Charities were in a strong position at the start of 2020. But then there were bushfires and COVID-19. What do the numbers tell us about what happened next?
The latest Australian charities report shows a significant increase in total sector revenue and expenditure. The eighth edition of the report uses the annual information returns of more than 49,000 charities from the 2020 reporting period and is published by the Australian Charities and Not-for-profits Commission (ACNC). This tells us that the Australian charity sector was in a strong position as our country headed into a catastrophic bushfire season and a pandemic of unimaginable scale. This resulted in both a wave of support and a sharp increase in costs. Let’s take a closer look at the report.
Australia’s charity sector is resilient and valuable
“It is pleasing to see that the…Australian charities report shows that we have a resilient charity sector. It is hugely important economically and employed over 10% of Australia’s workforce in the 2020 reporting period. The huge public support for charities is clear, with donations reaching 12.7 billions of dollars,” said Gary Johns, Australia’s Charities and Nonprofits Commissioner.
Funding has arrived…
The increase in income came mainly from government sources, followed by contributions from donations and legacies – including donations in response to the 2019/20 bushfires.
With many charities eligible for government support measures in response to the COVID-19 pandemic, government revenues increased to $88.8 billion for the sector in the 2020 reporting period, which represents 50.4% of total revenue. This is an increase of $10.7 billion from 2019.
Not only has there been an increase in amount in government revenue, there has also been an increase in the proportion charities that reported receiving this type of funding. In the 2019 reporting period, 37% of charities reported revenue from government – this figure increased to 47% in the 2020 reporting period.
Donations to charities also increased in the 2020 reporting period, rising 8% to $12.7 billion.
… but the net result fell
In the 2020 reporting period, the sector’s net income was reported at $10 billion, a decrease of $1.2 billion. This follows an increase in net income of $1.2 billion in the prior period.
As a major employer in Australia, more than half of the charity sector’s costs were employee spending, rising from $85.9 billion in 2019 to $93.8 billion in 2020.
Charities also reported spending $9.2 billion on grants and donations, an increase of $272 million. Of the $9.2 billion, charities spent $7.4 billion on grants and donations in Australia, an increase of $183 million from the previous reporting period. Grants and donations outside Australia increased by $88 million.
Increased need for COVID-19 and disrupted operations
The COVID-19 pandemic meant that the need for sustained support had never been greater than in 2020. Many charities were no longer able to operate as they had and had to find ways to meet the challenges presented by the pandemic. For some, that meant embracing technology and finding new ways to deliver services, for others, that meant cutting services, and for many, that meant shutting down operations altogether. In fact, the report shows that nearly 2,000 charities did not operate, including 650 citing COVID-19 as the reason.
We come in all shapes and sizes
The report shows that the size distribution among Australian charities remains stable. Small charities represent about two-thirds of all charities (65.3%), with large charities (19%) again outnumbering medium-sized charities (15.7%). Further analysis revealed that almost a third of all charities were “very small” (31.4%) – these organizations receive less than $50,000 in annual revenue.
Although they represent only 19% of charities, large charities accounted for a whopping 93% of sector employees. At the other end of this scale, 51% of charities reported having no paid staff at all. Many of the smaller charities in the sector are run entirely by volunteers.
What about the 8% increase in donations to $12.7 billion we talked about earlier? This was mostly concentrated among the largest charities, with the top 10 accounting for 17% of the overall sector’s revenue from donations.
Very large charities, which represent 0.4% of all charities, reported over 50% of the sector’s revenue, while very small charities, despite accounting for about a third of the sector , contributed 0.1% of total revenues.
Breakdown by state and territory
This breakdown uses a charity’s physical address and data from the 2020 Annual Information Statement. About 10% of charities operate in more than one jurisdiction, although this may not be reflected in the civic address of a charity.
This edition of the report captures data from charity programs for the first time, giving insight into the work of the sector across 75,000 programmes. charities reported having between one and four programs on average. Not surprisingly, the larger the charity, the more programs it has.
About 7% of charities said they had programs abroad, in 217 countries or regions. The five most common countries were Cambodia, the Philippines, Indonesia, Kenya and Papua New Guinea.
During the 2020 reporting period:
- Australian charities reported a significant increase in total income, assets and expenditure
- Total revenue reached $176 billion, up more than $10 billion from the prior period
- Donations increased 8% to $12.7 billion
- Government revenue reached $88.8 billion, up $10.7 billion from the previous period, accounting for 50.4% of total revenue
- The other main sources of income were goods and services (32.5%) and donations or legacies (7.2%)
- Top 50 charities by revenue accounted for 33% of total sector revenue
- Spending rose $10.2 billion to $167.8 billion
- About half of sector expenditure was personnel expenditure
- Charities employed 10.5% of all employees in Australia – 1.38 million people
- There has been an increase in the proportion of full-time and part-time staff and a decrease in casual staff
- Education charities employed the most staff – over 330,000 people
- 51% of charities reported having no paid staff
- The contribution of volunteers was high at 3.4 million volunteers, but decreased by 220,000 over the previous period
- Environmental charities reported the most volunteers – 810,000
- Of the nearly 2,000 charities that did not operate during the year, 650 cited COVID-19 as the reason
- JobKeeper payments to ACNC registered charities supported approximately 331,000 people between April 2020 and September 2020. This number was reduced to approximately 128,000 people between October 2020 and December 2020, and 86,000 people between January 2021 and March 2021.
The report is primarily based on data that 49,000 charities submitted in their 2020 annual information returns – most reporting on the 2020 calendar year or the 2019-20 fiscal year. It also includes JobKeeper data provided by the Australian Taxation Office.
Click here to access the full report.
For more on Gary John’s resignation as ACNC Commissioner, Click here.