Australian nonprofits prepare for hard times ahead

Given massive cuts to the federal government’s aid budget, how can Australian nonprofits and charities deliver much-needed services despite reduced funding?

This is the question top leaders of Australian nongovernmental organizations tried to address at a national roundtable this week, following the release of a Community Council for Australia report highlighting their struggles.

“Charities and not-for-profits are facing more expenses now than in the past and need to find money to meet their project and contractual obligations,” CCA chief executive David Crosbie told Devex, noting how many nonprofits are now facing the dilemma of being underfunded for the work they are contractually required to complete. But because they believe in the work, these NGOs are searching for means to make ends meet.

“They are feeling desperate and this is resulting in them having to make drastic cuts in staff and programs,” Crosbie said.

World Vision and Plan Australia have just completed negotiations with the Department of Foreign Affairs and Trade on the cuts to 6.5 million Australian dollars ($5 million) worth of projects, which included programs for clean water, health, education, gender-based violence eradication and child protection.

More than 1 million people in developing countries are estimated to be affected by the cuts, including those in Senegal, South Sudan, Uganda, India and East Timor. The cuts aren’t likely to stop there, however, as more projects are likely to be put on the chopping block as part of ongoing reductions to Australia’s aid budget.

Crosbie said the nonprofit sector is now looking at new ways of dealing with a change not only in the face of government cuts, but a reduction in public donations.

“Models charities and not-for-profits have used in the past are no longer working,” he said. “In the past, there was expectation that income from government funding and donations would continue to grow. Now this is not happening but they are still committed to their cause.”

Innovating for the future

Tom Costello, chief executive of World Vision in Australia, told Devex CCA’s report and the subsequent roundtable came at a critical juncture for the country’s nonprofit sector.

“We are seeking to own our future and the profound uncertainty within the sector means we need to take risks and determine how we can still work to achieve outcomes,” he said.

NGO leaders discussed measures they can implement in the short term, which included merging charities operating in similar areas and sharing offices to reduce overhead costs. Beyond short-term measures, however, the roundtable provided industry leaders an opportunity to plan long-term goals as a collective.

“The groups can spend too much time focusing on just trying to stay afloat,” Crosbie said. “They don’t often get to look forward at future directions and what the journey could look like.”

A collective voice to effect change

With the next Australian federal election taking place in 2016, the national roundtable was an opportunity to push the need for a united sector that can lobby for charities and nonprofits. And with the collective voice of the sector consisting of 5 million volunteers and more than 1 million employees, politically it cannot be ignored.

“Parties have to follow through on their promises after being elected,” Crosbie told Devex. “The policies are starting to be framed for the next election and together we can frame their agenda.”

On Wednesday, the potential political force of the sector was demonstrated.

Assistant Treasurer Josh Frydenberg effectively axed the proposed abolition of the Australian and Charities Not for Profits Commission, which was introduced last year as part of efforts to reduce bureaucratic processes. Although the assistant treasurer only said the proposal will no longer be treated as a priority, Crosbie is confident “the repeal bill won’t be going back to the Senate.”

The World Vision chief welcomed the news, saying ACNC was critical in building greater confidence in the sector that had been hit by scandals caused by fraudulent charities. ACNC can review charities and revoke their registration if they are not operating in accordance with regulations.

“It is a virus out there spreading,” Costello said. “Having the ACNC is incredibly important for confidence in charities.”

Moving forward

While ACNC is set to remain in place to regulate NGOs and reduce red tape, Crosbie said it is important the sector itself continues to work together on improving.

“As a sector, we need to continue to evaluate ourselves and lift our game,” he stressed. “Not everyone is performing at a high standard and we need to work on that.”

The national roundtable gave a glimpse of the value of bringing groups together to share knowledge, ideas and create a unified front. And this will continue in future forums as the CCA continues to advocate for the sector, which Crosbie hopes will be an inspiration for NGOs that are struggling financially.

“We have an eclectic group that [is] united to strengthen charities,” he said. “It is uplifting to look beyond my area and see what we can achieve collectively.”

Will aid cuts force a rise in mergers among Australian nongovernmental organizations in the next few months? Share your thoughts below.

Devex, in partnership with the Shared Value Initiative, FSG and Global Impact, is examining how the world’s largest international nongovernmental organizations are transitioning their partnership strategies from traditional corporate partnerships to more scalable initiatives. We’ll look at how these initiatives accelerate both social impact and a business return on investment, while highlighting engagement in shared value during this special series “The Future of International NGOs.” Join the conversation using #FutureINGO.