Community Perspectives on the Funding Agreement

The following information is based on a presentation by Merri Andrew and Charlie Pahlman from ACTCOSS during our seminars about the introduction of the Standard Funding Agreement.

The powerpoint slides that accompanied the presentation are also available for download: Community Sector Context for the Service Funding Agreement (PowerPoint presentation: 68 KB)

Sections include:

• Introduction
• Funding and Accountability
• Why Fund Community Organisations?
• A Distinctive Sector
• Moving Away from the Purchaser-Provider Model
• The New Agreement

Back to Funding: The Standard Funding Agreement

Introduction

ACTCOSS is very happy to be here to give our perspective on the new Standard Funding Agreement and its meaning for the community sector.

This is a historic event: a joint presentation by government and the community sector to government and the community sector managers.

The new Standard Funding Agreement and the process that has led to it do not just represent minor changes around the edges. Rather, it has involved embodying principles of fairness, cooperation and respect between funders and service providers in the document and the processes we use. It means recognising both our shared goals (supporting and empowering people living in disadvantage) and those points on which we sometimes diverge. The new Standard Funding Agreement allows for both.

Funding and Accountability

The new Standard Funding Agreement is also a mechanism of accountability. This is a point we often hear government people make, because of their imperative to be accountable for the use of public money. This is essential, but in enacting this there is sometimes a sense that public money is the government's own money, and that the management of contracts by government is the only accountability mechanism.

This is not true. It is the public's money, and funding responsible, accountable community organisations to provide services and advocacy is one way of returning the benefits to the public.

Funding non-government organisations is a practice in which both government and the community sector need to be accountable to the public in a shared way for priority setting, use of resources and the quality of services and advocacy.

Why Fund Community Organisations?

Given this complexity, why is it valuable to fund community organisations to deliver services and undertake advocacy?

It is valuable because of what we bring that is unique:

• Commitment
• Passion
• People-centred values
• Ability to make a few resources go a long way (although this is a potential problem as well as a strength)
• Innovation and lateral thinking
• Genuine expression of people's needs and interests, as demonstrated by volunteer boards.

One of the main contributions of the community sector is our work towards social justice: creating a decent and fair society that does not accept that people will be disempowered because they lack money or because they face other challenges, such as disability. In most cases we do this as the primary focus of our work, not simply as one consideration that must be worked in around others.

These qualities are reasonably well understood, but what is often not realised is the economic contribution of the community sector:

• In the ACT it is a major employer (employing well over 3000 people in community sector organisations);
• There are higher flow-on benefits to the economy in terms of value added and employment from spending on community services than almost every other industry (as shown by ACT Treasury's own analysis);
• The sector provides work opportunities, e.g. through volunteering and entry level jobs; and
• Community services facilitate the economic participation of people who are economically marginalised.

A Distinctive Sector

In outlining these features, it is clear that the community sector is different from both government and business. The community sector usually works most effectively when these differences are acknowledged and respected.

The community sector is not an arm of government, or a subsidiary form of government (which is why ACTCOSS is critical of the expression that the sector delivers services "on behalf of government").

Nor (as those in the community sector are painfully aware) is it a money-making enterprise.

Being distinct and independent from both government and commerce is vital for our contribution to the community.

Although this means that we'll sometimes criticise government policy or actions, this is an extremely valuable, irreplaceable characteristic of an open and strong society.

One of the strengths of the new Service Funding Agreement, and the Service Funding Policy of which it is part, is that it goes some way to recognising the distinctive contribution and needs of the community sector.

Moving away from the Purchaser Provider Model

This is a welcome shift, not a revolution, admittedly, but a significant shift from the previous Purchaser Provider model, of which numerous and familiar criticisms have rightly been made.

In looking at the new Service Funding Agreement, it is worth considering why the Purchaser Provider model did not work well for consumers, government or the community sector:

• It caused fragmentation;
• It treated community organisations as if they were commercial businesses;
• It inhibited shared learning, collaboration and innovation;
• It put quantity and cost above quality;
• It created an uneven power relationship between service providers and funding bodies, which caused extra stress and barriers to service provision; and
• It falsely restricted the community sector to the role of provider, neglecting its role in determining priorities and contributing to policy development.

The inappropriateness of the purchaser provider model has been recognised by various reviews, including the Reid review, and indeed by this Government itself, in the shift to the new Service Funding Policy.

Not everything has changed (for example agreements will still have outputs linked to funding amounts) but it gives us a chance to foster greater collegiality and cooperation.

The New Agreement

The Standard Funding Agreement was always going to be a vital expression of the changes in the relationship between government and the community sector. Because of the agreement's importance, there has been intense work and negotiation to try to accommodate both the community sector's and government's needs, and to a large extent we have achieved this. We have a final agreement, and it is on the whole a good one, which we'll be using from July this year.

This is not to say the document will never be reviewed. It will, and both community sector and government agreement managers will have a role in that, but this document now gives us a basis for moving into new funding agreements for 2004-05.

Some of the positive features of the agreement are:

• A three-year funding cycle;
• Consistency across all government departments;
• An emphasis on quality services and quality improvement processes;
• The inclusion of a dispute resolution process;
• The obligations of both organisation and government are laid out;
• Intellectual property retained by community organisations but can be used by government; and
• A number of smaller problematic elements of previous contracts have been fixed or improved, these include the definition and treatment of assets and the permission/notification process for government access to premises and information.

Agreements are an important underpinning of a funding relationship. They protect each party and define the limits and standards for behaviour. But an agreement on its own could never be enough. An open, frank, respectful relationship between the community sector and government managers is what will make the agreement work. No agreement can make up for the lack of this kind of relationship, though it can provide some guidelines for how to proceed when all else in the relationship fails.

A range of other policies support the relationship between the community sector and government, including the Social Compact, the Social Plan and Service Funding Policy. We need to keep putting energy into the implementation of these documents, for example, through the work on a framework for pricing principles, which will commence this year.

So, the Standard Funding Agreement is necessarily limited, but it is necessary. It is an important document for operational as well as policy reasons, and we believe it, and the process through which it has been developed, go a significant way to contributing to a clear, respectful and more equal relationship - one that recognises the different but essential roles of government and community organisations. Learning more about the agreement will help to embody this principle in the practical negotiations that will follow.


Back to Funding: The Standard Funding Agreement

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