MEDIA RELEASE

24 July 2015

No.134

NOT FOR PROFITS FACING CHALLENGES: CHARITY COMMISSIONER

The Commissioner of the Australian Charities and Not-for-profits Commission (ACNC) has likened the not-for-profit (NFP) sector to Cinderella, in an address to the Leadership Victoria Conference.

Speaking today in Melbourne the ACNC Commissioner, Susan Pascoe AM, stated that the sector was under recognised for the essential work it does for the community.

“The NFP sector hasn’t been given the glass slipper yet,” Ms Pascoe said.

“However, people are starting to take a second look, realising the sector has some very attractive qualities.”

Ms Pascoe explained that the NFP sector’s ability to contribute to the Australian community is underpinned by its sheer size.

“The NFP sector in Australia is enormous,” Ms Pascoe said.

“According to Australian Bureau of Statistics figures, the sector has annual revenue of over $100 billion, assets of almost twice that, and it employs 8% of Australia’s workforce.

“To put that in perspective, the income of the NFP sector is larger than the Agriculture and Fishing Industry, and the number of employees is five times higher than the mining sector.

“While there is no doubt that the Australian NFP sector is economically significant, the sector is not without its challenges.

Ms Pascoe highlighted three key issues facing the NFP sector going forward.

“Over the next five years, I believe that the sector will face three particularly important challenges: income, performance measurement, and efficiency.

Income

“Maintaining or increasing income, and diversifying funding sources are perennial problems for most NFPs and are difficult to solve.

“Changes in government policy and the impact on grants or procurement can be swift and deep for many NFPs and in some cases, threaten the viability of the organisation. Governments everywhere are reducing or reallocating funding in response to budget pressures, however the demand for housing, employment, drug and alcohol support and child protection doesn’t slow down with the economy.

“This presents significant challenges for mission-based organisations, and particularly for boards and front-line staff who have to make some hard choices.”

Performance measurement

“As income pressures increase, performance measurement will become vital for charities. Charities will need to show their funders that they are achieving their mission, rather than simply reporting on quantities and costs.

“As the charity regulator, the ACNC has advocated the assessment of charity impact, rather than a focus on arbitrary measures such as administration costs. Improved performance measurement is vital to helping funders understand a charity’s impact.

Efficiency

“And finally, in an environment of reduced income and improved transparency of performance measurement, charities will need to ensure they are acting as efficiently as possible. This is not to imply that charities act irresponsibly with their funds, but more so to encourage them to approach financial management more strategically.

“The ACNC has a role to play to help charities navigate these issues, through the promotion of good governance, the provision of support and guidance and increased transparency through the Charity Register.”

Although the sector faces challenges, Ms Pascoe expressed optimism in the future of the NFP sector.

“There will always be challenges in the sector and a continual need to improve,” Ms Pascoe said.

“However, I think we have every reason to be very confident in the future of our NFPs and in the directors who lead them.”

-ends-

ACNC Media Contact
media@acnc.gov.au or 0466 089 108

Return to all media releases