Pamela Sutton-Legaud, Fundraising Consultant at AskRIGHT in Melbourne, reviews the Australian Charities and Non-profit Commission‘s (ACNC) first ever report on Australia’s extra-small charities, completed in 2015. These tiny tots of the charity world make up over one-third of all Australian charities (37%). Who are these charities and how do they operate? Using her fundraising expertise, Pamela comments on the revenue and staffing of these small organisations, giving tips and insights along the way.
Who are the extra-small charities?
Very small charities are those 19,000 Australian charities that generate less than $50,000 p.a.
The ACNC report paints an interesting picture of a segment of this charities sector that, while utilising a high percentage of volunteers, represents over a third of Australian charities and yet raises only 0.2% of sector revenue. [i]
The most common purpose for these charities is Religion (31%) and then Social Services (14%).
They are special as they offer opportunities for community members to become involved in causes that are important to them allowing them to develop and contribute their skills.
Revenue and expenses of extra-small charities
Collectively, these very small charities reported income of $301.2 million or only 0.2% of the charity sectors’ total income of $134.5 billion. Of great concern is that, in total, the tinies spend 20% more than they earn.
What are they spending on? Not staff. Just 11.3% of expenditure was allocated to employee costs and more than two-thirds (68.1%) of all these charities spent nothing on employees.
While 38.4% of all registered charities had Deductible Gift Recipient (DGR) status in 2015, a smaller proportion (29.7%) of extra-small charities had DGR status. Still, it is a surprisingly high figure given the size of these organisations in terms of staff and the revenue generated. This could suggest that these organisations are not making the best use of the opportunity DGR status offers.
Although there are signs of change, extra-small charities have not been accessing government grants to the same level as the wider charities sector. Very small charities have a high reliance on philanthropic support at 38% of total revenue compared with 8.3% across the sector. Extra-small charities received government grants to the value of $17.2 million representing a small (5.7%) but growing share of their total income. For total charity income, government funding accounted for 41.4% – a wide disparity.
There has been considerable growth of revenue for at least 9,372 of these very small charities (of those that submitted financial information for both 2014 and 2015). They reported gross income of $225m in 2015, an increase of 38.4% on the previous year whereas the sector as whole had an increase of 2% only. Growth came in particular from increases in government funding at 83% as well as over 47% increase in donations and bequests.
Staff & Volunteers of extra-small charities
Four out of five of extra-small charities hire no staff with nearly 70% operating with volunteers only.
Extra-small charities utilise significant numbers of volunteers and therefore can be seen to be contributing to the Australian community – both in terms of utilisation of resources and delivery of services. 86.6% of extra-small charities utilise volunteers. This is higher than on average for the broad charity sector at 84.1%.
Interestingly, there is a difference between this segment and the wider charity sector when it comes to the category of activity and the amount of staff hired in that category.
Extra small charities employ two in every five of employees in the religion sector. Religion is the sector with the highest employment rate (39.5%) for extra-small charities compared with only 4% in the wider sector. It is the opposite in the health sector where the wider sector employs 29.4% of all staff while the extra-small charities employ only 5.2% of all staff. It is tempting to consider that this difference is cost related: i.e. staff for the religious sector are less expensive to hire and have fewer development costs than those of the health sector.
It is not clear from the research to what extent these extra-small organisations hired fundraising staff. It is very difficult for small organisations to find the surplus funds needed to employ a fundraiser. They should know that it might be worthwhile starting with a part-time fundraiser if they cannot afford one full-time. It is much better to have a dedicated part-time fundraiser than an employee that does fundraising and other tasks – because the chances are they will not do the fundraising. If there is no fundraising staff, then the onus will fall on board members or a generalist staff member often resulting in lower revenue generation or difficulties in managing and maintaining donor relationships.
If you are involved with a not for profit organisation that would value assistance with your fundraising, AskRIGHT provides a suite of free resources as well as free consultation and training that will help small organisations get their fundraising underway.
To find out how Pamela can help your organisation, contact p.legaud@AskRIGHT.com.
Latest posts by Pamela Sutton-Legaud (see all)
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- Now is the Time for Girls’ Schools - May 30, 2018
- Australia’s Extra-Small Charities are Extra-Special – Here’s Why - August 8, 2017
[i] This analysis utilised data compiled by the ACNC received from registered charities at the end of 2015 reporting period so is based on one year’s data only. The report provides the most comprehensive record to date of Australia’s smallest charities, those which had an annual income of less than $50,000 in 2015. The report builds on the material contained in the Australian Charities 2015 report.