ICAC seeks comment on corruption risk issues relating to NGO delivery of human services in NSW

Tuesday 28 August 2012

The Independent Commission Against Corruption (ICAC) is seeking responses to corruption risk issues it has raised in relation to the non-government organisation (NGO) delivery of human services in NSW, and in particular risks that apply to funding arrangements and the effectiveness of the controls in place to manage waste and address mismanagement of government funds.

In a consultation paper released today, Funding NGO Delivery of Human Services in NSW: A period of transition, the Commission says that every year in NSW alone, billions of dollars are provided to over 2,000 NGOs, which amounts to more than 7,000 different agreements to deliver human services – a field that broadly involves providing a range of health, welfare and social services to support the needs of individuals, families and communities – on behalf of the government. "Such large sums of money spent across so many agreements by so many agencies presents a formidable test of any control system," the paper notes.

The ICAC observes that efficiency, quality and responsiveness are compelling reasons for increasing the shift from government delivery to NGO delivery of human services, and notes that it is not the intention of the paper to challenge either the reasons for or the practice of funding NGOs to provide human services. Rather, the purpose is to examine the corruption risks in the funding arrangements in a way that, at a minimum, is compatible with the primary functions of the human service agencies and that, preferably, enhances the management of the funding.

"While the vast majority of NGOs and staff are dedicated to helping others, there are those that see government money as an opportunity for self-interested behaviour," the paper says, noting that there have been allegations and problems raised in NSW and other jurisdictions. These include (NGO) staff using government monies and resources for their own benefits, using funds to deliver a different service from the one agreed on with the government agency, obtaining funding for the same service from multiple programs, agencies and jurisdictions, collusion between government frontline staff and NGO staff, and falsely reporting to government that services have been delivered when they have not.

The ICAC raises concerns about the difficult task faced on the government-agency side of controlling funds. This can include the effectiveness of the internal arrangements of government agencies to control a flexible and outsourced delivery model, which is a fundamentally different control environment from the more traditional in-house delivery model. The paper observes that the transactions now occurring across organisational boundaries are quite different from those that occur between an in-house service provider and their clients. "These are all new challenges for a system built to manage delivery by government staff, particularly where operational staff do not typically have contract management skills," it says.

The paper says that each government agency operates in a service delivery environment characterised by a tangled web of jurisdictions, funding agencies and programs. "So far, the NSW Government has had limited success in coordinating the funding activities of all relevant agencies, despite the introduction of senior coordinator roles, various memoranda of understanding between government agencies, and the establishment of coordinating bodies," it says.

The Commission will accept written submissions in response to the paper up until 5 pm on Friday 5 October 2012. Submissions will inform a future position paper that may recommend changes to improve government management of corruption risks associated with NGO delivery of human services.

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

For enquiries in relation to submissions on the consultation paper, contact ICAC's Executive Director Corruption Prevention, Dr Robert Waldersee, on 02 8281 5999.

Media contact:

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