COVID-19 – Challenges facing the not-for-profit sector in Australia
2 April 2020 at 7:45 am
There has been a lot of commentary on the potential impacts of coronavirus on health, businesses and the economy, but what does all this mean for Australian charities and the millions of people who rely on these services?
The not-for-profit sector has experienced no shortage of challenges over the past six months. The extreme drought, bushfires and floods have all significantly impacted fundraising efforts of Australian charities, and now coronavirus threatens potential workforce shortages and further funding cuts as the economy slows.
For most not for profits, people are the key resource required to deliver services. The response to the coronavirus as mandated by federal and state governments is forcing people to remain at home and minimise contact with others which will impact service delivery. Not for profits also rely heavily on volunteers, so there will likely be a decrease in volunteer availability.
The funding landscape for Australian charities has changed dramatically, with the introduction of the National Disability Insurance Scheme (NDIS) and transition of services to organisations which were previously administered by government. Impacts of these changes include the requirement for not for profits to deliver the same or increased services to their clients, with the same or decreased level of funding, which has forced organisations to restructure their operations and reduce their costs. One of the biggest impacts of the coronavirus, amongst other factors, will be the weakening of the Australian economy.
These threats cannot be understated and below we go into more detail and highlight steps that can be taken to proactively respond to these threats.
What action can be taken now?
The challenges faced by the not-for-profit sector are unique. Here are a few issues which we recommend you review:
1. Current trading and cash flow position
Knowing exactly where your organisation stands in terms of trading and cash flow is vital in understanding how future uncertainties may impact your organisation, and what levers your organisation can pull in order to respond.
Organisations must review cash reserves and understand what amounts are tied to grants and what amounts can be drawn upon if required. A detailed understanding of expenses in the business is critical, so decisions can be made on where to adjust spending to improve the forecast cash position.
2. Funding agreements
Some funding agreements stipulate outcomes for the number of participants and these might not be met during a health crisis. Other funding sources not for profits count on, like sponsorships and donations, may be at risk if programs or fundraising events are cancelled or postponed, or if the stock market continues to wreak havoc on investments. There are serious implications for not for profits and charities if government and non-government funders and donors back off during this time or reinforce expectations for outcomes or outputs which will not be manageable or even possible.
Ensure you have open lines of communication with funders, grant makers and sponsors.
3. Employees and volunteers
The current situation is filled with uncertainty, so employees and volunteers are likely to be apprehensive in relation to both the impact on their everyday personal life as well as on their employment. Ensure you have strong open communication that is delivered in a calm, consistent, clear manner. In these times of uncertainty, encourage your team to talk about how they are feeling with each other, loved ones and/or professionals.
Ensure that volunteers and paid employees are aware of all relevant policies and procedures. Where possible employees must work remotely. Remote work isn’t possible for all not for profits. But for those where it is feasible, making this adjustment as effective as possible can help provide comfort to your employees that they can continue working without needing to draw on their leave.
If employees are working remotely or are indeed confined at home, it is important that they do not feel alone and isolated. Make sure to keep in contact and use online communication tools for conference calls and online webinars including:
- Skype (free to download)
- Google Hangouts Premium (free through to 1 July 2020)
- Microsoft Teams (free for six months)
- GoToMeeting (remote work tools are free for three months).
4. Look for opportunities
Every crisis creates opportunity. Spend time mitigating risk and analysing opportunity.
Are there any opportunities for your service that – with some repurposing – could provide a new service to meet a new need in the current conditions (or based on conditions getting worse).
The real impact of the recent disasters and now COVID-19 may be more charities facing non-existence. Now is the time to collaborate and partner to support each other.
Please visit our Covid-19 Resource Centre here for all the updated information on stimulus packages and tax changes.
Please feel free to contact me directly if you have any questions:
Head of clients and markets
P: 02 9020 4285