The project’s findings indicate that there are three broad themes that can be addressed to better enable
access to loan finance. These are:
~ The need to reduce the barriers to the demand for loans, primarily through educating sector
participants about the benefits of loan financing and how NGOs can access loans
~ The need to reduce the barriers to the supply of loan finance, to enable traditional and social finance
providers to increase the amount of loan finance that flows to the sector
~ The need for temporary arrangements during the transition to the NDIS, to enable both NGOs and
financial service providers reduce the risks associated with lending during this period.
The recommendations outlined below have been identified to address each of these themes.
Recommendation 1: Develop resources and tools to assist the NGO sector to
understand and better access loan products
Recommendation 1.1: Develop a series of resources for distribution to the sector that support NGOs in
exploring their financing options.
The resources proposed for development during the remainder of the project and post the project’s
completion are outlined below:
Resources for potential development during this project A simple paper that outlines: ~ the loan financing options that are available, in terms of both products and providers ~ the types of information that are generally needed for a loan application ~ an overview of the loan application process ~a checklist to judge the organisations readiness for seeking loan finance. A video scribed animation providing a rapid introduction to loan financing, the loan products and providers available, and how loan financing can be used to support NGO service delivery. Resources for potential development post this project A glossary of common terms used in loan financing, with examples of comparable terms and concepts in common use by the NGO sector. The design of a repeatable workshop aimed at members of NGO management teams and boards that presents: ~ the potential benefits for using loan finance ~ the loan financing options that are available, in terms of both products and providers ~ the types of information that are generally needed for a loan application ~ an overview of the loan application process.
The design of a training workshop aimed at representatives of peak bodies to improve their understanding of loan financing, so as to better enable them to share knowledge with their members. The design and development of a series of short webinars aimed at NGO board members that provide a quick introduction to loan financing, including: ~ the potential benefits for using loan finance ~ the loan financing options that are available, in terms of both products and providers ~ the types of information that are generally needed for a loan application ~ an overview of the loan application process. Supplementary materials for inclusion in ADHC good practice materials regarding loan financing for NGOs. The development of a simple cash flow modelling tool, based on the standard chart of accounts, to assist NGOs in understanding their future cash flows.
Recommendation 1.2: Review and refine resources that have previously been developed to enable
sector capability development to incorporate information regarding the use of loans as part of an NGO’s
financing mix.
Recommendation 1.3: Engage with NGO peak bodies to:
~ establish a program to provide coaching and support to NGO staff to better understand and use the
full functionality of existing finance systems
~ establish a peer network of NGOs to provide advice and share good practice in financial
management across the sector
~ promote the potential for increasing the efficiency of corporate services as a means to reduce
expenditure and enable improvements in cash flows
Recommendation 2: Engage with the financial services sector to promote the
understanding of and opportunities for NGO sector lending
Recommendation 2.1: Develop and publish information on the NGO sector to enable financial service
providers to become better informed about the sector and better judge the risk profiles of investment
opportunities.
Recommendation 2.2: Engage with the financial services sector to:
~ promote greater understanding of the NGO sector and its investment potential
~ encourage an expansion in access to loan products in general, and credit cards in particular as a
pragmatic approach to supporting working capital needs
~ consider the potential for the discounted resale of outstanding NGO loans from commercial financial
service providers to social finance providers, in order to reduce reputational risk and enable
Recommendation 3: Further enable NGOs to successfully transition to new
funding arrangements through additional initiatives
Recommendation 3.1: Collect and disseminate information about the NDIS market as it develops to
better inform sector participants and providers of finance. This should include:
~ data on changes to client behaviour, emerging pricing, and the emerging competitive environment ~ forecasts of what the future market environment will look like in terms of providers, clients and
services, based on emerging trends.
Recommendation 3.2: Undertake the detailed design for and establish a capacity building and working
capital SEDIF style fund to improve access to loan finance during the transition to the NDIS.
Recommendation 3.3: In collaboration with the social finance sector, further investigate and undertake
the detailed design for a temporary and tightly limited guarantee scheme to support NGOs transitioning
to the NDIS and encourage loan financing during this period.