OPINION: Not-for-Profit organisations providing for people with disabilities will need to undergo significant change with the introduction of a National Disability Insurance Scheme (NDIS) but are they ready for the challenge?

The NDIS will transfer decisions about how and where to spend money to the individual and their carers rather than the disability service providers.

This new 'citizen-centric' model represents a fundamental shift to the way disability services are funded and delivered that will have implications for the whole Not-for-Profit sector.

Prime Minister Julia Gillard has identified the NDIS as a key Federal Government reform, with details regarding the structure to be announced in the upcoming budget.

It is a reform on the scale of the introduction of Medicare and compulsory superannuation – two safety nets now taken for granted by every Australian.

The current system of disability funding is, according to the Productivity Commission, fragmented, underfunded and unfair, and gives users little choice or voice.

Disability support has been described as "a lottery" because the support people receive depends on how, where and when their disability was acquired.

In the current model the Government provides money via grants and a tender process to charities and service-providers that in turn provide services either for free or at a minimum cost.

With the advent of the NDIS, the Government will move to a model where eligible individuals will be granted a sum of money to allow them to choose the services that best suit their needs.

While some eligible individuals will look for packages of services from one organisation, others will cherry-pick services from a variety of charities and other organisations - services that are not necessarily provided by today's disability service-providers.

In the process Government will not only outsource service provision and choice but also risk.

Currently there is pressure on Government to 'fix' problems. By moving to a model where it 'steers the boat' rather than 'rows the boat' any problems become one step removed.

Disability services that currently receive a large amount of their funding from government will have to rethink part of – or possibly – their whole business model.  In future they will have no guarantee of income.  Instead, funding for a service will need to be on a 'fee for service' basis.

For the disability service-provider big decisions will need to be made about which services the organisation will provide; how they will provide it; at what price; and to whom.

It will mean a move from handling a few contracts usually with Government, to managing many hundreds, perhaps even thousands, of individual contracts.  There will be technology infrastructure impacts, staffing impacts, service impacts.

The NDIS will be phased in so organisations will have time to adapt. However Not-for-Profit organisations need to be thinking now, if they are not already, about the challenges ahead.

Suddenly the contextual changes swirling around the Not-for-Profit sector: the move from outputs to outcomes (measuring not what is being produced but whether it is making a difference); payment for performance; multiple sector partnerships; and funding from outside the NFP sector; are taking on an urgent dimension.

Managing the inevitable tensions of being true to their mission of providing for people with disabilities while needing to be sustainable in a fee-for-service world will be a huge cultural challenge for NFP Boards, Executives and staff.

While the NDIS will create a massive shake up for disability service providers, when the dust settles it is hoped the system that emerges will be one which provides better options and outcomes for those with disabilities and a pathway for other social service providers.

Gina Anderson is Philanthropy Fellow at the Centre for Social Impact, UNSW

This opinion piece first appeared in The Sydney Morning Herald