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Charities and not-for-profits set to soar if they can adapt

Published:10 April 2019

Australian Charities & Not-for-profits Commissioner Dr Gary Johns is pictured (third from left) with CQUniversity reps Professor Peter Best, Professor Julian Teicher, Associate Professor Olav Muurlink, Stephen Iles and Dr Tasadduq Imam.

Australia's charities and not-for-profit organisations are set to become key drivers of employment growth if they can adapt to the new transaction-based model of funding.

That's according to PhD researcher Stephen Iles who is part of an emerging group of CQUniversity academics focused on helping the sector move to a more business-like footing.

Mr Iles, who has a background in the finance sector, says reforms to disability, aged care and other community service delivery models set up fresh challenges for the viability of charities and not-for-profits.

"In the past, charities had expectations of government funding, often very predictable and on multi-year cycles, but now they are moving to a market-based system of unit prices where they get a share of market transactions," he says.

"This has been a fundamental shift and a lot of charities and NFPs are struggling to grow and even remain viable.

"We believe they will have to adopt well-established for-profit business reporting frameworks to help analyse their business, moving from a static understanding to a more dynamic understanding of what is happening."

Mr Iles says the National Disability Insurance Scheme (NDIS) alone predicts another 90 000 workers will be needed in coming years to service needs, meaning charities and NFPs should be bright spots in the Australian economy if they remain viable.

"Another challenging issue for charities and NFPs is that the level of donations from individuals, through gifts and philanthropy, has been going sideways for a long time," he says.

"In order to grow, organisations have been needing to look for income from social enterprises, where instead of seeking donations they offer products or services and then reinvest proceeds to fund their core service delivery.

"That's why they will need insights on how to apply business tools and business thinking to this new approach."

A CQUniversity team led by Professor Julian Teicher recently contributed to a policy consultation invited by the Australian Charities and Not for Profits Commission (ACNC).

"The ACNC invited consultation on how to help charities and NFPs adapt to draw on lessons from the business world.

"We are developing a research agenda around how best to apply business discipline and financial performance metrics to the social innovation and charitable space."

Professor Teicher said data from charities showed their investments were often under-performing and many were struggling to generate enough funding to renew their assets.

"We will develop a submission to the ACNC on how they can sustain a robust, viable and independent charity and NFP sector across Australia."