We cannot afford to see charities and the not-for-profit sector become casualties of the COVID-19 pandemic. We have witnessed the damaging impacts of the pandemic on the tourism, hospitality and retail industries. People have lost jobs; businesses have closed, and industries are on the brink of collapse. We cannot let this happen to a sector that provides support to so many Australians, particularly in times that create such varied and widespread challenges.
The not-for-profit sector is critical to Australia’s economy and society. According to the Australian Charities Report and Deloitte’s Access Economics, the sector’s annual revenue of $155 billion accounts for more than 8 percent of Australia’s GDP. One in ten employees in Australia work in this sector which employs more than 1.3 million people and engages a further three million volunteers who provide more than $12.7 billion of unpaid labour. It’s an industry that addresses social issues, supports community activities and strives for the betterment of our society. It’s vital we make the not-for-profit sector and the organisations within it part of the recovery from COVID-19 rather than a casualty.
Social Ventures Australia and the Centre for Social Impact recently released a report to better understand the effects of the COVID-19 pandemic on the financial viability of charities and not-for-profit organisations. Their research modelled the potential impact of the crisis on the financial health of the 16,022 registered charities in Australia who employee 1.22 million people.
Their model found a 20 percent fall in review for these charitable organisations with 88percentimmediately making an operating loss. It also found that 17 percent would be at high risk of closing their doors within six months even when taking their reserves into account. More than 200,000 jobs could be lost as a result of cost-cutting and organisational closures.
The data produced from this model is very troubling and affects more people beyond the not-for-profit sector itself. The sector provides much needed support services that are available to all Australians. We all know someone who has faced a challenge that required the support of a not-for-profit organisation. We have seen many crises and natural disasters, particularly in the past 12 months, that without the support of the not-for-profit sector, many people may not have been able to rebuild their lives.
The sector is also facing many challenges and desperately needs funding to transition out of COVID-19.
Not-for-profits tend to be lean and work under conditions that have seen limited resources and limited funding. But this pandemic has amplified these challenges. The sector is still working to support Australians but is having to manage increased demand for services while facing the same limited resource and funding challenges. If the predicted impact modelled by Social Ventures Australia and the Centre for Social Impact comes to fruition, the not-for-profit sector’s ability to provide their services and support Australians in need would be greatly reduced.
Innovation and collaboration will be important in supporting the sector through this period. Many organisations are already working to innovate and transform themselves during and post the pandemic such as not-for-profit Outside The Locker Room who launched OTLR Radio during the pandemic to continue providing support and educational resources for youth and the broader Australian community.
We need to see collaboration between the government, philanthropists, businesses and the not-for-profit sector to ensure the sector comes out of the pandemic in a stronger and more sustainable financial position. This could take the form of new funding to the sector or changes to exist funding arrangements. Such funding may be tied to specific projects or programs but should be made more flexible to allow charities and not-for-profits to adapt and respond to the conditions.
Not-for-profits form part of the mix that helps create a vibrant civil society. They bind our communities together. We need to see greater investment from government and local councils, whether that investment be funding or in-kind support in the form of sharing of resources, programs and/or knowledge.
Our not-for-profit sector needs to remain strong. It’s a growing sector that we will all rely on at one time or another. We cannot afford to see the sector struggle or services reduced. It’s time we help a sector that dedicates so much time to helping us.