A landmark report has revealed the widening gap between the cost of delivering desperately needed social services to disadvantaged Australians and the funding constraints preventing sector organisations from doing so.

Many community service organisations are under increasing strain as government funding tightens and demand for support rises, according to new research unveiled at the Catholic Social Services Australia national conference.

The findings were presented by Professor David Gilchrist, Director of the University of Western Australia’s Centre for Public Value, who warned that the sector is struggling to deliver services at the quality and scale required to meet community needs.

“The sector is less able to deliver services at the quality and quantity that must be delivered,” Gilchrist told The Community Advocate ahead of the conference. “This results in a reduction of the service mix that is required to meet service needs in the community.”

Gilchrist, who has spent decades researching the economics of human services delivery, said his latest study is the first to examine the issue through the lens of financial sustainability at the organisational level.

“This project is different because rather than looking at population-level data or government-wide perspectives, we've taken seven case studies and looked in much greater depth and detail at the cost of human services delivery for each of them,” he said. “This has not really been done before, and it allows us to step away from looking at these organisations as if they're homogeneous and really focus on each individual case.”

By analysing the financial operations of individual service providers, the study aims to determine whether current cost levels are sustainable, identify what is driving rising expenses, and explore possible ways to mitigate them.

Proposed improvements include reforms to funding and indexation policies and better access to financial data for greater transparency—measures that Gilchrist says would benefit clients, taxpayers, and governments alike.

The study also reveals that some cost increases are emerging in unexpected ways, especially in areas related to operational changes.

“For instance, organisations have traditionally applied for grants to pay capital costs for the purchase of IT,” Gilchrist said. “Whereas now, IT software is mainly subscribed to, and that has a very significant impact on the financial sustainability of these organisations, because that subscription value is not included in the cost of service delivery from a government funder’s perspective.”