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Funding allocation model

The move from budgeting services to Building Financial Capability created the opportunity to re-think the allocation of funding across New Zealand.

A new funding allocation model was designed in 2015 and 2016 to ensure that funding was invested using a fair, consistent, and transparent approach. PricewaterHouseCoopers (PwC) endorsed the methodology, stating: “the proposed model captures the widest picture of demand when compared with alternatives”.

The evidence-based investment model has ensured that funding is invested in the areas of greatest need. The overall aim was to ensure clients of the same need profile are able to access Building Financial Capability services in every region.

The model uses population-based indicators to express the relative level of need for Building Financial Capability services in each region. This informs the proposed levels of investment across the country at a Community Response Forum (CRF) regional level, ensuring equal availability to Building Financial Capability services for clients with the same need profile.

The following nine indicators were selected out of a total of 46 possible indicators on the basis of research and analysis completed by Community Investment’s Planning and Reporting and Service Development teams.

Population indicators
Number of families earning less than $50,000 per annum
Number of Hardship Emergency Grants, including Special Needs Grants
Māori population from the 2013 census
Number of single parents with dependant child(ren)
Number of families receiving Working for Families Support
Pacific population from the 2013 census
Number of clients receiving an Accommodation Supplement Benefit
Number of people who experienced personal insolvency
Number of people aged 20-24 with no qualifications

A sensitivity analysis was conducted on the model and did not raise any significant concerns about underlying data or framework. PwC agreed stating: “the highest quality available data appears to be used in all cases and clearly cited”.

The final allocation model distributes funding at a CRF regional level. The table below shows the final funding distribution for BFC services, for each full financial year of 'core' service delivery.

Community Response Forum region Building Financial Capability funding
Auckland Central $755,554.92
Auckland North $547,913.80
Auckland South $1,423,352.97
Auckland West $635,046.04
Bay of Plenty $842,368.29
Christchurch $959,526.35
East Coast $600,372.97
Nelson $358,793.61
Northland $534,650.62
Otago $572,861.27
Palmerston North $369,198.63
Taranaki $445,712.08
Waikato $958,299.34
Wellington $996,349.12
Total $10,000,000.00

The largest reductions in funding were in Northland and Bay of Plenty. This reflected the fact that these areas have previously had relative over-investment and service duplication. Both areas continue to have among the highest rates of investment per capita, reflecting the levels of need in that area.

While the model distributed funding at a CRF regional level, the locally run tender panels addressed the targeting of smaller, local communities within CRF regions.

Building on this work, a redesigned purchasing and pricing model was applied to funding in each CRF area. The 2016 model priced the session rate at $95.23 for core services which meant the total budget was divided by this rate to determine the total number of sessions available in each region.

Increases in the unit price

The Wellbeing Budget 2020 provided two areas of additional funding for BFC services:

    • $9.7 million over four years to increase funding for Financial Mentoring, MoneyMates and BFC Plus; and
    • $25.2 million over two years, as part of the Covid Response and Recovery Fund (CRRF) to support BFC providers to be more financially sustainable and respond more readily to increased demand resulting from COVID-19. This funding is for Financial Mentoring, MoneyMates, BFC Plus and microfinance services.

The new session rate for financial mentor and MoneyMates is $170.50 per session. This unit price is applicable to all BFC core contracts until 30 June 2022.

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