Funding frustrations and the peculiar paradox of purpose

I’ve spent a large part of my career in disability, mental health, suicide prevention, child safety and ageing services. Different corners of the same big, beautiful, chronically under-resourced tent. And if there’s one thing that unites everyone under that tent, it’s this: we’re all really good at doing more with less. We wear it like a badge of honour, actually. “We’re lean and scrappy” is basically the sector’s unofficial motto, printed on a mug somewhere in every op-shop in the country.

So when the Centre for Social Impact (CSI) recently released its Wave 2 Insights Report on Australia’s Social Economy – the second instalment of a three-year study, now up to 219 organisations from 140 last year – I read it the way you’d check in on an old friend. Genuinely curious, slightly nervous about what I might find. And look, there’s plenty to be proud of. Around 60 per cent of respondents believe they’re performing better against their own goals than last year. But there’s a pattern sitting right in the middle of the data that I can’t stop thinking about, because I’ve watched it play out for years, both as a senior ministerial adviser and sector worker.

CSI calls it, quite politely, “the financial paradox.” I’d call it something a bit more Aussie, but this is a professional newsletter.

Here’s the gist. Social Economy Organisations – charities, not-for-profits, social enterprises, the whole gang – rank “maintaining or increasing funding” and “diversifying income sources” as their two absolute top priorities. But when you ask where their money actually comes from, it’s the same old crew: government grants, government contracts, fundraising, donations. A bit like ordering the parmi every time even though the menu’s got forty other things on it.

Meanwhile, 68 per cent are either unsure about or haven’t considered newer forms of finance at all – blended capital, outcome-based contracts, community investment, impact bonds. Tellingly, the one area where experience actually grew was blended capital deals, up from 30 to 41 per cent, while outcome-based contracts went backwards. We’ll dip a toe in if someone else designs the pool, apparently, but building our own is a bridge too far. We say diversification is priorities one and two. We do priority nought.

And it’s not happening in isolation. Workforce pressure has muscled its way up this year – recruiting and retaining staff now sits in the top three, and “building staff capability” jumped from tenth to sixth in a single wave. Cybersecurity has cracked the top five external risks. Even collaboration, long the sector’s calling card, dipped, with partnerships between charities and for-profits falling from 49 to 32 per cent. Read together, it’s a sector that isn’t short of ambition, just short of the runway to build the capability it needs – money, people and systems all under strain at once, each making the others harder to fix.

Now, I don’t think any of this is because people in our sector are lazy or unimaginative. Quite the opposite – some of the most creative problem-solvers I’ve ever met work in community services, usually holding the whole show together with sticky tape and sheer will. The real issue is decades of muscle memory built around block-funded charity thinking. Write the submission, deliver the service, report the outputs, repeat. It’s a system that rewards compliance, not innovation.

The impact measurement findings back this up nicely, in a slightly heartbreaking way. Eighty-five per cent of organisations now measure impact for at least some of their activities, up from 70.6 per cent in 2019 – genuine improvement. But nearly half of the open-ended responses about barriers pointed to the same thing: funders demand evidence of impact but won’t or can’t pay for the foundation work of producing it. CSI’s take is telling: the fix isn’t every organisation cobbling together its own bespoke measurement system; it’s shared infrastructure across the sector. Which sounds a lot less exhausting.

The opportunity isn’t another finance product or framework nobody has time to implement. It’s a genuine, sector-wide cultural shift – from thinking of impact as a reporting obligation to thinking of it as the actual engine of the enterprise. That’s a mindset change, not a spreadsheet change. And mindset change is slow, human, occasionally uncomfortable work – which is exactly the kind of work our team at SAS Impact spends its days doing. If it’s messy, uncomfortable, overwhelming or unclear, that’s our happy place. Where others run from a fire, we lean in. We’re a bit weird like that.

We’re not selling silver bullets. Nobody credible in this space is. But we’ve got decades of practical and strategic experience watching a CEO realise, mid-sentence, that their organisation’s “impact story” and their funding strategy have never once been in the same conversation – and we’ve helped bring them together. Building the bridge between mission and money, one genuinely difficult conversation at a time. It’s also, not coincidentally, the exact question I’m chewing over in my own postgraduate work at CSI/UNSW right now – and this report is proving excellent, if occasionally sobering, company for that journey.

The social economy doesn’t need to become a different beast entirely. It just needs the confidence and the capability to back its own impact the way it expects funders to. Worth talking about over a cuppa. Give us a shout.

Daniel Hobbs is Associate Director and Head of SAS Impact at SAS Group and has spent his career in and around the social services sector. He is currently undertaking postgraduate studies at the Centre for Social Impact, UNSW.