Yes, the title is a deliberately provocative statement.   Here are a few more:

  • We need to stop using the label “not-for-profit”.   If we don’t make a profit, we are being irresponsible.
  • Serving our clients well means understanding our markets.
  • All community agencies need professional standards of governance.

 

It is clear that the sector is undergoing major changes, which include external challenges such as:

  • the move to client-directed funding, creating a more competitive environment; now being rolled through NDIS, but also coming to other human services domains near you.
  • Conservative governments (currently the Commonwealth) wanting to treat the community sector simply as another vehicle for contracting out.
  • Progressive governments (currently the ACT) wanting to explore more mature partnerships with the sector on policy development, as well as service delivery.

 

The response to such challenges can be a somewhat arid debate about the future of the community sector that wrongly assumes we have a stark choice: we can either maintain our values-based, community-oriented, social justice approach, or become more professional, efficient, well-governed and profit-driven.  This as a false choice.

In my view, a mature community sector must indeed adopt business-like efficiencies in order to survive.  Annual surpluses – ie profits – should be generated in order to invest in the social goals that drive the sector, and if an organisation is seeking to increase financial independence.

Committees or Boards must be skilled and professional, in order to ensure the best possible organisational performance, and to reduce the risks that funders, partners and community members face when dealing with less stable organisations.   There is no reason that standards of governance should be any less, just because we are in the community sector. (1)

Even if an agency remains 100% block-funded for the foreseeable future, it is critical that it acquires a more sophisticated view of their ‘market’ so as to deliver the best possible services.  This means genuine consultation – ideally co-design – with service users, and critically, with potential service users.  Block funding has sometimes been an excuse for community agencies to be lazy.   Too often, the phrase “hard to reach” clients is an excuse trotted out by hard to access services.  So at the very least, community agencies seeking to assist people with complex needs must do their market intelligence, to ensure that they are not simply addressing the easiest cases.

So if this the way we go, what makes the community sector different to the private for–profit sector?  It is one simple but powerful factor:  our mission.   In a notable speech earlier this year, Tony Nicholson reminded us that the community sector is best placed to work alongside local communities to create solutions for and with vulnerable and disadvantaged people, and to strengthen community life through social justice goals. (2)  This is a community development role that goes beyond what governments can readily provide, or the private sector can deliver in any depth, however much it pursues corporate social responsibility.

The community sector’s history is rooted in a passion to address economic and social ills.   Approaches range from the safely charitable to the radically transformational.  It is clear that many agencies continue to be driven by their mission.  A recent sector survey in NSW found that:

“Respondents…articulated a range of priorities for addressing poverty and disadvantage, including increasing access to affordable housing; ensuring income support covers living costs; improving employment conditions and opportunities for disadvantaged people; ensuring access to early intervention and affordable early childhood services; and promoting effective collaboration among services.” (3)

While this sense of purpose is clearly in the background for many service delivery agencies, that is the problem; it is too often hidden as we go about our day-to-day operations, and it is to too often left to our peak bodies to articulate.  This pivotal advocacy role is not only a clear point of difference from private for-profit providers, but unites the sector in what should be our common mission for social justice.

Ironically, the challenge of new competitors may drive some community-based organisations to see mission and values as less relevant, as they struggle to establish their market positions.  But quite the contrary, these times call for “revisiting organisational missions, rearticulating the kind of society [we] want…” (4)  If anything, such an approach may even be a ‘competitive advantage’, where market failure generating greater inequality becomes increasingly hard to ignore.

So going back to my opening statement, if we ditch the term “not-for-profit”, what do we call ourselves?   “Third sector?” – no, that sets up a separation when the trend is convergence.  “Profit for purpose?” – maybe, but a bit clunky, and begs the question; what purpose?   “Social enterprise” is already a well accepted term, but tends to have a more specialized definition.

I like “community business”.  It captures those two critical elements; we exist of, for and with the community, and in order to deliver on our missions, we must behave in a business-like way.  If the sector is to have a robust future, we simply cannot do one without the other.

 

Simon Rosenberg, CEO Northside Community Service, and Treasurer ACTCOSS

 

References

1. See for instance, Australian Institute of Company Directors, Good Governance Principles and Guidance for Not-for-Profit Organisations, 2013.

2. Tony Nicholson, Speech on the Future of the Community Welfare Sector, 27 May 2014

3. Social Policy Research Centre, UNSW, State of the community service sector in NSW 2014, p.3

4. Paul Smyth, “The lady vanishes: Australia’s disappearing voluntary sector”, speech given to Brotherhood of St Laurence, 14 August 2014, p.2