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Why Australia needs to rethink the debate on charities

For the first time in Australian history we have a picture of the size, complexity and contribution of the charitable sector. It shows clearly that it is time to rethink the national discussion regarding this incredibly important sector.

Curtin University’s report — Australian Charities 2013 — published in last month is based on our analysis of the Annual Information Statement data provided by charities to the Australian Charities and Not-for-profits Commission for the 2013 financial year. It also includes analysis of Australian Taxation Office data from charity Business Activity Statements lodged during the same period. As such, it is the first comprehensive view of the sector.

The data highlights that the sector is extremely diverse and incredibly economically important. It shows that the sector turned over around $100 billion during the 2013 financial year and employed almost 1 million people. Indeed, the sector employs more people than the mining, the automotive and the agricultural industries put together, and is able to leverage 2 million volunteers.

While the turnover reported is significant by any definition, the income of the sector reported is very much a low estimate as the data reviewed did not include donations and a number of other income sources that are not captured by the BAS form. Additionally, the report considers charities only and so any consideration of the broader not-for-profit sector (of which the charitable sector is a subset) will almost certainly mean the income of the sector will be considerably in excess of the $100 billion reported.

[pullquote] “The sector is so economically important that we should be considering the economic impact of social policy …” [/pullquote]

The analysis identifies many issues and elements for consideration. However, in terms of the most common theme, there is no doubt that the findings mean that we need to reset the debate surrounding charities in Australia.

The sector is so economically important that we should be considering the economic impact of social policy, including policy aimed at funding reductions, and increased for-profit participation in the activities of the sector. We also need to understand that the sector has invested over decades in infrastructure and intellectual capital such that it is able to quickly and effectively deploy resources, including volunteers, where they are needed. Indeed, 20% of large charities operate outside of their home state.

Importantly, there appears little pragmatic economic reasoning supporting the wholesale replacement of charitable operators providing services by for-profit organisations or that supports the often discussed consolidation of the sector — regardless of the ideology, the sector has already invested heavily and cannot be easily or effectively replaced. It can deploy the time and effort of 2 million volunteers, and it understands the needs of those who it serves as a result of decades of experience, trial and error.

Indeed, the governments of Australia need to rethink their perceptions of the sector and consider the fact that the sector is an incredibly important asset to them and the Australian community.

More at The Mandarin: Uncharitable cut? Aust’s not-for-profits regulator stands tough

Author Bio

David Gilchrist

David Gilchrist is a professor of accounting at University of Western Australia, a chartered accountant and an economic historian. He was foundation director of the Curtin Not-for-profit Initiative, and is a member of the Australian Charities and Not-for-profits Commission Advisory Board and of the Australian Accounting Standards Board Academic Advisory Panel. In his work, David has advised a number of Australian governments and authorities relating to human services governance, sustainability, accountability and strategy, most recently related to the NDIS.