Charities were in a strong position entering 2020. But then there were bushfires and COVID-19. What do the numbers tell us about what came next?
The latest Australian Charities Report shows a major rise in total sector revenue and expenses. The eighth edition of the report uses the Annual Information Statements of more than 49,000 charities from the 2020 reporting period and is published by the Australian Charities and Not-for-profits Commission (ACNC). It tells us that Australia’s charity sector was in a robust position as our country headed into a catastrophic season of bushfires and a pandemic of unimaginable magnitude. What resulted was both an outpouring of support and a steep increase in costs. Let’s take a closer look at the report.
The Australian charity sector is resilient and valuable
“Pleasingly, the… Australian Charities Report shows that we have a resilient charity sector. It is hugely important economically and employed more than 10 per cent of Australia’s workforce in the 2020 reporting period. Enormous public support for charities is clear, with donations increasing to $12.7 billion,” says Gary Johns, the Australian Charities and Not-for-profits Commissioner.
Funding rolled in…
The increase in revenue came predominately from government sources, followed by contributions from donations and bequests – including gifts in response to the 2019/20 bushfires.
With many charities eligible for government support measures in response to the COVID-19 pandemic, revenue from government increased to $88.8 billion for the sector in the 2020 reporting period, accounting for 50.4% of total revenue. This is an increase of $10.7 billion on 2019.
Not only was there an increase in the amount of revenue from government, there was also an increase in the proportion of charities that reported receiving this type of funding. The 2019 reporting period saw 37% of charities reporting revenue from government – this rose to 47% in the 2020 period.
Donations to charities also increased in the 2020 reporting period, rising 8% to $12.7 billion.
… but net income went down
In the 2020 reporting period, the net income of the sector was reported at $10 billion, a decrease of $1.2 billion. This follows a net income increase of $1.2 billion in the previous reporting period.
As a significant employer in Australia, more than half of the charity sector’s costs were employee expenses, growing 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 within Australia, an increase of $183 million compared to the previous reporting period. Grants and donations outside Australia increased by $88 million.
COVID-19 increased need and upended operations
The COVID-19 pandemic meant the need for sustained support was never felt as keenly as it was in 2020. Many charities were no longer able to operate as they had and needed to find ways to navigate the challenges the pandemic presented. For some, this meant embracing technology and finding new ways to deliver services, for others it meant paring back services, and for many it meant putting a hold on activities entirely. In fact, the report shows that nearly 2,000 charities did not operate, with 650 citing COVID-19 as a reason.
We come in all shapes and sizes
The report shows that the distribution of sizes among Australia’s charities remains stable. Small charities make up approximately two-thirds of all charities (65.3%), with large charities (19%) again outnumbering medium charities (15.7%). Further analysis revealed that nearly one-third of all charities were ‘extra small’ (31.4%) – these organisations receive less than $50,000 in annual revenue.
Despite making up only 19% of charities, large charities accounted for a huge 93% of the sector’s employees. On the other end of this scale, 51% of charities reported not having any paid staff at all. Many of the sector’s small charities are run entirely by volunteers.
And the 8% rise in donations to $12.7 billion that we mentioned earlier? This was concentrated mainly amongst the largest charities, with the top 10 accounting for 17% of the entire sector’s revenue from donations.
Extra-large charities, which make up 0.4% of all charities, reported more than 50% of the sector’s revenue, while extra small charities, despite making up approximately one-third of the sector, contributed 0.1% of the aggregate revenue.
State and territory breakdown
This breakdown uses a charity’s physical address and data from the 2020 Annual Information Statement. Around 10% of charities operate in multiple jurisdictions, although this may not be reflected in a charity’s street address.
This edition of the report captures charity program data for the first time, giving an insight into the work of the sector across 75,000 programs. Charities reported having between one and four programs on average. Unsurprisingly, the larger the charity, the more programs it tends to have.
Approximately 7% of charities reported that they operate programs overseas, in 217 countries or regions. The five most common countries were Cambodia, the Philippines, Indonesia, Kenya and Papua New Guinea.
In the 2020 reporting period:
- Australia’s charities reported a significant increase in total revenue, assets and expenses
- Total revenue rose to $176 billion — up by more than $10 billion on the previous period
- Donations rose by 8% to $12.7 billion
- Revenue from government rose to $88.8 billion — up $10.7 billion on the previous period, accounting for 50.4% of total revenue
- Other major revenue sources were goods and services (32.5%) and donations or bequests (7.2%)
- The 50 largest charities by revenue accounted for 33% of total sector revenue
- Expenses increased by $10.2 billion to $167.8 billion
- Approximately half of the sector’s expenses were employee expenses
- Charities employed 10.5% of all employees in Australia — 1.38 million people
- There was a rise in the proportion of full-time and part-time staff and a decrease in casual staff
- Education charities employed the most staff — more than 330,000 people
- 51% of charities reported no paid staff
- Volunteer contribution was high at 3.4 million volunteers, but decreased by 220,000 on the previous period
- Environment charities reported the most volunteers — 810,000
- Of the nearly 2,000 charities that were not operating for the year, 650 cited COVID-19 as a reason
- JobKeeper payments to ACNC registered charities supported an estimated 331,000 individuals in the period between April 2020 and September 2020. This reduced to approximately 128,000 individuals between October 2020 and December 2020, and 86,000 individuals between January 2021 and March 2021.
The report is mainly based on data 49,000 charities submitted in their 2020 Annual Information Statements — most reporting on the 2020 calendar year or the 2019-20 financial year. It also includes JobKeeper data supplied by the Australian Taxation Office.
Click here to access the full report.
To read more about Gary John’s resignation as the ACNC Commissioner, click here.