One of the state's biggest providers of youth services is facing significant financial challenges in the wake of findings from the child sex abuse royal commission.
YMCA NSW has invested heavily in strengthening child protection procedures since shocking revelations about child sex abuse within the organisation were aired before the royal commission in 2013.
The Royal Commission into Institutional Responses to Child Sexual Abuse re-visited YMCA NSW on Monday to hear what improvements had been made over the past three years.
Tightening child protection procedures has come at a high price for YMCA NSW, the commission heard.
"The cost of reform has been significant and challenged the ability of YMCA NSW to remain solvent," counsel assisting Gail Furness SC said.
"It has also affected the tenders that have been entered into by YMCA and its successes or otherwise."
The organisation's 2015 financial report shows a $2.6 million loss from operations.
YMCA NSW is contracted to run a number of services for 141,000 children including aquatic programs, recreational activities, camps and child care.
The price of contracts has been driven up by YMCA NSW's investment in training, an increase in staff-to-child ratios and a strengthening of oversight mechanisms, following the 2013 inquiry which heard how former Sutherland Shire child care worker Jonathan Lord systematically groomed and abused children in his care for two years without being detected.
YMCA NSW chief executive Phillip Hare resigned in 2014 shortly before a royal commission report found that it was not a safe organisation for children.
New chief executive Leisa Hart told the commission YMCA NSW would not compromise on child safety, even if it meant losing contracts.
In evidence, Ms Hart said YMCA NSW had been unsuccessful in re-tendering for services with councils, including the City of Sydney, because of "cost issues" related to child safety. YMCA NSW has contracts with about 30 councils in the state.
"It is a startling proposition ... that you have adopted appropriate criteria and the cost of that is driving many councils not to be able to acquire that level of service," royal commission chairman Justice Peter McClellan said.
Commissioner Andrew Murray asked whether councils had accepted the proposition that higher staff ratios reduced the risk to child safety.
"I don't think so," Ms Hart replied.
The commission heard YMCA NSW had reported about six allegations of child sexual abuse to the NSW Ombudsman since 2014.
YMCA NSW has established its own redress scheme for people who were sexually abused in the institution and supports the Commonwealth scheme, announced last month,
The royal commission has entered a new phase, reviewing the current polices and procedures of the institutions which have appeared before the inquiry.
Scouts NSW is scheduled to appear on Tuesday and the Salvation Army is scheduled to appear on Wednesday.
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