'Charities don't want to be casualties of the COVID crisis': NFPs facing a dire financial future

Analysis shows almost one in five Aussie charities could be at high risk of closing their doors within six months  

More than 200,000 charity workers could lose their jobs if COVID-19 financial supports are not extended, a new report warns.

Social Ventures Australia (SVA) and the Centre for Social Impact (CSI) modeled a 20 per cent revenue cut to the charity sector – to simulate the impact of the current economic crisis – and found this would cause 88 per cent of charities to immediately make an operating loss.

This would put 17 per cent of charities at high risk of becoming unviable and shutting down within six months.

SVA CEO Suzie Riddell said hundreds of thousands of charity sector jobs will be lost without further support for NFPs.

“Our financial analysis shows that thousands of charities are at risk of closing and more than 200,000 jobs [could be] lost at a time when we should be pump-priming charities to aid the recovery,” Riddell said.

“Charities provide services that people, communities and government rely on. They are the social glue in our communities. Without thriving charities, our productivity and wellbeing is at risk.”

While the JobKeeper Payment has helped keep the sector afloat for now, advocates fear an “October cliff” is coming when JobKeeper and other government supports are slated to end.

Riddell told Pro Bono News the looming support cuts came at a time when demand for services was set to soar.  

“SVA has spoken with many charity leaders who are really worried for their organisations because they really can’t see a path forward to be able to achieve the impacts that they want to,” she said.

“Australia’s charities don’t want to be casualties of the COVID crisis.

“They want to be partners in the recovery and be able to meet that need so they can not just survive, but thrive.”

Research last month found that while 44 per cent of charities have experienced increased demand for services during the coronavirus crisis, just 4 per cent have been able to increase revenue.

CSI CEO Professor Kristy Muir said most charities already ran with very tight margins and had little in reserve to fall back on during a crisis, which is why sustainable financial models were needed to aid the sector.

She said governments, philanthropists, business, and charities must work in partnership to ensure the sector’s long-term viability.

“For Australia to thrive, charities need financially viable business models (not just revenue growth) in the recovery phase and into the future,” Muir said.

“This impending crisis of an ‘October cliff’ could disrupt the provision of services to some of Australia’s most vulnerable, including those directly affected by the COVID crisis.”

The report calls for the government to protect the sector by planning for a gradual transition of JobKeeper and other temporary supports – to create a “ramp” not a “cliff” in October.

It said a one-off Charities Transformation Fund is needed to help NFPs transition to the new realities of operating online, restructuring their organisation and investing in the capability of staff. 

The report also repeated sector pleas for nationally consistent fundraising laws and new incentives to encourage increased philanthropic support – at a time when giving is estimated to fall by almost 20 per cent.

Community Council for Australia chair Reverend Tim Costello said while this report highlighted how many jobs were at risk, the issue was much more wide-ranging.

“The charities sector is essential to create stronger communities. They advocate and support the needs of Australians,” Costello said.

“If the role of charities is diminished, it will heavily impact our communities.”