‘Charities adapt to changing circumstances’ 

The Australian Charities and Not-for-profits Commission recently released its 9th Australian Charities Report, an annual analysis of the size and scope of the sector. It also illustrates the sector’s contribution to the Australian economy and to communities. It was the first for Commissioner Sue Woodward AM. Here, she reflects on some of the key findings of the report and the outlook for the sector. 

1. The ACNC reviewed its approach, purpose and data analysis for its 9^th report. What was the focus of the review and why is accurate and comprehensive data becoming increasingly important to illustrating activities and outputs of the charities sector? 

We sought feedback from stakeholders who are key users of the report to gain insight into their thoughts on how we could improve the content and layout. Accurate data is critical to provide a clear picture of the diversity and contribution of charities to communities and the economy, as well as to support trust and confidence in the charity register. The data in the Australian Charities Report is rich, and through the Charity Data Explorer, it can be sliced and diced in many ways, to gain insights into different kinds of charities and sector trends to inform policy discussion. For those who would like to donate or grant money, or volunteer their time, it provides a strong foundation to help make informed decisions.    

2. The ACNC’s Australian Charities Report included a section on philanthropy for the first time in light of the Productivity Commission review, showing that nearly one fifth of registered charities are grantmakers. What main developments do you hope will come out of the PC report for the sector? 

We recognise that increasing philanthropy is a lever to supporting the sustainability of the charity sector. We included the section on philanthropy in the Australian Charities Report to aid public understanding of giving and philanthropy and to inform the Productivity Commission Philanthropy Inquiry review. We also made a submission to the Inquiry, focusing on some of the challenges we have identified through our regulatory work.   

The Inquiry is a national conversation with significant implications for the charity sector as it can identify barriers and opportunities to grow philanthropic giving, providing a pathway to help achieve the government’s objective to double philanthropic giving by 2030. The ACNC looks forward to supporting the outcomes of the Inquiry, in line with our object to support a robust, vibrant, independent and innovative not-for-profit sector 

3. Figures in ACNC’s report indicated that grants and distributions by charities for use in Australia has increased 5% to $9.7 billion in 2021 but it’s suggested by Philanthropy Australia’s CEO Jack Heath that that figure needs to be at least 8% if we are going to double giving by 2030. What are the key factors that could enhance Australia’s generosity do you think? 

A rise of 5 % in grants and distributions by charities for use in Australia is a significant increase. I saw Jack’s analysis in the Australian Financial Review and it is great to see key stakeholders and peak bodies like Philanthropy Australia analysing and commenting on the implications of the data – that’s what we want to happen! This part of the data is also the primary focus of the Productivity Commission Philanthropy Inquiry. It’s not for me to guess at the outcomes of their detailed work, but of course we are interested in the discussion. It’s important we understand matters of key significance to charities and think ahead to how we can work with governments to implement any policy changes we might have a role in (while maintaining our independence as the regulator).    

4. The report showed that structured giving – via ancillary funds and charitable trusts – granted around $2.2 billion. Given the country’s rising wealth and intergenerational wealth transfer currently under way, how could we encourage more Australians to engage with structured giving? 

The main role we can play is to work toward our object to maintain, protect and enhance public trust and confidence in the sector. We do this by preserving the integrity of data on the Charity Register and supporting charities to understand and meet their obligations. For those making decisions about giving, the Register is a valuable tool to conduct checks and make other detailed enquiries about a charity.  

We know grant-makers look up the Register to find charities, and to confirm information about them. They can use it to find charities working on a cause close to their hearts. And they can verify that a charity’s financial reporting is up to date, the names of the people who lead it, its ABN and so on. This helps paint a picture about governance, and givers are rightly keen to ensure any organisation they might support is well-governed. 

5. Charity sector revenue increased to $190 billion in 2021, an annual increase of $14 billion, which was more than expenses. But only medium to extra large charities reported an increase. How can smaller charities, including Community Foundations, increase their revenues? 

It is clear from our data that there is a difference between the circumstances of small charities and larger charities. Our data shows most charities are small  ̶  around 65%. For the reporting period covered in this latest report that meant they had annual revenue of under $250,000. But if you look even deeper you will see that one third of all charities had less than $50,000 annual revenue. Extra small charities received the least revenue from government, and generally speaking, the percentage of revenue that came from government increased with charity size. Our role is to present the data, and its then over to the sector and government to consider the implications for policy and decision-making.   

6. The report confirms the widely observed decline in Australian volunteering post-Covid, with volunteer numbers dropping to 3.2 million in 2021 from 3.4 million in 2020. Do you see this improving as we pull further away from the pandemic, or are these sorts of figures here to stay?  

Successive Australian Charities Reports indicate that formal volunteering in the charity sector has been trending downward since 2018, yet over 50% of registered charities still operate without any paid staff. This shows that volunteers continue to be the engine room of charities, enabling them to fulfill their purpose, to best meet the needs of the people and causes they serve. Despite declines, there are still around 2.4 volunteers for every paid employee in charities. Volunteers are critical for smaller charities that have about 18 volunteers per employee. 

Earlier this year, I was pleased to be present when Volunteering Australia released the National Strategy for Volunteering  ̶  a ten year blueprint for the future of volunteering in Australia. I am hopeful that the work being done by the sector on this initiative will ensure that volunteering numbers will rise to support volunteering remaining at the heart of Australian communities.    

7. Volunteers continue to underpin the work of the sector and 50% of charities operate with no paid staff. Compounded with cost of living pressures, can you see any financial light at the end of the tunnel for charities? 

If we look back over the past few years, there have been floods, bushfires, a global pandemic and more recently very high cost of living pressures. I acknowledge the challenges placed on the sector. However, I know from having worked with all kinds of charities over the years, big and small, that they adapt to changing circumstances. They find new ways of doing things and new ways of attracting support.   

When it comes to volunteers, 50 per cent of all Australian charities rely completely on them. If you drill down further into the data, 54% of small charities and 88% of extra small charities have no paid staff. So the decline in volunteer numbers is of concern. Nevertheless, many charities are already exploring new ways to recruit and retain volunteers, and it will be interesting to see how that unfolds with the data in our next report and now that there is a growing awareness about this issue.   

8. The government has announced increased support to the ACNC to improve transparency reforms, which you’ve mentioned are important to help build trust. What are the other key challenges and opportunities facing the sector in the next few years? 

We welcomed the May budget announcement that will enable the ACNC to disclose information about registration and compliance decisions. Some of these changes cannot be progressed without law change. Initially we will work toward publishing deidentified reasons for decisions to accept or refuse applications for registration of charities. This will be of educational benefit to the wider charity sector. 

At the moment, a key challenge for many charities is the higher cost of living. It is putting extra pressure on demand for programs, while at the same time, charities have higher operating costs.  

We hear from charities that the government’s current Development of the Not-for-profit Sector Development Blueprint and doubling philanthropic giving by 2030 measure present opportunities for new avenues to strengthen the sector. The discussion around new ways to engage volunteers could also yield increased support. 

And finally, the new national fundraising standards are set to come into effect. The charity sector has long called for less fundraising red tape, and there is hope among charities that this could make fundraising a lot simpler, freeing up more time to focus on delivering programs.