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The Australian Not-for-Profit Sector

An Overview - The Community Sector

The Australian community sector - sometimes also labelled as the not-for-profit sector, nonprofit sector, third sector, or social sector - encompasses a broad range of social institutions that are neither commercial nor governmental.

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 counselling 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 Australian Bureau of Statistics regarded 41,008 as economically significant. Religious organisations accounted for 21.4% (8786) of all not-for-profit organisations, followed by culture and recreation organisations, which accounted for 20.1% (8258) .

The Sector's Impact on the Economy

According to the Productivity Commission's Contribution of the Not-for-Profit Sector report, the sector in 2006-07 generated $41 billion in gross valued added (GVA) - a measure in economics of the value of goods and services produced in an area or sector of an economy.

This figure was equivalent to 4.3% of total GVA. This figure is also comparable to the measured contribution to national income of the wholesale trade sector ($48 billion), transport and storage ($48 billion) and government administration and defence ($40 billion). It is also larger than the gross value added of the communications sector ($25 billion), but smaller than that of finance and insurance ($77 billion).

In more traditional GNP measures, not-for-profits make up an even more impressive 9.6% of the economy. Not-for-profits represent 2.9% of all Australian enterprises, 3.3% of all outlets, 5.7% of the nation's revenue, and 14.5% of the Australian workforce.

As a whole, community organisations dominate several sectors of the Australian economy. The community services sector, for example, assists and supports individuals, families and communities in need nearly 90% of organisations operating in this sector are not-for-profits. The sector is growing rapidly with most of this growth driven by not-for-profit organisations.

In 2001 40% of the employing organisations involved in sport and physical recreation activities were in the not-for-profit sector. While not-for-profits made up only 25% of the music and theatre companies in Australia, they took in 52% of the income. Sixteen thousand volunteers participated in 175 arts festivals.

Not-for-profit organisations employed 889,919 people at the end of June 2007. Social services organisations accounted for 24.9% of these, followed by education and research organisations (24.5%). Permanent full-time employees accounted for 41.4% of total employment in the not-for-profit sector, while 34.3% were permanent part-time and 24.3% were casual employees.

Funding

In 2006-07, not-for-profit groups received $76.6 billion in income, with 33% of that from government grants, 30.5% income from services, and 9%, or $7.2 billion, through donations, fundraising and sponsorship.

Philanthropy and Giving

The strength of the not-for-profit sector rests heavily on the Australians who donate money and volunteer their time. The most recent, comprehensive statistics in this area date from between 2004 and 2006.

Total giving to nonprofit organisations by individuals and businesses was $11 billion in 2004, made up of:

In 2004 Australians donated $5.7 billion, a staggering increase of 88% since 1997.

This represented a total of $7.7 billion going to support the not-for-profit sector. Business giving has more than doubled since 2000-01, with more than 525,900 businesses, or 67% of all businesses giving a total of $3.3 billion: Where are the donations being given?

Only about 20,000 of the nation's 600,000 not-for-profits have Deductible Gift Recipient status, and can thus receive tax-deductible gifts. The amount claimed continues to rise over time, however, although the global financial crisis has caused cause a blip in the graph - the total amount donated in 2008-09 was $2.09 billion, compared to $2.35 billion the year before - a drop of 10.79%. Still, the average tax-deductible donation made to DGRs has nearly trebled in the last decade, far above the rate of inflation. Community

The majority of Australian not-for-profits, however, operate below the radar at the local level. Local community groups play many roles in society.


Sources

ABS - Not-for-profit Organisations, Australia, 2006-07. (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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