Charities in crisis: Why we must help the helpers

By Suzie Riddell

June 14, 2021

Charity funding for services doesn’t rise in parallel with demand, and can in fact go down. (Image: Adobe/Halfpoint)

There’s an old saying that you never miss your water ‘til the well runs dry. That’s the worry of Australia’s charities right now.

Through bushfires, floods and the continued setbacks of COVID-19, charities have continued doing what they always do — supporting people in need. And after 18 months of increased demand for their help, many charities are under significant stress. Unlike commercial businesses, charity funding for services doesn’t rise in parallel with demand, and can in fact go down.

Although the economy has bounced back better than anyone anticipated, the research we recently commissioned from ANU with the Brotherhood of St Laurence shows that the removal of the Coronavirus Supplement will trigger a rise in poverty, and subsequently raise demand for crisis services.

Single-parent families have been hit hardest, with child poverty rates expected to go up from 17% to 41% — higher than pre-COVID levels. Want the most impactful preventative policy since seatbelts (or vaccines, for that matter)? Putting more money in the hands of single parents has a profound impact on the wellbeing of their children and a significant economic return over a lifetime.

The relentless draw on our charities is taking a toll and a continuing lack of targeted government support has left many in a tenuous financial situation. You have to ask yourself, who’s helping the helpers? What happens if they run into trouble?

Last month, Social Ventures Australia (SVA) released a report with our partners at the Centre for Social Impact (CSI) that shows charities were already running on very thin financial margins before the pandemic. Now, more than half of the charities surveyed are worried about their financial future.

Many are running down their reserves to try to meet high demand and also can’t raise private capital the way a commercial enterprise can to fund innovation, build new services and upgrade IT systems for online service delivery — even though more than 80% told us that they had to move to a mixed-delivery model during the pandemic.

And despite being the glue that held communities together through the challenges of 2020, charities didn’t rate a single mention in the Federal Treasurer’s speech on Budget night last month. The only mention of not-for-profits was about the Cashflow Boost, which was very welcome, but it finished last year.

This is a much bigger problem than you might think. In Australia, one in 10 employees work for a charity — they run many of our sporting groups, homeless and domestic violence services, religious groups, schools, arts organisations, hospitals, aged care services and local environmental groups. Charities are also more concentrated in sectors that employ larger numbers of women.

 The Budget has allocated more than $20 billion to commercial enterprises in asset write-offs, tax deductions and R&D incentives to encourage them to invest in improving their productivity and smooth the end of JobKeeper. However, none of these measures are of much use to the 16,000 Australian charities that employ more people than the mining and manufacturing sectors combined.

If we can afford these investments for businesses, surely we can modify the mechanisms to make similar investments in charities to take account of their unique structures?

That’s why we designed a model for a Resilient Charities Fund in consultation with dozens of charities, philanthropists and policy experts. Covered in our latest report, the Fund would be a one-time investment of $200 million to $400 million and provide the same kind of supports to charitable organisations as those being offered to businesses.

Investments from the fund would have the same time-limited expenditure, stimulate economic activity and employment, result in the same productivity improvements (though arguably a better impact on gender equity) and improve our collective wellbeing and community resilience to boot. Economic benefit — tick, social benefit — tick, environmental benefit — tick.

 This isn’t a new problem. We’ve been raising the challenges faced by the charities sector since June last year. From the Budget and continued silence from the government, our concerns seem to be falling on deaf ears.

The Budget did make some long overdue and very welcome investments in the caring economy, including aged care, mental health services and domestic and family violence services. But through the Budget, we’ve actually given a leg-up to the commercial operators in all those sectors relative to their not-for-profit peers. Was that the plan?

 There is great innovation and entrepreneurship that stems from our commercial sector. At SVA, we should know — we’re one of the foremost proponents of impact investing, which channels private investment to help solve social problems where it’s appropriate to do so, like in social and affordable housing. But even these opportunities for a social dividend of private investment have been missed, with no response to the recommendations from the Prime Minister’s Social Impact Investing Taskforce chaired by our former CEO, Michael Traill.

 Our charities stand willing and ready to partner with governments and businesses to drive our economic and social recovery and make our communities more resilient, but they need help to make sure they have a strong and vibrant future. By definition, they exist to serve us all — and like SVA, they have a vision for an Australia where all communities and people can thrive.

As most charities go about doing their quiet work that flies beneath the radar, we have to consider that if we don’t help the helpers, we may just find that the next time communities are in dire straits — which, as we’ve seen in Victoria, could be just another quarantine breach away — we’ll go back to the well to discover it’s already run dry.

Hear Suzie Riddell and Professor Kirsty Muir discuss the importance of building resilient charities at the next CSI impact2021 webinar on 22 June. Register here.


At what cost do we let our charities shut their doors?

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