Last month, I met charities across central New South Wales, to gain insight into their day-to-day operations, innovations and successes, as well as their challenges. I learned from 20 charities on the front line in Parramatta, Penrith, Katoomba, Bathurst, Orange, Dubbo, Gilgandra, Coonabarabran, Tamworth, Gunnedah, Muswellbrook, and Newcastle. There were many uplifting and moving stories, and I will highlight a few here.
The Homicide Victims Support Group in Parramatta does extraordinary work. I am so thankful for the experiences and understanding members shared with me. Mama Lana’s in Penrith provides meals for people who experience homelessness, demonstrating outstanding devotion. At the Orange Hospital, Ronald McDonald House provides world-class care and accommodation for women with difficult pregnancies, and their families, who find it difficult getting to town to see specialists. The rescue squads at Dubbo and Coonabarabran are formidable. Well equipped, highly trained volunteers attend road accidents to free trapped passengers – an essential first responder role that saves lives.
Moorambilla Voices scouts more than 100 regional schools every year to build a youth choir; very uplifting. At the Gilgandra Museum, my farmer host had counted 20,000 mice on his property recently − a significant risk to his livelihood! Then, an extraordinary visit to a haulage group that carts free feed to drought-affected properties. Oh yes, and the trucker is the local priest – weddings, christenings, funerals are part of the service.
I ended this trip in Newcastle, meeting Nova, a group devoted to finding accommodation for women and children who are experiencing homelessness. If you have a spare property, right now they really need it. Late last year, I visited charities in regional Victoria and my next stop is regional South Australia. I look forward to gleaning further insights from charities on the ground.
As we all know, the last year or so has been a particularly challenging period for charities. Overall, the sector has risen to the challenges presented by the immense economic impacts of the global pandemic. It has been more than a year since the advent of COVID in Australia; the dust is beginning to settle, and charities are transitioning to a so-called ‘COVID normal’ mode.
Many charities have been highly resourceful, employing a range of strategies to maintain their financial positions. For example, some have used short-term government assistance such as the JobKeeper program, and some have drawn on their reserves. However, there may be charities that find the short-term strategies they have had in place to date are not viable in the longer term, requiring them to consider making significant changes.
For those charities, there are a range of options. They may consider shared service arrangements with other charities to reduce back-office overheads, or even merging with another registered charity. Merging with another charity that has similar purposes, activities and beneficiaries and offers a good cultural fit can reduce financial uncertainty in challenging economic conditions. If considering a merger, risks and benefits should be carefully weighed to determine whether a merger would deliver long term benefits. Such a move, although difficult at the time, can lead to unexpected developments and successes down the line such as wider reach, expanded services and economies of scale.
Winding up is another option if your charity can no longer keep operating. Winding up is most likely to be considered for charities that have achieved their mission, or for those where a merger is not an option but they are not in a position to continue operating. Deciding to wind up is often a difficult decision, but it is one that, for some charities, may be in the best interests of all involved. It is important to be aware of the realities of your charity’s situation, seek expert advice, and explore all options carefully.
In some cases, insolvency may become reality. Being insolvent − unable to pay all debts when they are due − will generally force a charity to wind up. Governance Standard five requires a charity’s Responsible People to ensure it does not operate while insolvent, so it is important to be able to spot significant financial trouble on the horizon.
Whether your charity is considering merging or may be facing insolvency and considering winding up, it is crucial to have a clear plan of what must be done. Obtain professional advice – financial and legal – to help you assess your charity’s circumstances, and make sure you balance the advantages and disadvantages of each course of action.
The Hon Dr Gary Johns