Australian charities hit by rising costs

Charity workers packing boxes. | Newsreel
Australian charities have been hit with rising costs. including employee wages. | Photo: South Agency

Australian charities are going backward, as increased costs outstrip a recent rise in revenue.

The latest Australian Charities Report, released today, showed a 5.6 percent annual increase in revenue was dwarfed by a 12.6 percent jump in costs.

The Australian Charities and Not-for-profits Commission (ACNC) report found total sector revenue rose by $11 billion, to a record high of just over $200 billion, in the 2022 reporting period, however, expenses grew by $22 billion.

ACNC Commissioner Sue Woodward said employee expenses rose by nearly 10 percent, the highest annual rise ever recorded.

Ms Woodward said the sector was a major employer, accounting for 10.5 percent of the Australian workforce.

“Still, it continued to depend on volunteers, with more than half of all charities operating with no paid staff,” Ms Woodward said.

“Our latest data demonstrates charities make an enormous contribution to Australia’s social fabric, its economy and employment. It is important to recognise that the rise in expenses and liabilities outpaced the rise in revenue and assets,” Ms Woodward said.

The report found donations to charities grew by 4.4 percent, to $13.9 billion, with charities distributing $11.7 billion in grants and donations, primarily to other charities and not-for-profit organisations, mainly in Australia.

Ms Woodward said the report included a spotlight on extra small charities – those with an annual revenue of less than $50,000.

She said they made up around 31 percent of the sector, but operated with just 0.1 percent of sector revenue.

“In contrast, extra large charities – those with $100 million or more in annual revenue – comprise 0.5 percent of the sector, but operate with more than 54 percent of the aggregate revenue.”

Ms Woodward said a five-year analysis showed almost 90 percent of extra-small charities operated with no paid staff.

“Further, they had a 17 percent drop in the number of volunteers and an 18 percent drop in paid staff.

“The differences between the smallest and largest charities could not be starker,” Ms Woodward said.

“This five-year focus data shows the cost of operating and delivering services has increased, but extra small charities haven’t received sufficient revenue or donations to keep pace.”

Read the full report.