The COVID-19 challenges for charities are far from over

The government is being urged to invest in a one-off, time-limited Resilient Charities Fund to help the sector get through the pandemic 

While Australia is experiencing a strong economic recovery from COVID-19, major challenges remain for the charity sector, with new research showing JobKeeper has provided only a temporary fix for many charities.        

A report by Social Ventures Australia (SVA) and the Centre for Social Impact (CSI) has surveyed the current landscape for charities amid the ongoing COVID-19 crisis, and found many organisations were in a vulnerable financial position.

The report said while Commonwealth financial support through JobKeeper had undoubtedly helped charities through the initial phase of the pandemic, 41 per cent of eligible charities reported this stimulus represented a temporary fix only.

The recent end of JobKeeper is expected to result in job losses across the sector, with researchers pointing to a Pro Bono News reader poll that found 12 per cent of charities will need to retrench staff when the payment finishes.

Professor Kristy Muir, the CEO of CSI, said the end of JobKeeper came at a time when demand for charitable services was set to rise.

“Despite the fact that the Australian economy has performed much better than expected in the recovery phase of the pandemic, charities continue to be at risk,” Muir said.

“Now that JobKeeper and the JobSeeker coronavirus supplement have ended, more people will be turning to charities for support as they experience a significant loss of income.”

The report said that unlike with commercial businesses, this expected increase in demand would not necessarily lead to an increase in revenue to meet it.

Research in May last year 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.

SVA CEO Suzie Riddell told Pro Bono News that before the bushfires and the COVID pandemic hit, most charities balanced their books every year, but had little in reserve to fall back on.

She said supporting the community though these crises has taken a toll on the sector’s financial viability.

“What we know now is that many charities had pretty thin margins and low reserves coming into the crisis, and many of them have now used those reserves up,” Riddell said.

“So now they’re in a really tough position and asking what can we do next?”

Riddell said given Australia’s excellent recovery from COVID-19, there was now a great opportunity for the federal government to provide tailored support to charities so they can thrive into the future.

The report has outlined six actions that governments can take to support charity resilience: 

1. Continue to provide targeted support to charities facing long-run effects of the pandemic, including ensuring that business support is structured so charities can benefit on an equal footing.
2. Appropriately fund government contracted services delivered by charities.
3. Make fundraising and philanthropy simpler to encourage increased giving.
4. Establish a Resilient Charities Fund to enable charities to invest in capability building and organisational transformation.
5. Support further research to better understand how to build the charities sector back so that it is funded for impact.
6. Meaningfully increase the rate of JobSeeker payment to reduce poverty and financial stress.

Riddell said raising welfare payments to help lessen the pressure on services in the sector was one of the most pressing demands.

She also drew particular attention to the Resilient Charities Fund, a one-off, time-limited fund from government which could be leveraged by philanthropy and allow charities to achieve better outcomes.

The report calls on the government to invest between $200 and $400 million in the fund, which Riddell said was similar to what we’ve seen in other government industry support packages.

“This would allow charities to invest in things like technology upgrades, adapting their business models, and building workforce capability,” she said.

“These are things that they would like to be able to invest in, but they just simply don’t have the income or the balance sheet to be able to do that currently.”

You can see the full report here.