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Funding and contracting options

Skip Navigation LinksThe Funding Reform Funding and Contracting

 The Delivering Community Services in Partnership Policy provides for four different ways in which to fund or contract community services. This set of fact-sheets will attempt to explain this further, and look at ways in which community service organisations can take advantage of each form of funding or contracting. Grants and flexible arrangements are considered funding options, and service agreements and commercial contracts are considered contracting options.


A grant is the traditional mechanism through which government provides funds to community service organisations. It is the provision of an amount of money (often smaller amounts, but there have been grants upwards of $1 million) with a reporting and acquittal structure, but these reporting requirements are not usually onerous. Beyond providing the funds, the funding agency does not often require any further involvement in the project. Through the DCSP Policy, a large amount of funds (we are not yet sure how much) that were previously provided as grants will now be provided through service agreements. This is because grants are meant to be used as once off funds to seed projects, or to encourage work in a particular area. For ongoing arrangements, service agreements are more secure and stable, and therefore require greater accountability.

Flexible Arrangements

Flexible arrangements are probably the least defined aspect of this part of the policy. Flexible arrangements appear to include loans and potentially other arrangements for funding of special projects or pilots that do not involve a service contract, or do not fall into the ‘grants’ category. This is an area that WACOSS has interest in investigating further to identify funding opportunities for community service organisations.

Service Agreements

Service agreements are the end product of a process of collaboration and negotiation between a funding agency and a preferred service provider. Service agreements run between 3-5 years and should include a full costing of services based on agreed outcomes, and a process for evaluation of and reporting on service outcomes.

Commercial Contracts (ie tender, purchasing)

Lastly, government agencies can put services out to a competitive tender or purchase services under a certain amount through the DCSP Policy. When requests for tender are released under the DCSP Policy, not-for-profits are deemed preferred suppliers. For tender requests that are outside the DCSP Policy though, not-for-profit organisations do not have this preferred status.

To review factsheets on the different funding and contracting options, please go back to What does it mean for me? - page or if you would like to know more about grant funding, click here.

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