Prepared by Social Ventures Australia and the Centre for Social Impact, this fifth instalment of the Partners in Recovery series highlights the importance of government and philanthropy funding the full costs of charity service delivery to meet demand and support a healthy sector.

Overall, the financial viability of the charity sector appears to have improved during the pandemic. The data shows that a smaller proportion of charities were loss-making in 2021 compared to 2019. Yet while the overall picture is positive, some parts of the sector fared better than others.

Looking ahead, charities face renewed financial pressures from the current economic context – in particular rising inflation, increasing wage costs and staff shortages. These come on top of the structural constraints for the sector highlighted in our previous Partners in Recovery reports,  that remain unchanged and contribute to underlying vulnerability.

The analysis highlights the importance of government and philanthropy funding the full costs of charity service delivery to meet demand and support a healthy sector. Adequate funding to invest in core capabilities is crucial for thriving charities.

The Centre for Social Impact (CSI) and Social Ventures Australia (SVA) began the Partners in Recovery project in 2020. The project aims to help fill a gap in knowledge about the financial state of charities during the COVID-19 crisis, and prompt debate amongst decision makers and within the sector about the policy settings needed to sustain it.