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Merge or Shut Down, Australian Charities Told

11 November 2015 at 12:01 am
Xavier Smerdon
The Not for Profit sector is facing an efficiency dilemma and hundreds of charities should merge or disappear altogether because too many of them are wasting valuable resources competing with each other, the Community Council for Australia has warned.

Xavier Smerdon | 11 November 2015 at 12:01 am


Merge or Shut Down, Australian Charities Told
11 November 2015 at 12:01 am

The Not for Profit sector is facing an efficiency dilemma and hundreds of charities should merge or disappear altogether because too many of them are wasting valuable resources competing with each other, the Community Council for Australia has warned.

CEO of the CCA, David Crosbie, has sent a stark message to charities and Not for Profits to put self interest aside and minimise the duplication that is creating “a significant amount of wasted effort” and negatively affecting the sector.

Crosbie said while many charities were running off the “smell of an oily rag” and relying on volunteers, this frugal approach was not always the best way to save money and serve the community, and collaboration and possible mergers should be a part of future planning for all organisations.

“Self-interest can be a hard thing for charities to put aside, however we are in the business of serving communities, not ourselves,” Crosbie said.

“Charities and Not for Profits serving the same communities may need to work much harder at collaboration and possible merges, not just because it is in their interests but in the interests of the communities they serve.

“Large federated organisations must be able to justify the significant expense of having eight different CEOs, eight different finance and HR teams and eight competing fundraising teams. Smaller organisations may need to consider why they cannot draw on the resources of larger organisations to provide back office and other support.”

In a statement to Pro Bono Australia News, Social Services Minister, Christian Porter, indicated his general support for Crosbie’s message.

“With over 600,000 Not for Profit organisations, the Commonwealth Government supports the sector making decisions around improving efficiency and how best to work together,” Porter said.

“The charities and Not for Profit sector plays a vital role in helping vulnerable and disadvantaged people in society.

“It’s clear the sector delivers important services and that’s why I’m working with all levels of government and the sector to ease the administrative burden.”

The charity regulator, the Australian Charities and Not-for-profits Commission (ACNC), has said that, on average, nine new charities are being registered every day, with Crosbie highlighting that the number of charities in Australia increased by 10 per cent between 2011 and 2014.

A spokesperson for the ACNC said it was up to a charity’s Board to decide if merging was the right move for the organisation.

“The ACNC respects the autonomy of charities and their freedom to determine their own goals and strategies,” the spokesperson said.

“It is a charity’s board members that have ultimate responsibility for running their charity and determining how best they can achieve their charitable purpose.

“Decisions about merging or winding down are strategic decisions for a charity’s board to determine.”

Crosbie said over 80 per cent of the 60,000 registered charities in Australia turn over less than $1 million while collectively they turn over more than $105 billion, and the number of charities in Australia is growing at around 3 per cent a year.

CEO of World Vision, Tim Costello, said the social sector needed to honour the trust the community has given to charities.

“All of us need to ensure we are doing everything possible to provide the best possible services in the best possible way,” Costello said.

“Most people do not care whether it is one kind of organisational structure or another that does the work. They do care whether their money is being used as effectively as possible to address their issue of concern.”

Crosbie said that a much tougher operating environment was putting mergers on the agenda as never before.

“Giving is dropping and the statistics spell that out,” he said.

“Government increases in funding have stalled and that has placed more and more pressure on charities and Not for Profits, as previous growth and funding cannot be guaranteed.

“Since 2008 (the year of the GFC) people have been giving less in terms of average percentage of salary claimed back from the ATO for giving.”

In July this year Not for Profit organisations, Save the Children and Good Beginnings, became two of highest profile charities to merge.

Save the Children CEO, Paul Ronalds, encouraged other charity leaders to follow his lead.

“While I am not suggesting that bigger is always better, I am in no doubt that there are enormous opportunities for improved efficiency and effectiveness in the sector,” Ronalds said.

“This opportunity exists at a time when the pressure on charities couldn’t be greater.

“While once upon a time good intentions were good enough, stakeholders rightly demand that charities are able to clearly demonstrate their impact and value for money.

“In my view, too few sector leaders are challenging themselves to put organisational ego aside and develop structures that are judged on whether they are most effectively achieving their mission.”

CCA said it will be hosting a series of forums across Australia that seek to reduce the number of charities in Australia.

The Collaboration and Mergers Forums will be held in Brisbane, Melbourne, Sydney and Perth over the coming month and are supported by the Myer Foundation, PwC and the ACNC.

On Thursday November 12, Pro Bono Australia is hosting a webinar on MOUs and Mergers with Kate Fazio from Justice Connect.

In an Australian exclusive, World Vision CEO, Tim Costello, CCA CEO, David Crosbie, Save the Children CEO, Paul Ronalds and former Good Beginnings CEO, Jayne Meyer Tucker, have all written articles published by Pro Bono Australia News today on the need for charities to consider merging.

Xavier Smerdon  |  Journalist  |  @XavierSmerdon

Xavier Smerdon is a journalist specialising in the Not for Profit sector. He writes breaking and investigative news articles.

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One comment

  • Neill Hahn says:

    This makes heaps of sense. NFP’s don’t have money to waste on duplicating the management costs of each organization. That would be the main area to merge, with the individual NFP’s outcomes being considered as “projects” of the merged entity.

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