INTHEBLACK February 2025 - Magazine - Page 44
F E AT U R E
“In the commercial business world, when you have an
increase in demand, you can put up your prices. It doesn't
work that way in the NFP sector.”
SUE WOODWARD AM, AUSTRALIAN CHARITIES
AND NOT-FOR-PROFITS COMMISSION (ACNC)
The 10th edition of the Australian
Charities Report from the Australian
Charities and Not-for-profits Commission
(ACNC) shows total sector revenue rose
by 5.6 per cent, or A$11 billion, to a record
high of just over A$200 billion in the 2022
reporting period, compared to the previous
period. However, this growth was outstripped
by an increase in expenses of A$22 billion
in the same period.
In other jurisdictions such as Hong Kong,
the sector is experiencing staffing and
fundraising challenges in the post-pandemic
era, according to a recent survey by the
Hong Kong Council of Social Service.
Meanwhile, in Singapore, the National
Giving Study 2023 by the National Volunteer
and Philanthropy Centre shows a decline
in charitable donations across the city-state.
PINCH POINTS
The NFP sector is characterised by its
diversity. There’s a huge variation in the
services they provide — from social welfare
to environmental, law reform advocacy
to sporting groups and faith-based
organisations. Challenges also vary across
large global organisations that may employ
thousands of people, and small entities
that may rely solely on volunteers.
In Australia, for example, data from
ACNC shows large charities with annual
revenue of A$11 million comprise about
half a per cent of the sector, but represent
54 per cent of its aggregate revenue.
Very small charities, which have an annual
revenue of less than A$25,000, make up
a third of the sector, but operate with
0.1 per cent of the sector’s revenue.
Sue Woodward AM, commissioner
of the ACNC, says that while the sector
is not homogenous, it is experiencing
“common pinch points” across the board.
“In the commercial business world, when
you have an increase in demand, you can put
up your prices,” she says. “It doesn't work
that way in the NFP sector.”
44 INTHEBLACK February 2025
ACNC data shows charities employ about
10.5 per cent of the Australian workforce,
but Woodward notes the sector is experiencing
significant staffing challenges. Staffing costs
in 2022 increased by almost 10 per cent
year-on-year — the highest annual percentage
increase recorded.
“Traditionally, where the sector has
not offered the highest salaries, it was often
a leader in offering flexibility or part-time
employment,” says Woodward. “But since
the pandemic, more organisations are
providing hybrid working arrangements
and greater flexibility, so it has become
harder for the sector to recruit unless they
can go closer to meeting the salaries [in
the for-profit sector].”
Ellie Paterson CPA, consulting CFO
at Not for Profit Accounting Specialists
(NFPAS), a South Australian accounting
practice specialising in NFPs and charities,
says many of her clients “can see their
margins shrinking almost before their eyes”.
“It just gets tougher and tougher,” says
Paterson, who previously worked as finance
manager for Variety – the Children’s Charity.
“Wage increases are well-deserved,
but they make it harder for the NFPs
to operate. Payroll costs are a significant
proportion of their costs, and a 3.75 per cent
wage increase really hurts.”
Nunzio Giunta FCPA, managing partner
at Giuntabell in Victoria, an accounting
practice that specialises in NFPs and
charities, says many entities in the sector
consist of directors or executives who are
passionate about their cause, but often lack
the skills or experience required to run
a business.
“As a result, from a governance perspective,
they risk getting themselves into trouble,”
he says. “We've walked into organisations
who have a lot of money owing to the ATO
because their superannuation hasn’t been
paid for years.
“We help a lot of these organisations
develop strong governance and make sure
