'We need to know what went wrong': shock as service goes bust

The not-for-profit organisation went bust after three decades as a neighbourhood centre that provided food relief, services for young people, parenting programs, disability support and a central hub where Lake Macquarie's most disadvantaged always felt welcome.

In a Facebook post earlier this month, the organisation announced it had to close due to "escalating costs" and a "lack of funding", despite the Department of Communities and Justice (DCJ) providing just over $320,000 in funds each year.

Mr Piper said board members raised concerns about funds with him late last year, and although they were secured, he was told the service would wind up this month.

"There were obviously deeper problems ... so that was very concerning," he said.

"My staff have spoken to DCJ people who have said there were some significant problems with the finances, I don't know how critical they were but enough that the board felt they couldn't trade out of it."

The Newcastle Herald understands staff at the service were let go and were not given certainty that their entitlements, like annual leave, would be paid out.

However, SCS board president Amanda Howard said all staff entitlements owed would be covered.

She said the service closed due to escalating costs and administrative burdens, which weren't matched with increased funding and income.

"We have tried to keep services going for as long as we could, but the time and admin burden on a volunteer board who are all already over committed with caring, community and work responsibilities has just become too much," she said.

"This is a bigger issue for small local organisations all over NSW.

"The whole system relies on fabulous staff such as the SCS team going above and beyond what they were paid and volunteers on the board and at the centre increasingly taking up the challenge of supporting local people in need using their own time and resources."

Mr Piper told the Herald he was aware of possible issues with employee entitlements and said if that's the case, it's "unacceptable".

"It's not acceptable for people working in community service to then find that they've been the ones who are left out, who are dudded by the system," he said.

"This is why I'm so concerned, because SCS has been such a reliable operator for so long, I'd be very upset if their employees were stranded in that sense and I will certainly be pursuing that if that's the case."

The Herald understands that in early November 2023, SCS had asked DCJ for an extension in providing their annual accountability requirements that were due at the end of October.

An extension was granted, however, the financial statements provided by Southlake did not comply with requirements and DCJ staff met with SCS staff to talk about the organisation's financial viability.

Nine days later, DCJ wrote to the board formally requesting the financial accountability documents and a plan for financial recovery, and on January 7, were told SCS intended to shut down two days later and liquidate the organisation as of February.

According to publicly available information on the Australian Charities and Not-for-Profits Commission website, SCS has not yet submitted its Annual Information Statement (AIS) for 2023, which is due at the end of the month and its financial report is pending.

Data from its 2022 AIS shows total revenue sat at $1.14 million, $443,057 of which came from 'other revenue', $380,755 from providing goods and services, $305,348 from government including grants and $15,404 in donations.

The organisation's total expenses came to almost $1.3 million, meaning it was about $154,000 in the red.

From July 2021 to June 2022, the organisation employed seven people part-time, seven on a casual basis and was estimated to have 20 volunteers.

A DCJ spokeswoman said Southlake notified them on January 7 that they intended to cease service delivery.

"DCJ has been working urgently since that time to secure a new provider for the services it funded, to ensure there is minimal disruption for clients," she said.

"DCJ has been working closely with Lake Macquarie council and other local stakeholders to ensure young people and families are supported throughout this period.

"We are committed to ensuring service delivery is resumed as soon as possible."

Ms Howard said the board is working with the local council and DCJ to ensure services continue from Morisset and she is hopeful it can happen with another organisation.

"This process is underway," she said.

"It has been a really sad time for staff, the board, volunteers and people using services at SCS but unfortunately the service model has become financially unsustainable."

The weekly playgroup offered a cost-effective way for parents like Cooranbong resident Amber Monzavi to connect, now, she's had to look at more expensive options that aren't feasible for every family.

"I found out through the Facebook pages first and I was sad to hear that, as it is one playgroup I do recommend to parents in my area," she said.

"As we had been going regularly we got to connect and meet with other regular parents weekly which was nice."

Mr Piper said he's hopeful another provider might step in to fill the gap.

"I think it will be a great loss to the area, but I'm very hopeful and I'm quite confident that it will be salvaged, I'm really hoping that's the case," he said.

"Maybe not with the same people, maybe not the exact same structure, but I think council, DCJ and other operators in that space know how valuable it is.

"I'm hoping we can get someone in there relatively soon but we need to get it right, and we need to know what went wrong."

SCS also managed the Morisset Multipurpose Centre on behalf of Lake Macquarie City Council (LMCC), a task which has been taken over by NovaCare in the interim.

A council spokesman said it became aware SCS had gone into liquidation on January 9.

"It is council's understanding that DCJ are looking to reallocate the funds to an alternative organisation to enable the continuation of services for the local community," he said.

"NovaCare will manage bookings for the next six months and LMCC will undertake an EOI for a new lessee to continue to provide the services."