Australia / Analyst Insights
Australian charities are adjusting to lower government funding
by Celine Pascal
Nov 16 2016

According to the Australian Charities and Not-For-Profits Commission, Australian charities represented $103 billion in 2014. However, government support, which is a primary source of revenue for charities and not-for-profits, has declined over the past five years and constrained revenue growth. This trend has come about as Australian governments have increasingly focused on cutting back spending. As a result, organisations have been forced to rethink their revenue raising strategies. Two of Australia’s most well-known charities, The Australian Red Cross Society and World Vision Australia, have focused on developing innovative strategies to compensate for declining government expenditure.

The Australian Red Cross Society is a not-for-profit organisation that provides humanitarian services in Australia and nearby countries. The organisation’s total revenue declined by 12.6% over 2014-15, despite posting revenue growth of 8.0% in the previous year. The Australian Red Cross Society has stated that grants from the government to fund humanitarian services accounted for about 71% of its income in 2013-14, while donations, legacies and sponsorships represented about 19% of revenue. However, government support declined to 62% of funding in 2014-15, and the latter increased to 26%.

World Vision Australia is a locally owned not-for-profit organisation that provides international development aid, relief, and advocacy services. The organisation’s total revenue grew by 12.0% for the year ending September 2015, primarily due to monetary and non-monetary donations, gifts, bequests and legacies. Child sponsorship declined by 4.6% in 2015, but still contributed about 43% of the total income, with only about 10% of total revenue coming from government grants. Furthermore, the organisation’s other revenue, which includes appeals, non-government grants, cash donations and gifts, and investment income, grew by 17.8%. This was largely driven by increasing discretionary incomes, resulting in people donating more to the charity.

Charities and associations haven’t traditionally pioneered or emphasised technology as part of their business strategies. Despite generally low technology usage, both organisations have incorporated technology in fundraising strategies to enhance member experiences and retention, and improve operations. Moreover, it has also enabled associations to move away from traditional door-knocking and mail communication channels.

World Vision Australia has partnered with PayPal to launch new payment capabilities that aim to improve supporter experiences and facilitate donations. In July 2015, the organisation partnered with Australian-based Good Thnx platform, which makes use of smartphones to let users donate to their chosen charity. The Australian Red Cross Society has also expanded its donations through partnerships and technology-based strategies. In January 2016, the organisation partnered with technology-based transport company Uber to facilitate and increase clothes donations. As such, the Red Cross is expanding its non-monetary donations to rely less on monetary growth.

Constrained government funding has hindered fundraising for many community organisations and encouraged them to diversify their funding strategies. Red Cross Australia and World Vision Australia have attempted to improve their monetary and non-monetary donation rates through partnerships and technology. Additionally, higher household discretionary incomes have increased donation rates.

Relevant companies:

The Australian Red Cross Society

World Vision Australia