Charities to struggle, even with JobKeeper
4 August 2020 at 8:41 am
JobKeeper will keep charities afloat in the short term, but is it enough?
Around 110,000 charity workers are at risk of becoming unemployed by September, with a further 70,000 potentially losing their jobs by next year, even under the revised JobKeeper payments, new research reveals.
The latest report from Social Ventures Australia (SVA) and the Centre for Social Impact (CSI), released on Tuesday, models the financial impact of the revised JobKeeper arrangements on the charity sector.
Currently, charities that have experienced a 15 per cent reduction in turnover have access to the $1,500 a fortnight government payment. The federal government announced last month however that organisations will need to reapply for the payment at the end of September and again at the start of January if they want to still receive the payment.
The report modelled a fall in revenue over 18 months from the start of the crisis, with a 20 per cent fall for the first six months, then gradually recovering to a 10 per cent fall, including the impact of JobKeeper. It found that 44 per cent of charities would be making an operating loss in September 2021, compared to 83 per cent without JobKeeper.
The report also found that in this scenario, 8 per cent of charities would be non-viable by September, with this figure rising to 17 per cent without JobKeeper. More than 100,000 jobs were also at risk by September, compared to more than 250,000 without JobKeeper.
While the cushion of JobKeeper was promising, the report said it wasn’t enough to “prevent significant damage”, particularly when states such as Victoria were still under strict lockdown conditions.
“14 per cent of charities employing more than 180,000 people – will still be at risk or at high risk of becoming unviable by September 2021 under the new JobKeeper arrangements,” the report said.
“The economic consequences of job losses on this scale would be dramatic, especially in an ongoing recession.”
This latest report is the third instalment in the SVA and CSI “Partners in Recovery” research series, exploring the social and economic contribution charities make to Australian society and how they are affected by service disruption, falling income, rising demand and higher operating costs.
Ensure financial viability of charities so they can continue their economic and social
- Monitor the impact of the JobKeeper ramp-down and adapt it if economic conditions worsen.
- Maintain and, where needed, increase funding for government contracted services delivered by charities.
- Make fundraising and philanthropic giving rules simpler to encourage giving.
Building capacity to improve impact:
- Create a Charities Transformation Fund to transition organisations to the “new normal”.
- Support further research to better understand how to build back the charities sector so that they are funded for impact.
Decrease demand for charity crisis services:
- Retain JobSeeker and other income support payments at a higher level.
Charities worth more than meets the eye
The report also highlighted that the charity sector had a lot to offer economically as well. The sector’s total economic contribution was equivalent to 8.5 per cent of the country’s GDP, and employed 1.3 million people, which sits around the same as retail, and more than the construction and manufacturing industries.
SVA CEO Suzie Riddell said that while people intuitively understood the social role charities played, charities’ economic contribution was often overlooked and underestimated.
“Charities are the unsung heroes of our economy,” Riddell said.
“Charities employ more people than mining and manufacturing and they’re more concentrated in sectors with strong prospects for future job growth like health care, disability services and education.”
She said if the government didn’t act soon, the impacts would be devastating in the long term.
“Our charities give us strength and support when we need it. If governments implement some smart reforms, charities can also boost our economy when it badly needs support,” she said.
A full copy of the report will be released later today.