Homelessness Services Need Alternate Funding to Meet Demand

Homelessness services are facing an increasingly strained funding environment, due to their reliance on government, and are unable to meet the growing needs of vulnerable Australians.

A study from the University of Western Australia’s Centre for Social Impact (CSI) found between 60.6 per cent and 84.6 per cent of the homelessness sector’s income came from government.

Although funding is a highly-discussed issue in the not-for-profit sector, the study is said to be the first of its kind in Australia and uses data from the Australian Homelessness Funding and Delivery survey.

Lead author of the study and CSI director Professor Paul Flatau said the reliance on government funding made service providers vulnerable to changes in policy, funding cuts and financial constraints.

“In particular, current levels of funding are too low to fully meet the current needs of those experiencing homelessness and help homeless people find employment and access permanent housing,” Flatau said.

The study found only a minority of services were able to fully meet demands of their clients for access to permanent housing.

Flatau told Pro Bono Australia News the strain meant many service providers were already investigating alternative funding sources, to varying degrees of success.  

“They’re not quite achieving that in many cases, and in other cases they are – but they’re not quite achieving it across the board,” Flatau said.

“They are trying to diversify, and it’s important for services to be able to diversify, not only to reduce risk when you have that contract not renewed, but also to do things that government financing is not enabling services to do.

“It’s really important to get extra sources of funding because what contracts provide is not enough to do the job, and that’s a fundamental finding of the research, it’s not enough to do the job.”  

Mission Australia operations and fundraising executive James Toomey said even with diverse revenue streams homelessness services were stretched.  

“It can be distressing for staff to have to turn people away, but that is nothing compared to the human cost when people can’t access the services they need,” Toomey said.

“A number of the programs we run are funded through regular givers, philanthropists and bequests.

“They enable us to supplement the programs which federal, state and territories pay us to deliver but we still struggle to provide the extent and levels of support that many of our service users require.”

Survey respondents said they had applied for philanthropic funding, instigated social enterprises, sought public donations and targeted a broader range of government funds in an effort to diversify income streams.

However, the survey also found some homelessness service providers expressed concerns about the negative consequences of alternate funding sources.

“We would say there are positives with diversification because you reduce some of your risk, you add to your funding stock,” Flatau said.

“The negative side to it though is you have different funders in place, and the different funders may want different things, and it means you’ve got a range of different masters.

“Now if those masters – the funders – were more connected with one another, I think those costs of diversification would be reduced.

“[But] funders don’t necessarily talk to each other, even though they may be after the same objectives – that is to support homeless people and to end homelessness.

“Contracts made with one state government department may require certain outcomes measurement, another contract with a federal government agency, or even with another state government department, may want other outcomes measured.”

He said this increases the costs of the transaction and the costs of measurement, particularly for small service providers.

A further hindrance is that the size of contracts are not often large.

“If they were in the millions it would be great, but often they’re in the small hundreds of thousands,” Flatau said.

“And so that means that you are duplicating your work… for different funders, and that is a cost that came out in the survey – different funders pulling in different directions and a multiplication of reporting costs.”

While there have been repeated calls for not for profits to merge or collaborate, Flatau said it would be more effective for funders to change their approach.

“We’re not necessarily saying organisations and services themselves need to merge, it’s not a position that we would necessarily adopt,” he said.

“I know that a lot of people talk about the need to merge small not for profits, well the difficulty with saying that is you’re not in tune with the local needs that created that service in the first place.

“On the other hand, when we talk about funders… federal and state government departments etc. know of each other, and they’re generally aware that the services they’re funding are being funded by different kinds of people.

“So it isn’t too difficult, in our view, for different funders to get on the phone and collaborate a little bit around the reporting needs for services that they’re funding. And I think there needs to be greater collaboration in that area.”

He also said there should be greater collaboration among organisations, especially between specialist homelessness services and mainstream providers, who could link in additional support.  

But he said the survey findings were ultimately a “wake-up call for funders”.

“Funders need to recognise the levels of funding are below what’s necessary to meet need, so we know there is unmet need at the present time, unmet demand,” he said.

“Beyond that, the level of funding is not sufficient to do the things we know will end homelessness  – that is to provide strong housing, to provide additional support outside of homelessness and, importantly, to provide employment opportunities for people.”

Flatau also encouraged providers to continue pursuing diverse funding sources.

“You do have to develop new funding sources and we are seeing services try,” he said.

“But some of those new funding sources have yet to be fully realised, for example in terms of impact investing, in terms of social enterprise revenue.

“Very little income and revenue is coming from those new sources, but I believe in the future homelessness services will benefit from those new funding sources and to keep trying, to keep trying to add to your base funding stock.”

The Financing, Delivery and Effectiveness of Programs to Reduce Homelessness study, funded by the Australian Housing and Urban Research Institute, can be found here.