Losing a significant government-funded contract can be a daunting prospect for any not-for-profit

Losing a significant government-funded contract can be a daunting prospect for any not-for-profit organisations, particularly when it represents a significant portion of their income. In Australia, many not-for-profits rely on government funding to deliver vital services to their communities, so the loss of a contract can have far-reaching consequences. In this blog, we will explore the impact of losing a government-funded contract and provide strategic advice to help not-for-profits adjust to this situation.

The Impact of Losing a Government-Funded Contract

The loss of a government-funded contract can have a profound impact on a not-for-profit organisation. In addition to the financial implications, there can be wider repercussions such as reduced capacity to deliver services, loss of staff, and a damaged reputation. It is not just the financial loss, but also the loss of valuable relationships with government and the community, that can make it challenging for a not-for-profit to regain its footing.

For example, in 2019, the Australian government made changes to the National Disability Insurance Scheme (NDIS), resulting in significant cuts to funding for disability service providers. This left many not-for-profits scrambling to find new sources of income and forced some organisations to close their doors.

Strategic Advice for Navigating the Crisis

To navigate the crisis of losing a government-funded contract, not-for-profits need to take a strategic approach. Here are some tips to help them adjust and mitigate risk:

Diversify income streams

It's crucial to have a mix of income streams to ensure financial stability. Not-for-profits should explore other funding opportunities such as grants, donations, and corporate partnerships.

Retain key staff

Losing key staff can exacerbate the crisis. Not-for-profits should consider measures such as retraining staff for different roles, providing financial incentives, or offering flexible working arrangements to retain staff.

Communicate with stakeholders

Not-for-profits should maintain open communication with stakeholders such as government, donors, and the community to ensure they are aware of the organisations situation and any changes in services.

Innovate and streamline services

Not-for-profits should explore innovative ways of delivering services to maximize efficiency and reduce costs.

Case Study: St Vincent de Paul Society

St Vincent de Paul Society is a medium-sized not-for-profit that provides a range of services to disadvantaged Australians, including emergency relief, accommodation, and support services. In 2019, the organisations lost a significant government-funded contract, which represented 15% of their income. To navigate the crisis, St Vincent de Paul Society took a strategic approach, implementing the following measures:

Diversified income streams

St Vincent de Paul Society explored other funding opportunities such as grants, donations, and corporate partnerships.

Retained key staff

The organisations retrained staff for different roles and offered financial incentives to retain staff.

Communicated with stakeholders

St Vincent de Paul Society maintained open communication with government, donors, and the community to ensure they were aware of the organisation’s situation.

Innovated and streamlined services

The organisations explored innovative ways of delivering services, such as digitising their services and reducing overheads.

These measures enabled St Vincent de Paul Society to recover from the loss of the government contract and continue providing essential services to their community.

In conclusion, losing a significant government-funded contract can be a crisis for not-for-profits, but with a strategic approach and careful planning, organisations can adjust and mitigate the risks.

SynergyWorks Consulting can provide tailored advice and support to not-for-profits to navigate such challenges. If your organisation needs assistance, please reach out to us via www.synergyworksconsulting.com.au

Nathan Burbridge (BPlan, MEnvLaw, GAICD)

Managing Director, SynergyWorks Consulting