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ICAC recommends shift in how government funds NGOs along with amended legislation to improve oversight

Tuesday 18 December 2012

The Independent Commission Against Corruption (ICAC) recommends a deep shift in the way non-government organisations (NGOs) delivering human services are funded by government in NSW, as the centralised model struggles to cope with the increased delivery of such services by NGOs, along with amended legislation to improve oversight of financial compliance and system performance.

In its position paper Funding NGO Delivery of Human Services in NSW: A period of transition, released today, the Commission follows up its August 2012 consultation paper with 18 recommendations to address corruption prevention issues.

Each year, NSW provides billions of dollars of funding to more than 2,000 organisations to service over 7,000 agreements for this purpose. Yet despite this, not all NGOs are within the jurisdiction of the ICAC and the NSW Auditor-General. The Commission recommends that legislation be amended to provide the NSW Auditor-General with the power to inspect, examine and audit the accounts of non-government organisations (NGOs) that have been provided with government funding. This in turn would give the Commission jurisdiction.

Other recommendations include that the role of designing broad policy and need determinations, along with the oversight of regions and local service areas, would be retained by the central office. The decision-making around human service delivery and the funding of NGOs, however, would take place at the community level by establishing, where appropriate, local service areas by agencies across NSW and the devolution of decision-making authority to those local service areas.

This would allow local staff to work together formally within partnership arrangements, and informally bring together related agencies, clients and the community to produce place-based solutions. Such arrangements would provide transparency and sharing of information that makes corrupt conduct more difficult.

The Commission also recommends that aspects of financial authority and budgets be devolved to the regions so that basic service contracting and management of supplier performance can be carried out using local knowledge.

In relation to information management, the position paper says that the current systems in NSW fall well short of what is needed to prevent corrupt conduct and maintain control of operations. "Government, or even agencies, are unable to determine what funding has been provided to which NGOs, for what purpose, and what outcomes have been achieved. Information on incidents, funding, NGO capabilities, client perceptions, complaints, expert evaluations, frontlines, and so on, is spread across many points of most agencies," the position paper says.

The Commission also recommends that the use of grants be minimised and that they be managed separately from service-delivery funding. Capital grants should be managed separately from both non-capital grants and service-delivery funding.

The Commission recommends that eligibility to receive control of government funds would be contingent on accreditation granted by expert, independent review bodies.

Funding NGO delivery of human services in NSW: A period of transition - position paper

Media enquiries: ICAC's Manager Communications & Media, Nicole Thomas, 02 8281 5799 / 0417 467 801