Charities have a key role in the COVID recovery, but what if they aren’t there?
22 July 2020 at 10:20 am
Experts say the unique business structure of charities makes it harder for them to rebound
Charities are in urgent need of tailored support that recognises their unique circumstances if they are going to help service vulnerable communities in the pandemic recovery, new analysis finds.
Released by Social Ventures Australia (SVA) and the Centre for Social Impact, the report said that while charities could play a critical role in the pandemic recovery, many were in a financially precarious state, and were struggling under the weight of increased demand.
The report said that charity’s financial positions were already weak going into the crisis, and that compared to commercial businesses, they were up against different financial, legal and operational constraints, making it harder to bounce back post-pandemic.
Suzie Riddell, the CEO of SVA, told Pro Bono News that for this reason, broad business support packages would not be enough.
“Usually if you see an increase in demand, you would see a proportionate increase in revenue, but most charities don’t have that relationship between demand and revenue at the moment,” Riddell said.
“Charities also can’t easily access the financial resources they need in order to meet additional demand or rebuild quickly. They can’t raise equity when they’re not fit for purpose.”
The report said that without ongoing support, charities would not be able to deliver the services that the community relied on them for, and the costs would be enormous.
“Australia spends $15.2 billion each year because children and young people experience serious issues that require crisis services. We also know that poor educational performance and educational inequity directly affects long-term GDP growth,” the report said.
“Many of these costs are avoidable in future and a strong charities sector will play a significant role.”
Riddell said the decision by the federal government on Wednesday to extend JobKeeper support for large charities that had experienced a 15 per cent drop in revenue (as opposed to 30 per cent for commercial organisations) was positive, but that a greater appreciation for the unique circumstances of charity’s was required.
“I’d like to think that a lot of people who are closely involved with charities will understand there is a real double whammy if we see charities falling over or significantly cutting services,” she said.
“On the one level, we will see more people who are unemployed, and secondly if we cut services from charities, the gap will widen between the demand for those services and the ability of charities to meet that demand.”
It follows a report published last month that found thousands of charities were at risk of closing and more than 200,000 jobs could be lost because of COVID-related financial pressures.