A new report calls for urgent reforms to support charities as analysis reveals charities could power a post-COVID economic recovery.
The report, entitled “Taken for Granted? Charities’ role in economic recovery”, comes from Social Ventures Australia (SVA) and the Centre for Social Impact (CSI).
“The financial modelling SVA and CSI has undertaken shows that if JobKeeper ends without additional investments and reforms the sector will still face dire consequences, with more than 40% of charities in operating deficit. The job losses that would result as charities either cut costs to survive or shut down altogether would be in the tens of thousands. Comprehensive reform is required to prevent this from happening,” said SVA Chief Executive Officer, Suzie Riddell,
Total economic contributions of charities and not-for-profits are equivalent to 8.5% of Australia's GDP, and they employ more than one in ten employees in Australia, around 1.3 million people. That’s around the same number of people as retail trade (10% of people employed, the second largest industry after health care and social assistance), and more than the construction (9.2%), professional, scientific and technical services (8.6%) and manufacturing (7.2%) industries.
The report modelled a fall in revenue over 18 months from the start of the crisis – a 20% fall for the first six months, then gradually recovering to a 10% fall – plus the impact of JobKeeper, and found that:
- 44% of charities would be making an operating loss in September 2021, compared to 83% without JobKeeper;
- 8% would be at risk of being unviable by September 2020, compared to 17% without JobKeeper;
- more than 100,000 jobs are at high risk by September 2020 as a result of cost-cutting and organisational closures, compared to more than 250,000 without JobKeeper (while promising, it will not be enough to prevent significant damage); and
- 14% of charities – employing more than 180,000 people – will still be at risk or at high risk of becoming unviable by September 2021 under the planned new JobKeeper arrangements.
“These findings are significant for Australia’s not-for-profit community education providers, and many participated in this research. Our members provide invaluable community assistance and skills training at a crucial moment in economic recovery,” said Dr Don Perlgut, CEO of Community Colleges Australia.
The report calls for an integrated package of six reforms under three directions to support viability of the charity sector:
Ensure financial viability of charities so they can continue their economic and social contribution
- Monitor the impact of the JobKeeper ramp-down and adapt it if economic conditions worsen
- Maintain and, where needed, increase funding for government-contracted services delivered by charities
- Make fundraising and philanthropic giving rules simpler to encourage giving
Building capacity to improve impact
- Create a Charities Transformation Fund to transition organisations to the ‘new normal’
- Support further research to better understand how to build back the charities sector so that they are funded for impact
Decrease demand for charity crisis services
- Retain JobSeeker and other income support payments at a higher level
