The importance of knowing your contribution margins

October 2020

When you want to check the financial performance of an organisation, the first and most obvious indicator is profitability. Even in the ‘not for profit’ sector, profit is the key indicator of financial performance – has the organisation operated within its income for this and the most recent years?  Has it generated a surplus to reinvest in social impact and organisational sustainability and growth?

It’s easy to lean on profitability as the key indicator of financial success, and sometimes as a proxy for good organisational governance and management. Whilst profitability is the key driver of organisation sustainability, viewed in isolation, it can be a bit of a blunt instrument. The key risk is that overall organisational profitability can hide a lot of issues. Whilst the results for the business as a whole might look great – and they may genuinely be reflective of business performance as a whole – you could have some significant losses hiding behind some hero income streams.

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Building safer lives – the role of the service provider

October 2020

Being disabled you are in the hands of others and if those hands aren’t kind what an awful world it must be.

(Henrietta Spink)

Ann Marie Smith’s death was a shocking case of abuse and neglect and, as the independent investigations have confirmed, also a failure of the system. The review of the adequacy of the regulation of the supports and services provided to Ms Smith conducted by the Hon Alan Robertson provides a list of ten recommendations of how the NDIS Commission‘s processes and systems should be changed. The advice for the two-way information flow between the NDIS Commission and the NDIS reveals major gaps in the system.

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Fixing your internal issues is part of the strategic plan

October 2020

Strategy retreats and planning days that start from a ‘blank sheet of paper’ and focus on ‘blue sky thinking’ can get lost in the optimism of what might be possible, and lose sight of the operational issues present which can hinder that achievement.

Risk is the effect of uncertainty on objectives, and so failing to undertake a critical analysis of internal issues or trends means blindly introducing risk to the strategy process: the risk that the organisation won’t be capable of delivering on its aspirations.

The strategic plan needs to be balanced – forward looking, making the most of the opportunities; but also addressing the internal issues and market constraints that can hold the organisation back.

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Mitigating risk through your management system

October 2020

A strong and effective management system is one of the best methods of risk mitigation in a business – as well as a driver of improved organisational performance.

The management system is made up of the different policies, procedures and forms which describe  the way that things should be  done in your organisation. It’s about how things are done in the organisation, and documenting it in these ways helps to ensure a consistent approach.

As providers transitioned from state government block funding in to the NDIS, many had to simultaneously comply with the requirements of three different quality frameworks: 1/ legacy funding state government quality accreditations, 2/ NDIS quality and safeguards requirements (supporting participants up to age 64), and 3/ the aged care quality standards often under the Commonwealth Home Support Program (for clients 65 and over).

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Addressing risks (and opportunities) through the budgeting process

September 2020

When setting the budget, one thing you are never going to get perfect is for the actual revenue and expenses to precisely hit the budget that you set. There will always be items that are under budget and others that are over budget.

Inherent in the budgeting process is that there are a myriad of assumptions that you make: utility bills will be the same as last year plus inflation; we have a new service/product which we hope will bring in a certain amount of revenue; we need to invest in some IT work to improve systems which will cost a certain amount.

The budget is a series of guesses – well, educated guesses! You have targets and predictions and know what happened last year, so you can usually make a fairly good ‘guess’, but there will always be overs and unders – as compared with the assumptions.

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NDIS group supports – ‘challenging and unviable’ or ‘reasonable and necessary’?

September 2020

In an inclusive society, people with disabilities are able to take part in the same activities as anyone else. If we successfully removed barriers and integrated everyone into social and recreational activities we would need less disability specific community participation supports.

There have been calls to reduce the incentives for disability providers to offer group supports as people with disabilities should be able to choose their individual supports and the activities they are interested in.

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Key areas you should look at when considering which KPIs to select

September 2020

Choosing the right Key Performance Indicators (KPIs) may seem overwhelming, but the right metrics, and subsequently the measuring and reporting of those metrics, can provide enormous value to not for profit leaders and their boards.

The right KPIs can have the ability to provide meaningful insights at a glance, which is particularly useful for stakeholders that are not involved in the organisation on a daily basis.

With that said there are a number of key areas to take into account when considering which KPIs to select.

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