Ministry of Social Development announces new funding strategy; first social bond introduced

Minister for Social Development Anne Tolley has announced a "new long-term strategy for social service investment."

Ms Tolley said the Community Investment Strategy would create a "more results-focused and evidence-based approach for MSD’s purchasing of social services for vulnerable people and communities, and will also be more transparent, targeted, flexible and efficient."

The key elements of the strategy include:

• "Focusing more clearly on priority results
• Building the evidence base
• Improving the quality of data collection
• Setting a clear direction for funding
• Simplifying compliance requirements, and
• Building provider capability"

MSD’s purchasing of services for vulnerable people will focus on three priority areas based on the government’s Better Public Service targets:

• "Supporting vulnerable children, children in hardship and reducing child maltreatment
• Supporting vulnerable youth, including young offenders and reducing youth crime
• Supporting vulnerable adult victims/survivors, addressing perpetrators’ behaviour and reducing violent crime"

Mrs Tolley said:

"Over the next three years MSD will work with providers to help them transition to contracts that include results measures. This will be fully rolled-out by June 2018, and the gradual introduction is in line with advice received from PWC in an independent analysis of the strategy."

The strategy covers funding of $330 million a year out of the ministry's total of $600 million for non-government organisations (NGOs).

The strategy, the Cabinet paper supporting it and the PricewaterhouseCoopers report are available on the Community Investment website.

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Related information

The strategy is part of a significant programme of change to the way government funds community organisations. These changes include MSD's Investing in Services for Outcomes.

On 1 June 2015, the Government announced New Zealand’s first social bond, Under social bonds, private and public sector organisations operate together to fund and deliver services. The Government said, "If they achieve agreed results, the Government will pay back the investors plus a return. The return depends on the level of results, up to an agreed amount." Budget 2015 set aside $28.8 million for four social bond programmes. The first is for employment services for people with mental health conditions. The next social bond will focus on either lowering re-offending rates, or helping people manage long-term health conditions. Further information is available in the previous Clearinghouse news story on the draft report of the Productivity Commission, which assessed social bonds.

Re-Imagining Social Work, a volunteer collective of social workers, social work academics, researchers and others, has cited the Government's review of Child, Youth and Family as another example of the "continuing roll out of the National Government's 'investment approach' to marketise and privatise health and social services."

In April 2015, a press release by Trevor McGlinchey, Executive Officer of the New Zealand Council of Christian Social Services (NZCCSS) raised concerns about changes to how the social sector is funded.

The New Zealand Council of Christian Social Services (NZCCSS) has also published a report, Outcomes Plus: The added value provided by community social services (May 2015). NZCCSS commissioned the report in order to better understand how community-based and community-focussed organisations make a difference and how they add value  to their communities above and beyond the funded outcome. NZCCSS strongly urges the development of funding strategies that recognise and reward this added value. The report was written by Brent Neilson with Charles Sedgwick and Sandra Grey, with financial support from the JR Mckenzie Trust and The Tindall Foundation. The Council’s strategic partner Te Kāhui Atawhai o te Motu supported the project.

The Community Research webinar State of the Sector: Outcomes and Accountability (Nowland-Foreman, May 2015) discussed the state of the sector, conceptualised "funder capture" and its role in the sector, and provided some information on the use of outcomes measurement.