Australia’s Charity Sector at Highest Ever Concentration

Australia has the largest number of charities per capita in its history, with one charity for every 422 people, a new report has revealed.

The report also tracked the growth of the now $200 billion per year sector over the past 20 years. It found that the number of charities was doubling every two decades, with 56,894 charities in Australia.

Australia’s charity concentration was compared to the US, where there is one charity per 648 Americans. Australian charities also face more significant donor funding challenges, with only 0.23 per cent of individuals giving as a percentage of GDP, compared to 1.44 per cent in the US.

Wealth management firm JBWere released the Cause Report on Tuesday, the first major in-depth look at the state of Australia’s Not for Profit industry from the corporate sector.

JBWere CEO Justin Greiner said Australia’s charity sector needed to innovate to remain relevant.

“There is no question that Australia’s charity sector, which helps the most vulnerable and needy people in Australia and overseas, is crucial to our country’s future prosperity,” Greiner said.

“But after two decades of strong growth, the sector is fast approaching a crossroads. With overall spending growing at about 8.4 per cent a year since 1996, and the sector facing potentially tighter funding models, something has to change.”

Grenier’s statement followed calls from sector leaders late last year calling for charities to merge or shut down because too many are wasting valuable resources competing with each other.

The report found that the sector also faces a shrinking and ageing volunteer workforce, with many charities struggling to attract younger people.

“There are real concerns around where the sector’s next generation of supporters will come from,” Greiner said.

“Everything comes back to the need for the sector to consolidate its operating models, through reinvigorating the way activities are carried out in Australia.

“The report shows us that charities and Not for Profits are not operating productively as they could be within the sector, leading to the uneven distribution of assets and services for worthwhile causes.”

But he said that one of the biggest opportunities for the Not for Profit sector lies with corporate Australia, and that charities need to “rethink” the way they engage corporates.  

“There is a real opportunity for businesses to become a ‘skilled partner’ to charitable organisations,” he said.

“Rather than focusing on well-intended philanthropy, we need to focus on structured, strategic partnerships that benefit both parties in keeping with a shared-value approach.

“At the end of the day, in order for the Australian charity sector to work productively and thrive, we need to prompt a sensible sharing of assets and knowledge between Not for Profits, corporate supporters and individual donors.

“It’s only then that we will be able to evolve as an industry and ensure we produce the greatest impact both here and overseas.”

The report said that the charity workforce included more than one million people, representing 8.5 per cent of Australian employees, which is consistent with the Australian Charities and Not-for-profits Commission’s Annual Charities Report findings released late last year.

However, it also said that there were only 1.5 volunteers for each paid employees, which was less than the ACNC estimates.

The report said that the Australian charity sector’s income sources were 38 per cent from government, 54 per cent self-earned income and 8 per cent philanthropy.