The expenses of registered charities depend on their purposes and activities and differ greatly. Nearly half of all registered charities operate with no paid staff, while others provide services for the community that are rely heavily on paid staff – for example child care, schools, hospitals, aged-care facilities and universities.

Each year, on average, registered charities spend a combined $75 billion on expenses relating to employees, which accounts for 55% of all expenditure.

Charities provide their annual expenses in the Annual Information Statement and this information populates the graphs you can see on the Overview tab of a charity's page on the Charity Register.

The different types of expenses included in the graph are:

Employee expenses

Employee expenses include salaries and wages paid to staff (permanent, casual or temporary) employed by a charity. They also include leave expenses and superannuation.

Interest expenses

Interest expenses include interest paid by a charity on any money it has borrowed, as well as any interest accrued during the reporting period that has not yet been paid.

Grants and donations made for use in Australia

Some charities make grants to other charities, individuals or beneficiaries, while some provide scholarships. If a charity has done so, the amount will contribute to this section of the graph.

Grants and donations made for use outside Australia

Some charities make grants and donations outside Australia. These can include:

• grants and sponsorship programs or projects
• money, goods or services a charity has donated to a sister organisation or main governing body overseas
• indirectly sending money overseas, via another Australian organisation or charity.

If a charity has made a grant or donation for use outside Australia, the specific countries will also be listed in its Annual Information Statement.

All other expenses

This section includes expenditure not already listed. This might include:

• administration costs
• agency contractor staff
• amortisation expense (loss due to the depreciation of a non-tangible asset – for example, intellectual property such as patents, trademarks or copyrights)
• partnership fees
• bad debts
• bank charges
• board or governance expenses, including governance activities such as travel and accommodation for meetings
• cleaning
• consultancy fees
• cost of goods sold
• costs directly associated with grant funds
• credit card fees
• depreciation
• entertainment costs
• equipment hire or lease
• printing and stationery
• rental expenses
• repairs and maintenance.

Factors which should be considered when interpreting the information featured on a charity's Register page include:

• Charity size and complexity which affect wages and administration costs as a percentage of expenses
  • For example, a small charity may rely entirely on volunteers to do administrative work, therefore recording no administration costs.
• Operating locations
  • For example, a charity operating in rural Western Australia will probably have higher costs than one in Perth due to the area it covers and increased shipping or transportation costs.
• Activities
  • Different activities have different associated costs. Some charities might have higher fundraising and administration costs, while others could have large service delivery costs.
• Assets and liabilities, as there is a risk of misunderstanding a charity’s financial position by comparing its assets and liabilities without context.
  • For example, if the value of a charity’s assets increases from one reporting period to the next it might appear that it has acquired new assets. However, this may not necessarily be the case - the value of its existing assets may have simply increased.
  • Another example is a charity that owns valuable equipment because these are used in providing direct services to beneficiaries. However, it may not be able to sell this equipment to repay its debts unless it is intending to wind up.
  • Some charities may report their grants as liabilities. For example, a school may have a grant to build a gymnasium. However, until it has been built they may choose to classify it as a liability.
• Grants or funding, as funding bodies may impose different requirements on the charities they fund.
  • For example, the majority of funds may be paid out at the start or end of a project. This may result in one reporting period showing few funds and the next reporting period showing large funds, or vice versa. This could lead to comparisons between periods being distorted.
  • Grant and ‘in kind’ donations (including contribution of professional services) might be interpreted differently. Some charities will recognise the grant upfront and not apportion the grant income to different reporting periods. For example, a school may have a grant to build a gymnasium and choose to recognise the whole grant in the period they receive it.
• Frequency of activities, as some charities might conduct activities biannually, or may respond to emergencies (natural disasters) that occur without warning.
  • This will mean a charity might show less activity and expense in some years compared to others.

Presentation of financial reports

All charities must prepare their financial reports in accordance with Australian Accounting Standards and present a true and fair view. However, the way one charity presents information in a financial report may be different from how another charity presents its information.

Charity staff and their advisers use their judgement to decide how accounts are treated and financial reports are prepared. This may lead to differences in reporting - for example: a charity may provide a detailed breakdown of expenses, such as ‘stationery expenses’ whereas another charity may include smaller items like stationery as part of ‘other expenses’.

In addition, it can be hard to compare line items when different information is disclosed in the reports. Some charities may choose to report and allocate cost by functions such as reporting on program cost, as opposed to classification such as salaries.

In addition:

• Some charities may report using cash accounting, while others might use accrual accounting (cash or accrual), meaning their financial statements cannot be properly compared.
• General purpose financial statements can provide additional disclosures that may not be included in a special purpose financial statement. This can again lead to differences.
• While both audited and reviewed financial reports have a level of assurance provided by a third party, an audited financial report provides a higher level of examination and assurance than a reviewed report.

Other financial information

In addition to the graphs that display in the 'Overview' section, you can see the figures that a charity provided in their Annual Information Statement in the 'Financials & Documents' section of the Charity Register page.

In the 'Financials & Documents' section, there are links to all the Annual Information Statements that a charity has submitted as well as the financial reports that were included with each Annual Information Statement.

Read more about when charities have to report and their requirements in our factsheet on charity reporting obligations.

There are other sources through which you can gain further information about a charity's finances:

• Visit the charity’s website
• Read the charity’s annual report
• Contact the charity and ask questions

We have also examined some of the more common questions members of the public ask about charity money and spending in our Charity Money Myths guide. That guide provides a handy overview on issues like charity administration costs, charity reserves, charity surpluses and whether charities can make investments.