely to deliver the quality of services required to support high quality front-of-house service delivery and leads to a reduction in overall organisational effectiveness and efficiency.

2.     Organisations demonstrated the value of fit-for-purpose back-of-house service delivery models. The diversity of organisations involved in the benchmarking project illustrated that NFP organisations are able to adapt their back-of-house service delivery models to match their size and client service delivery profiles and that efficiencies are achievable across the diverse scale of participating organisations.

3.     Organisations have been able to maintain a stable and consistent level of back-of-house service delivery in a constrained funding environment to date. The organisations participating in this project have been able to maintain efficient and high quality services in a resource constrained environment to date, that are informed by sophisticated business intelligence systems and organisational KPIs.

“The three year project also provided a clear demonstration that NFP organisations are prepared to disclose and share lessons and best practice on detailed areas of their organisational operations with each other and with the sector more broadly,” the report said.

“This has resulted in the emergence of active communities of practice among functional managers and the exploration of co-operative projects (e.g. developing better IT systems, using group purchasing power etc.).”

As one participating organisation said, “Benchmarking has provided a productive and safe forum to share ideas and discuss challenges with the rest of the sector. There was not the same level of coordination beforehand.”

Micaela Cronin, CEO of MacKillop Family Services, lead agency in the project said that the Sector Benchmarking Project provided a unique opportunity for the 12 participating organisations to work together.

“This project has potential to improve the overall service delivery and build a solid foundation for ongoing improvement – benefiting the sector as a whole,” she said.

“MacKillop is committed to building upon the relationships between the partner organisations and sharing the knowledge that they have developed over the last three years with the sector more broadly.”

Sandy Forbes, a Principal with the management consulting firm Nous Group that delivered the project, said that benchmarking has delivered benefits at multiple levels within organisations.

“Benchmarking has helped service delivery managers to develop new capabilities and improve certain processes and systems. Executive teams now have increased transparency around their back-of-house costs and a better understanding of what drives service costs and quality.

The benchmarking data has provided board members with a clearer line of sight in terms of where they need to make big investments or savings. We have seen substantial changes across each organisation as a result of the benchmarking project and also within NFP organisations that Nous has benchmarked in other states and sectors”.

The 12 organisations that participated and financially contributed to the three year benchmarking project are:

1.      MacKillop Family Services (also the lead agency in the project)

2.      Anglicare Victoria

3.     Berry Street

4.     The Brotherhood of St Laurence

5.     Child and Family Services Ballarat

6.     Connections UnitingCare

7.     Hanover Welfare Services

8.     Jesuit Social Services

9.     Melbourne City Mission

10.  Relationships Australia Victoria

11.  St Luke’s Anglicare

12.  Windermere Child and Family Services

This project was funded by the?  Helen Macpherson Smith Trust, The Ian Potter Foundation, The Jack Brockhoff Foundation and the The Myer Foundation.

In addition, Nous Group’s Community Contribution Fund also supported this project.

The consortium also acknowledged the support of The Australian Centre for Philanthropy and Non-profit Studies (Queensland University of Technology), the Centre for Excellence in Child and Family Welfare, The Office for the Community Sector (Victorian Department of Planning and Community Development), and The Victorian Council of Social Service.

A copy of the summary report from the third and final year of the project can be found here.