Government Policy Changes for Non-Profits

In the past two weeks, I have been taking a close look at the large-scale government policy trends in Australia and what these mean for non-profits. The first in my series of three articles explored the trend towards outsourcing. This, my second article in the series, looks at the shift to outcomes measurement. The third article will take a deep dive into the issues and pitfalls for non-profits surrounding consumer choice.

A shift to measuring outcomes

Health services in Australia have always been subject to rigorous accountability and outcomes measurement. Evidence-based practice, clinical research, double blind trials, and public access to meta-analysis and global research through the government-funded Cochrane Collaboration are all designed to deliver this. However, up until recently, billions of dollars of government funding have been invested in other social services without stringent accountability or an accompanying framework for measuring outcomes. This is now changing. Organisations once allowed to claim their own ‘evidence base’—often anecdotal evidence rather than credible research and data analysis, and little proof required for claims of innovation—are facing a more answerable future.

Regulatory issues when it comes to measuring outcomes

The issue is that outcomes measurement in social services is complex. It is not always easy to identify exactly what should be measured or how to go about measuring it. Other questions also come into play: What standard of evidence is acceptable in social services? Where can and should similar expectations be applied as to the health sector? Should the bar be lowered in some cases for social services? Research into employment services, aged care, disability services, vocational training and the justice system is just beginning to answer some of these questions.

One of the biggest risk factors for social services is that measuring outcomes may cause early stage innovation and model testing to stall. Private capital and social impact bonds may not have the capacity to completely replace risk capital and innovation capital, which has historically funded early stage innovation for non-profits. The industry needs a broader shift of regulatory frameworks to drive innovation, not simply a change in funding mechanism.

Impact of measuring outcomes on non-profits

The need to measure outcomes requires organisations to bear the cost of upgrading business systems that facilitate data collection and reporting. Also, with funding no longer guaranteed and a shift to funding based on services already delivered rather than block grants paid in advance, organisations will need to review their approach to balance sheets and cash flows. To ignore this is to face potentially disastrous consequences.

Greater accountability also calls for a significant cultural shift. Innovation may now require partnerships with researchers and universities, and non-profits should consider initiating outcomes measurement as part of their strategy for continuous improvement rather than relying on the government or academics to lead and advise them. Those that use data in strategic planning, developing evidence-based models, internal and external communication, fundraising and marketing, will remain relevant and viable in competitive markets.

We hope this second blog in our series ‘Government changes in policy and what this means for non-profits’ has helped clarify the issues for non-profits around measuring outcomes. Our first blog took a deep dive into the government shift to outsourcing, and our final blog will look more closely at what consumer choice means for non-profits. What do these changes entail? What must non-profits do so that they ride the waves of change and come out on top? What are the consequences of ignoring change or falling behind?

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