‘For heaven’s sakes, make it five years’: Community sector frustrated by short funding cycles

“The most important change governments can make that will provide job security for frontline workers and certainty for people needing services is longer contracts” 

Community leaders are calling for five-year government contracts to become standard for service providers, amid concerns short funding cycles are constraining the sector’s ability to help vulnerable people.   

The Social Policy Research Centre at UNSW Sydney recently conducted interviews and focus groups with a diverse range of sector leaders, who expressed frustration around current contracting arrangements and funding levels for organisations.

In a new report – commissioned by the Australian Council of Social Service – researchers identified several key issues for the sector, including short contract lengths, limited flexibility with grant money, and a lack of commitment to funding advocacy.

While contracting issues have plagued the sector for years, the report said these problems have now accumulated to the point where they serve as “unnecessary roadblocks” to organisations achieving change.

Dr Megan Blaxland, the lead author of the report, told Pro Bono News that service providers typically dealt with short contracts of two years or less, and often did not get sufficient notice about whether they would be renewed.

She said this meant organisations were operating on short cycles, which makes long-term planning difficult.

“If they had the security of knowing that they had longer funding, they could make a plan for a service for the community that would last, for example, for five years,” she said.

“The other implication is around staffing. They want to attract the best staff that they can, and that is more difficult when they can only offer people short contracts and people don’t know if the contracts are going to be renewed or not.” 

Long-term contracts needed for the sector

All leaders spoken to by researchers called for longer contracts that ideally ran for five years.

And while some jurisdictions and government departments have already introduced five-year contracts, the report noted these were “rare and prized”.

A medium-sized migrant support service leader told researchers: “The [issue] for us is continuity of funding. Not once off, one year or two year funding but, for heaven’s sakes, make it five years.”

A national peak body leader said they were worried about having to make staff redundant because they “haven’t had confirmation on funding for the next year”.

“It’s a lot of unnecessary worry and planning and a distraction for the board when they should be looking at strategy,” they said.

 It is not just sector leaders who have called for longer government contracts. A 2015 Senate inquiry into Commonwealth community service tendering processes recommended that five-year contracts be awarded to service providers to ensure stability. 

COVID shows greater flexibility is possible

This research builds on a 2020 UNSW report, which found that 53 per cent of community sector leaders were offered increased funding flexibility by government to get through the pandemic.

This flexibility included allowing organisations to roll over or repurpose unused funds.

Blaxland said this innovation around contracting arrangements was something we could learn from in the future.

“Because the operating environment changed quite substantially, governments didn’t necessarily expect everyone to meet their contracted targets in the way that they previously would have expected,” she said.

“Some contracts can be quite narrowly focused on the targets that need to be met. And so the extra flexibility that COVID introduced was a great bonus for community organisations.” 

ACOSS calls for action 

In wake of the report, ACOSS is calling for urgent action to help remove the roadblocks constricting the work of the sector. 

ACOSS CEO Dr Cassandra Goldie said longer contracts must be matched with adequate funding that accounts for the full cost of service delivery – including infrastructure, admin fees and indexation. 

“The most important change governments can make that will provide job security for frontline workers and certainty for people needing services is longer contracts and funding agreements that cover the full cost of providing the service,” Goldie said.

“[We need] at least five-year contracts and funding certainty, instead of keeping service providers on tenterhooks about whether their funding would continue.”

The report recommended providing greater flexibility to funding arrangements, such as by specifying outputs, outcomes and activities in contracts rather than inputs. 

It said funding contracts should also remove restrictions on using government funds for advocacy or law reform. 

Blaxland said these changes would benefit not only community organisations, but also the vulnerable people the sector serves.  

“The community sector is so committed to the work that it does. Every time I speak to people who work in the sector, the level of dedication to helping people who need assistance is just so high,” she said.

“If they were adequately resourced to do that work and could plan it appropriately, they would absolutely be able to do a better job of looking after community members.”