BLOG: Developing a Balanced Portfolio of Human & Financial Capital – Part 3
Thursday, 25th June 2015 at 11:29 am
Another strategy to mitigate against being too reliant on Government funding is to have a more balanced portfolio of human and financial capital, writes writes Doug Taylor from UnitingCare NSW & ACT in his series on how NFPs can stop being ‘hollowed out’ by Government.
There’s a lot of talk at the moment about being too reliant on Government funding and it’s no doubt driven by the recent defunding of numerous organisations by the Department of Social Services. This is all completely understandable but there are a few limitations to this.
Firstly, it often misses the opportunity to attract new types of income that will give more scope to deliver on one’s mission. It’s increasingly clear that Government funding provides little discretionary income to redirect into the organisation own initiatives, as a result much of the Community Service sector has little ‘untied capital’ which underscores the importance of diversification.
The second problem with much of this emerging agenda is that it solely focuses on financial and not human capital.
Too often I hear Not for Profits, who are planning to diversify their income, not asking strategic questions about the type of income they will need to deliver on their mission. This is not straightforward because it will undoubtedly take an organisation into unchartered waters so often there’s a sense of fear.
Fear of not knowing how to go about it, fear that it is change and they have been comfortable in dealing with Government for so long that there is not a belief that there is another way despite the evidence to the contrary. Despite these things it’s critical that some hard work be done to attract money to better support your mission and not just focus on getting income from a different tier of Government or a different Department.
Essentially diversifying should mean securing money that is different in nature to what you have. That makes sense but the bigger problem is that in order to attract this type of money you need a clear agenda for innovation and evidence in addressing new and emerging community needs aligned to your mission and capability.
My fear is that too few Not for Profits have a genuine agenda for Social Innovation which is the driver for securing new resources. Simple we are stuck in that rut of "doing the same thing and expecting a different result".
The other thing often missed in the discussion about diversification is the focus on financial and not human capital. Money is a critical resource for delivering on one’s mission. Sure money makes the world go round and all that but let’s not forget that Social Change is about mobilising people.
This means, dare I say it, sometimes you can create change without employing hundreds of employees. Of course large scale services need to engage employees but even that is under threat according to Tony Nicholson, CEO of the Brotherhood of St Lawrence; “It’s not sustainable or desirable to solely contract to Government to deliver services. The prevailing paradigm of gathering paid professional people around the vulnerable in our community will become unviable in the next twenty years".
There are new frontiers opening up in the community to mobilise people through technology, the workplace and an ageing population that has a longer life-span than expected. Solely focusing on financial capital misses these emerging opportunities.
Of course there was a time when our social services infrastructure solely relied on volunteers. I’m not saying we should go back there because of the inequitable nature of how the services were delivered but the point is we can do more to use power and passion of citizens to broaden the resource base.
My hunch is that this will be clear differentiator for Not for Profits as more businesses enter the marketplace to compete to deliver Government contracts in the future.
About the author: Doug Taylor is the Director for Strategic Engagement at UnitingCare NSW & ACT. He has spent more than 20 years working in the social sector and is also a Board member of the School for Social Entrepreneurs, the Australian Centre for Social Innovation and the Centre for Social Impact. He tweets at @dougtayloruw and writes a blog at https://blogaworkinglife.wordpress.com