No budget relief for challenged charity sector

A financially vulnerable charity sector has found few major Budget initiatives to ameliorate the twin pressures of increased demand and diminished revenue driven by the combined bushfire, floods and pandemic crises of last year.

A new report released earlier this week by Social Ventures Australia and the Centre for Social Impact found that more than half of the nation’s charities faced some form of temporary closure last year, and three-quarters reported that recent events had put a strain on their financial operations. It urged the Federal Government to provide funding to help charities continue supporting Australians and help provide job opportunities.

However, the Federal Budget contained no specific measures to support the charity sector.

SVA CEO Suzie Riddell said despite the sector employing more than one in ten Australians and playing a vital role in supporting communities through the health, environmental and economic challenges of the past 12 months, charities “were not at the forefront of the minds of those who devised the Budget.’’

She said the good news was that the economic downturn was nowhere as bad as had been anticipated and the unemployment rate was well short of last year’s dire predictions. “When the opportunities have arisen, we’ve seen some good policy responses from government,’’ Ms Riddell said. She hailed the Government’s quick response to the sector’s lobbying to include charities in the JobKeeper scheme at the height of the pandemic, which enabled many charities to retain staff. But she said while it was important to see gender as part of the Budget, some of the initiatives would only benefit a small number of women.

CSI CEO Prof Kristy Muir said there were a number of urgent issues that the public had been “loudly calling for that have been a missed opportunity in this Budget.’’

She cited climate change and the environment, the Black Lives Matter movement, the importance of migration and migrants and support for the for-purpose organisations “…who during COVID had increased demands and decreased revenue and who are critical to build the society we want and need for a brighter, cleaner and fairer future.’’

“The emphasis on job creation, addressing aged care quality and safety and women’s safety are strongly welcomed. But we have missed the opportunity for some fundamental shifts to society,’’ Prof Muir wrote in her Budget response. 

The economic recovery is not expected to be even and there will be many Australians, particularly those on the post-pandemic JobSeeker rate, who are likely to find themselves turning to charities for help.

The SVA-CSI report, entitled Vital Support: Building resilient charities to support Australia’s wellbeing, revealed that many social service charities were expecting to see a spike in demand in the second quarter of 2021.

“With JobKeeper, the JobSeeker Coronavirus Supplement and eviction moratoriums ceasing at the end of March, many people will experience decreased income and increased expenses, and charities will be expected to pick up the slack,’’ the report said.

“Unlike commercial businesses, charity funding for services does not rise in parallel with demand. Charity revenue fell during the pandemic, and charities already had lean reserves going in. This leaves them in a precarious position now.’’

For charities themselves, the JobKeeper initiative was a significant help but according to the SVA-CSI report, 40 per cent of eligible charities reported that it was only a temporary fix. The end of the subsidy, combined with other prevailing economic circumstances, are likely to lead some charities retrenching staff or reducing the scale of their operations, the report stated. It also reported that 52 per cent of organisations were worried they would not be able to provide their services in the current economic climate.

The report also included an analysis of the Paul Ramsay Foundation’s sustaining our Partners Taskforce, which worked with 80 social purpose organisations to ensure they built their resilience and remained viable.

“Given the sector’s importance, there is a clear case for government support for the resilience and productivity of the charity sector,’’ the report states. “Given the clear economic and social benefits we all derive from charities, targeted investment in the resilience of the sector is a win-win.’’

The centrepiece of the report’s six recommended actions for government and others to take to support charities is a $200-$400 million one-off investment in a time-limited Resilient Charities Fund to support charities to undertake strategic and operational transformation. “This would help them to develop more impactful and efficient ways to operate in a “with-COVID’ and “post-COVID’ environment, so they can continue to strengthen Australia’s economy and society beyond the immediate recovery,’’ the report says.

Other recommended actions include a ‘meaningful increase’ to the JobSeeker rate to reduce poverty and financial stress; continue targetted support for charities facing on-going effects from the pandemic; and making fundraising and philanthropy simpler to encourage increased giving.

Ms Riddell said there would be on-going engagement with the Federal Government about resilience funding. The NSW Government has already announced its support for the sector with the establishment of the $50 million Social Sector Transformation Fund in November last year. The NSW Treasurer Dominic Perrottet said at the time: “Community services organisations were hit hard by the pandemic’s pressures of weaker donations, increased demand and the challenge and cost of delivering COVID-safe devices. This fund will support these organisations, and the tens-of-thousands of people they employ, by giving them a hand during this challenging and uncertain time.’’

The SVA-CSI report is the fourth in the Partners in Recovery project.

CSI’s Pulse Survey, which was used as a source for some of the report’s analysis, is currently seeking responses from the for-purpose sector for its second wave of research investigating the needs of charities, not-for-profit organisations, philanthropy, social enterprises and businesses. Members of the sector are encouraged to complete the survey here.

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