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COVID-19 and the impact on the charitable sector By Mark Holton on Jun 5, 2020


This month I thought we would look at something a little different. The past few months have certainly posed challenges for our accounting firms and clients as well as the not for profit charitable sector.

With restrictions easing I believe it is time to start looking at recovery services to try to get back to where businesses were pre COVID-19. This will naturally be different in each type of industry as will the type of services required. One such sector I would like to examine this month is charities.

I was recently sent a link to a great report titled “Will Australian charities be COVID-19 casualties or partners in recovery? A financial health check.” The report was published in June 2020 by Social Ventures Australia (SVA) and the Centre for Social Impact (CSI) that models the potential impact of COVID-19 on the financial health of Australia’s 16,000 registered charities who employ people, to better understand the effects and identify systemic solutions.

The report found that without transitional support more than 200,000 jobs could be lost among Australian charities as support like JobKeeper, and lease and loan deferrals come to an end in October. Some of the statistics from the full report are detailed in the below extract;

The report also identifies that this impending ‘October cliff’ could disrupt the provision of services to some of Australia’s most vulnerable people, including those directly affected by the COVID-19 crisis.

This report calls for governments to ensure the resilience and viability of the charity sector through a range of supports, including:

  • Gradual transition of JobKeeper and other supports to create a ‘ramp’ not a ‘cliff’ in October
  • One-off Charities Transformation Fund to help organisations transition to the ‘new normal’ including operating online, restructuring etc
  • Maintain funding for government contracted services delivered by charities to reflect the true cost of delivering services
  • Retain JobSeeker at a higher level to mitigate the increase in service demand while also stimulating the broader economy
  • Simplify fundraising and philanthropy with nationally consistent fundraising laws
  • Support research to better understand how to build back the charities

How many of our clients will experience this “October Cliff” scenario and how do we help them with recovery services that in the first instance, get them on the pathway back to where they were before COVID-19 let alone grow and succeed in their businesses. Just like charities, business owners have similar challenges. We need to be thinking now of planning for success and getting our clients focussed on developing strategic actions to recovery.

It is an interesting read and I am sure the lessons and actions can be applied to many of our clients as well as the not for profits I know many accountants devote their valuable time to support.

The report is available for download at here.


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