An Overview - The Community Sector

The Australian community sector - sometimes referred to as the not-for-profit sector, nonprofit sector, third sector, or social sector - encompasses a broad range of organisations that are neither commercial nor governmental, all pursuing a range of charitable purposes through service delivery, grantmaking and other activities which advance health, education, social welfare and religion. It includes entities of all sizes - hospitals, community services, universities, sports clubs, religious groups, day care centres, recreation clubs, environmental groups, job-training centres, family counseling agencies, and many more.

The number of Australian community sector organisations was most recently estimated at around 600,000 (Productivity Commission, Contribution of the Not-for-Profit Sector (2010)). Some 440,000 are smaller unincorporated organisations.

In 2007, the Australian Tax Office (ATO) classified 177,109 organisations as not-for-profits. Of those, the Productivity Commission report of 2010 regarded 59,000 as economically significant. According to the ACNC's Australian Charities Report 2014, religious organisations accounted for 29% of all not-for-profit organisations, followed by education and research organisations, which accounted for 18%, while 8% of organisations belonged to the health sector.

The Sector's Impact on the Economy

According to the ACNC's Australian Charities Report 2014, the sector reported income totaling $103 billion in 2013-14. Of this, $42 billion came from government grants, $6.8 billion from donations and bequests and $54.5 billion from other sources.

This figure was equivalent to 3.8% of gross value added (GVA) to the Australian economy. This figure is greater than the contribution to GVA of the agricultural, forestry and fishing industries (2.4%) and the information, media and telecommunications industries (3%).

According to the ACNC's Australian Charities Report 2014, Australian charities had $95 billion worth of expenses in 2013-14, $52 billion of which were employee expenses. Not-for-profit organisations employed more than 1 million people in 2013-2014, representing 9.7% of the Australian workforce. This is comparable to the 1.27 million people employed in the retail sector.

Education and research organisations accounted for over 31% of employment in the not-for-profit sector, while aged care accounted for 15% and social services accounted for 8%. Permanent full-time employees accounted for 40% of total employment in the not-for-profit sector, while 36% were permanent part-time and 24% were casual employees.

Philanthropy and Giving

The strength of the not-for-profit sector rests heavily on Australians who donate money and volunteer their time. This is highlighted by the fact that more than 3.8 million volunteers provided more than $17.3 billion of free labour in 2012-13, according to the Australian Bureau of Statistics. Nearly all not-for-profit organisations benefit from the use of volunteers, with 83% engaging at least one volunteer.

The ACNC's Australian Charities Report 2014 highlighted the fact that some charities rely heavily on donations and bequests while others don't rely on them at all. In 2013-2014:

• 35% of charities received no donations at all
• 25% of charities relied on donations for more than half of their income
• 12% of large organisations and 31% of small organisations relied on donations for more than half of their income
• 72% of organisations that listed international activities and 59% that listed religious activities as their main purpose relied on donations for more than half of their income
• Less than 6% of organisations that listed housing activities, employment and training, law and legal services, and aged care services as their main purpose relied on donations for more than half of their income.

Only about 20,000 of the nation's 600,000 not-for-profits have deductible gift recipient (DGR) status, and can thus receive tax-deductible gifts. The ACNC's Australian Charities Report 2014 emphasises the substantial variation in the proportion of charities with DGR status according to their sector. The charities most likely to have DGR status were those whose main activity was in the health (80%), social services (72%), law, advocacy and politics (64%), environment (60%), or culture and recreation (59%) sectors. In contrast, charities whose main activity was in the religious sector were least likely to have DGR status (11%).

Community

The majority of Australian not-for-profits operate "underneath the radar" at the local level. The direct impact of these local community groups on the national economy is small, but these groups play many roles in our society:

• They give voice to communities of place and of interest and contribute to a more involved Australian democracy
• They improve the quality of life through groups, events and celebrations
• They provide a place for people to participate and engage with each other in community life
• They break down isolation and enable people from a diversity of backgrounds to join up and join in
• They provide the opportunity for people to join together to share responsibility
• They provide services that are responsive, relevant, and accountable to their communities.

Sources

ABS - Not-for-profit Organisations, Australia, 2012-13. (Click here.)

Lyons, M (1999), Australia's Nonprofit Sector, in Year Book Australia 1999, ABS Catalogue No. 1301.01. (Click here.)

Lyons, Mark (2009), The Nonprofit Sector in Australia: A Fact Sheet. (Click here.)

McGregor-Lowndes, M, 2011, An Examination of Tax Deductible Donations Made By Individual Australian Taxpayers in 2008 - 09, Working Paper No. CPNS 54, The Australian Centre for Philanthropy and Nonprofit Studies, Queensland University of Technology Productivity Commission (2010) Contribution of the Not-for-Profit Sector. (Click here.)

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