A major report released today shines a spotlight on the financial pressures faced by the ACT community sector.

Counting the costs: Sustainable funding for the ACT community services sector presents a comprehensive picture of the costs involved in delivering community services, the cost pressures that community organisations in the ACT experience, and ways to ensure funding is sustainable and meets community needs.

The UNSW report was commissioned by the ACT Council of Social Service (ACTCOSS) on behalf of the ACT’s Community Services Industry Strategy Steering Group (ISSG), and funded by the ACT Government and the Community Sector Levy.

The report found that:

• The annual indexation rate applied to funding was insufficient to cover rising costs;
• Nearly half of organisations incurred losses on ACT Government funded programs;
• To remain competitive, one in four organisations priced services below cost when tendering for contracts;
• Almost two-thirds of organisations decided not to apply for funds to deliver services because available funding was insufficient to cover costs;
• Demand for mental health services has doubled, yet funding for mental health services has not kept pace, and the share of funding to community mental health services has decreased;
• Nine out of ten organisations reported no funding or underfunding for monitoring and evaluation activities; and only one in three said they were adequately funded for regulatory compliance.

The report highlighted the historical undervaluing of the sector, and an expectation by funders that the community sector would be able to sustain low overheads despite rising costs.

It also detailed issues including Canberra’s high costs of living, rising financial stress, and significant unmet housing needs that led to rising demand for services.

The report made recommendations to improve the current funding situation:

• Reviewing the calculation of indexation to ensure funding levels kept pace with rising costs;
• Reviewing all ACT funding agreements to fully cover the costs of providing services;
• Building sector capacity to accurately assess the cost of services when applying for tenders;
• Boosting funding for areas of high need – for example, where there are long waiting lists and clear evidence of significant and unmet demand;
• Prioritising early intervention and prevention; and
• ACT community sector and ACT Government working together to further encourage efficiencies and reduce cost pressures.

Rachel Stephen-Smith, ACT Minister for Families and Community Services, said the ACT Government would carefully consider the report’s findings and recommendations.

“The community sector played a critical role in delivering programs and services that improve health and social outcomes for Canberrans, particularly for people who are vulnerable or at risk,” Ms Stephen-Smith said.

“The 2021-22 ACT Budget included $4 million over four years to support an increase in community sector funding. However, we understand that there is more work to do, which is why the Government commissioned this report jointly with ACTCOSS.

“Community service organisations are an essential part of a flourishing Canberra, and we value the above-and-beyond efforts of those who work in the sector. This report is a valuable platform for improving mutual understanding.

“ACT Government directorates are already working with their community sector partners on a new way of collaboratively designing and procuring services through commissioning for outcomes.”

ACTCOSS applauded the ACT Government’s commitment to work with community services to develop a more sustainable model of funding.

CEO Dr Emma Campbell commended the ACT Government for its support of the report and its openness to a rigorous analysis of the gap between costs incurred and funding received.

“The report demonstrates how population changes and the increased complexity of need of community service users in Canberra have compounded pressure on providers and the sector in recent years,” Dr Campbell said.

“A sustainable funding model is desperately needed.

“Workers in the community sector do an amazing job delivering essential services, including during the COVID-19 pandemic. However, we are seeing increasing rates of burnout by staff and leaders as they make difficult decisions because of resource constraints – including turning people away.

“It is not sustainable for the community sector to run essential services such as mental health support, community legal support or domestic violence services without sufficient funding to cover costs.”

The report found that almost half the leaders surveyed ran programs funded by the Government at a loss, and that three in five community sector organisations do not apply for ACT funds due to poor cost coverage.

“This affects Government and clients by reducing the choices available for delivery of these services,” Dr Campbell said. “It will also affect the Territory’s ability to recover from the pandemic as increasing numbers of services are unwilling to deliver desperately needed services because funding is insufficient to cover costs,” said Dr Campbell.

The report can be accessed at www.actcoss.org.au/publications/advocacy-publications/report-counting-costs.