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

Unemployment Charities Economic modelling Not for profit sector Australia

This report models the potential impact on the financial health of Australia’s 16,000 registered charities with employees (excluding those run purely by volunteers) to better understand the effects and identify systemic solutions.

Charities strengthen the fabric and functioning of Australia’s society and economy with wide-spread benefits to education, health care, sports and recreation, aged care, religion, arts and culture, animal protection, and environmental protection. As a community, we especially rely on charities during crisis. Charities also employ 1 in 10 of our workforce. Stronger charities will be well positioned to support the community, accelerating our collective recovery. But weakened charities, forced to cut jobs and services, will compound the collective challenges we face.

Due to pre-existing funding issues, an increasing demand for services during the COVID-19 pandemic and subsequent economic downturn, charities are facing an increase in delivery costs and struggling to secure funding to adapt to this new environment.

Main recommendations:

  • Plan for a gradual transition of JobKeeper and other temporary supports for charities to create a ‘ramp’ not a ‘cliff’ in October, including temporary extensions of funding in sub-sectors facing long recovery times.
  • Create a one-off Charities Transformation Fund to help organisations transition to the ‘new normal’ including operating online, restructuring their organisation and investing in the capability of staff.
  • Maintain and, where needed, increase funding for government contracted services delivered by charities to reflect the true cost of delivering services for impact and meeting increased demand, particularly given the sensitivity of the sector to changes in government funding.
  • Retain JobSeeker at a higher level (do not revert to previous Newstart amounts) to mitigate the increase in service demand on charities while also stimulating the broader economy.
  • Make fundraising and philanthropy simpler by creating nationally consistent fundraising laws and offering incentives to encourage increased philanthropic giving.
  • Support further research to better understand how to build back the charities sector so that it is funded for impact.
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