FairGo Group Founder and CEO, Jill Riseley, recently spoke with Finance Leaders in For Benefit Organisations (Flifbo) at CPA Australia about the increasing funding gap faced by Not-for-Profits (NFPs).
Jill highlighted the collective significant contribution made to Australia by the 600,000 community organisations and the 55,000 registered charities. The not-for-profit sector employs 1 in 10 Australians and is considered the lifeblood of Australian communities.
However, the NFP and community sector is under increasing pressure to do more with less. FairGo Group research found operational costs are increasing at a faster rate then funding/revenue and the vast majority of organisations paying higher rates for core operational items. In addition, increasing wages continued to put pressure on the NFP bottom line.
The 2016 ACNC report showed average charity income increased by only 2% (with 42% of charities income actually decreasing). 68% of charities’ assets would fund less than six months of expenses.
New research by FairGo Group has found operational expenses increased at 7% whilst funding increased at 2%. Multiplied across the charity sector, this would equate to an approximate $6.7 billion funding gap.
But the pressure is unlikely to subside soon. FairGo research also found mergers and acquisitions amongst the sector is likely to increase but highlighted that Australia doesn’t necessarily have too many charities (with less per capita than US, UK, NZ and Canada). At a macro level, Australian taxation rates (% GDP) are significantly below the OECD average which will create long-term funding pressure on governments. In addition, Australians who donate had fallen 4%.
FairGo aims to support the sector by using its collaborative power to negotiate better rates and fairer terms.