Private sector threat

Private Sector Threat

The Private Sector Threat to the not-for-profit sector, particularly in the disability area has begun to surface.  It may only be a small example, but the threat is real.  It was reported in the Australian Newspaper earlier this week how a conference organising company is charging $5000 to attend events about the rollout of the National Disability Insurance Scheme or Disability Care Australia as it has been renamed.  They are praying on an opportunity to make money – there is nothing wrong with this, it is a question of market opportunities.

While this is a small example of the private sector threat, the broader not-for-profit sector must take it is a warning of what is to come.  Market forces are going to change the sector and many organisations will not survive unless they change.

Using the Disability sector as an example, until recently the majority of families looking after someone with a disability did not have any real disposable income.  They were restricted to using the services they could get their family member into that were largely funded by the government.  As Disability Care rolls out, it brings with it a person centred approach.  That means families are given the funding and the choice of where to spend it.  The balance of power has shifted.  The Private sector can now see this area is going to be flooded with cashed up families.  There is an opportunity for them to grab a slice of a very significant pie.

Imagine you are entrepreneur looking for business opportunities.  You see there are thousands of families who are going to be given thousands of dollars to spend each year.  What you then think is, if I hire the best staff (because charities will not be able to compete with the salaries the private sector can offer) and open the best facility – I can charge more and make large amounts of money.  Let’s face it, which family would not want to choose the best of everything?

It’s easy enough to say people should boycott a simple conference, but how much traction will it get when the private sector really enters the market?

The Private Sector Threat is no longer a mythical wait and see, it is here.  The not-for-profit sector must adapt its structures, models and marketing quickly.  If every dollar of funding from families, government and donors is basically spent on service provision – they will fail.  If staff are not being paid as well as they can earn in the private sector, they will lose them.  Communication with all your stakeholder audiences is becoming more critical.  It must be consistent, two-way, professional and ongoing, otherwise the organisation will fail.

Families will not be concerned about the private sector threat because they want the best for their families.  In theory not-for-profits should be able to block this private sector threat, by virtue of not having to charge as much for their services, because their income can be compensated by donations.  However, without effective structures, looking after staff and marketing to the community so people know what they are doing they will lose the advantage.

I say all this now, not for the sake of being an alarmist, but to stir organisations into action.  It’s no longer a time to say we don’t spend money on communications and marketing.  Organisations can not afford to think they can do it themselves or with a junior or a part-time person.  I established CommTogether to provide an affordable solution.  There is no other agency offering this unique opportunity.