Vic Charities Still Buried in Red Tape

Victoria’s community sector charities are contributing billions to the state’s economy and creating thousands of jobs, despite battling convoluted and expensive reporting requirements, an analysis by sector peak body VCOSS has found.

More Than Charity analysed financial data for more than 3,500 community sector charities operating across a range of service areas, including aged care, emergency relief, mental health services and domestic violence services.

It found that, on average, organisations spent about 300 hours meeting government reporting obligations at a cost of more than $23 million each year.

As well, the report found that the financial cost of compliance would be more than $23 million if other factors – such as the costs of auditors, software systems and staff time entering data into client management systems – were also taken into account.

“That’s the equivalent of having one person working exclusively on reporting for nine weeks straight, each and every year,” VCOSS CEO Emma King told Pro Bono Australia News.

“These are organisations that help the vulnerable and disadvantaged. It’s time and money that would be better spent actually delivering better services.”

“The research exposes how much red tape is crippling organisations but it is also showing the significant contribution that the community sector is making to the economy.

“One of the challenges we have had as the charitable sector has been about how we talk about our economic contribution and often it is not well understood  and we are not being seen as the really big economic powerhouse that it is.”

The report also highlighted the economic value of Victoria’s charitable sector. It found that the sector generates about $11 billion of new economic activity annually and employs 135,000 people.

“That’s more than the state’s mining, automotive manufacturing, media, IT, telecommunications and utility sectors combined,” King said.

“In regional centres, community sector charities are often the key driver of local employment too,”

King said the findings turned on its head any perception the community sector was a “cost” to society.

“Rather, the sector is a key social and economic asset. It runs efficiently under immense pressure, and delivers considerable value,” she said.

“Community sector charities should be valued and supported, not buried in red tape.”

King said the current employment trends, with the introduction of the NDIS, would deliver several hundred thousand new jobs by 2021, with most of those likely to be in the community sector.

“So not only are we driving a significant economic value now and contributing to the Victorian economy, that is going to significantly grow over upcoming years so… that’s only going to continue to grow.”

She said the report was a great chance to shine a light on the significant work that the community sector does but it also highlights the red tape that can really stand in the way of us delivering to people who are vulnerable and disadvantaged.

“We need to report once use often. If we look at some of the examples in our report they just show the constant auditing process that is undertaken through different funding streams that stops organisations doing the work that they need to do,” she said.  

“Often different government departments are collecting the same or similar materials. If we can develop report-once-use-often it would free up hours of time in community organisations and hours of other resources.”

 Key findings include:

• Victoria’s community sector charities create an $11 billion industry.
• 89 per cent of community sector charities are running balanced or surplus budgets.
• Victoria’s community sector charities draw on a diverse range of funding sources, with just over half their income (54 per cent) derived from sources other than government funding, including donations, bequests and other revenue generation activities.
• Just over half (52 per cent) of Victoria’s community sector charities receive income from government grants and the vast majority (86 per cent) generate income from other revenue sources (including service fees and charges).
• Employee expenses make up the majority (54 per cent) of community sector charities’ expenses.
• The majority of community sector charities operate balanced budgets (68 per cent). A further 21 per cent operate surplus budgets.
• Victoria’s community sector charities employ 134,958 workers across the state.
• Almost one-quarter (22 per cent) of community sector workers are employed casually, and therefore face an insecure employment situation.
• Victoria’s community sector charities make a strong economic contribution in regional areas, and provide significant employment in these areas.