Revenue challenges squeeze the charity sector

It’s good news and bad news for the Australian charities sector in the latest Australian Charities Report.

Australian registered charities are being squeezed by a fall in “giving” and are operating with less funding from donations from the public, according to the 2017 Australian Charities Report, released in May.

In 2017, $9.9 billion in donations and bequests were made to registered charities a $600 million decrease from 2016. “A drop of close to 6 per cent in public donations is a concerning trend and something that boards of charities need to be taking note of” said Phil Butler, AICD NFP Sector Leader. “For some organisations, this may be a continuing trend which may reflect the drop in trust as measured by the Edelman Trust Barometer over the same time period.”

However, it’s not all bad news for charities, as government funding to the sector rose by $7 billion to $68 billion in 2017, according to the report, published by the Australian Charities and Not-for-Profits Commission.

In another positive sign, volunteer numbers were also up by 400,000 from 2016, sitting at a total of 3.3 million (up from 2.9m in 2016). Other findings of the sector snapshot are as follows:

• There are 57,500 charities registered with the ACNC (this does not include the thousands of NFP organisations which are not charities)
• In 2017, the sector generated total revenue of $146 billion (up from $143b in 2016)
• Government funding to charities was $68 billion in 2017 (up from $61b in 2016)
• 30 per cent of charities report their main activity is religious
• Most charities are small — with annual revenue of less than $250,000 (65%)
• Sixteen per cent of charities are medium-sized
• Nineteen per cent of charities are large
• Just under half of all charities (49%) are operated solely by volunteers.
• Almost 10% of charities (4,567) operate in an overseas location.
• Charities employ 1.26 million staff (37.7 per cent fulltime)
• The top 10 charities by revenue (including reporting groups) account for 13.6% of the sector’s entire revenue.
• The top 50 charities account for 34.4% of the sector’s revenue

The Australian Charities Report 2017 analyses the Annual Information Statements of approximately 47,000 charities — those that were submitted by 13 February 2019. This is the fifth annual charities report that has been published by the ACNC.

Religion and education dominate the sector, as shown by the data below.

NFP sector breakdown

• 30.4% Religion
• 19.7% Education and Research
• 10.9% Social Services
• 8.8% Health
• 8.5% Development and Housing
• 7.7% Philanthropic Intermediaries and Voluntarism Promotion
• 7.4% Culture and recreation
• 3.2% Environment

NDIS Charities

The number of charities that reported they had provided support and/or services funded by the National Disability Insurance Scheme (NDIS) more than doubled from 8 per cent in 2016 to 17 per cent in 2017.

Charities that intended to provide services and support funded by the NDIS in the next reporting period rose from 20 per cent in 2016 to 27 per cent in 2017.

“About 17% of charities that help people with a disability provided services funded by the NDIS in the 2017 reporting period. A further increase is expected as the NDIS continues to roll out across the country,” the report said.