05/11/2020 - 14:00

Pandemic dampens donations

05/11/2020 - 14:00

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Almost 40 per cent of not-for-profit organisations in Australia recorded a decrease in philanthropic funding in 2020, according to a survey by the Australian Institute of Company Directors.

Pandemic dampens donations
Angus Armour says many organisations entered the pandemic already facing serious financial challenges, and COVID-19 intensified that pressure.

Almost 40 per cent of not-for-profit organisations in Australia recorded a decrease in philanthropic funding in 2020, according to a survey by the Australian Institute of Company Directors.

The institute conducted focus groups and surveyed 1,173 not-for-profits nationwide to compile the '2020 Governance and Performance Study'.

The survey found 37 per cent of organisations surveyed received fewer donations in 2020 than in 2019, 28 per cent experienced no change, and 16 per cent received more donations.

Thirty-four per cent of respondents had a decrease in own-source funding, 31 per cent had no change, and 25 per cent reported an increase.

It said those reliant on government funding were faring better than those relying on philanthropy and face-to-face fundraising.

While Telethon 2020 raised a record-breaking $46.3 million, other Western Australian fundraising events, including the MACA Cancer 200 Challenge, raised less than in previous years.

The report found COVID-19 worsened not for profits groups’ previously poor financials, finding almost 40 per cent of organisations had made a loss in the previous three years, while 48 per cent were expecting to make a loss or break even this year.

Larger not-for-profits were not immune to the pandemic, with 68 per cent of directors of organisations with turnover greater than $20 million reporting a profit in 2017, compared to 51 per cent in 2020.

Fewer respondents, only 3 per cent, were considering merging or winding up their organisations than in previous years.

However, organisations said those discussions would resume once government stimulus measures came to an end.

The study highlighted the disparity between different sub sectors’ ability to navigate the crisis, with organisations in the arts, sports and health and aged care sectors most affected.

Organisations in the aged care and disability sectors noted an increase in costs for delivering essential services.

Only 36 per cent of health and residential aged care not-for-profits made a profit, 22 per cent broke even and 40 per cent made a loss.

AICD managing director and chief executive Angus Armour said many organisations entered the pandemic already facing serious financial challenges, and COVID-19 intensified that pressure.

“Just when demand for NFP services increased, their revenue took a huge hit,” he said.

“The government’s JobKeeper program has been nothing short of a lifeline for many, but significant concerns remain about how organisations will manage when the current scheme ends.

“These organisations need to be able to continue their vital work through the pandemic and on the other side, but unless issues of funding are addressed, it is likely some will be forced to wind up.

“Given the vital role these organisations play in our society, targeted assistance is required to ensure these organisations survive over the long term.”

The report suggested not-for-profits in the aged care, disability, mental health and arts sectors have struggled with inadequate funding, inefficient funding structures and inequitable distribution of support, and baseline funding in these sectors needed to increase.

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