Full Cost Of Service Delivery Project

Background

The Full Cost of Service Delivery project was jointly initiated in 2006 by QCOSS and National Disability Services Queensland (formerly ACROD) in response to the announcement by Warren Pitt (former Minister of Communities, Disability Services and Seniors) around the commencement of the Funding Policy project. The Funding Policy project (previously Fair Level of Funding project) was a part of the Strengthening Non-Government Organisation (SNGO) project, and its purpose was to examine a fair price for service delivery and the sustainability of funding for community and disability services.

Aims of the Project

The Full Cost of Service Delivery project was undertaken in preparation for the Funding Policy to bring community sector representatives together to discuss the issues in costing community services. With the increasing trend of government departments towards funding the direct costs of projects only, community organisations are finding it difficult to continue to meet the overhead costs of service delivery (such as administration, management and IT costs) which are also integral components of any project or service. This approach to funding is unsustainable as under-funding these overhead costs means reduced ability to maintain infrastructure and retain quality in both management and service delivery.   

The Full Cost of Service Delivery project aimed to progress discussion around full cost recovery - funding the full cost of a project or service to an organisation, including direct project costs as well as “core” costs.

The primary aims of the Full Cost of Service Delivery project are to:

  • Establish “core” costs for service delivery for different size and kinds of organisations within the sector. These should include insurance, rent, utilities, administrative costs, IT costs, and tax.  

  • Facilitate the development of and transition to an appropriate alternative funding model for the sector based on an investment approach. 

Full Cost of Service Delivery Project – Funding Forums

As part of the Full Cost of Service Delivery project, a series of funding forums were held to progress the discussion around costing and models of funding. These forums were attended by representatives from the community services sector and government. The forum were held from June to November 2006.

When the Funding Policy project commenced in October 2006, feedback and input into the project were provided through the two Reference Groups for the project. QCOSS and NDS were represented on the Community and Disability Services Reference Groups, respectively.  

Looking at what others have done

In undertaking this work QCOSS has drawn on research into the sustainability of funding for service delivery and costing models which have been developed.

In Queensland

·         Issue paper 3 - Sustainable Specialist Disability Services into the Future (2003). This paper is the result of the 2001 Disabilities Services Queensland (DSQ) Disability Funding Reform Project group to address issues including the viability and sustainability of non-government service providers. The paper identifies the key issues for resolution to achieve sustainability and takes a long-term strategic view of the funding policies and practices for DSQ. 

·         Pricing Principles for the Disability Services Sector (March 2006). National Disability Services Queensland (previously ACROD Queensland)have commissioned this report to explore the issue of pricing as it relates to sustainability for service providers within the disability sector. The report provides a useful comparison of funding approaches and features of a sustainable industry as well as a list of agreed pricing objectives and principles.

·         Towards SustainableServices for Children Young People and Their Families (2002). A report by Peakcare on costings pulling together models for developing costs for: shared family care; residential care; and intervention services.

In New South Wales

·         NSW Department of Community Services Funding Policy (2005). This funding policy was developed as part of the funding reform in New South Wales. The policy sets broad directions for funding reform in funding for community services.

·         Costing Manual for Child and Family Services in New South Wales (2006). The costing manual has been developed to help non-government organisations determine the indicative unit costs for a range of child and family services. It provides standardised costing principles and unit costings for use by the Department and non government organisations in planning, developing and reviewing their services.   

In Australia

·         The Cost of Caring: A study of appropriate foster care payments for stable and adequate out-of-home-care in Australia (2002). A national study which compares foster care reimbursement with the 'normal' cost of caring for children. 

In the United Kingdom

·         The Role of the Voluntary & Community Sector in Service Delivery: A Cross-Cutting Review (2002). Report produced by the HM Treasury (UK). The review examined the relationship with the sector with regards to contractual funding agreements across all government departments and endorses the principle of Full Cost Recovery for all departments.

·         Improving Financial Relationships with the Third Sector: Guidance to Funders and Purchasers (2006). Report produced by the HM Treasury (UK). Report intended to help government departments & other funding bodies responsible for distributing money to the third sector. Addresses the following four issues: stability in the funding relationship, timing of payments, Full Cost Recovery, and reducing the burden of bureaucracy.

·         Full Cost Recovery Toolkit - ACEVO (Association of Chief Executives of Voluntary Organisations). ACEVO have been working in partnership with the government in addressing the issue of full cost recovery in the UK since 1997 with considerable success. The Toolkit provides a step-by-step guide for estimating the core (management and operational) costs of any organisation. In May 2006 QCOSS hosted a workshop with a Stephen Bubb, the CEO of ACEVO on their work around Full Cost Recovery.