Highlights from the Australian Charities Report, 9th Edition

Every year, the Australian Charities and Not-For-Profit Commission (ACNC) releases a data-driven analysis of the charities sector based on the Annual Information Statements submitted by charitable organisations within a given reporting period.

The ACNC last week released the 9th Edition Report based on the 2021 reporting period, providing a valuable retrospective analysis of the COVID-19 pandemic on the sector. The methodology was changed this year to include more state-based analysis and comparisons with the 2018 data.

Overall, the ACNC have reported healthy revenue and increase in donations and bequests, notwithstanding increased operating costs and declining rates of those willing to volunteer.

Key statistics

The Report highlights the following key metrics:

  1. As at 8 February 2023 there are 59,967 charities operating in Australia, meaning there is 1 charity for every 433 Australians.
  2. 65% of charities are “small” in size with an annual revenue of under $250,000.
  3. The charity sector is a major employer, employing $1.4 million Australians and representing 10.5% of the total Australian workforce.
  4. 50% of charities are operating with no paid staff.
  5. Volunteer numbers continue to trend down, decreasing by nearly a half a million since the 2018 Report.
  6. Total revenue of the charity sector improved by 7.9% in 2021, rising by $14 billion to $190 billion.
  7. Revenue from charitable donations and bequests rose by 27.2% in 2021, increasing to $13.4 billion in 2021.
  8. Charities are holding three times the amount of assets than liabilities.
  9. 19% of charities are grant-makers.
  10. 5% of charities have deductible gift recipient (DGR) status from the Australian Taxation Office and DGR status is leading to increased donations.

Based on our reading of the metrics, here are some deeper insights and ‘food for thought’ for our charity clients as we continue to face economically uncertain times:

Workforce issues

The Report presents us with the statistic that 50% percent of all charities are operating with no paid staff (nearly 90% for extra small charities) and volunteer numbers have significantly declined (since 2018). However, the charity sector still spent $99 billion on employee expenses in 2021. This suggests to us that charities are operating with less people and with increasing costs of compliance. This is likely to be a major developing theme as we move towards a time of greater economic uncertainty.

It is challenging to rely on volunteers for consistent and reliable support, as they have varying levels of commitment and availability. This will only become more challenging as we will continue to see less people willing to devote their time to unpaid work whilst inflation sores to an all-time high and housing is virtually unaffordable.

Volunteers, for the purposes of Federal workplace laws, receive the same treatment particularly in the context of work health and safety, workplace bullying and harassment claims and public liability/insurance.

As the cost of managing a volunteer workforce rises, charitable organisations will continue to feel the burden of managing these resources in a legally compliant way, whilst ensuring a sustainable and efficient operation that leverages the enthusiasm and dedication of volunteers.

In our experience, many organisations find success by utilising a carefully balanced combination of volunteers and paid staff.

It may be timely to review:

  • your organisation’s workplace policies, removing ambiguities and reducing the potential for issues that arise from managing a contingent workforce;
  • whether volunteer agreements are in place;
  • whether volunteer roles, duties and responsibilities are clearly defined;
  • whether volunteer roles are suitable for fulfillment by an individual who is not financially remunerated for their effort;
  • what contingency plans are in place if your organisation is not able to attract and retain volunteers as the cost-of-living crisis looms; and
  • what is your organisation doing to encourage volunteering?

Economic challenges ahead

Whilst there is no apparent shortage of philanthropic activity in Australia in the 2021 reporting period, charities must continue seeking opportunity for new revenue streams and continue positively leveraging the spirit of giving as much as possible, as it remains to be seen whether the cost-of-living and housing crisis in Australia will harm the strong charity revenue reported by the ACNC.

There are wide reports that Australia is heading towards (or may already be in) another recession. This will create a perfect storm of increased demand for charity and community-based services for the needy and vulnerable, less people volunteering and increasing operating costs.

Financial literacy and management, risk management, innovation and resilience will be critical in this coming period. Have you considered whether:

  • there is a comfortable level of financial literacy across your Board and executive management;
  • risks are being identified and managed appropriately, and the organisation is taking measured risk in order to capitalise on opportunities;
  • your organisation is applying for and winning Government grants;
  • there are more innovative ways to encourage donations and bequests; and
  • the assets and investments of the organisation should be reviewed considering soaring interest rates?

COVID-19 impacts

Of the 2000 charities that reported they ceased operating during the 2021 reporting period, 860 cited the impact of the pandemic as the reason.

According to Australian Taxation Office data included in the Report, about 12,000 charities received JobKeeper payments totalling $7.6 billion. At the peak of pandemic lockdowns, JobKeeper payments to charities supported an estimated 331,000 people in the sector between April 2020 and September 2020.

Unsurprisingly, this data broadly correlates with the charity sector being a major employer.

Key takeaway

Given the data was derived from a period in which Australia was navigating COVID-19 challenges, it is positive to see a continued strong economic contribution from the charity sector and an increase in philanthropy. It will be interesting to view this data in light of the Productivity Commissions’ findings from its Philanthropy Inquiry (draft report due November 2023).

We anticipate the ‘post-COVID recovery’ data beyond 2021 may reveal more sobering statistics about the impacts of the current economy on charities. Having the right expertise within and supporting your organisation will be critical to managing the challenges that lay ahead.

Read and download the full report by the ACNC here.

This publication was authored by Amanda Salama from For Purpose Advisory and is ©For Purpose Advisory. It is for general guidance only and any opinions expressed are the opinions of the author. The content and any links are current as at the date it was published and For Purpose Advisory takes no responsibility for any changes to the links or accuracy of the content.