Reimagining Charities as Sustainable Businesses

Charities will need to reposition themselves as sustainable social enterprises to be successful in the future, according to a new report.

The Koda Capital Snapshot of Australian Giving said the concept of a charitable organisation may need to be reimagined with people becoming less charitable and less trusting of charities.

“Not only do many of our largest and best-resourced charities operate businesses and effectively run as sustainable social enterprises… they do this without as much pressure to justify their expenditure on administration, fundraising, research and development,” the report said.

While charities collect roughly $143 billion in annual revenue, only 7 per cent comes from donations and bequests.

Concerningly, 90 per cent of charities share just 6 per cent of all donation income, with the other 94 going to the top 10 per cent of fundraising charities in Australia.

The report warned growth in the giving population was not evident and said new money was coming from a smaller number of wealthier donors who expected a return on investment.

The latest report from the Koda Philanthropy & Social Capital team is now available. 'A Snapshot of Australian Giving' is written for the benefit of donors and fundraisers and is based on Koda’s analysis of the latest giving data from a variety of sources. https://t.co/ZXqy0sQfdM pic.twitter.com/saWaJ3xVig

— Koda Capital (@KodaCapital) September 25, 2018

Koda Capital’s head of philanthropy and social capital, David Knowles said charities needed to be more businesslike and generate more income outside of traditional donation methods.

“I think the donor appetite to give a traditional hand-out is diminishing, and successful charities will be the ones that operate more like a sustainable business than a traditional charity,” Knowles told Pro Bono News.

The report also found less employees were donating via workplace giving, and the average amount given was also falling – from $43 million to $35 million in 12 months.

Knowles said workplace giving had huge potential but a different approach from employers was needed.

“The key to unlocking the potential for workplace giving is understanding the reasons why people don’t participate even though it’s a very simple and effective way to give,” he said.

“The number one thing that stops people giving is a belief that the money they give is just used to make their employer look good.”  

The report said if one in three employees used workplace giving, Australian charities could receive an extra $245 million a year.

“It remains hard to convert workplace giving participation into meaningful relationships and the volume of money just isn’t there yet,” the report said.