Will Australian charities be COVID-19 casualties or partners in recovery? A financial health check

Will Australian charities be COVID-19 casualties or partners in recovery? A financial health check is a report published in June 2020 by Social Ventures Australia (SVA) and the Centre for Social Impact (CSI) that models the potential impact of COVID-19 on the financial health of Australia’s 16,000 registered charities who employ people, to better understand the effects and identify systemic solutions.  

This new modelling has found that without transitional support more than 200,000 jobs could be lost among Australian charities as support like JobKeeper, and lease and loan deferrals come to an end in October.  

There has been great concern about the future of the sector, and the people it supports, given the economic, health and social crises currently unfolding. It will be sometime yet before there is sufficient data to be able determine its full impact. However, decisions made now will strongly affect whether charities are COVID-19 casualties or partners in recovery, and those decisions need to be based on the best available information. SVA and CSI undertook this work to support the discussion as the sector seeks to transform in response to COVID-19.  

Charities deliver vital services and provide wide-spread benefits from their contributions to all aspects of society,  including education, health care, sports and recreation, aged care, religion, arts and culture, animal protection, and environmental protection. These organisations are used to operating efficiently with minimal resources but have little in reserve to transform in the face of a crisis of this scale. The report identifies that this impending ‘October cliff’ could disrupt the provision of services to some of Australia’s most vulnerable people, including those directly affected by the COVID-19 crisis.

This report calls for governments to ensure the resilience and viability of the charity sector through a range of supports, including:  

  • Gradual transition of JobKeeper and other supports to create and ‘ramp’ not a ‘cliff’ in October 
  • One-off Charities Transformation Fund to help organisations transition to the ‘new normal’ including operating online, restructuring etc  
  • Maintain funding for government contracted services delivered by charities to reflect the true cost of delivering services  
  • Retain JobSeeker at higher level to mitigate the increase in service demand while also stimulating the broader economy 
  • Simplify fundraising and philanthropy with nationally consistent fundraising laws 
  • Support research to better understand how to build back the charities sector 

‘We must act on these dire forecasts to ensure communities, people and governments continue to receive life-changing support and services. Charities are the social glue in our communities. Without thriving charities, our productivity and wellbeing is at risk.’  – Suzie Riddell, SVA CEO   

Download report

The report is available for download here.

Response from our sector partners

Many sector partners have welcomed the release of the report. CEO of the The Paul Ramsay Foundation Professor Glyn Davis AC said that Australia’s charitable sector not only provides vital services to the most marginalised and disadvantaged in the community, but the sector is a considerable employer and contributor to the economy.

‘We welcome the recommendations in the report to plan for a gradual transition from JobKeeper and other temporary supports for charities,’ Professor Davis said.

In a media release, Chair of the Community Council of Australia (CCA) Tim Costello said ‘this research confirms charities were doing it tough before COVID-19 and are going to be doing it tough for some time, having to stand down staff, close down services. The projected loss of jobs across the charities sector would have a devastating impact, let alone the loss of all the charitable work that is so vital to so many communities. We are going to need as many charities as possible surviving through this crisis and helping rebuild Australia into the future.  Governments could start by getting rid of pointless wasteful fundraising red tape.  It would cost nothing and benefit many donors’.

CCA CEO David Crosbie said ‘Government concessions to charities in JobKeeper eligibility mean thousands of charity jobs have been saved over the past few months, but we now face a situation where the future viability of one in six charities is in doubt. With the downturn in fundraising, closure of events and meetings, closure of volunteer run shops and other services, loss of fees from training, education and other programs, many charities are already struggling to stay open.  Some charities had been able to move several of their services on-line, but in many cases this has not been possible.  The loss of volunteers has also translated into higher costs at a time when many front-line charities are experiencing higher need.’

The Australian Council of Social Services (ACOSS) Chief Executive Cassandra Goldie said that community sector charities did vital work to help people experiencing disadvantage across the country. ‘While the JobKeeper payment has been welcome, the road to recovery will be long and we must ensure those reaching out for the support of community service charities get the help they need to rebuild their lives,’ Ms Goldie said.

‘The pandemic has increased the need for some services delivered by charities, such as food relief and mental health services. At the same time, the crisis has reduced the revenue and capacity of many organisations, with decreased ­donations and fewer people being able to volunteer.’

Lisa George, Global Head of the Macquarie Group Foundation said ‘While Australian not-for-profits are some of the most productive globally, the report has quantified the real challenges the sector is facing in the current COVID-19 economic climate. We support measures to maintain and build capacity at a time it is needed most and believe the private sector can also play a role in helping not-for-profits adjust to a new normal in areas like the online operating environment. As an organisation, we continue to support our staff in working with the sector during this time and have also allocated $A20 million globally to those working to combat COVID-19 and provide relief to affected communities.’

CSI Chief Executive Professor Kristy Muir said that most charities already run with very tight margins and have little in reserve to fall back on in a crisis. ‘This is about what’s right for Australian society. Governments, philanthropists, business, and and charities need to work in partnership to ensure viability and long-term financial support for the not-for-profit sector so they can deliver on their purpose. While most charities and not-for-profits are creative, agile and efficient, their funding models are often not viable for impact. They are often cross-subsidising, unable to invest in organisational capacity and innovation and were already on very thin margins before COVID-19,’ Professor Muir said.