DEALS issue is about Funding and Sustainability

26 May 2006

DEALS issue is about Funding and Sustainability

Members of the Tangata Whenua, community and voluntary sector say the alleged over-claiming for funding by a Porirua-based disability service provider raises a broader question about funding and sustainability within the sector and the impact that this has on New Zealand communities.

Members of the Sector say the issue with DEALS highlights problems that plague many not-for-profit service providers who contract with government agencies.

“Most organisations only receive part-funding for the services they are providing to the community, which can be unsustainable over a long period of time. Obtaining a sustainable level of funding is crucial for effective service delivery and is a key issue for many organisations in the sector,” says Robyn Scott, executive director of Philanthropy New Zealand.

Most organisations are typically funded through a combination of public and private monies, for example, government contracts could account for up to 50% of an organisation’s funding.

“Often, the level of funding in these contracts remains static over time, which impacts on an organisation’s ability to cope with increasing compliance and operating costs,” says Tim Burns, executive director of Volunteering New Zealand.

Margy-Jean Malcolm, programme director of Unitec’s Graduate Diploma in Not for Profit Management, says that many of the students on this course cite problems with unsustainable funding within their organisations.

“Harvard University research shows that the key factor affecting not for profit organisations’ performance is the level of investment in organisational capacity. Everyone wants the service but noone wants to pay for the true cost of running the organisation,” she says.

Kevin Haunui, general manager of the Funding Information Service says that the vast majority of Tangata Whenua, community and voluntary sector groups deliver exceptional value for money and provide vital services that would be difficult to replace.

“The Value Added by Voluntary Agencies Project, which was issued in September 2004, showed that voluntary groups return between $3 and $5 worth of services for every $1 they receive in funding. So, in 2002, the ten groups returned approximately $177 million for the $42 million in funding they received,” says Mr Haunui.

ENDS

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