Australian Charities and Not-For-Profits Commission
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Australian Charities and Not-for-Profits Commission The Australian Charities and Not-for-Profits
Commission (ACNC) is Australia’s national charity regulator. Registered charities are required to provide the ACNC with an Annual Information Statement comprising up-to-date corporate governance and financial data. The ACNC has commissioned the Centre for Social Impact (CSI) at UNSW to analyse charity data and provide reports for distribution to the sector and the broader Australian community. This closes the feedback loop for charities required to provide data and provides empirically based insights into Australia’s charities. ACNC data can also be explored at: http:// australiancharities.acnc.gov.au
The Centre for Social Impact The Centre for Social Impact (CSI) is a collaboration between the University of New South Wales, The University of Western Australia and Swinburne University of Technology. CSI’s mission is to create beneficial social impact in Australia through teaching, research, measurement and promoting public debate. We consider and promote best practice and thought leadership in the context of a systems thinking approach to social purpose.
The Social Policy Research Centre The Social Policy Research Centre (SPRC) at the University of New South Wales was founded in 1980 as Australia’s first national research centre dedicated to shaping awareness of social welfare issues. The Centre makes a positive impact through independent and leading research that explores the key social issues of poverty, inequality, wellbeing and justice.
Research team Centre for Social Impact Roger Simnett, Abigail Powell, Rebecca Reeve, Andrew Young, Ioana Ramia Social Policy Research Centre Natasha Cortis
Suggested citation Powell, A., Cortis, N., Young, A., Reeve, R., Simnett, R., and Ramia, I. (2016) Australia’s Smallest Charities 2015. Centre for Social Impact and Social Policy Research Centre, UNSW Australia.
Contact for follow-up Abigail Powell, Senior Research Fellow, Centre for Social Impact: Email: [email protected] Ph: 02 8936 0916
Acknowledgements The research team has benefited from the extensive expertise, commitment and support of Susan Pascoe AM, Ross Gillott, Susan Cotterill, Melville Yates, Tim Liu and Benjamin Rashid from the ACNC, and Chris Twomey from Western Australian Council of Social Services (WACOSS). We also thank the charities that contributed to the case studies: Diamond Creek Men’s Shed; Yarra Foundation; Brave Foundation; Living Child; Women’s Federation for World Peace Australia; Haemophilia Foundation ACT; and School Volunteer Program ACT. Any errors or omissions are those of the authors.
©ACNC for the Commonwealth of Australia. You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ACNC or the Commonwealth endorses you or any of your services or products). However, we do ask that you cite the report using the suggested citation above.
2 1. CONTENTS
3 2. FIGURES
4 FIGURES IN APPENDICES
5 3. ABBREVIATIONS
ABN Australian Business Number ABR Australian Business Register ACNC Australian Charities and Not-for-profits Commission AIS Annual Information Statement CSI Centre for Social Impact DGR Deductible Gift Recipient L Large charities (total income $1,000,000 to <$10,000,000) M Medium charities (total income $250,000 to <$1,000,000) ORIC Office of the Registrar of Indigenous Corporations PBI Public Benevolent Institution S Small charities (total income $50,000 to <$250,000) SPRC Social Policy Research Centre XL Extra large charities (total income $10,000,000 to <$100,000,000) XS Extra small charities (total income <$50,000) XXL Extra, extra large charities (total income >$100,000,000)
6 4. EXECUTIVE SUMMARY
This report profiles almost 19,000 of Australia’s smallest charities registered with the Australian Charities and Not-for-Profits Commission (ACNC), each of which reported an income of less than $50,000 in 20151. We refer to these charities as ‘extra small’ charities, ‘charities with less than $50,000 in income’, or ‘Australia’s smallest charities’ throughout the report. This is a companion report to Australian Charities Report 2015 and other resources available at http:// australiancharities.acnc.gov.au.
Key findings
In 2015, 37.1% of Australia’s 50,908 charities had an income under $50,000. Together, these 18,892 extra small charities had:
Total income of $301.2 million; total expenses of $361.3 million
Total assets worth $5.0 billion, with net assets worth $4.5 billion after liabilities
26,177 paid staff employed and a total of 436,234 volunteers.
Size and location
Among Australia’s extra small charities, 3.8% reported no income for 2015; 38.7% had incomes greater than zero but less than $10,000 a year. Four in five extra small charities operated in only one state or territory; 7.2% of extra small charities operated overseas.
Activities and beneficiaries
Most extra small charities reported performing an activity in the reporting period (91.2%), that is, relatively few were ‘dormant’ in 2015.
Charities with no income were less likely to report an activity (63.3%).
As with charities of all sizes, the most common main activity for extra small charities was religion (30.6%).
However, extra small charities were more likely than average to report that their main activity was in social services (13.9%), culture and recreation (10.5%) and as philanthropic intermediaries (8.8%).
As with other charities, around half of extra small charities reported supporting the ‘general community in Australia’ (48.7% of extra small charities), while large proportions also reported helping ‘people of all ages’ (34.5%), ‘women’ (31.8%) and ‘men’ (30.0%).
Staff and volunteers
1 This is calculated based on gross total income reported in the AIS.
7 In 2015, extra small charities employed a total of 26,177 staff – over two-thirds of these were casual staff (66.9%).
However, four in five extra small charities engaged no paid staff.
Extra small charities’ paid staff were concentrated in a relatively narrow range of sectors.
For example, the culture and recreation sector employed more than half of all employees within extra small charities (58.1%). However, this same sector employed only 4.4% of all charity employees.
Staff that work in extra small charities are much less likely to work in education and research and health than average, as these sectors tend to consist of larger charities.
Extra small charities have high levels of volunteer engagement:
Together, they engaged 436,234 volunteers in 2015.
Over two-thirds of extra small charities (68.4%) operated with volunteers only and no paid staff, compared to only 39.1% of all charities.
Income sources
In total, extra small charities reported incomes of $301.2 million. Compared with all charities, extra small charities’ incomes consisted of relatively low proportions of government grants, whereas relatively high proportions came from donations and bequests.
Among extra small charities, government grants comprised 5.7% of total income, whereas among all charities, income from government comprised 41.4% of income.
Extra small charities received 38% of income from donations and bequests, compared with 8.3% for all charities.
Expenses
In total, extra small charities spent $361.3 million pursuing their purposes; 11.3% of this was on employee expenses and 24.9% on grants and donations expenses.
Financial status
Extra small charities’ net income ratio was –19.8% (indicating an average deficit of 19.8% of total income). By contrast, across the whole sector charities had an average surplus equivalent to 8.7% of total income. Rather than indicating poor financial performance, this is likely to reflect a range of circumstances.
For extra small charities, total assets minus total liabilities amounted to $4.5 billion. The net asset ratio for this group was 89.9% (indicating that net assets were 89.9% of total assets). This is higher than the 69.7% for all charities and higher than any other size segment, which may be because extra small charities are less likely than others to have significant liabilities.
Change over time (2014–2015)
8 Charities that were extra small in 2014 experienced high levels of growth, with income growing by 38.4% between 2014 and 2015.
9 Where does the data come from?
Data comes from all Australian charities that were registered with the ACNC at the end of their 2015 reporting period.2 This report uses the best and most recent data available for each charity. In most cases, data came from Annual Information Statements (AIS) provided for 2015, or from 2014 or 2013 where 2015 data was unavailable. Where no AIS data was available, information was used from the ACNC Register. Where financial information was not reported by charities, it was estimated based on data reported by comparable charities, to help build a complete picture of the charity sector.
Visit http:// australiancharities.acnc.gov.au to:
Download a summary (14 page) Australian Charities Report 2015 – a view of the charity sector in pictures.
Interact with ‘datacubes’ to view and customise graphics for the whole charity sector or for one or two sectors (for example, health or education).
Download specific interest reports. A report on aged care charities will be added in 2017. Reports on charities working with people with disabilities, charities working internationally and charity red tape were completed in 2015.
2 Charities which, by the end of the 2015 AIS lodgement period, had not provided their AIS for 2 years (and met the criteria for deregistration) were excluded. A number of charities which report to the Office of the Registrar of Indigenous Corporations (ORIC) were also excluded.
10 1. INTRODUCTION This report explores the characteristics of charities registered with the Australian Charities and Not-for-profits Commission (ACNC) in 20153 with an annual income of less than $50,000. We refer to these charities throughout this report as ‘extra small charities’ or Australia’s ‘smallest charities’. In 2015, there were 18,892 extra small charities in Australia, accounting for 37.1% of all charities. Extra small charities are a significant subset of the ACNC’s category of small charities (55.2%), which captures charities with annual revenues of less than $250,000.4 Australia’s 18,892 extra small charities are of interest not only because of their numerical significance, but because they differ from the wider charity sector in important ways. Compared with larger charities, smaller charities have been found to depend more on volunteers (Morris, 2000) and on fundraising income (Van der Heijden, 2013). Further, while small charities are often considered highly specialised, flexible, locally embedded and responsive to localised or niche needs, they also face some risks. Small charities have been found to be more financially vulnerable for example (Backus and Clifford, 2013; Kay, 2016) and many find it hard to compete with large charities for government contracts or donor funds (Kay, 2016; Morris, 2000). It may be difficult for small charities to offer their paid staff opportunities for professional development, and they may face difficulties contributing to and influencing government reform, and in growing and diversifying their funding base (Cortis and Blaxland, 2014). By providing a profile of Australia’s smallest charities, the report shows how they compare with the rest of the charity sector, and underlines the importance of the contribution these charities make to social, cultural, and economic life in Australia and overseas. Some caution should be used, however, when interpreting the findings. The extra small size categorisation used in this report is based on reported income for one year only5 and does not take into account assets or expenses. Future work should consider how the categorisation of charities by size may be improved. The report should be read alongside the Australian Charities Report 2015. Like that report (which profiles all registered charities), data here comes from charities that were registered with the ACNC at the end of their 2015 financial year.6 The dataset uses the best and most recent data available for each charity. In most cases, data came from Annual Information Statements (AIS) provided for 2015, or from the 2014 or 2013 AIS (which ever was more recent) where 2015 data
3 Charitable organisations must register with the ACNC and be recognised as charities under the Charities Act 2013 (Commonwealth) in order to receive Commonwealth charity tax concessions from the Australian Taxation Office or access other Commonwealth exemptions or benefits. Throughout this report, the term ‘charities’ refers to charities registered with the ACNC. Information about the statutory definition of charities is provided in Appendix D.
4 Small registered charities in Australia are regulated by the ACNC through a simplified framework. Reporting obligations are available at http://www.acnc.gov.au/ACNC/Manage/Reporting/Report_information_- _small_charity/ACNC/Report/ReportSmall.aspx?hkey=a866d65c-f225-4fe4-8880-c80fe65f8d02
5 This is calculated based on gross total income reported in the AIS, whereas ACNC categorisation of small, medium and large charities is based on revenue. Revenue is the income that arises in the course of ordinary activities of an entity, whereas total income includes revenue and income outside the ordinary activities of an entity. Small charities are only required to report on income/receipts not revenue in the AIS, so detailed size categorisation is only possible by income.
6 Charities which, by the end of the 2015 AIS lodgement period, had not provided their AIS for 2 years (and met the criteria for deregistration) were excluded. Charities which report to the Office of the Registrar of Indigenous Corporations (ORIC) were also excluded.
11 was unavailable. Additional data was taken from the ACNC Register and from the Australian Business Register. Where no AIS data was available, data was estimated, where possible using information from the ACNC Register. The methodology for this estimation process is described in Appendix B: Further methodological details. Together this information builds the most accurate picture of the characteristics, structure, activities, purpose and resources of Australia’s smallest charities to date. For the first time, it also uses a panel data set which shows the change among charities between 2014 and 2015.
Extra small charity case studies Throughout this report we include a number of case studies of extra small charities. For anyone not familiar with extra small charities, these case studies provide an insight into the type of work Australia’s extra small charities do and how they operate in terms of staff, volunteers, where they get their income from and what they spending their funding on. These case studies highlight the diversity of extra small charities found in Australia and their purpose.
2015 Report series This report should be read alongside Australian Charities Report 2015.
Data can also be explored at http:// australiancharities.acnc.gov.au, where you can:
Download a summary of Australian Charities 2015 Report – a view of the charity sector in pictures.
Interact with ‘datacubes’ to view and customise graphics for the whole charity sector or for one or two sectors (for example, health or education).
Download specific interest reports. A report on aged care charities will be added in 2017. Reports on charities working with people with disabilities, charities working internationally and charity red tape were completed in 2015.
Constructing the dataset Full details of the dataset are in Australian Charities 2015 Report. In summary, data from the following sources was matched using Australian Business Numbers (ABNs): The ACNC Register The Australian Business Register (ABR) Charities’ Annual Information Statements (AIS). In the whole dataset, there were 50,908 records containing information about the activities of 51,679 charities.7 However, this report is focused on the 18,892 charities considered ‘extra small’ on the basis that their annual incomes in 2015 were under $50,000.
The ACNC register The ACNC register contains information provided by charities for the purposes of registering with the ACNC. This includes their legal name, ABN, date of establishment and their charitable purpose. The register is available publicly on the ACNC website.8 The ACNC register is a ‘living’ dataset. It is regularly updated by the ACNC as new charities are registered or report a change of
7 There were three extra small charities which reported as part of one group. Each group is treated as a single charity.
12 details, or as charities have their registration voluntarily or involuntarily revoked. Some data in this report, including charities’ date of establishment, and charitable purpose, is derived from the register, as this information was not captured in the AIS.
The Australian Business Register (ABR) dataset The ABR contains details provided by Australian businesses and organisations when they register for an Australian Business Number (ABN). It includes information about whether or not charities are endorsed for tax concessions. Relevant ABR data were obtained by the ACNC and provided to the research team for matching to the ACNC Register and 2015 AIS data. In this report, ABR information is used to profile charities’ legal structure, and their Deductible Gift Recipient (DGR) status. It is important to note that for some charities, ABR data may be incorrect or out of date compared to data held on the ACNC Register.
The Annual Information Statement (AIS) dataset Most information in this report comes from information reported by charities to the ACNC as part of their AIS. The 2015 AIS relates to charities’ characteristics and activities in the reporting period ending in 2015. The standard ACNC reporting period is the financial year from 1 July to 30 June. However, charities that use a different reporting period can apply for a ‘substituted accounting period’ (ACNC, 2015e). The time period reported in the AIS is based on the reporting period used by the charity. The dataset incorporates information from the 2015 AIS for 15,839 extra small charities that had provided the required information to the ACNC by 19 September 2016 (83.8%). Among those who provided their 2015 AIS, there were three extra small charities which reported their AIS as part of one group. This group is treated as a single charity for the purposes of the analysis, as it is not possible to disaggregate the data and assign values to each charity in the group. The AIS captures information including charity size, activities, beneficiaries, employee and volunteer numbers, and locations of operations. Since 2014, AIS information has included financial information. Not all registered charities were required to provide an AIS in 2015 (such as newly established charities), and not all providing an AIS were required to provide financial information (such as basic religious charities). In addition, some charities required to report had not done so in time for analysis and inclusion in this report. In these cases, proxy information for the charity was used. Proxy information was required for the 3,052 charities for which 2015 AIS data was not available.9 The information for these charities was estimated based on the best available data about the charity which was held by the ACNC. In most cases information was drawn from the charity’s previous AIS. For extra small charities, data came from the 2014 AIS for 1,580 charities and from the 2013 AIS for 48 charities. Where information could not be drawn from a previous AIS, estimation processes were used, based on information in the ACNC Register (1,424 charities). The approach to estimation is described in Australian Charities 2015 Report. The composition of the dataset is presented in Figure 1.1.
8 Charities are able to withhold commercially sensitive details, if public release could cause harm to the charity or a person, or endanger public safety ACNC. (2016) Information on the ACNC Register: withheld information. Available at: http://acnc.gov.au/ACNC/FindCharity/About_Register/Withheld_info/ACNC/Reg/With_info.aspx.
9 Charities did not report 2015 either because they were not required to, or in a smaller number of cases, because they had not done so in time for the analysis.
13 Figure 1.1 Summary of data sources
Source Number of charities % Cumulative % 2015 AIS 15,839 83.8 83.8 Group charities, 2015 AIS 1 0.0 83.8 2014 AIS 1,580 8.4 92.2 2013 AIS 48 0.3 92.4 Data estimated, where possible based on 1,424 7.5 100.0 information in ACNC Register Total 18,892 100.0 Notes: *three charities reported as one group
Some questions in the AIS were not answered by all charities, so the total number of responses to each question may vary. Non-response reduces the accuracy with which the findings represent the whole population of registered charities. Notwithstanding, the near-complete nature of the data, and the approach to identifying and correcting errors means the dataset provides the most accurate and comprehensive information ever available about Australia’s charities to date.
Want to know more about the data? Further information about the dataset, including estimation processes and data quality, can be found in the Appendix of Australian Charities 2015 Report.
14 5.CASE STUDY: DIAMOND CREEK MEN’S SHED The Diamond Creek Men’s Shed is based in Nillumbik Shire – in Melbourne’s north-eastern suburbs – and has been operating since 2011. The Shed is led by a small group of local men who are passionate about ‘finding creative ways to promote wellbeing’ for other men in their community. Like 81.4% of Australia’s smallest charities, the Diamond Creek Men’s Shed has no paid staff and is entirely reliant on volunteers. It has a small annual membership fee that is affordable even to those on a low income or who are reliant on government support. In 2015, it recorded income of $19,800 and expenses of $11,308. Its funding sources included grants from the Victorian and Commonwealth Governments, support from other local community organisations and businesses, and through fundraising and community donations. The Diamond Creek Men’s Shed conducts a range of activities, including bike-riding groups, woodworking programs and regular day outings for members. However, its Tuesday lunches are perhaps the most important aspect of its work. These lunches allow the charity to create a safe and trusting environment for men, and encourage conversations about issues affecting their personal lives or health. Conversations like these provide men with the opportunity to support each other as they share personal issues; some which may not even be shared with their own family members. The Diamond Creek Men’s Shed also runs projects where members can help support other local community organisations, including the local quilters group, disability support organisation, and Scouts group. Networking with other charities produces benefits for the local community, as well as increases the Men’s Shed’s presence in the area. The Men’s Shed’s main challenge is securing funding, be it through systematic searches for grants or regular fundraising. As a volunteer-run organisation, it also faces the challenge of ensuring it keeps up with other obligations such as OH&S, governance, building regulations and public liability. Looking into the future, the Diamond Creek Men’s Shed hopes to grow its membership so it can increase the range of services and activities it offers, including extending its operating hours. It also plans to build on existing networks and to form new partnerships with other organisations. It hopes to further broaden its engagement with the local community and increase awareness of men’s health. The Men’s Shed works to reduce member churn by addressing new members’ needs and expectations. It is also focussing on being recognised as a professional, proactive organisation that makes a difference.
15 2. INTRODUCING AUSTRALIA’S SMALLEST CHARITIES In this chapter we introduce some basic information about Australia’s smallest charities, including a further breakdown of the size of extra small charities by their income, how old Australia’s smallest charities are, where they are located, and the business structures they use.
How many extra small charities are there? In 2015, there were 18,892 extra small charities (income less than $50,000). These charities made up 37.1% of all charities in Australia (50,908).
Examining the size of Australia’s smallest charities Charity size is indicated by total income, based on a charity’s most recent financial data reported to the ACNC in the AIS, where possible, or extrapolated using an estimation model as described earlier and in the Australian Charities 2015 Report. As noted in the introduction, some caution should be used when interpreting findings based on income. This is because income does not reflect assets. A charity may, for example, have large assets and no current revenue, or could have small revenue in the current year, but large expenses. Future work should consider how the categorisation of charities by size may be improved.
Charities’ total income Among the extra small charities in Australia, there is a wide variation in the amount of income charities receive. Of the 18,892 extra small charities: 19.1% had an annual income of more than $25k, but less than $50k 38.4% had an income of between $10k and $25k 38.7% had an income greater than zero, but less than $10k 3.8% of extra small charities reported no income in 201510. This is shown in Figure 2.2. These four income categories are used throughout this report to explore some of the nuances among Australia’s smallest charities. Figure 2.2 Small charity size, 2015 % of extra small Size n % of all charities charities No income reported ($) 720 3.8 1.4 >$0–$10k 7,303 38.7 14.3 >$10k–$25k 7,255 38.4 14.3 >$25–$50k 3,614 19.1 7.1 Total 18,892 100.0 37.1 Figure 2.3 Size of extra small charities, 2015 (%)
Notes: n = 18,892
10 Charities may have reported no income if they have had no activity in the existing year, for example.
16 How old are the smallest charities?
Years since establishment On average, extra small charities in the dataset had been established for 31.0 years (median 20 years), which was younger than the average of 34.1 years across all charities (median 24 years). Figure 2.4 shows that compared with all charities, slightly higher proportions of extra small charities had been established in the last year, 1 to 5 years, 5 to 10 years, and 10 to 20 years. Nevertheless, around a third of extra small charities (32.2%) had been operating for more than 20 and less than 50 years. Further, 14.3% of extra small charities had been operating for between 50 and 100 years, and 4.7% had been operating for more than 100 years. This underlines how extra small charities are not necessarily newly established, with more than half established for 20 years or more.
Figure 2.4 Years since established, 2015
Notes: n = 15,959 extra small charities, data was missing for 2,933 charities; n = 44,871 total charities, data was missing for 6,037 charities.
Figure 2.5 shows the mean age of extra small charities, by their detailed size category. Extra small charities that had incomes between $10,000 and $25,000 were older, on average, than other extra small charities (mean age of 37.7 years). This is an interesting finding, suggesting that a higher income does not necessarily mean that a charity is more established. Figure 2.5 Mean years since charity was established by detailed size, extra small charities 2015
Notes: Extra small charities n = 15,959, data missing for 2,933 charities.
Figure 2.6 shows the proportion of extra small charities in each age category, by main activity. It shows that a higher proportion of extra small international charities were established less than 5 years ago, compared to other extra small charities (41.8% compared with 12.1%). As noted above, one in five extra small charities were established more than 50 years ago. When breaking this down by main activity, the analysis found that more than a quarter of extra small charities with main activities in religion or social services were over 50 years old (27.5% and 25.8% respectively). In contrast, among extra small international and environmental charities, very few were over 50 years old (2.4% and 2.6% respectively). Figure 2.6 Proportion of extra small charities in each age category by main activity, 2015
Where are the smallest charities located? The dataset captures two types of information about charities’ locations. These are: Main or registered business address, including the state or territory and postcode. This shows the locations in which charities were registered or based.
17 The Australian states and territories and the overseas countries in which charities’ conducted charitable activities. This shows the jurisdictions in which charities operated.
Registered business address Information about charities’ main business address includes their state and postcode. Of course, many charities operate in multiple sites. Their registered business address indicates their ‘home’, but does not necessarily represent the areas in which they conduct activities.
Distribution of charities across Australian jurisdictions Figure 2.7 shows that the largest number of extra small charities had a registered business address in New South Wales (6,722, or 35.6% of extra small charities), and 38.2% of extra small charities operated there. A little over a quarter of extra small charities were based in Victoria (26.4%) while 29.3% of extra small charities reported operating there. Less than 1.0% of extra small charities were registered in the Northern Territory (123 charities or 0.7%). However, 1,100 charities (5.8% of extra small charities) operated in that jurisdiction, indicating relatively high servicing by extra small charities based in more populous states. Figure 2.7 Extra small charities registered and operating in each jurisdiction, 2015
Extra small charities’ registered address in Extra small charities operating in each each jurisdiction jurisdiction n % n % NSW 6,722 35.6 7,213 38.2 VIC 4,979 26.4 5,539 29.3 QLD 2,732 14.5 3,675 19.5 WA 1,973 10.4 2,902 15.4 SA 1,525 8.1 2,497 13.2 TAS 483 2.6 1,485 7.9 ACT 354 1.9 1,431 7.6 NT 123 0.7 1,100 5.8 Total 18,892 100.0 – 100.0
Notes: The number of charities operating in each jurisdiction adds to more than the total of charities, as a charity can operate in more than one jurisdiction. Figures may not add due to rounding.
Charities operating in multiple states and territories Many charities operate in multiple sites within the state or territory in which they are based, and beyond. While the ACNC does not collect information about the exact locations in which charities operate, the AIS asks which states and territories charities operated in. Reflecting the small size of most charities, 79.7% reported operating in one state or territory only, while 4.5% operated in every state and territory, and 9.2% did not have operations in Australia during the reporting period (although they may have operated overseas). While these findings tend to be similar to the findings for all charities, they are in stark contrast to extra, extra large (XXL) charities, where more than 50% operate in two or more jurisdictions. Figure 2.8 Number of states and territories that charities operated in, by income, 2015 (%)
Notes: n = 17,156; data missing for 1,736 charities.
18 Size of charities in each state or territory There were some differences in the size mix of charities operating in the states and territories. Figure 2.9 shows the proportion of charities which operated in each jurisdiction according to income. The ACT (54.4%) and NT (59.1%) had the highest proportion of charities operating with less than $10k. NSW had the highest proportion of charities operating with income between >$10k–$25k (40.3%) and >$25k–50k (21.7%). Figure 2.9 Proportion of extra small charities operating in each state and territory by size, 2015 (%)
Notes: As charities could operate in more than one state the total number of charities is greater than 18,892: NSW n = 6,722; VIC n = 2,227; SA n = 1,990; WA n = 140; Tas n = 4,604; QLD n = 2,732; ACT n = 354; NT n = 123.
Charities registered in rural and remote locations The ACNC does not currently collect information about the precise locations of charities’ operations. However, charities which were registered in rural and remote locations can be identified using their main business address. This is shown in Figure 2.10. Postcodes of main business address were coded against the Australian Bureau of Statistics Remoteness Areas 2011, part of the Australian Standard Geographical Classification (ABS, 2011). This shows the distribution of charities across major cities, regional and remote Australia.11 Two-thirds of extra small charities were registered in major cities (62.8%), and a further 21.4% in inner regional, and 12.6% in outer regional Australia. This reflects overall trends for charities, with most registered in major cities regardless of size. Among all charities, extra small charities make up the largest proportion in outer regional Australia, where they account for 44.1% of all charities (regardless of size), compared to 34.3% in major cities. This may suggest that extra small charities are particularly important outside the major cities. Figure 2.10 Charities registered in major cities, regional and remote areas, 2015 (%)
Notes: n = 18,113. Postcodes could not be classified for 779 charities.
Charities operating overseas When charities were asked to report in which Australian jurisdictions they conducted activities, they were also given the opportunity to select ‘overseas’, and were directed to select which overseas countries the charity conducted activities in, or helped communities in. There were 1,342 extra small charities that selected ‘overseas’. These charities make up 32.7% of all charities that operated overseas in 2015 and 7.2% of all extra small charities. Extra small charities reported operating in a total of 245 countries, primarily in the Asia- Pacific region. The most common countries of operation were India (170), the Philippines (114), New Zealand (101), USA (91), Nepal (90), Kenya (86), Cambodia (79), Indonesia (76), Thailand (75) and Papa New Guinea (73). A breakdown by size can be found in Figure A. 1. Detailed background information on Australia’s charities operating overseas in 2014 can be found in Cortis et al. (2016b) and the Australian Charities Report 2015.
11 For definitions, see ABS. (2011) Australian Statistical Geography Standard (ASGS): Volume 5 – Remoteness Structure, ABS Cat. No. 1270.0.55.005. Canberra: Australian Bureau of Statistics.
19 What business structures are used by the smallest charities? Charities’ business structures shape their legal identities, governance structures, financial responsibilities and compliance obligations. Charities are required to declare their legal structure and charitable purpose(s) when registering with the ACNC, and to the Australian Business Register when they apply for an ABN.
Entit y type There was little difference in the entity types of extra small charities and all charities (see Figure 2.11). Of the 18,891 charities for which data was available, the majority (7,672 charities, or 40.6%) were incorporated associations and 6,154 (32.6%) were unincorporated associations. This distribution closely resembled the pattern for all charities. However, compared with the whole charity sector, higher proportions of Australia’s smallest charities were trusts (15.1% compared with 12.3%) and lower proportions were companies limited by guarantee (8.1% compared with 12.2%).
Figure 2.11 Entity type of reporting charities, XS and all charities 2015 (%)
Notes: XS charities= 18,891. All charities =50,792 (data was missing for 114 groups and 2 who did not record their entity type). See also Figure A. 9.
DGR status DGRs are organisations that are endorsed to receive tax deductible gifts.12 Although the criteria for DGR endorsement does not specify size, larger charities were much more likely to have DGR status. While 38.4% of all registered charities had DGR status in 2015, a smaller proportion (29.7%) of extra small charities had DGR status13. By comparison, 85.2% of the largest charities (with over $100 million in annual income) had DGR status. This is shown in Figure 2.12. This is consistent with previous research, which has shown that being a small charity (annual income of under $250,000) more than halves the odds of having DGR status. Further research could continue to unpack other factors affecting DGR status among extra small charities, and whether greater support is needed to assist eligible charities in obtaining it.
Figure 2.12 Proportion of charities with DGR status by size, 2015 (%)
Notes: n = 50,908.
12 DGR status can help charities to attract donations and can enable charities to receive distributions from some charitable funds. Not all charities are able to be DGRs. To be eligible, an organisation must have its own ABN, fall within a general DGR category or have a fund that is part of the organisation which falls within a general DGR category, have acceptable rules for transferring surplus gifts and deductible contributions on winding up or DGR endorsement being revoked, maintain a gift fund (if seeking endorsement for the operation of a fund), and generally, be in Australia (ACNC, 2015c). Data about DGR status was obtained from the ABR.
13 This is slightly lower than the figure reported in the Australian Charities Report 2014 (40.4%), most likely because of the use of the more comprehensive dataset in 2015.
20 DGR status and main activity Figure 2.13 shows the proportion of extra small charities with DGR status in each sector of main activity, compared with all charities. This shows that across each activity sector, there are consistently smaller proportions of extra small charities with DGR status. Figure 2.13 Proportion of charities with DGR status by sector, extra small and all charities 2015 (%)
Notes: n = 15,835 extra small charities; n = 46,831 total charities. Main activity was not available for 4,077 charities.
21 6.CASE STUDY: LIVING CHILD There aren’t many extra small charities which operate overseas; in fact, only 7.2% of all extra small charities reported activities outside Australia in 2015. Among those that do is Western Australian–based charity, Living Child. Living Child was created in response to alarming rates of maternal and infant deaths during pregnancy and childbirth in remote villages of Papua New Guinea. The charity’s volunteers offer professional, evidence-based reproductive health training and support for village volunteers and health centre staff, as well as providing medical supplies and equipment to health workers. The training and resources Living Child provides enables locals to teach others in their communities about the importance of reproductive health. The charity also conducts family planning training at a village level, ensuring everyone benefits. In addition, Living Child also offers leadership training and professional development support to healthcare staff. This builds staff capacity and helps them better manage their health facilities and address other workplace issues. Living Child’s impact in these communities has been evident, with improved outcomes for mothers and their infants. And the charity’s volunteers find working overseas extremely rewarding, with the positive impacts for local people both inspiring and motivating. Operating overseas results in many challenges. For Living Child, those challenges are compounded by working in extremely remote areas of Papua New Guinea. Recruiting volunteers can be difficult, as there are often concerns about health and personal risk. Recruiting the right locals remains a constant challenge as well. Finding sufficient funding is an additional challenge. In 2015, Living Child’s total reported income was $45,278. This income came predominantly from donations and other revenue, with no funding received from government sources. As a completely voluntary organisation, Living Child incurs no employee costs. Its 2015 expenses totalled $38,609, and included $10,378 set aside for grants and donations outside Australia. Other expenses sought to cover basic administrative needs, while insurance for volunteers working in Papua New Guinea remains a significant additional operating cost for the charity. Operating on such a small budget with no paid staff provides further pressures for Living Child. To ensure it meets all governance standards, volunteers invest hours in managing its reporting obligations to a number of different agencies. With only 10 volunteers, time spent meeting these obligations means Living Child has less time to meet its charitable purpose. Living Child would like to see greater support for charities in order to meet their obligations, as well as further streamlining to support reporting at a national level rather than through separate state-based systems. Despite being a relatively young charity, Living Child has achieved much. The charity faced initial resistance from local government while it advocated for greater support for mothers and infants in remote villages. By winning the trust of local people and the local government, Living Child overcame this barrier. The charity has now been officially invited into the Province in which it works, a milestone which will provide it with more opportunities to expand. Living Child says this acceptance is its biggest achievement so far.
22 While Living Child does not have any plans to become a big charity, it believes it will continue to grow as demand for its services increases.
23 3. WHAT DO AUSTRALIA’S SMALLEST CHARITIES DO?
What activities do the smallest charities perform? The AIS asked charities to select their main activities in the reporting period, as well as any general activities they performed. AIS activity areas are based on the International Classification of Non-profit Organisations (ICNPO).14 Activities are examined by grouped main activity areas, referred to as sectors, as well as more detailed main activities. Figure A. 2 details the sectors and corresponding main activity areas they include, as per the AIS15.
Charities which reported any activity Overall, 91.2% of extra small charities reported that they performed some activity in the previous year. This is slightly lower than the average across all charities (96.2%). The reasons for not conducting any activity were not captured. However, it may indicate that the charity was either newly established or winding down; that it did not perform activities every year; or that it may have distributed funds and not considered this an ‘activity’ as such. The likelihood of reporting any activity was strongly associated with income levels for extra small charities. Among charities that reported no income in 2015, only 63.3% of charities reported performing activities, increasing to 98.7% for charities with income over $25,000 (Figure 3.14). Figure 3.14 Extra small charities reporting any activity, 2015
Notes: n = 17,334, activity data missing for 1,558 charities.
Extra small charities and their main activities Information about extra small charities’ main activity was available for 15,835 charities.16 Sector of main activity for extra small charities, and for all charities, is shown inFigure 3.15. Consistent with the whole charity sector, the most common main activities among extra small charities were religious activities. This was the main activity for 4,851 extra small charities (30.6%) (close to the figure of 31.0% for all charities). Compared with all charities, there were lower proportions of extra small charities in education and research. However, there were higher proportions of extra small charities in social services. Relatively high proportions of extra small charities were in the culture and recreation, and philanthropic sectors as well (see Figure 3.15). Figure 3.15 Extra small charities’ main sectors of activity, compared to all charities, 2015 (%)
Notes: n = 15,835 extra small charities; 46,830 total charities. Data was missing about activity for 3,057 extra small charities and 4,078 charities in total.
Figure 3.16 shows the detailed income size of extra small charities in each sector of main activity. The vast majority of extra small charities whose main activity was religion had incomes over $10,000 (86.7%). In contrast, the environment sector and law and advocacy sector operated on relatively less income. Around half of the extra small charities operating in these two sectors had
14 The AIS categories had some minor variations from ICNPO, namely the inclusion of a category for aged care and the exclusion of business and professional associations and unions.
15 For information about grouping of activity areas, see the 2015 AIS.
16 As per our method, where information from the 2015 AIS was unavailable, data from a previous AIS was used.
24 income below $10,000, including 3.7% of extra small charities in each of these sectors reporting no income at all. Figure 3.16 Sector of main activity by size, 2015 (%)
Notes: n = 15,835. Data on main activity was unavailable for 3,057 charities. See also Figure A.3
25 7.CASE STUDY: WOMEN’S FEDERATION FOR WORLD PEACE AUSTRALIA Women’s Federation for World Peace (WFWP) Australia is a chapter of WFWP International, and aims to advance peace through supporting families and children. WFWP Australia’s main charitable activities are categorised under the ‘development and housing’ sector. Only 5.3% of Australia’s extra small charities listed their main activities in this sector in 2015. The charity has a large range of support and service projects within Australia and across Oceania. For example, in 2015 the charity donated sewing machines to an Australian rural town to help newly arrived migrants learn how to sew. In a separate project, it donated portable solar lights to families in a remote village of Vanuatu with no access to electricity. WFWP Australia is a multicultural organisation drawing members across all ages, abilities, nationalities, faiths and cultural groups. This diversity of the charity’s membership is mirrored on its Board. The charity provides volunteers with many enriching opportunities. It has helped its volunteers to connect with others, participate in meaningful community development projects and cultivate a range of skills for their personal development. WFWP Australia’s two main sources of income are its annual fundraising walkathon and its membership fees. These membership fees support the charity’s project work and its ongoing operation. Like 83.4% of extra small charities in the ‘development and housing’ sector, WFWP Australia employs no paid staff. This helps it minimise operating costs and, in doing so, demonstrate the money it raises goes directly to the causes it supports. WFWP Australia recorded total income of $12,543 in 2015. In the same year, it recorded $12,881 in expenses – a figure which is lower than the overall average spent by extra small charities ($19,123). WFWP Australia believes its structure as a small charity has clear benefits. Its reliance on volunteers results in them feeling a very real connection to the charity’s visions and vision. While it is small, the charity is part of a broader network under WFWP International. This means it is able to work with other international chapters, and support them to meet the needs identified in their local community. This provides WFWP Australia with further confidence that its efforts as an extra small charity can help those most in need. WFWP Australia has plans to grow, but realises there are challenges in finding sufficient funding to support this growth. Given the charity is volunteer-based, it can be difficult to ensure sufficient time is given to both its management and increasing the awareness of its charity’s purpose. The charity hopes increasing its volunteer numbers should help to address this issue.
26 How do the smallest charities pursue their purpose? Among extra small charities, the most common charitable purpose was advancing religion, reported by 28.6% of charities, slightly less than the figure for all charities (31.2%). The next most common charitable purpose was advancing education (16.9%) and advancing social or public welfare (11.8%) (Figure 0.17). These correspond to the most common charitable purposes selected across all charities. Figure 0.17 Charitable purpose, 2015 (%)
Notes: n = 18,891 extra small charities, data for one charity was missing.
How charities achieve their purpose The 2015 AIS gave charities the opportunity to describe how their charity’s activities and outcomes helped achieve their purpose. Responses to this show that the most commonly occurring words were ‘community’, ‘support’, ‘provided’, ‘activity’, and ‘people’, similar to the broader charity sector. Figure 0.18 Word frequency: how Australia’s smallest charities pursue their purpose
27 The descriptions of how extra small charities pursue their purposes reflect their considerable contribution in and beyond their local communities. Many extra small charities described some quite specific and localised activities, for example: Fundraising efforts to assist with the upgrade of the canteen and grounds and garden group towards sustainable vegetable gardens throughout the school (Economic, social and community development charity based in NSW). The hall committee holds fundraising events to pay for insurance, water rates, electricity and general up keep and maintenance of the Hall and Grounds. So the community may have access to the facility whenever the need arises (Culture and arts charity based in Queensland). We liaised and co-operated with three local municipalities for the purpose of snake relocation and the rescue of injured and orphaned wildlife (Animal protection charity based in TAS). Provided school starter kits to children from needy families. Provided refugee welcoming kits to young new arrivals and school lunch boxes (Other education charity based in WA). Other extra small charities described pursuing a broader set of purposes, which could be expected to make an impact beyond their immediate local communities, for example: Promote the research and understanding of intellectual disability. Bring together people with an interest in the field of intellectual disability. Promote high standards of practice in the field of intellectual disability (Civic and advocacy charity based in TAS). Provided total $32,000 in grants to support women's legal services, women's cancer research, and indigenous secondary school girls (Grant-making charity based in QLD). Notably, many extra small charities pursued purposes overseas. Some examples of how they did so are as follows: We conducted training and education in several African countries and provided disability support and tutoring (international activities, based in SA). Supporting an orphanage in the Philippines. Family support for families with child protection difficulties (Social services charity based in WA). During the year the Trust distributed wheelchairs to disabled Cambodians free of charge (Other education charity based in VIC). Assisted in maintaining an 850 laying hen house and a piggery at Leprosy and Care centre. Assisted destitute women set up micro business with business training and capital funding. Provided blankets to orphans (International activities, based in QLD). We supplied monthly food drops to families, helped with our families getting their HIV treatment, built houses for some of our families, supplied school books and uniforms for our children including bikes for them to get to school, supplied filters for water drinking and storage tanks and helped with farming (Income support and maintenance charity based in VIC).
28 Notably, 8.2% of extra small charities (1,434) reported that they were planning to change how they achieve their purpose, which was slightly higher than the average (6.3%) for all charities. This difference may reflect that some extra small charities are in the process of scaling up or scaling down their operations, and may be more likely to report an intention to change their purpose than larger, more established charities. Indeed, the very smallest extra small charities were most likely to intend to change their purpose: 17.6% of those with no income and 11.4% of those with incomes under $10,000 in 2015 reported an intention to change how they achieve their purpose in the following year. The nature of change is reflected in their comments, as some commented that they ceased part or all of their operations during the period. For example: We do not have any grant funding at this stage so we may have to cut back some activities until we attain more funding (Social services charity based in NSW). Op shop will be closed (Religious charity based in SA). The charity will be wound down and closed (Religious charity in based NSW). Our child-care centre closed… Future activity will be solely pursuing religious activities (Other education charity based in VIC). Another was unsure of their future as their activities would depend on organisational changes and an associated review: Through a proposed amalgamation, the project will be subject for review (Aged care charity based in WA).
29 However, other extra small charities reported intentions to increase their activities, for example: The number of programs and the size of the participant group will increase this year (Culture and the arts charity based in VIC). We are planning on starting more income generating projects in 2016 (International charity based in WA). Introduce new mobile vehicles to help service outlying communities that require help (Emergency relief charity based in VIC). We will hold a number of public lectures in addition to those which are part of our monthly meetings (Other education charity based in the ACT). In addition to current activities the organisation will provide welfare support to local secondary school community (Social services charity based in VIC).
Who do the smallest charities help? The 2015 AIS asked charities about their beneficiaries with the question: “Who was helped by your charity’s activities in the 2015 reporting period?” As charities may help multiple populations, they were asked to select all that apply. Whether or not the charity was focused on a main beneficiary group, and the extent to which their activities were aimed at this group, was not identified.17 On average, extra small charities selected 3.9 beneficiary groups, although the median was lower (2.0 beneficiary groups). By contrast, among all charities, each organisation supported 5.1 beneficiary groups, (median of 3). This shows that, as could be expected, extra small charities report supporting a slightly narrower range of beneficiary groups. However, it should be noted that while 34.7% of extra small charities selected only one beneficiary group, there were many extra small charities that reported helping a wider range of groups. In fact, almost a third of extra small charities (31.3%) said they support five or more beneficiary groups. Figure 0.19 provides information on the proportion of extra small charities which reported that their activities helped particular groups. Around half of extra small charities selected the category ‘general community in Australia’ (48.7%), and around one in three (34.5%) selected ‘all ages’. Extra small charities were less likely than others to report assisting women (31.8% compared with 41.1% of all charities), and men (30.0% compared with 38.7%). These data reflect the smaller number of beneficiary groups selected by extra small charities compared with others, as indicated above. Figure 0.19 Proportion of charities helping particular groups, 2015 (%)
Notes: n = 18,892 extra small charities, 50,908 charities in total. Charities could report helping more than one beneficiary group. See also Figure A.4.
.
17 From the 2016 Annual Information Statement onwards, the beneficiary question will collect more specific information from charities about their beneficiaries.
30 8.CASE STUDY: YARRA FOUNDATION A group of Iranian immigrants were the driving force behind the establishment of the Melbourne-based Yarra Foundation in 2013. The foundation supports disadvantaged children in Iran to ‘escape the loop of illiteracy and poverty’ by helping them access good quality education in their home country. There are many reasons why these children cannot access education, including poverty, child labour, homelessness or disability. Yarra Foundation supports them by offering to pay for tuition as well as helping with stationery and uniform costs. The charity has also provided materials to schools in remote areas to ensure students aren’t missing out. The charity has supported thousands of children, many of whom were at risk of dropping out of school. Yarra Foundation is also making an impact locally. Its fundraising events have helped newly arrived migrants and refugees develop new skills and networks, and have supported their integration into Australian society. Yarra Foundation also conducts events to support the local community in Melbourne, such as regular blood donations. While there are very few extra small charities that operate overseas (1,342 in total), even fewer operated in Iran. Yarra Foundation is one of only five charities that reported activities in Iran in 2015, and is the only one whose main activities were in advancing primary and secondary education. Working overseas has its challenges. The time difference between Australia and Iran can cause problems when communicating with representatives who work there. In addition, recent sanctions against Iran have made it difficult for the charity to continue its work in the country. Yarra Foundation is completely managed by volunteers. The charity views this as an advantage, as it makes administration costs negligible, and allows the charity to demonstrate to its donors that the maximum amount of funds is used directly to support beneficiaries. However, the charity does find it challenging to manage volunteers’ commitment levels at times. Extra small charities are often more reliant on donations for income. Yarra Foundation is one of the 30.5% extra small charities that gain more than half their income from donations and bequests. In fact, 92% of Yarra Foundation’s 2015 income came from this source. While its small size and volunteer-only profile helps attract donations, Yarra Foundation has found some grant-makers or donors may perceive education as less important as other charitable causes. Nevertheless, Yarra Foundation is firm in its belief that education is key to the alleviation of poverty for families and the community. And the foundation’s size remains something it is acutely aware of. While it is content to continue its growth organically, becoming a larger charity may make management more difficult.
31 4. WHO WORKS IN AUSTRALIA’S SMALLEST CHARITIES? Australia’s extra small charities conduct activities and pursue their purposes using a workforce of both paid employees and volunteers.
Paid employees in Australia’s registered charities The AIS asked charities to indicate the number of paid full-time, part-time, and casual employees who worked for the charity during the last pay period of the 2015 reporting period. Charities were asked to provide their best estimate, if exact figures were unavailable. The AIS did not ask charities whether their casual staff worked on a full or part-time basis. Further, as the data is for one pay period only, it does not capture fluctuations in staffing levels over the reporting period. Rather, it should be considered a snapshot of the charity’s employment for that pay period. While the whole charity sector employed around 1.2 million paid staff, extra small charities employed 12,287 staff (1% of all charity employees). On average, extra small charities had less than one employee (0.7 employees), whereas there were 25.2 employees per charity across all charities. One-third of employees in extra small charities were employed on a casual basis (29.8%). This was slightly higher than the average across all charities (25.8%), perhaps reflecting extra small charities’ need for flexibility and inability to commit resources to permanent staff, given their size. This is shown in Figure 4.20. Figure 4.20 Full-time, part-time and casual staff, extra small charities, 2015 Staff Mean Sum % of total Full-time staff 0.2 4,218 34.7 Part-time staff 0.2 4,320 35.5 Casual staff 0.2 3,932 29.8 Total 0.7 12,287 100
Notes: The sum of full-time, part-time and casual staff does not equal the number of total staff because some charities have only reported total number of staff and their staff could not be disaggregated by type of employment
The proportion of staff employed in charities in each size category, and across the categories of main activity are shown in Figure A.5 and Figure A.6.
Figure 4.21 provides a summary of the proportion of all paid staff according to the main activity of their employer. This shows that among extra small charities, the sector with the highest employment rate was religion, which employed two in five of all employees in extra small charities (39.5%). When we look at employment across the whole charity sector, however, only 4.0% were employed by religious charities. It is also notable that charities whose main activity was health employed 29.4% of all charity employees, but only 5.2% of employees in extra small charities. Similarly, while 40.3% of all charity staff were employed in education and research, only 22.7% of employees of extra small charities were employed in this sector.
Figure 4.21 Proportion of all staff employed by sector, extra small charities and all charities, 2015 (%)
Notes: Small charities, total number of staff= 12,287. All charities, total number of staff =1,212,097.
32 Charities with no paid staff Most extra small charities had no paid staff (81.4%). This means that four in every five extra small charities operate with no paid workforce. This is consistent with previous research that, although the non-profit sector is a significant employer, employment is highly concentrated in a small number of organisations, with the majority of Australian not-for-profits having no paid employees (Dalton and Butcher 2014; Lyons, 2001). Figure 4.22 shows how in 2015, the proportion of extra small charities with no paid staff differed by sector of main activity. Operating without paid staff was highest among extra small charities whose main activity was classified as ‘philanthropic intermediaries and voluntarism promotion’ (94.8%), social services (91.2%) and environment (90.1%). Figure 4.22 Proportion of charities with no paid staff by sector, 2015 (%)
Notes: n = 17,331, data about paid employees was missing for 1,545 charities. See also
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Volunteers in Australia’s charities As described in the Australian Charities 2015 report, most charities draw on the efforts of unpaid volunteers to perform their activities. The AIS asked charities to report the estimated number of volunteers who worked for the charity during the 2015 reporting period. The proportion of charities that engaged any volunteers is shown in Figure 4.23 by sector. Overall, 86.6% of extra small charities used volunteer staff. This is slightly higher than for charities on average (84.1%). Across all sectors there was a higher likelihood of engaging volunteers in extra small charities compared to average, with the exception of philanthropic charities. Among philanthropic intermediaries only 30.7% of extra small charities had volunteers, which is less than the figure for all charities (36.1%). The analysis found that in some sectors extra small charities were more likely to engage volunteers compared to average for all charities. These sectors included development and housing (89.2% compared with 79.5%) and education and research (88.7% compared with 81.5%). Figure 4.24 shows the proportion of charities which had any volunteers, and provides mean, median and total numbers of volunteers by sector. Extra small charities engaged a total of 436,234 volunteers. This represents approximately 14.7% of the total volunteer effort across all charities18. On average, extra small charities had 27.6 volunteers (median of 10), although this differed by sector. The highest total number of volunteers were in the sectors of religion (133,811 volunteers in total), social services (100,920) and culture and recreation (50,901) (Figure 4.24). Figure 4.23 Charities with volunteers by sector, 2015 (%)
Notes: n = 15,786 extra small charities and 46,649 total charities, as number of volunteers and sector of main activity were missing some.
Figure 4.24 Proportion of charities with volunteers by sector, 2015 (%) % with any Mean number Median Sum % of total volunteers of volunteers Culture and recreation 95.1 30.6 14.0 50,961 11.7 Education and research 88.7 18.0 10.0 46,200 10.6
18 Australia’s Charities Report 2015 identified a total of 2.97 million volunteers.
33 Law and advocacy 95.2 22.6 10.0 4,233 1.0 Environment 95.8 39.3 15.0 24,223 5.6 Health 91.9 19.9 10.0 20,308 4.7 Development and housing 89.2 34.4 10.0 28,014 6.4 Social services 95.6 45.9 11.0 100,920 23.1 Philanthropic intermediaries 30.7 13.1 0.0 18,195 4.2 Religion 91.3 27.6 11.0 133,811 30.7 International 95.3 18.5 9.0 3,124 0.7 Other 84.1 19.9 5.0 6,245 1.4 Total 86.6 27.6 10.0 436,234 100.0
Notes: n = 15,786, as number of volunteers and sector of main activity were missing for some. See also Figure A. 8.
34 Figure 4.25 provides a breakdown of volunteers by charity size. Among extra small charities it shows that charities with an income of more than $10,000 and less than $25,000 were most likely to engage volunteers (88.5%), although the number of charities engaging volunteers is relatively similar among all extra small charities. Figure 4.25 Charities with volunteers by size, 2015 (%) Notes: n = 15,844. Volunteer numbers were not reported by 3,048 charities.
Charities with both volunteers and employees Figure 4.26 shows the proportion of charities with employees and volunteers. It shows that compared to the average for all charities, extra small charities, were more likely to rely on volunteers only (68.4% compared to 39.1%), while 2.1% of extra small charities relied on paid employees alone compared to 7.5% of all charities. Figure 4.26 Proportion of charities with employees and volunteers, 2015 (%)
Notes: n = 15,799 extra small charities and 46,813 total charities. 9.CASE STUDY: BRAVE FOUNDATION Launched nationally in 2015, Brave Foundation is a charity that supports teenage parents and those teenagers set to become parents. It is the first Australian organisation to address these issues affecting teenagers at a national level. Each year, about 24,000 teenagers benefit from the foundation’s work. With over 180 services available on their directory, the charity acts as a central reference point for teenagers seeking support. The foundation has a firm belief that it takes ‘a village of support and acceptance’ to effectively help each expecting and parenting teenager. To provide this support, the charity has established strategic partnerships with health, government, education and community bodies and representatives. Expecting and parenting teenagers are involved throughout this process to ensure the services delivered genuinely support them in achieving their aspirations and ultimately reduce the risk of long-term welfare dependency. Operating as a small charity has allowed Brave Foundation to develop credibility and hands-on experience through a robust understanding of community needs. Brave Foundation is one of very few extra small charities to be based in Tasmania. Only 2.6% of Australia’s extra small charities are registered there. It is also one of very few such charities to operate in all Australian states and territories; in 2015, only 4.5% of extra small charities reported this as being the case. Brave Foundation is proud that its work has an impact on a national level. But it describes as challenging meeting the different reporting requirements of Australia’s state and territory fundraising regulators. Supporting the charity’s work in 2015 was a team of 20 volunteers and two paid staff. Less than one in five extra small charities reported employing paid staff (18.6%) and Brave Foundation is part of this minority. Brave Foundation’s total 2015 income was $13,141, a figure slightly lower than the average income of all extra small charities ($15,945). The foundation acknowledges that finding sufficient funding can be difficult – however, now it is more established, it has seen an increase in donations, including a significant bequest that has supported the charity’s cause substantially. It also plans to introduce a membership scheme to generate more income. Increasing its income would allow the charity to develop and implement pilot programs aimed at helping expecting and parenting teens continue their education in a flexible manner. The foundation describes two of its achievements as particularly special. The first is a partnership with another national organisation targeting issues related to depression. This has resulted in increased recognition for the charity and its cause, as expecting and parenting teenagers have a statistically higher incidence of depression than the general population. The second came when the Brave Foundation and its work featured in research about social impact investment. The research highlighted the significant social impact of the foundation’s work in supporting teenage mothers, and will provide it with information to continue its advocacy and awareness-raising efforts. As it looks to the future, Brave Foundation hopes to increase the distribution of its services to all secondary schools, hospitals and pregnancy support centres in Australia. Until now there has been a lack of a nationally coordinated approach to keeping expecting and parenting teens in the education system, and Brave Foundation hopes to fill this gap. 5. A CLOSER LOOK AT THE FINANCES OF AUSTRALIA’S SMALLEST CHARITIES
How do the smallest charities fund their activities? The AIS requires most charities to answer questions about financial information, including the source of their income for the 2015 reporting period. Income for basic religious charities and others for which financial information was unavailable is estimated (see Appendix B: Further methodological details). This information shows the composition of charities’ income, to help understand how they fund their activities. Income in the AIS was captured in three main categories: Government grants Donations and bequests Other income and revenue.
Total income As found in the Australian Charities 2015 Report, Australia’s registered charities had $134.5 billion in income in 2015.19 Extra small charities accounted for only a small proportion of this: $301.2 million, or 0.2% of charities’ total income despite representing 37.1% of all registered charities. Among extra small charities, the average income was only $15,945. Further, half of extra small charities had incomes under $12,526 for the whole year. While low incomes may limit the operations of these charities or create barriers to sufficient resourcing needed to achieve their mission, this is not necessarily always the case. As discussed previously, many extra small charities perform highly specialised and localised activities in their communities, and there tends to be high levels of volunteer engagement that helps to compensate for the lack of paid resources. The composition of income among Australia’s smallest charities differed from that of the wider sector. Compared with all charities, extra small charities relied less on government grants and more on donations and bequests. Figure 5.27 shows that extra small charities received $17.2 million in government grants, which constituted only 5.7% of their total income. By contrast, government grants accounted for 41.4% of total charity income. For extra small charities, a very high proportion of income came from donations and bequests (38.0%, compared with 8.3% across the sector). As such, extra small charities are much more dependent on philanthropic income, and much less dependent on government grants, than the charity sector as a whole. Figure 5.27 Summary of income sources, extra small charities and all charities 2015 % of total income % of total income (all Extra small charities Income source All charities ($) (extra small charities) ($) charities) Government grants 55,664,078,556 41.4 17,291,625 5.7 Donations and bequests 11,169,158,530 8.3 114,510,674 38.0 Other income and revenue 67,682,720,868 50.3 169,504,957 56.3 Total 134,514,292,173 100.0 301,236,103 100.0
Notes: n = 50,908. Totals include estimated data for charities which had not provided financial reports.
19 This figure is higher than the figure reported in the Australian Charities Report 2014, because of the use of a more complete data set in 2015. This does not reflect change. Figure 5.28 reports the proportion of charities that received any income from each source, and the mean income per charity from each source. The most common source of income was ‘other income and revenue’, which was received by 91.2% of all charities. Slightly fewer extra small charities (82.2%) received other income, receiving $8,972 on average. Donations and bequests were received by 62.8% of all charities and 59.0% of extra small charities, with the average donations received each year per extra small charity $6,061 (Figure 5.28). Figure 5.28 Key indicators of income sources, extra small charities, 2015 % of all charities % of extra small Extra small charities All charities – mean Income source which received charities which – mean per charity per charity ($)* income ^ received income^ ($)* Government grants 35.1 1,093,425 12.7 915 Donations and 62.8 219,399 59.0 6,061 bequests Other income and 91.2 1,329,641 82.2 8,972 revenue Total 98.1 2,642,302 94.5 15,945
Notes: ^Uses reported data: all charities n = 38,117, extra small charities n = 13,040 (reported data only). Due to discrepancies in charities’ reporting of income sources and totals, figures for government grants, donations and bequests and other income and revenue may not sum to the total. *Uses estimated data n = 50,908, all charities n = 18,892.
Government grants The total charity sector had government grants totalling around $55.7 billion, and government grants accounted for 41.4% of sector income. However, for extra small charities, government grants constituted only 5.7% of total income. As an indicator of reliance on government grants, three categories were constructed, capturing those with no government grants, those for which grants made a relatively minor (less than 50%) contribution to total income, and those for which grants constituted a major (more than 50%) contribution to total income. The vast majority of extra small charities received no income from government. Figure 5.29 shows that 87.3% of extra small charities (excluding those with no income) did not receive income from government grants, and that this differed slightly across the detailed size categories. Whereas 92.6% of those with incomes under $10,000 had no income from government grants, the figure was 81.2% for those with incomes between $25,000 and $50,000. However, even among charities with an income between $25,000 and $50,000, very few (5.8%) received 50% or more of their total income from government. Figure 5.29 Extra small charities for which government grants comprised more than 50% of total income, 2015 (%)
Notes: n = 13,040, based on charities with reported income data only. Note that data for 720 charities which reported $0 in total income are not included in the ‘>$0–$10k’ category. However, this group is included in the total ‘All XS’ category.
Donations and bequests Among all charities, 62.8% received some amount of income from donations and bequests, amounting to $11.2 billion, or 8.3% of charities’ total income. On the other hand, extra small charities were relatively more dependent on donations and bequests. While around one in four of all charities (26.0%) depended on donations and bequests for 50% or more of their total income, this figure was higher for extra small charities (30.5%). Across the detailed size categories there was little difference in the proportions of extra small charities which depended on donations for more than half their income (see Figure 5.30). However, those with incomes under $10,000 were most likely to have no income from donations: 45.5% of this group did not report donations, compared with 33.3% of those in the $10,000 to $25,000 category and 32.3% of those in the $25,000 to $50,000 category. Extra small charities whose main activities were ‘international’ or ‘religion’ had the highest mean value of donations and bequests ($13,378 and $11,936 respectively), whereas culture and recreation had the lowest ($3,487) per extra small charity. Figure 5.30 Proportion of total income from donations and bequests, by size, 2015 (%)
Notes: n = 13,040, based on reported data only. Note that data is not shown for 720 charities with total incomes of $0 in the ‘>$0– $10k’ category. However this group is included in the total ‘All XS’ category.
Other income and revenue Apart from government grants and donations, charities’ income was captured in three other AIS line items called: ‘other income/receipts’, ‘other revenue’ and ‘other income’. We refer to these together as ‘other income’. Charities were directed to include all other income and revenue at this item that was not from government grants, donations and bequests. Items within these AIS line items could include a variety of income sources such as those from ordinary activities including sale of goods, user contributions to services rendered, member fees, interest, dividends, as well as income earned outside of ordinary activities, such as gains received from the sale of assets. As such, this can be considered an indication of charities’ market or commercial income. Future development of the AIS should provide more detailed breakdown of ‘other income’, given that this is the most commonly reported source of income and comprises a significant portion of the sector’s total income. Figure 5.31 shows that for more than half of extra small charities (58.0%), other income comprised half of total income or more, while for 24.3% it made a less significant contribution to total income. There was a relatively large proportion of extra small charities (17.8%) which had no ‘other income or revenue’. This was more than double the figure for all charities (8.8%). While we do not know the full circumstances of these charities, it may be that charities with no other income or revenue are in the process of setting up or winding down. ‘Other income’ was highest for extra small charities in the categories of culture and recreation ($12,675 on average) and education and research ($12,386 on average) and lowest among international charities ($3,744 on average). Figure 5.31 Proportion of total income from ‘other income’ by size, 2015 (%)
Notes: n = 13,040, based on reported data only. Note that data is not shown for 720 charities with total incomes of $0 in the ‘>$0–$10k’ category. However this group is included in the total ‘All XS’ category. How do the smallest charities allocate their funds? As part of the AIS, charities were required to specify how they allocate their funds. This is captured as part of the income statement, under expenses/payments. Categories were: Employee expenses/payments Grants and donations made by the registered entity for use in Australia Grants and donations made by the registered entity for use outside Australia Other expenses / payments. These were then added to indicate total expenses, and (in the following section) compared with total income to indicate net surplus / deficit.
Total expenses In total, Australia’s smallest charities spent around $361.3 million pursuing their purposes over the 12- month period reported in the 2015 AIS (see Figure 5.32). Expenditure among extra small charities accounted for only 0.29% of all charities’ spending. The main type of spending among extra small charities was on ‘other expenses’ ($230.4 billion), or 63.8% of total spending. Around 11.3% of extra small charities’ total spending was on employee expenses, while 24.9% was on grants and donations. On average, each extra small charity spent $19,123. This differed across the detailed size categories (Figure 5.33). Figure 5.32 Summary of expenditure, 2015 ($) XS expenses as a % of Expenditure Total expenses ($) Mean ($) % of XS expenses all expenses Employee expenses 40,973,006 2,169 11.3 0.03 Grants and donations 90,000,101 4,764 24.9 0.07 Other 230,428,915 12,197 63.8 0.19 Total XS charities 361,272,796 19,123 100.0 0.29 Total all charities 122,768,180,845 2,411,570 – 100.0
Notes: n = 18,892. Due to discrepancies in charities’ reporting of each expense source and totals, figures for employee expenses, grants and other expenses may not sum to the total.
Figure 5.33 Mean total expenditure by size, 2015 ($) Charity size Total expenses ($) Mean ($) % of XS No income 11,139,955 15,472 3.1 >$0–$10k 59,777,035 8,185 16.5 >$10k–$25k 154,720,742 21,326 42.8 >$25k–$50k 135,635,065 37,530 37.5 Total 361,272,796 19,123 100.0
Notes: n = 18,892.
Spending on employees More than two-thirds of extra small charities had no expenditure related to employees (68.1%). This is much higher than the average for all charities (49.5%), confirming data in earlier chapters that extra small charities are generally much less reliant on paid employees than other charities. This reliance, however, varied widely by sectors. Figure 5.34 Charities for which employee expenses were zero, 2015 (%)
Notes: n = 15,827, data missing for 3,065 charities.
By sector, extra small religious charities spent 17.1% of total expenditure on employees, which was higher than for other extra small charities. Extra small international charities spent 13.3% of total income, on employees, on average (although 84.7% had no employee expenses). This may indicate higher employee costs associated with working internationally. For extra small philanthropic intermediaries, employee expenses constituted a very low proportion of total spending (2.4%, on average).
Figure 5.35 Proportion of expenditure on employee expenses by sector, 2015 (%)
Notes: n = 15,827, data missing for 3,065 charities. See also Figure A. 10.
Spending on grants and donations The AIS also asked about spending on grants and donations made by the charity for use within Australia, and for use outside Australia. Spending on grants for use in Australia by extra small charities totalled $77.1 million, while grants for use outside Australia totalled $12.9 million (Figure 5.36). On average, extra small charities spent $4,764 on grants and donations, most of which was for use in Australia ($4,082.5 per charity). Figure 5.36 Expenditure on grants, 2015 ($)
Expenditure on grants Total expenses ($) Mean ($) For use in Australia 77,126,756 4,083 For use outside Australia 12,873,346 681 Total 90,000,101 4,764
Notes: n = 18,892.
Among extra small charities, those in the philanthropic sector, not surprisingly, spent the largest proportion of their expenses on grants and donations (71.0%). This was followed by international activities (43.6%) (Figure 5.37). Figure 5.37 Proportion of all spending on grants by sector, 2015
Notes: n = 15,835, data missing for 3,057 charities. See also Figure A. 10. The financial status of the smallest charities Charities need to have sound financial health in order to sustain their activities and achieve their purpose. This can be particularly important for small charities given evidence that they may be more financially vulnerable than other charities (Backus and Clifford, 2013). However, there is no simple, universally applicable way of assessing the financial sustainability of organisations (whether they are charities or for-profit businesses). Many factors can impact on the financial health of a charity. In this section we provide a snapshot of the financial stability of Australia’s smallest charities. This analysis should be considered general in nature. You can read more about the approached used to analyse the financial status of charities within this report in chapter 12 of Australia’s Charities 2015.
Financial performance Information about charities’ income and expenditure, and their assets and liabilities provides insight into their financial status and performance. Based on income minus expenditure, 59.2% of extra small charities made a surplus in the 2015 period and 38.4% reported a deficit result (the balance had near-zero net income, or broke even).
A charity’s Net Income Ratio20 summarises the ratio of the charity’s surplus or deficit to its total income in the financial year. Extra small charities’ net income ratio was –19.8% (indicating an average deficit equivalent to 19.8% of total income). By contrast, across the whole sector charities had an average surplus equivalent to 8.7% of total income. Rather than poor performance, this may indicate a range of circumstances, and should be interpreted in the context of a charity’s financial strategy, assets, and growth.
Net income ratio by size Net income ratio varied significantly by organisation size, as shown in Figure 5.38, with extra small charities reporting the highest levels of negative net income across all charities. This was more evident for extra small charities with income of less than $10,000 per annum (–55.3%). Figure 5.38 Average net income ratio by size, 2015 (%)21
Notes: n = 12,091.
While this data alone makes it appear that extra small charities are unsustainable, the picture is likely more complicated. This is because charity size is defined based on income. The smallest charity category includes charities whose total income is either zero or small, but whose net income is significantly negative (charities which didn’t have material income but did have significant expenses). This may be the case for charities that are in the process of setting up or winding down. If, for example, charities with a deficit of more than $100,000 are excluded from the calculation, the net income ratio for extra small charities improves to –3.6%.
20 In the ACNC’s Annual Information Statement form financial data may have different labels; for example, ‘Net Income’ is Net Surplus/Deficit; ‘Total Income’ is Total Gross Income for Medium and Large charities and Total Income/Receipts for Small charities.
21 Calculated as the total of net income for charities in a group, divided by total income for charities in that group. Figure 5.39 Net income ratio by size, 2015 – 1 0 0 > % % –25% to 10% to 2 Size n < –25% to –5% to 0% 0% to 5% to 10% < 0 > 0 –10% 25% 5 5 % – % 5 % 3 2. 3. 6. >$0–$10k 4 30.9% 6.1% 5 2.9% 2.9% 9 3.7% 10.7% 42.4% 54.7% 5 % % % 3 4. 7. 0. >$10k–$25k 3 18.7% 9.1% 3 5.8% 2.3% 5 7.5% 14.6% 37.8% 60.0% 3 % % % 2 4. 8. 9. >$25k–$50k 3 13.3% 8.4% 5 7.2% 1.9% 9 8.0% 18.7% 33.4% 64.6% 1 % % % 3 3. 6. 2. All XS Charities 1 22.0% 7.7% 6 5.0% 2.4% 4 6.1% 14.2% 38.4% 59.2% 5 % % % Notes: Detailed analysis of sustainability ratios is based on reported data only (n displayed the figure). ‘0%’ net income ratio is ±0.1%. The table values are percentages of charities in each row (rows add to 100%). 720 extra small charities are excluded because they have zero total income. Figure 5.40 Net income ratio by sector, 2015 < – –25% to –10% to 5% to 10% to Sector n 2 –5% to 0% 0% 0% to 5% > 25% < 0 > 0 –10% –5% 10% 25% 5 % 1 Culture and 9. 1,544 9.5% 4.7% 5.5% 1.3% 7.6% 6.9% 16.8% 28.3% 39.1% 59.6% recreation 4 % 2 Development and 6. 714 9.2% 2.4% 5.3% 2.5% 6.4% 4.5% 12.5% 31.1% 43.0% 54.5% housing 1 % 2 Education and 1. 2,257 8.6% 3.0% 4.8% 2.3% 5.3% 5.5% 14.6% 34.1% 38.2% 59.5% research 8 % 2 9. Environment 555 8.8% 2.7% 4.9% 1.8% 5.2% 5.0% 12.3% 29.9% 45.8% 52.4% 4 % 2 4. Health 908 7.2% 3.4% 4.4% 2.4% 5.4% 4.7% 12.0% 36.0% 39.4% 58.1% 4 % 2 0. International 154 9.1% 3.9% 3.9% 3.9% 9.7% 3.9% 9.1% 35.7% 37.7% 58.4% 8 % 3 0. Law and advocacy 164 8.5% 3.0% 4.3% 1.2% 5.5% 4.3% 15.9% 26.8% 46.3% 52.4% 5 % 1 Philanthropic 9. 1,228 5.7% 2.5% 3.7% 1.1% 4.6% 10.2% 19.5% 32.9% 31.8% 67.2% intermediaries 8 % 1 5. Religion 1,919 9.2% 5.2% 6.8% 4.8% 9.7% 7.2% 15.1% 26.0% 37.1% 58.1% 9 % 2 5. Social services 1,855 6.0% 3.9% 4.8% 1.8% 6.3% 5.6% 12.6% 33.2% 40.5% 57.7% 8 % 2 4. Other/Unknown 794 2.9% 2.8% 3.9% 3.0% 4.0% 2.9% 7.4% 48.7% 33.9% 63.1% 3 % 1. All XS charities 12,092 6 0.2% 0.2% 0.3% 0.2% 0.3% 0.2% 0.5% 3.2% 2.2% 4.1% % Notes: Detailed analysis of sustainability ratios is based on reported data only (n displayed the figure). ‘0%’ net income ratio is ±0.1%. The table values are percentages of charities in each row (rows add to 100%). 720 extra small charities are excluded because they have zero total income. Figure 5.13 provides a detailed breakdown of the proportion of charities whose net income falls into one of nine bands from –25% or less to +25% or more. There is significant variation by size: Charities with an income >$25k–$50k were more likely than the smaller charities to record a surplus. 36.5% of extra small charities (>$0k–$10k) recorded a surplus of more than 25%, but were also more likely to report a deficit of over 25% (30.9%).
Net income ratio by sector Figure 5.14 summarises the average net income ratio by sector for extra small charities. It shows that charities in the philanthropic sector were most likely to record a surplus (67.2% had a positive net income ratio). In contrast law and advocacy charities and environmental charities were most likely to operate with a deficit (46.3% and 45.8%, respectively, had a negative net income ratio). These findings may be related to the analysis within Chapter 3 of this report which found that extra small charities in these two sectors had the lowest levels of income compared to extra small charities operating in other sectors.
Financial position While analysis of net income tells us something about financial performance, the balance sheet provides a clearer picture of a charity’s financial position. In this section we analyse indicative ratios of charities’ long-term financial position (net asset ratio). It is not possible to look at short- term financial positions, as small charities are not required to provide data about their current ratio in the AIS.
Net assets and net asset ratio The AIS information on assets and liabilities provides insight into the financial position of Australia’s charities. Australia’s smallest charities reported net assets of $4.5 billion at the end of the 2015 reporting period (Figure 5.41). That is, total assets minus total liabilities amounted to $4.5 billion.
The net asset ratio for this group was 89.9% (indicating that net assets were 89.9% of total assets). This is higher than the 69.7% for all charities and higher than any other size segment. These data may reflect how smaller charities are less likely to have significant liabilities, or because they report using cash accounting rather than accruals accounting. For example, a voluntary organisation providing local services may have a bank account and operating income and expenses, but no liabilities; in these cases the net asset ratio would be 100%.
Figure 5.41 Summary of assets and liabilities, 2015 ($)
$ Total Assets 5,006,385,542 Total Liabilities 505,283,251 Net Assets 4,501,102,286 Net Asset Ratio 89.9%
Notes: n = 18,892; figures may not add due to rounding.
Figure 5.42 shows that nearly 3% of all extra small charities had a negative net asset ratio in 2015, meaning their liabilities were reported as more than their assets, while 92% of all extra small charities had a net asset ratio of 50% or greater. In fact, it appears that the majority (85.2%) of extra small charities had a net asset ratio of 90% or more. Figure 5.42 Net asset ratio by size, 201522 0 to 90% to Size n < 0% 50% to 75% 75% to 90% 50% 100% No income 617 6.5 6.6 3.6 1.9 81.4 <$0–$10k 4,289 2.9 5.0 2.4 2.6 87.1 <$10k–$25k 3,242 2.6 5.4 3.1 3.6 85.3 <$25k–$50k 3,242 2.1 5.2 4.3 5.2 83.2 All XS charities 11,390 2.8 5.3 3.2 3.6 85.2
Net asset ratio by sector By sector, Figure 5.43 shows that among extra small charities, the net asset ratio varied widely. Philanthropic charities were most likely to have a net asset ratio of over 90% (95.5%). International charities were most likely to have a net asset ratio of zero (5.8%) or less than 50% (14.9%), followed by charities in the development and housing sector (5.7% and 8.4% respectively). While environmental charities and law and advocacy charities had the least positive net income ratios, when assessed by their average net asset ratio, their performance improves: 90.7% of environmental charities and 91.7% of law and advocacy charities reported a net asset ratio of 50% or above. Figure 5.43 Average Net Asset Ratio by Sector, 2015 (%) 0 to 50% to 75% to 90% to Sector n < 0% 50% 75% 90% 100% Culture and recreation 1,415 1.8 5.0 3.3 4.9 84.9 Development and housing 704 5.7 8.4 4.4 4.3 77.3 Education and research 1,948 2.8 5.1 3.4 4.8 83.8 Environment 498 4.2 5.0 5.6 4.2 80.9 Health 845 2.4 6.4 3.2 4.6 83.4 International 121 5.8 14.9 2.5 2.5 74.4 Law and advocacy 155 2.6 5.8 6.5 6.5 78.7 Philanthropic intermediaries 1,218 0.9 1.3 1.1 1.2 95.5 Religion 1,760 3.1 6.5 4.3 3.6 82.5 Social services 1,795 2.0 4.2 2.2 2.4 89.2 Other/Unknown 931 4.4 6.7 2.1 2.3 84.5 All XS Charities 11,390 2.8 5.3 3.2 3.6 85.2
Note: figures may not add due to rounding.
Sustainability framework The analysis in this section combines two ratios that compare charities’ net assets with income and expenses to provide a more informative picture of sustainability. In brief, the sustainability framework used in this analysis compares a charity’s asset years with their asset growth.
22The strength of the shading in the figure relates to the relative prevalence of charities in each table cell. The net assets and total expenses are used to determine the asset years (or net asset expenditure cover). The net income and net assets are used to calculate the asset growth. More information about this sustainability framework and how to interpret the findings here can be found in Australia’s Charities 2015. Around 40% of extra small charities have negative net income (as a result their asset growth is less than zero). However, the sustainability framework shows that the majority of these have reasonable net assets in proportion to their expenses, so may not be at immediate financial risk (Figure 5.44). Figure 5.44 Sustainability framework example: Extra small charities, 2015
"Asset Years" Asset 0 - 6 months 6 - 18 months 18 months - 5 years >5 years Growth
> 20% 8.0% 5.4% 5.3% 3.2%
10% - 20% 0.9% 1.8% 2.9% 2.0%
0 - 10% 1.7% 2.4% 5.0% 20.2%
< 0 10.6% 8.0% 9.3% 13.3%
Notes: n = 10,022. 10. CASE STUDY: HAEMOPHILIA FOUNDATION ACT Haemophilia Foundation ACT (HFACT) supports people in the ACT and surrounding regions who have a bleeding disorder. The charity offers mutual support and networking opportunities, and strives to provide optimal health care services for its members. Although the charity has been operating for over 30 years, HFACT’s still defines its biggest achievement as its formation in the early 1980s. At the time, the charity was established in response to the needs of the community affected with a bleeding disorder. Since that time, the charity has built a close-knit community that has proved effective in supporting its members. In addition to its work within its local community, HFACT is also part of the Haemophilia Foundation Australia national committee and contributes to the discussion on policy, medical and advocacy issues affecting its members. HFACT’s small size reflects the small number of people in and around ACT that are affected by a bleeding disorder. The charity plans to maintain its current size, but HFACT is always conducting outreach work should new members seek to join. One benefit of being a ‘smaller charity’ is the less onerous reporting requirements. HFACT has minimal administrative costs so the charity is relatively easy to manage by volunteers. This means that the charity is able to remain small and nimble, responding to changes as the need arises. A second benefit of its size is that HFACT does not face dramatic fluctuations to its income base due to changes in funding arrangements or donations received from year to year. In 2015, HFACT reported a total gross income of $38,298. Of this, close to $33,000 came from government grants. This makes HFACT one of only 4.7% of extra small charities that received more than 50% of their annual income from government grants. The government grants have enabled HFACT to employ a part-time counsellor to assist in the delivery of their health services. In addition to government grants, the charity receives one-off grants for defined purposes (e.g. family camps) from the broader Haemophilia Foundation Australia organisation. Donations also make up a small part of HFACT’s overall funding. There are a number of opportunities and challenges which HFACT foresee. The charity will continue advocacy work to ensure that essential medical products and the latest advances in treatment options are available for the local community. HFACT will also endeavour to maintain an effective working relationship with its primary funders so that long-term funding is secured. Expected changes to government tendering processes will likely have an impact on how HFACT approaches this issue. As a largely volunteer-based charity, it is a constant challenge for HFACT to ensure it remains strong and well-supported. Maintaining the charity’s profile will assist with this. HFACT notes that this can be challenging though, as bleeding disorders are rare and there are many other organisations competing for the same funds. 6. HOW ARE AUSTRALIA’S SMALL CHARITIES CHANGING? This section examines how Australia’s smallest charities changed from 2014 to 2015. It uses a specially constructed matched panel dataset. This matched panel dataset was initially analysed for all charities (see Australia’s Charities 2015) and consisted of 29,829 charities which reported financial data in both 2014 and 2015.23 For this report, we use a subset of the dataset: 10,162 charities which were extra small in 2014 and who also reported in 2015. Some of these charities may have moved out of the extra small size category in 2015.
Change in total income Financial change over time data is limited to the 9,372 extra small charities that reported financial data in 2014 and 2015. Together, these extra small charities reported $162.5 million in total gross income in 2014, which had risen to $224.8 million in 2015, representing a growth of 38.4%. This is much higher than the average growth reported across all charities (2%). Figure 6.45 shows that among extra small charities in the dataset, mean income grew from $17,335 to $23,994 (38.4% growth). Among charities with incomes under $10,000 in 2014, mean incomes more than doubled from $4,006 in 2014 to $9,755 in 2015. Approximately 983 charities (10.5%) increased their income from 2014 to 2015, such that they would no longer be considered extra small, i.e. their income in 2015 was greater than $50,000. Figure 6.45 Change in mean income among extra small charities, 2014 and 2015
Together, extra small charities in the dataset reported 83.0% growth in government grants, 47.5% growth in donations and bequests, and 28.4% growth in other income.
Change in main activities Most extra small charities were doing the same activities in 2014 and 2015. For example, among extra small charities whose main activity was religion, 97% remained in the same category in 2015. Where a change in main activities was captured, the change was mostly a result of missing data in 2015 or resulted in a selection of a similar activity to the one chosen in 2014. Among extra small charities with a main activity in law and legal services in 2014, only 77.8% retained the same main activity in 2015. As for extra small charities whose main activity was international in 2014, 85.2% were in the same category in 2015, and small numbers had moved into a wide range of other activity categories.
Change in employment There were 9,524 extra small charities in the matched panel dataset which reported employment numbers in both years. Together, these charities, reported 18,471 employees in 2015, up from 17,307 in 2014 (an increase of 6.7%). As such, employment in extra small charities was higher than employment among all charities (which had a modest net increase of 0.7%). The mean number of employees per extra small charity rose from 1.8 to 1.9. However, staff numbers dropped from 2014 to 2015 by 13% for the very smallest charities (those with under $10,000) and by 6.8% among charities with incomes between $10,000 and $25,000. This was offset by an 11.0% increase among extra small charities with incomes between $25,000 and $50,000. That is, employment growth among extra small charities was concentrated in the larger extra small charities.
23 Further information on how the matched panel dataset was constructed is in Australian Charities Report 2015. It is important to note that employment growth was primarily among casual staff. Casual staff employed by extra small charities grew from 14,181 in 2014 to 15,568 in 2015 (9.8%). Part-time staff fell from 1,924 to 1,682 (a drop of 12.6%) while full-time staff grew only modestly, from 1,202 to 1,221 (1.6%).
Change in volunteers Due to changes in the AIS, the way volunteer numbers was reported differed between 2014 and 2015. The AIS in 2014 asked for the numbers of volunteers in categories, while the total figure was required in the 2015 AIS. As such, net increases and decreases in volunteers cannot be shown. However, movement between categories can be analysed. Among extra small charities who reported no volunteers in 2014, 78.0% reported no volunteers again in 2015 (Figure 6.46). This same group of extra small charities, however, were also the most likely to report an increase in volunteers in (22%) compared those that already had volunteers in 2014. In contrast, extra small charities that had over 50 volunteers in 2014 were more likely to report fewer volunteers in the following year. Figure 6.46 Percentage of charities in the same or different category of volunteers in 2015 compared with 2014 Volunteers in 2015 Same volunteers Fewer volunteers More volunteers Volunteers in 2014 n (2014) (%) (%) (%) No volunteers 1,615 78.0 – 22.0 1–10 volunteers 4,085 76.6 4.0 19.4 11–50 volunteers 2,893 80.3 14.1 5.6 >50 volunteers 466 64.2 35.8 –
Notes: n = 9,059 charities. Data missing for 782 charities.
Change in overseas operations In the matched panel dataset, there were 739 extra small charities which reported operating overseas in 2014. Of these, 654 also reported operating overseas in 2015 (88.5%). Of those which did not report operating overseas in 2014, only 0.8% had indicated extending their operations overseas in 2015. 11. CASE STUDY: THE SCHOOL VOLUNTEER PROGRAM ACT (SVPACT) The School Volunteer Program ACT (SVPACT) is a small Canberra-based charity whose purpose is to support ACT Government school students with their educational needs. The charity is completely reliant on the efforts of volunteers. While the average number of volunteers within extra small charities in the education and research sector is 18, SVPACT had 140 volunteers in 2015 that contribution thousands of hours to the charity. SVPACT hasn’t always had this many volunteers. In 2006, the charity only had 12 volunteers, but has progressively grown its volunteer base during the past decade. SVPACT has a committee of 12 (also all volunteers) to help recruit, manage and train its team of volunteer mentors. Almost 40 ACT schools are part of the SVPACT program, which sees volunteers spend an hour each week mentoring students on a one-on-one basis at their school. A unique approach adopted by the charity is using Meccano building as a means to conduct their mentoring program, which has seen much success. Teachers choose students to participate based on who they believe will benefit from engaging with a mature role model who takes a personal interest in their wellbeing. And the volunteer mentors, many of whom are retired, report great enjoyment in witnessing the development and increasing self-worth in their students. The program’s positive impact on students, and the wider ACT community, was recognised in 2015 when SVPACT won Volunteering and Contact ACT’s Volunteer Team of the Year award in the Education, Science and Technology category. And while SVPACT may be small, its committee is content to remain a completely voluntary organisation. Doing so means there is no need for paid staff, and less pressure to seek significant funding support from governments or other sources. SVPACT recorded income of $15,770 in 2015. This included a one-off grant from a government agency worth $10,000. Other donated funds helped SVPACT cover its annual insurance costs and other basic administrative costs such as website maintenance and postage. Volunteer mentors cover travel- related costs. One challenge SVPACT faces is gaining the support of teachers and schools to allow SVPACT to run its program with their students. The level of enthusiasm with which schools and teachers welcome the program varies considerably, often reflecting the fact that schools are extremely busy places. In response, SVPACT has met with teachers to explain the benefits of the mentoring process – especially in improving needy students’ self-esteem, and, in turn, enhancing their academic performance. Another significant challenge for SVPACT is to complete an ever-increasing amount of management and administrative work without the need for paid support. The need to upgrade mentor training and ensure close monitoring of their performance has become more urgent as mentor numbers have grown. A third challenge is that because many of SVPACT’s volunteers are retired and aged between 60 and 90, there is a relatively large turnover in mentors. Despite these challenges, SVPACT has a number of new opportunities on the horizon. The recent signing of a memorandum of understanding with the ACT Education Directorate has formalised SVPACT’s partnership with the education authority. This is likely to mean further changes for the charity, including greater visibility of its program in ACT Government schools.
7. CONCLUSION
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. You can read more about the data and methodological details in the main report. It is also complemented by interactive data resources available at http://australiancharities.acnc.gov.au/.
The report provides an in-depth profile of Australia’s smallest charities, and underlines the important contribution they make to achieving charitable purposes, through a range of activities, and in particular, through engaging volunteers.
It has demonstrated that despite accounting for a relatively small proportion of total charity income (0.2%), extra small charities are numerically and socially significant. They comprise over one-third of all registered charities and are involved in a wide range of activities and support a wide range of beneficiaries.
Extra small charities differ from the wider charity sector in some important ways. Compared with all charities, extra small charities are more dependent on philanthropic income and less likely to receive government grants than larger charities. This may be because they don’t require government grants to pursue their purpose, or that they face barriers to obtaining government grants. The importance of donations and bequests in the income mix of extra small charities also indicates that policies affecting charities’ access to donations, such as fundraising regulation, may have a disproportionate effect of smaller charities.
What is also noticeable about extra small charities, is that they are much less likely than average to rely on full- and part-time paid employees – four in every five extra small charities operates with no paid workforce. Instead extra small charities are more likely to depend on a casual workforce and volunteer effort. While it is not possible to put a value on the contribution of volunteers using AIS data, the contribution they make to this sector is clearly significant. The reliance on casual and volunteer staff is also likely a reflection of the activities that extra small charities are involved in compared to the average, which generally speaking may be less labour intensive (e.g. health and social services). It could also reflect their financial status, which restricts their capacity to engage paid staff in an ongoing way. For example, the data shows a net income ratio of –19.2% for extra small charities, which is the lowest for all charity size groups. Nevertheless, data on extra small charities should be interpreted with some caution and regarded as general in nature only, rather than indicative of the performance, position and sustainability of individual charities. This is further complicated by our definition of charity size which is based on income, such that a charity may report a zero or low income in one reporting year for a specific reason that determines its size as extra small, despite having either expenditure or assets well over $50,000. This may, for example, be true of a philanthropic charity that is spending down its reserves. Subsequent research using the AIS should therefore consider adopting a more nuanced definition of size, for example considering characteristics such as expenses and assets in addition to income. 12.REFERENCES ABS. (2011) Australian Statistical Geography Standard (ASGS): Volume 5 – Remoteness Structure, Cat. No. 1270.0.55.005. Canberra: Australian Bureau of Statistics. ABS. (2015a) Australian National Accounts: Non-profit Institutions Satellite Account, 2012–14. Cat. No. 5256.0. Canberra: Australian Bureau of Statistics. ABS. (2015b) General Social Survey: Summary Results, Australia, 2014. Cat. No. 4159.0. Canberra: Australian Bureau of Statistics. ABS. (2016) Australian Demographic Statistics, Dec 2015, Cat. No. 3101.0. Canberra: Australian Bureau of Statistics. ACNC. (2015a) 2014 Annual Information Statement guide. Available at: http://www.acnc.gov.au/ACNC/Manage/Reporting/2014Guide/ACNC/Report/2014AISGuide.aspx. ACNC. (2015b) Factsheet: Charity size and revenue. Available at: http://acnc.gov.au/ACNC/FTS/Fact_CharSize.aspx. ACNC. (2015c) Factsheet: Deductible gift recipients (DGRs) and the ACNC. Available at: http://acnc.gov.au/ACNC/FTS/Fact_DGR.aspx. ACNC. (2015d) Factsheet: Who can register with the ACNC. Available at: http://acnc.gov.au/ACNC/FTS/Fact_Charity.aspx. ACNC. (2015e) Reporting – due dates. Available at: http://acnc.gov.au/ACNC/Manage/Reporting/Reporting/ACNC/Report/ReportDue.aspx?hkey=8cb2363b- 95e9-4c4e-84b7-c5b27ccd9c36. ACNC. (2016) Information on the ACNC Register: withheld information. Available at: http://acnc.gov.au/ACNC/FindCharity/About_Register/Withheld_info/ACNC/Reg/With_info.aspx. Cortis, N., and Blaxland, M. (2014). Small community service organisations in New South Wales: characteristics and challenges (Monograph 2/2014). Sydney: Social Policy Research Centre, UNSW Australia. Cortis N, Lee I, Powell A, et al. (2015a) Australian Charities Report 2014. Centre for Social Impact and Social Policy Research Centre, UNSW Australia. Cortis N, Lee I, Powell A, et al. (2015b) Australia's Disability Charities 2014. Centre for Social Impact and Social Policy Research Centre, UNSW Australia. Cortis N, Lee I, Reeve R, et al. (2016) Australian Charities Involved Overseas 2014. Centre for Social Impact and Social Policy Research Centre, UNSW Australia. Knight P and Gilchrist D. (2014) Australian Charities 2013: The First Report on Charities Registered with the Australian Charities and Not-for-profits Commission. Curtin University Not for Profit Initiative. Knight P and Gilchrist D. (2015a) Australia’s Faith-based Charities 2013: A summary of data from the Australian Charities 2013 Report. Curtin University Not-for-Profit Initiative. Knight P and Gilchrist D. (2015b) Australian Charities Involved Overseas: A study supplementing the Australian Charities 2013 Report. Curtin University Not-for-Profit Initiative. Lyons M. (2001) Third Sector: The contribution of nonprofit and cooperative enterprises in Australia: Allen & Unwin. McGregor-Lowndes M and Crittall M. (2015) The State of Queensland Charities: An examination of the first Annual Information Statements of charities operating in Queensland. ACPNS Working Paper no. 65. Queensland University of Technology. Sayers M and Mukherjee D. (2016) More than Charity: Victoria's Community Sector Charities. Melbourne: Victorian Council of Social Service. VCOSS. (2015) Strengthening the State: A snapshot of Victoria's community sector charities. Melbourne: Victorian Council of Social Service. 13.APPENDIX A: SUPPLEMENTARY TABLES Figure A. 1 Extra small charities operating overseas by size
Operates overseas Total n n % No income 720 32 4.4 >$0–$10k 7,169 465 6.5 >$10k–$25k 7,255 526 7.3 >$25k–$50k 3,614 319 8.8 All XS 18,758 1,342 7.2
Notes: n = 18,758, data is missing for 134 charities.
Figure A. 2 Sectors and main activity areas
Sector Main activities Culture and recreation Culture and arts Sports Other recreation and social club activities Law, advocacy and politics Civic and advocacy activities, political activities* Law and legal services Health Hospital services and rehabilitation activities Aged care activities Mental health and crisis intervention Other health service delivery Social services Social services Emergency and relief Income support and maintenance International International activities Education and research Primary and secondary education Higher education Other education Research Environment Environmental activities Animal protection Development and housing Economic, social and community development Housing activities Employment and training Philanthropic intermediaries and voluntarism promotion Grant-making activities (Philanthropic activities) Other philanthropic activities Religion Religious activities Other Other
* These activities have been combined for the purpose of this report due to low numbers of charities in these categories Figure A. 3 Extra small charities’ main activity by size
No income >$0–$10k >$10k–$25k >$25k–$50k All XS % n % n % n % n % n (col) Culture and arts 15 1.5 338 34.5 331 33.8 295 30.1 979 6.2 Sports 1 0.8 39 32.8 43 36.1 36 30.3 119 0.8 Other recreation and social club 8 1.4 190 33.3 219 38.4 154 27.0 571 3.6 activities Civic and advocacy activities 6 3.7 66 40.5 54 33.1 37 22.7 163 1.0 Law and legal services 1 4.2 17 70.8 3 12.5 3 12.5 24 0.2 Hospital services and 0 0 53 35.6 56 37.6 40 26.8 149 0.9 rehabilitation activities Aged care activities 7 2.7 80 31.3 92 35.9 77 30.1 256 1.6 Mental health and crisis 4 2.4 71 43.3 49 29.9 40 24.4 164 1.0 intervention Other health service delivery 16 3.5 178 39.0 155 34.0 107 23.5 456 2.9 Social services 98 7.4 562 42.5 406 30.7 255 19.3 1,321 8.3 Emergency and relief 18 2.3 297 37.8 306 38.9 165 21.0 786 5.0 Income support and maintenance 2 2.0 38 38.4 38 38.4 21 21.2 99 0.6 International activities 3 1.8 56 32.9 67 39.4 44 25.9 170 1.1 Primary and secondary education 38 3.6 287 27.2 425 40.3 305 28.9 1,055 6.7 Higher education 6 3.1 74 38.3 50 25.9 63 32.6 193 1.2 Other education 37 3.3 413 36.5 398 35.1 285 25.2 1,133 7.2 Research 17 8.5 76 37.8 58 28.9 50 24.9 201 1.3 Environmental activities 17 4.4 211 54.2 100 25.7 61 15.7 389 2.5 Animal protection 6 2.6 67 29.1 89 38.7 68 29.6 230 1.5 Economic, social and community 36 5.4 212 31.7 241 36.0 180 26.9 669 4.2 development Housing activities 10 9.9 27 26.7 28 27.7 36 35.6 101 0.6 Employment and training 4 8.2 18 36.7 16 32.7 11 22.4 49 0.3 Grant making activities 22 1.8 467 39.0 384 32.1 323 27.0 1,196 7.6 Other philanthropic activities 13 6.8 67 34.9 61 31.8 51 26.6 192 1.2 Religious activities 76 1.6 571 11.8 3,424 70.6 780 16.1 4,851 30.6 Other activities 8 2.5 165 51.7 69 21.6 77 24.1 319 2.0 Total 469 3.0 4,640 29.3 7,162 45.2 3,564 22.5 15,835 100.0
Notes: n = 15,835, income or activity data is missing for 3,057 charities. Figure A. 4 Main beneficiaries of extra small charities by size (column %)
No income >$0–$10k >$10k–$25k >$25k–$50k All XS n % n % n % n % n % General community in Australia 313 43.5 3,219 44.1 4,016 55.4 1,647 45.6 9,195 48.7 All ages 226 31.4 1,708 23.4 2,756 38.0 1,314 36.4 6,004 34.5 Women 145 20.1 1,589 21.8 2,834 39.1 1,433 39.7 6,001 31.8 Men 140 19.4 1,437 19.7 2,728 37.6 1,360 37.6 5,665 30.0 Children – under 13 154 21.4 1,553 21.3 2,482 34.2 1,350 37.4 5,539 29.3 Youth – 13 to under 25 149 20.7 1,497 20.5 2,190 30.2 1,246 34.5 5,082 26.9 Elderly – 60 and over 78 10.8 1,066 14.6 1,956 27.0 1,009 27.9 4,109 21.8 Adults – 25 to under 60 78 10.8 938 12.8 1,795 24.7 961 26.6 3,772 21.7 People with disabilities 97 13.5 1,120 15.3 1,710 23.6 938 26.0 3,865 20.5 Other charities 70 9.7 709 9.7 1,365 18.8 620 17.2 2,764 15.9 People with chronic or terminal 70 9.7 660 9.0 1,172 16.2 543 15.0 2,445 12.9 illness Unemployed persons 77 10.7 554 7.6 1,092 15.1 583 16.1 2,306 12.2 People from an ethnic background 65 9.0 603 8.3 1,069 14.7 563 15.6 2,300 12.2 Communities overseas 42 5.8 564 7.7 1,108 15.3 510 14.1 2,224 11.8 Aboriginal and Torres Strait Islander 85 11.8 652 8.9 967 13.3 508 14.1 2,212 11.7 people Veterans and/or their families 105 14.6 684 9.4 748 10.3 406 11.2 1,943 10.3 People at risk of homelessness/the 66 9.2 464 6.4 902 12.4 419 11.6 1,851 9.8 homeless Migrants, refugees or asylum 44 6.1 424 5.8 878 12.1 366 10.1 1,712 9.1 seekers Victims of disaster 32 4.4 354 4.8 853 11.8 330 9.1 1,569 8.3 Gay, lesbian, bisexual, transgender 24 3.3 211 2.9 376 5.2 180 5.0 791 4.2 or intersex people Victims of crime 21 2.9 169 2.3 331 4.6 121 3.3 642 3.4 Pre/post release offenders and/or 16 2.2 118 1.6 362 5.0 120 3.3 616 3.3 their families Others not listed 51 7.1 635 8.7 722 10.0 460 12.7 1,868 10.7 Total 720 100.0 7,303 100.0 7,255 100.0 3,614 100.0 18,892 100.0
Figure A. 5 Staff in extra small charities by size
Full-time Part-time Casual Total Sum Mean Sum Mean Sum Mean Sum Mean No income 405 0.6 184 0.3 105 0.1 694 1.0 >$0–$10k 353 0.1 370 0.1 455 0.1 1,295 0.2 >$10k–$25k 3,004 0.5 2,846 0.4 2,126 0.3 7,976 1.1 >$25k–$50k 456 0.1 920 0.3 946 0.3 2,322 0.6 All XS 4,218 0.2 4,320 0.2 3,632 0.2 12,287 0.7 Figure A. 6 Staff by main activity and size
Full-time Part-time Casual Total Sum Sum Sum Sum Mean Culture and arts 85 273 613 971 1.0 Sports 0 12 115 127 1.1 Other recreation and social club 12 49 90 151 0.3 activities Civic and advocacy activities 6 16 17 39 0.2 Law and legal services 0 3 3 6 0.3 Hospital services and rehabilitation 10 8 8 26 0.2 activities Aged care activities 43 172 116 331 1.3 Mental health and crisis 9 39 15 63 0.3 intervention Other health service delivery 28 102 77 207 0.5 Social services 122 158 112 392 0.3 Emergency and relief 348 118 88 554 0.7 Income support and maintenance 21 18 5 44 0.4 International activities 27 36 29 92 0.5 Primary and secondary education 665 457 295 1,417 1.3 Higher education 37 42 78 157 0.8 Other education 219 436 484 1,139 1.0 Research 15 14 14 43 0.2 Environmental activities 17 32 52 101 0.3 Animal protection 4 6 11 21 0.1 Economic, social and community 614 160 189 963 1.4 development Housing activities 7 4 11 22 0.2 Employment and training 39 71 27 137 2.8 Grant making activities 32 48 25 105 0.1 Other philanthropic activities 37 23 33 93 0.5 Religious activities 1,804 1,976 1,024 4,804 1.0 Other activities 15 44 91 150 0.5 Missing 2 3 10 132 0.1 Total 4,218 4,320 3,632 12,287 0.7
Figure A. 7 Extra small charities with no paid staff by size
No paid staff Total n n % No income 720 650 90.3 >$0–$10k 5,780 5,428 93.8 >$10k–$25k 7,280 5,188 71.3 >$25k–$50k 3,614 2,837 78.5 All XS 17,331 14,103 81.4
Notes: n = 17,331, income or staff data is missing for 1,561 charities.
Figure A. 8 Volunteers by main activity % with any Mean number of Median Sum % of total volunteers volunteers Culture and arts 94.5 33.1 15 32,343 7.4 Sports 96.6 30.3 12 3,550 0.8 Other recreation and social club 95.3 26.4 14 15,068 3.5 activities Civic and advocacy activities 95.1 15.4 10 2,518 0.6 Law and legal services 95.8 71.5 10 1,715 0.4 Hospital services and rehabilitation 84.6 13.6 8 2,018 0.5 activities Aged care activities 92.6 22.4 12 5,706 1.3 Mental health and crisis intervention 96.3 20.9 10 3,420 0.8 Other health service delivery 91.4 20.2 10 9,164 2.1 Social services 96.1 49.9 10 65,748 15.1 Emergency and relief 95.2 43.9 18 34,279 7.9 Income support and maintenance 83.8 9.0 5 893 0.2 International activities 94.7 18.5 9 3,124 0.7 Primary and secondary education 89.4 19.3 11 20,206 4.6 Higher education 70.5 8.5 5 1,641 0.4 Other education 90.6 19.2 10 21,693 5.0 Research 86.6 13.3 6 2,660 0.6 Environmental activities 96.1 44.6 15 17,261 4.0 Animal protection 94.3 30.3 10 6,962 1.6 Economic, social and community 89.5 40.1 10 26,647 6.1 development Housing activities 85.1 8.4 6 853 0.2 Employment and training 85.7 10.5 5 514 0.1 Grant making activities 22.9 10.1 0 12,088 2.8 Other philanthropic activities 79.2 31.8 7 6,107 1.4 Religious activities 91.2 27.6 11 133,811 30.7 Other activities 82.8 19.9 5 6,245 1.4 Total 86.6 27.6 10 436,234 100.0
Notes: n = 15,786, volunteer and activity data missing for 3,106 charities.
Figure A. 9 Entity type by size
No income >$0–$10k >$10k–$25k >$25k–$50k All XS n % n % n % n % n % Incorporated 212 29.4 3,120 42.7 2,477 34.2 1,863 51.6 7,672 40.6 Unincorporated 205 28.5 1,746 23.9 3,323 45.8 880 24.4 6,154 32.6 Public company 119 16.5 825 11.3 327 4.5 261 7.2 1,532 8.1 Trusts 154 21.4 1,295 17.7 941 13.0 470 13.0 2,860 15.1 Other legal entity 30 4.2 317 4.3 186 2.6 140 3.9 673 3.6 Total 720 100 7,303 100 7,254 100 3,614 100 18,891 100.0
Notes: n = 18,891, data for one charity was missing.
Figure A. 10 Employee and grant expenses as proportion total expenses by main activity
Employee Grant Grant Total Employee Total n expenses as % expenses ($) expenses as % expenditure ($) expenses ($) total total Culture and arts 979 24,000,000 1,786,020 7.4 4,945,263 20.6 Sports 119 2,233,739 214,480 9.6 452,803 20.3 Other recreation and social 571 10,200,000 537,674 5.3 1,093,669 10.7 club activities Civic and advocacy activities 163 2,544,875 325,757 12.8 284,163 11.2
Law and legal services 24 298,668 9,241 3.1 9,013 3.0 Hospital services and 149 3,131,506 281,494 9.0 1,558,812 49.8 rehabilitation activities Aged care activities 256 8,051,358 461,409 5.7 1,043,025 13.0 Mental health and crisis 164 2,876,700 312,333 10.9 514,160 17.9 intervention Other health service delivery 456 8,560,870 1,360,799 15.9 1,910,928 22.3
Social services 1,321 20,200,000 1,970,426 9.8 3,140,252 15.5
Emergency and relief 786 12,100,000 898,479 7.4 2,598,124 21.5 Income support and 99 2,051,504 146,588 7.1 1,252,062 61.0 maintenance International activities 170 3,579,424 476,467 13.3 1,561,149 43.6 Primary and secondary 1,055 21,100,000 1,683,614 8.0 5,685,305 26.9 education Higher education 193 4,380,070 675,046 15.4 2,001,668 45.7
Other education 1,133 24,000,000 4,077,687 17.0 4,613,249 19.2
Research 201 4,297,185 345,068 8.0 1,444,358 33.6
Environmental activities 389 5,751,842 551,943 9.6 854,071 14.8
Animal protection 230 4,570,595 74,011 1.6 413,570 9.0 Economic, social and 669 15,300,000 1,493,464 9.8 4,837,590 31.6 community development Housing activities 101 4,239,930 253,023 6.0 289,411 6.8
Employment and training 49 1,969,076 938,610 47.7 253,061 12.9
Grant making activities 1,196 26,500,000 647,170 2.4 19,300,000 72.8
Other philanthropic activities 192 3,590,520 67,919 1.9 2,061,067 57.4
Religious activities 4,851 113,000,000 19,300,000 17.1 18,200,000 16.1
Other activities 319 4,540,789 359,927 7.9 785,122 17.3
Missing 3,057 28,100,000 1,708,367 6.1 8,936,586 31.8
Total 18,892 361,000,000 41,000,000 11.4 90,000,000 24.9
14.APPENDIX B: FURTHER METHODOLOGICAL DETAILS All quantitative data analysis was undertaken in Stata version 14.0. Data inclusion Charities in scope for this report are charities which were registered with the ACNC at the end of their 2015 financial year24, excluding: Charities that report to Office of the Registrar of Indigenous Corporations (ORIC) Charities that failed to provide both their 2014 or 2015 Annual Information Statements and were liable for revocation at the end of the 2015 year (‘double-defaulters’). For each charity, the most recent data was used in the following order of preference: 2015 Annual Information Statement – Groups Data 2015 Annual Information Statement 2014 Annual Information Statement 2013 Annual Information Statement ACNC Register information. In addition, data about tax concessions and entity type from the Australian Business Register, based on a charity’s ABN.
Group data The ACNC Act 2012 allows some charities to request group reporting. If approved, one Annual Information Statement (AIS) report is provided for two or more charities. In the 2015 AIS data 114 groups reported for a total of 885 individual charities. If at least one charity in each group had DGR status then the group was considered to have DGR status. The ACNC also provided a location as the ‘head office’ for each group. Some data cannot be inferred for the group as a whole, for example, type of entity. These are treated as missing in the associated analyses.
Data cleaning – ACNC Errors in AIS data for the 2014 and 2015 years were corrected by the ACNC as follows: Errors/potential errors in financial data were identified; for example, where totals did not agree with the data provided or where financial data provided was materially inconsistent with other data (for example, reported charity size); Charities were contacted by email and/or phone about the potential errors and invited to correct errors. In correcting potential errors in the 2015 AIS (for example) 7,085 charities were contacted and invited to complete an online form correcting one or more potential errors in the submitted AIS. Corrected/amended data was uploaded to the ACNC Register by the ACNC prior to data being provided to the research team.
Data cleaning/omission – Research team The research team received the data from the ACNC in separate data files (see Data inclusion above) and combined the data into a consolidated dataset for analysis (see Data inclusion above).
24 Charities financial years vary; the end of the 2015 financial year may be 30 June 2015 for many, but can also be 31 December 2015 or any other date. Charities were included based on their registration status on the last day of the Charity’s financial year. The team then conducted an analysis to identify remaining errors and/or outliers: Financial errors, where data provided did not match sub-totals or totals provided Materially inconsistent data, for example, where a charity reported its size as small but had total revenue over $10m. Where one or more errors were identified: Data was examined record-by-record for errors over $30m. Where data could be amended with confidence it was corrected (for example, where an error in a sub-total could be corrected, and the resulting sub-total agreed with both the data adding to the sub-total and in the resulting overall total); otherwise the data was excluded. For financial data errors below $30m, data was excluded based on its significance in relation to the calculated size of the charity (generally excluded if the largest error was more than half the minimum total income figure for the calculated size segment): o Error of at least $50m for XXL charities (income over $100m) o Error of at least $5m for XL charities (income over $10m) o Error of at least $0.5m for L charities (income over $1m) o Error of at least $125k for M charities (income over $250k) o Error of at least $25k for S charities (income over $50k) o Error of at least $5k for XS charities (income more than $0 but less than $50k). In addition, the research team consulted with the ACNC data details for cleaning: The ACNC advised the research team which fields contained blank, zero or ‘null’ responses by default so that non-reporting could be separated from actual zeros in the data. Data for volunteers in prior years was reported in ranges (for example, 1–10, and 11–50), and the 2015 AIS as an estimated number (e.g. 36). Data provided in ranges was converted to an estimated value using the midpoint of the range (e.g. 31 if 11–50). Inconsistencies in reporting were amended for consistency; for example, reporting ‘Victoria’ instead of ‘VIC’ and binary data in the forms of Y/N and 1/0. Some missing data was added where it could be inferred; for example, a missing state added where the postcode was present.
Estimation model The consolidated dataset includes over 50,000 records, of which 25% have no reported financial data either because they have not reported financial data (e.g. Basic Religious Charities or other exemption; have not yet submitted a 2015 or 2014 AIS, or had large errors in financial data and so data was excluded. For charities without reported financial data, financial data was estimated using mean values from a two-dimensional segmentation model based on ‘sector’ (category of main activity e.g. health, social services) and income segment (XS, S, M, L, XL or XXL): Charities were allocated estimated values for financial data based on their reported size and main activity. In addition, charities within the ‘small’ size group were allocated at random into XS and S income segments, and charities in the ‘Large’ group were allocated at random into L and XL income segments in proportion to the segmentation model data. Sensitivity testing was conducted on the estimated model. In spite of the fact that 25% of charities did not report financial data, and so their data was estimated, a disproportionate number of these are small. As a result, the contribution of the estimated financial data to overall sector totals is of the order of 4–6% and so the uncertainty introduced by the model is very low. Averages (e.g. for total income) by income size (XS, S, M, L, XL, XXL) or sector of main activity (health, social services etc.) are not affected. Estimated model data is used to calculate sector and segment financial totals (estimating the value of the whole charity sector) and averages (where the model does not affect the outcome). Reported data is used to calculate medians and for categorical data such as staff, volunteers, and beneficiaries.
Change over time model The change over time model used a specially constructed matched panel dataset consisting of the 41,908 charities which provided an AIS in both 2014 and 2015. This was constructed by matching ABNs. Data was cleaned using the same methods described above, so data excluded from the 2015 dataset was also excluded in the panel dataset. Additional exclusion criteria were applied to financial data. To summarise: Charities with financial data in 2014 AND 2015 was used as the starting point (~31,000). Charities whose 2014 data had errors above the same thresholds used in the 2015 analysis were excluded. Balance sheet data was excluded for any charity with all zeros in either year or both years. The counts were 2,933 in 2014, 2,322 in 2015, and 3,388 excluded as a result. Income statements excluded where the statement was zero in either or both years (346 excluded) Then the size of the change was considered: o The top 1% of changes in the income statement were excluded for each segment (XS, S, M, L, XL, XXL) – the whole income statement for these was excluded, but the balance sheet was retained. o The top 1% of changes in the balance sheet were excluded for each segment – the whole balance sheet for these was excluded, but the income statement was retained. o For the largest segment, changes exceeding $500 million were also excluded (one case).