Peppercorn Services

1. Peppercorn Services Leveraging Investment in Community Services for the City of Hawkesbury

2. Outline • The tyranny of local geography • The ‘wicked problem’ • A response to the challenge • PSI Structure – Model – Outcomes - Benefits • Lessons Learnt • The Only Constant is Change

3. Some context . . . Hawkesbury City Council  Largest LGA in Sydney Metro. Region  North-Western periphery 75% wilderness  A ‘watershed’ - to the south + east urban metro councils; to the west + north rural country councils.

4. Relative Size

5. Relative Populations

6. The ‘Wicked Problem’ • Neither rural or urban - competing for community services with larger adjoining urban councils. • Hawkesbury LGA traditionally served by relatively small and fragmented community-based NGOs • Large not-for-profit (NFP) organisations located outside of the City unable to maintain viable outreach presence (even where funded to do so) – service models are not sympathetic to local geography • Changes in government funding arrangements have favoured larger organisations who have attracted the majority of new funding • The Hawkesbury (as a region) placed at a comparative disadvantage in attracting external investment for locally-based community services

7. The Challenge • find a more successful way to plan and leverage investment in community services to deliver better outcomes for residents • overcome the limitations of a uncompetitive, fragmented + peripheral geography where NGO's may pursue conflicting objectives without reference to each other The Solution? Create an integrated mechanism to - • synchronize city-wide service planning, • build district alliances and partnerships, and  increase capacity to successfully tender for new services

8. Peppercorn Services Inc. • ‘humble’ beginnings – 1999 HCC asked to assume responsibility for local Community Transport Service (due to financial + operational issues). • HCC restructured service - in 2001 established PSI to provide community ‘oversight’. • PSI evolved ‘organically’ - now manages, on Council's behalf, a portfolio of 20 programs across 5 LGAs with 40 staff and total annual expenditures of $3M. • has captured additional $1.5M in new annual funding which otherwise would have gone elsewhere

9. Structure  PSI established as a Board of Management – members appointed on basis of skills + industry experience.  Operates as autonomous entity (at arms length from HCC based ‘Memorandum of Terms of Delegation’).  Constitution provides for prescribed membership with representatives nominated by key local agencies:  Nepean Blue Mountains Local Health District Hawkesbury District Health  Nova Employment Service  Anglicare Community Care Services  Merana Aboriginal Community Association  Hawkesbury Multicultural & Youth Inter-agencies  Hawkesbury Nepean Community Legal Centre  Hawkesbury Seniors Advisory Committee  Hawkesbury City Council (3 staff and 1 Councillor)  + 2 community representatives

10. PSI Governance Model

11. Leveraging Investment 1. through collaboration using the resources, stability and credibility of local government as lead agency - key institutions/stakeholder invited to investigate opportunities for collaboration - allocating (Council and PSI) resources to drive these process;  jointly analysing needs of target populations to achieve consensus on regional response & way forward and feeding this into government planning forums  negotiating formal agreements – roles, governance framework & goals for collaborative partnerships; establishing city-wide service coalitions as vehicles to submit tenders for regional projects.

12. Leveraging Investment 2. using assets transferred to PSI’s control as revenue base to achieve a comparative advantage  PSI uses community buildings as venues for new services so that it can compete with large NGOs.  income generated from reserves used as ‘start-up’ capital’ - changing funding environment requires institutions to outlay funds to place themselves in the position where they can competitively tender.  growth of PSI generates economies of scale required to respond to an increasingly complex, competitive, and commercially driven funding environment.

13. The Peppercorn ‘Model’ A ‘third’ way  a regionally based solutions model which sits between large charities + small NGOs. A re-defined partnership approach  makes best use of the respective strengths of local government, the NFP sector and state/federal agencies – it assembles infrastructure & community planning capability of local government; the flexibility & knowledge of community sector; and the resources of state/federal agencies; A vehicle for social entrepreneurship - meets the challenge of an evolving funding landscape by achieving a sustainable comparative advantage - through: • strategic leadership (for a defined community/geography)  a unity of purpose in the face of complexity • building connections to create better social value • innovation, being pro-active and measured risk-taking

14. The Process • Register Incorporated Association. • Apply for DGR and PBI status from ATO. • Transfer staff from Council to new employer (PSI). • Transfer ELE and unexpended grants. • Delegate Care and Control of Community Facilities • Evolution from internal project management provided by Council staff to appointment of CEO • Negotiate Memorandum of Terms of Delegation

15. Expansion of PSI 2001 - started with 3 externally funded community transport services and 1 community facility 2003 - Community Medical Transport 2005 - Hawkesbury Seniors Centre - Transition to Work Program 2006 - Centre Based Meals Program - Brighter Futures Early Intervention (Family Service) 2007 - Social Enterprise Cleaning Program - Hawkesbury Family Co-op (Community Builders Project) - Forgotten Valley Mobile Resource Unit - South Windsor Family Centre 2008 - Hawkesbury Family Day Care - Richmond Occasional Child Care - Home Lawn & Garden Maintenance Service - Man Made Meals Program 2009 - Community Participation (Disability Service) -WYSH Project (Youth Service)

16. Outcomes • Secured additional recurrent funding of $1.5M - 60% increase in annual community service grant receipts. • created additional social value for residents through funding of new  early intervention family services  supported employ/training for people with disabilities  social support service for older persons  child-care + community services in disadvantaged neighbourhoods  community transport services. • Annual injection of $1.5M in the local economy has been calculated to have generated 28 jobs, and a further $1.47M in flow on effects.

17. Benefits to Council • specialised ‘arms-length’ community services administration with broad industry expertise • cost neutral operations (eliminates cost shifting) • created mechanism for social entrepreneurship (capacity to take calculated financial risks) • infrastructure partnerships - Community Garage, commercial kitchen in Seniors Centre, South Windsor Family Centre • competitive staffing arrangements (PBI) & vehicle for ‘arms length’ philanthropy.

18. Benefits to PSI • ‘cut price’ access to suite of professional services + advice (finance, IT, corporate governance etc.) • effective funding mechanism for service expansion • access to purpose built community facilities • increased opportunities to explore service partnerships within a wider network • Deductible Gift Recipient + Public Benevolent Institution Status

19. Benefits to Community • increased range of services (provided directly and indirectly) • a more responsive vehicle for consumer input • reduced costs of service delivery • using ‘profits’ to deliver subsidised services + new initiatives • regional service development mechanism to address service gaps

20. Lessons Learnt • appointed a skilled CEO much earlier in the piece; • a contestable funding landscape will generate suspicion of Council’s motivation – complaints of empire building etc. Invest time in establishing a formal memorandum of understanding with small NGOs to clarify objectives of PSI model (‘new’ funding is not a zero-sum game); • strong focus on good customer services to offset the negative media of other service providers; • industrially – some antagonism from unions (loss of members to rival unions); • caution as to who to partner with – be the lead agency or pick the right lead agency to collaborate with • ‘innovation’ is hard – particularly in local government

21. The Future • Funding landscape is changing – funding ‘reforms’, NDIS, ‘person centred care’. • Catchment for contracted human services is moving away from local/district level posing challenges and opportunities for future growth. • PSI talking with large community housing provider to establish business structure for regional vehicle to tender for human services across multiple LGAs • Structure based on strong regional roots and proven track record. You need to turn up to not vacate the field to larger charities - charities not necessarily best providers of contracted services .