The Bethanie Group Inc and Community First International provide powerful case studies on how smart not-for-profit groups can meet both commercial and social goals.
COMMUNITY First International has achieved growth that would be the envy of many listed companies.
Over the past six years, it has more than tripled annual revenue to $17.4 million and is projecting further growth to $21 million next year.
With 188 staff, the employment and community services provider has clearly come a long way from its origins in 1984 as a community youth support scheme.
There are many strands to its success, but one that chief executive Clare Allen emphasises is the group’s performance culture.
“The board decided they wanted a new person in the role and wanted to do things differently,” Ms Allen told WA Business News.
“They gave me a mandate to be able to do that.”
Stephen Becsi is another energetic chief executive focused on driving improved performance in his business.
“You need to be business-like so you can meet your social goals,” Mr Becsi said.
His business is The Bethanie Group, a well-established nursing home and retirement home operator that is targeting growth in the affordable housing sector, with plans to spend up to $100 million on capital projects.
“We think that’s where we can deliver real value,” Mr Becsi said.
“Not for profits are more commercial than governments and therefore can deliver more value.”
Ms Allen has a similar view, saying governments may be good at policy but can leave service delivery to others.
“I think we are more cost effective and we are very strongly focused on outcomes. Not for profits are in a great position to deliver these sorts of services,” she said.
Ms Allen also believes that some not-for-profit groups are their own worst enemies because they fail to operate in a sustainable manner.
“We make sure when we fund that we can provide high-quality services at the tendered price,” she said.
“We wouldn’t run a program unless we are at least breaking even.
“There are other not for profits that say: ‘I really want to do that, it fits with our purpose and our philosophy and we want to make a difference, and we’ll do it even if we make a loss’.
“That’s great, but you can’t run all your programs like that, and it gives government an option to take advantage, if you like, of the sector’s good nature.”
Mr Becsi shares this concern, noting that “not for profits are good organisations, they have good-hearted people with all the right intentions”.
His challenge is to harness the good intentions while ensuring the business is run properly.
Mr Becsi brings an interesting resume to his current role, which he started in February following the retirement of Wayne Belcher.
He spent 20 years in the navy, leading up to project management roles, including as business manager of the Anzac frigates project.
He originally joined Bethanie nearly a decade ago, but prior to taking up his current role was seconded back to the navy to run its strategic reform plan, which he said was targeting savings of $2.8 billion.
It may not be immediately apparent to an outsider, but Mr Becsi believes there are major parallels.
“We set up a business environment inside the army, navy and air force. We had to put them on a sustainable business model,” he said.
During his earlier stint at Bethanie, he actually brought in consultants from the military to implement tools such as activity based costing and predictive modelling, to work out the optimum size of nursing homes.
That gave Bethanie a strong business case to start developing larger facilities, from the old days when it had 18 facilities with 21 to 50 beds.
Mr Becsi also believes the project management skills he learned in the navy are transferable.
“The process behind building warships is exactly the same as building hospitals and aged care facilities,” he said.
Ms Allen, by contrast, has worked in the not-for-profit sector for most of her career.
“To be honest I think its easier in the corporate sector than it is here because you’ve got so many competing things you are dealing with,” she said.
“However I make that choice because I know I’m growing a business that is making a difference.”
When she joined Community First six years ago, Ms Allen said the organisation was struggling, with a weak balance sheet and poor service delivery.
To lift its performance, she implemented a ‘business excellence’ framework, built up her leadership team, used her skills in tendering to win new work, and focused on lifting customer service and winning awards to gain recognition.
“My thing is to promote the organisation from the rooftops and at the same time ensure we are an exceptional provider of services,” she said.
“So instead of complaining, we work with government and make sure we deliver against the contracts.”
Ms Allen said that contrasted with her experience with some others in the sector.
“I go to meetings all the time and I hear not-for-profits complaining quite often. They are doing fantastic work but they are often complaining,” she said.
“We go in and we use our data, our knowledge.
‘I think that’s where we’re different, we’re trying to help government to find solutions to really good approaches they want to adopt.”
Ms Allen said Community First ran annual Building Greatness workshops to develop the skills and mindset of its staff.
The work put into coaching and staff development is matched by a strict focus on performance.
“They all have KPIs so they all know they have case loads to manage, they all know they have to achieve results in a certain amount of time and they all need to measure impact,” she said.
“Every single department has a functional business plan that is aligned to the business excellence framework.
“Some people join us because they want to work for a not-for-profit then they realise they have KPIs to meet. Often those people will leave.
“It’s just a matter of getting people to understand the contracts we have and our expectations for success and how we measure that.
“Often not for profits have these nebulous statements that don’t mean anything and you don’t know how to measure it.
“We break that down and say: ‘what do we think success would look like on this program in 12 months?’ And then ask how we measure that.”
Ms Allen believes her staff sees clear performance measures and the delivery of surpluses as a plus.
“Most people are searching for meaning in the workplace. They know that any surpluses we make in the employment services side of the business get fed back into our community services. That helps people appreciate the more commercial side because they recognise the greater good,” she said.
She also believes the organisation has little choice but to focus on performance.
“We know that if we don’t grow, we won’t exist; small not-for-profits will become a thing of the past because governments want to deal with larger players.
“Look at the last Job Services Australia contracts, there were quite a few not-for-profit groups that lost their business.
“That was really sad because we didn’t want our colleagues in the not-for-profit sector to lose their business, but it did happen. We think we were successful because we had high performance and we were very strategic in our approach.”
Mr Becsi believes a growing trend will be for performance measurement to extend from individual staff to the sector as a whole.
Bethanie has anticipated this by adopting a US practice of calculating each year its ‘social contribution’, which means all the ‘extra’ services it delivers or charges it does not levy relative to required levels.
Its social contribution last year was $3.28 million, with the largest component arising from Bethanie having more concessional nursing home beds than is required under legislation.
“I think in time it’s going to go that way. We will need to detail what we are giving back to society in order to get our tax breaks and (salary) packaging benefits,” Mr Becsi said.
