Assessing the Financial Vulnerability of Not-for-Profit Organisations in the Australian Aged Care Sector

Abstract

This study addresses the measurement of financial vulnerability (FV) of aged care non-profit organisations (NFPs) in Australia by creating a revised multi-dimensional framework and the development of an FV index and FV scores. In addition to its methodological contribution, the study assesses the extent of FV faced by aged care NFPs, using annual reporting data collected from 200 organisations in the period from 2017 to 2019. The results suggest aged care NFPs hold a limited capacity to withstand financial shocks and provide an alarming message on the high level of FV risks faced by all NFPs. This study contributes to the literature in several ways: (1) by examining the conceptual and empirical disjuncture among the dimensions developed for measuring financial health in the NFP sector; (2) by providing evidence to the limited literature on measuring the extent of FV in the NFP sector, especially as related to the Australian aged care sector; and (3) by extending the literature on the risk associated with outsourcing public sector service delivery. Consequently, the study provides new insights to allow the Australian government to identify potential risks associated with outsourced government service delivery.  

DOI: http://doi.org/10.31357/fhss/vjhss.v08i02.12