August 05th, 2020
Government subsidies introduced during the COVID-19 health crisis are central to ensuring Australian charities are sufficiently financially healthy to continue their support for the nation’s vulnerable, according to a new report.
The Centre for Social Impact and Social Ventures Australia report identifies six reforms that they believe will help mitigate the threat posed to charities' viability because of the health crisis.
The first step is monitoring the planned scaling down of the JobKeeper package to ensure that charities are supported and that any negative impacts on the broader Australian community are minimized. The report highlights JobKeeper’s importance in helping at-risk charities survive.
The Federal government announced last month changes to the JobKeeper package that preserve the current payment until September 27 which will then be extended into a two-tiered payment system.
The CSI-SVA report reveals just how important JobKeeper has been in keeping many charities alive: 44 per cent of charities are forecast to make an operating loss in September 2021 with the Government’s revised JobKeeper payments, compared to 83 per cent without the subsidy.
“By September 2020, over 1,400 charities who would otherwise have been under threat have potentially had their viability maintained by JobKeeper,’’ the report finds. “By March 2021, over 2,300 of the more than 3,300 charities under threat (approximately 70%) have potentially had their viability maintained under the new JobKeeper arrangements, compared to around 1,800 under the original JobKeeper arrangements.’’
But JobKeeper’s impact is still not adequate to protect 14 per cent of charities who would be at risk or a high risk of becoming unviable by September next year.
“The [JobKeeper] extension…will help many people stay attached to their employer, reducing demand on charities for support. It will also directly support many charities to remain viable and keep their staff. It buys everyone some time to plan the next stage of transformation,’’ the report says.
“But the analysis in this report shows that JobKeeper alone will not be enough to ensure the viability of the charity sector – in too many cases it is only delaying the inevitable. Now is the time to undertake the structural reform that the charity sector needs to thrive. If we don’t, we’re missing a major opportunity to maintain and create employment in fast-growing sectors of the economy.’’
The report, the third in the CSI-SVA’s Partners in Recovery series analyzing the COVID-19 impact on the charity sector, also recommends making fundraising and philanthropy “simpler to encourage increased giving.’’
“Creating nationally consistent fundraising regulations would reduce the red tape burden on charities seeking to fundraise in a changed environment,’’ it says.
Another recommendation urges government to maintain, and if required, increase funding, for contracted services that charities deliver on governments’ behalf.
A key second plank of the report’s recommendation is to build capacity within the charity sector by establishing a Charities Transformation Fund. “Most charities do not have much financial margin or flexible untied funding, and so are unable to invest capacity building and organizational transformation to prepare themselves for the post-crisis world,’’ the report states. The Fund would help with the transition without demanding any extra government financial support.
The report also recommends that keeping JobSeeker (and other payments) at its current level will help moderate the likely increase in demand on charities while also providing economic stimulus. There is also a need to undertake further research to better understand how the charities sector can build back.