Do I need a Needs Analysis?


The Government is responsible for administering taxpayer funding in the interest of the community, which is why they often require a Needs Analysis to demonstrate how grant funding will address a community or business issue.


Grant application rounds are becoming more and more competitive, so it is critical that organisations plan their grant application, and undertake the work needed to ensure the application stands out from the rest.

A Needs Analysis is a formal process of collecting objective data on the needs of a particular region, group or industry, and proving how a project or initiative will address those needs in a cost-effective manner.

Data can include quantitative data (facts such as statistics, independent models or case studies) and qualitative data (community or market surveys, stakeholder consultations).

A Needs Analysis is not about establishing the needs of your organisation. This is a common trap some organisations fall into when preparing grant applications: “If we had X infrastructure, we could provide Y service”.

Governments are not directly interested in funding your needs, but how your organisation can address community or economic needs.

The use of reliable and independent data is therefore critical. We can all point to ‘needs’ in our community, business or industry, but Governments require objective evidence to prove that the need you have identified actually exists, and that the solution you are proposing will address the need cost-effectively.

A Needs Analysis is also an important due diligence tool for organisations and businesses wanting to establish that the investment of time and energy required by a project is warranted, and that it will advance the organisations’ strategic objectives.

The first stage of a Needs Analysis is to identify the specific needs of a region, group, community or industry. For example:

  • poor access to services, or poor utilisation of existing services, that adversely impact health, educational opportunity or social participation;

  • bottlenecks in supply chains that increase the cost of business;

  • regulatory requirements that are unnecessary and add to the cost of doing business;

  • low take up of educational opportunities resulting in skills shortages that undermines business growth and increase social exclusion;

  • environmental issues that reduce biodiversity and contribute to loss of species important for agricultural productivity.

An evidence-based Needs Analysis should not only demonstrate the existing need, but how inaction in addressing that need may change the scale of the problems over time. For example, problems with access to aged care services may be shown to increase by referring to demographic projections data that prove that the aged population will increase over time.

A Needs Analysis should, where relevant, demonstrate how the proposal advances Government policy priorities and can reduce the cost to Government in the long-term. For example, a Needs Analysis about poor access to primary health care services might use data to show how this contributed to increased levels of chronic disease and preventable hospitalisations, which in turn increases the cost to Government.

A business preparing a Needs Analysis on transport blockages may use data to demonstrate how inadequate road infrastructure costs the economy in lost export opportunity and taxation revenues.

When using data, it is important to understand what data sources are reliable and credible. Data from Government sources can generally be relied upon, but may require careful selection. For example, when using different population projections it is generally advisable to use the mid-range projections, rather than the high-range, so you proposal is seen as conservative.

Some economic modelling techniques may not be suitable if they rely on questionable assumptions about how things will change in the future, or if they are not done by organisations that have an established reputation with Government.

Once you have established the need, you then need to demonstrate that the proposed project, initiative, infrastructure or strategy will actually addresses the existing or emerging need. This requires an objective and evidence-based approach to prove that the solution you are proposing will work.

In this stage, it is important to be able to demonstrate why your business or organisation is the right one to deliver the solution. This requires you to demonstrate that the initiative is clearly aligned to your organisational mission, objectives and capability. It may require evidence of similar initiatives or services you have managed in the past, your success rate, and how your existing capabilities can be adapted to deliver the project successfully.

To show that your solution will address both current and future needs, you might provide examples of similar programs that have successfully addressed the problem elsewhere. However, if you use case studies, you need to show why the same approach will work locally. You cannot just assume that a program that works in one region will work the same way in another.

This could be done by commissioning an independent survey of potential users to show that they would be likely to use the proposed service or infrastructure if it was available in the form you are proposing locally, or using data to show that the characteristics of the two regions are similar.

It’s very important to be able to demonstrate that your solution will be sustainable over time. Many grant applications are good at showing how particular infrastructure or a new service will provide a solution to current needs, but do not show how it will scale to address any changes in those needs over time as business activity changes, populations grow or decline, or community expectations change.

Governments want to know that their investment will continue to deliver a good return into the future.

In an increasingly competitive environment, an effective Needs Analysis is an important tool in showing that your organisation understands the issues that you are addressing, and has the knowledge and expertise to deliver a sustainable solution.

For more information of preparing a Needs Analysis, please contact WRI team@wri.org.au.

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