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February 22, 2010
In response to the economic climate, 85 per cent of Australian third sector organisations are changing their focus from cost cutting to generating revenue growth over the next twelve months.
The second survey by the Centre for Social Impact (CSI), PricewaterhouseCoopers (PwC) and the Fundraising Institute Australia (FIA), Managing for Recovery, reveals that in the face of the worldwide financial crisis, Australian charities generally expect a positive year ahead.
Professor Peter Shergold, CSI's Macquarie Group Foundation Professor and report co-author emphasised that the second survey provides an opportunity for the third sector to see how they have fared since the initial impact of the economic downturn and to get a snapshot on what their future outlook is likely to be for the next 12 months. Listen to the interview with Professor Shergold on Radio National. Read article in The Australian on Tues 23rd Feb.
The survey finds that although conditions have been tough for charitable organisations, there is now a mood of cautious optimism returning and a shift in focus from cost cutting to revenue raising.
Professor Shergold said, "The Australian third sector has been through a tough period but has not done as badly as anticipated six months ago. Stable support from government and less severe declines from other sources such as corporates has helped lessen the impact."
"In the six months since the last survey, more than half of the respondents experienced the pain of declining revenue, but now only a quarter (28 per cent) are expecting further declines going forward. While these figures are still not good, they are considerably better than was previously expected and an increasing spirit of cautious optimism now exists in the sector. The economic upturn we're seeing in Australia is being mirrored in the incomes of the third sector."
"Government funding has been very important in providing some stability of revenue to the sector over the last 6 months but fundraising income is bouncing back reasonably strongly and is expected to continue to do so. In particular corporate funding for the sector fell much less steeply than many anticipated, is now recovering and is expected to continue to do so. The sentiment of the third sector towards government is a positive one with only 8 per cent characterising their relationship with government as poor."
"Looking forward there is a clear difference in expectation between small and large organisations in the third sector with the latter being much more confident about accessing increasing government income into the future."
Survey co-author and PricewaterhouseCoopers partner Rick Millen said, "Last year's survey showed 64 per cent of not-for-profits anticipated a drop in income from corporates. But corporates have continued to support the sector more strongly than anticipated 6 months ago, and we're seeing much more optimism with 82 per cent expecting corporate fundraising will remain flat or begin to grow again. It has been really encouraging to see that despite budgetary pressures corporates have not abandoned the not-for-profit sector. This perhaps reflects deeper and more sustainable cross sector relationships that have been established in recent years."
According to the survey, the outlook for all types of fundraising income has improved significantly and is expected to continue to do so. Third sector organisations are now looking to leverage this trend by applying more resource to increasing public awareness and fundraising activities.
Fundraising Institute Australia CEO Chris McMillan said the survey clearly showed how swift action by the third sector in the first half of 2009 in putting sustainable business strategies in place ensured the sector successfully weathered the financial storm.
"It's imperative not-for-profits continue to have a clear financial plan and strategy over the next 12 months to ensure their sustainable future in a competitive market," Ms McMillan said.
Mr Millen said larger organisations have fared better than their smaller counterparts in the last 6 months, with two in five (39 per cent) of large respondents experiencing an increase in income compared to a quarter (25 per cent) of small organisations. This trend is expected to continue across all sources of funding.
"There are pluses and minuses to this as large not-for-profits are likely to obtain more government funding than small not-for-profits," Mr Millen said.
"On the other hand, larger organisations are more likely to have investments, and therefore suffered greater falls in investment income as a result of the downturn."
The Managing for Recovery survey was conducted in December 2009. In total, 119 third sector organisations responded to the survey. It is a follow-on from the Managing in a Downturn survey conducted in April-May 2009.
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