NDIS forcing not-for-profit sector reform

The transition from the state to the federal NDIS model is underway in Western Australian and it’s a whole new ball game, writes Lucio Di Giallonardo from HLB Mann Judd Perth.

The transition from the state-based to the national model of the National Disability Insurance Scheme (NDIS) is shaking up Western Australian not-for-profit (NFP) service providers in the disability service sector by increasing financial pressure, forcing a step change in business focus and sparking mergers.

Under the previous funding model the state government provided disability service and care providers up-front funding which underpinned their operations. The move to providing funding packages to individuals is leading to significant changes in structure and strategy across the sector.

The transition from the state to the federal NDIS model is underway, and it’s a whole new ball game. While there are inherent benefits of the individualised funding model of the NDIS, the certainty the previous block funding model provided is gone and organisations are effectively having to fight for every client.

As a direct result of the roll out of the NDIS, our experience is showing us that not for profits in the disability services sector are having to shift their sole focus from service delivery to meeting new commercial needs such as beefing-up their marketing capabilities to attract new clients.

There were also reports from the sector of providers having to be ruthless in maintaining programs or services for clients where the flow of funds was not guaranteed.

There has been a noticeable spike in the number of NFPs merging in Western Australia in recent times which has invariably led to economies of scale and efficiencies to combat the challenges created by the national NDIS model.

The cost of doing business under the National Disability Insurance Agency (NDIA) has placed additional pressures on the NFP sector including staff resources to assist families to negotiate NDIS care plans, rolling out new IT systems and independent auditing requirements.

While this may seem like it is encouraging efficiencies, this is within an already lean sector and the danger is that NFPs which provide disability services will struggle to balance the need to secure funding with their core business of caring.

It’s never been more critical for NFPs to seek robust financial advice to help them navigate the new economic environment.

This article was authored by Lucio Di Giallonardo, audit and assurance partner at HLB Mann Judd Perth. For more information, contact Lucio on (08) 9227 7500 or lucio@hlbwa.com.au.