The sector delivers services on behalf of government across a broad spectrum including aged care, children’s services, environment, social services, legal, sport, education and the arts. The sector also provides an opportunity for community and civic participation. As well as organisations providing national or state-wide community services and social welfare, there are thousands of associations with a primarily local focus allowing volunteers to pursue different interests and forms of recreation.

The Victorian Government provides significant funding support to the NFP sector. Government funding of NFPs serves a range of purposes, including meeting specific policy objectives (such as strengthening local communities), funding the delivery of essential community and public services, and encouraging civic participation.

The purpose, level and proportion of government funding vary across organisations. Many organisations exist independently of any government assistance. Sometimes funding is used to purchase services to be delivered by an NFP organisation on behalf of the State, for example, aged care services. In other instances, organisations receive grants for a specific purpose, for example, to contribute towards the costs of a local festival or to upgrade the ICT (information and communication technology) facilities at a Neighbourhood House.

The nature of the funding relationship varies across government. Funding agreements are variously described as ‘contracts’, ‘service agreements’ or ‘grants’. Responsibility for establishing accountability for public funds to NFPs through funding agreements rests with individual departments and agencies.

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