Media Release

NFP Finance & Governance Insights Media Release and PDF

Fault lines and seismic shifts revealed in $107 billion not-for-profit sector

New research into Australia's $107 billion not-for-profit sector has revealed a massive undercurrent of pressures driving a fundamental shift in the sector that powers Australia's communities.

The survey of 845 senior representatives of Australian not-for-profit groups shows that 5% of not-for-profits have been pushed to merge over the past year, with three times that number expecting to do so in the next 12 months.

The survey, which was conducted by Our Community between February 23 and April 24, also uncovered some troubling capacity gaps in the financial oversight and governance of the sector.

In some troubling findings, the survey found that up to $38 million may have been lost to fraud last year, with 79% of offences being committed by a trusted insider and a worrying 58% not reported to police.

While the survey is a call to action, there is also a cause for optimism. 71% of respondents believed that their organisation's finances are well managed while only 4% of respondents felt that their organisation's finances were poorly managed.

Our Community group managing director Denis Moriarty said the march towards mergers should not go un-noted by those who donate to, support, regulate, fund, and work or volunteer in the not-for-profit sector.

"This survey reveals the seismic shifts that are occurring right now in the Australian not-for-profit sector and also highlights some of the fault lines that need to be addressed," he said.

"As the not-for-profit sector continues to grow in size and economic importance, it is vital that board members and senior staff of not-for-profits refresh their skills in financial literacy to ensure they can respond to the immensely challenging funding climate they now face.

"While the sector as a whole is growing at 7% a year, community groups are being gobbled up, revealing the new face of the social economy: much bigger not-for-profits," he said. "This is a process that has to be managed very carefully. These are the organisations that are dealing with this country's most vulnerable people. They employ more than a million Australians. Shifts this big need to be monitored carefully."

Mr Moriarty said Our Community's Institute of Community Directors Australia was helping to train a new breed of Australian not-for-profit managers and directors to deal with some of the issues this groundbreaking research has highlighted.

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About the report

  • Survey conducted online between February 23 and April 24, 2015
  • 845 participants drawn from across the not-for-profit sector and across the nation
  • 58% of respondents drawn from organisations operating in Victoria and NSW, 16% from Queensland
  • 28 different sub-sectors represented, with 21% from the community services sub-sector, 14% from sport and recreation sub-sector and 11% from education and training sub-sector
  • Survey included organisations of all different sizes, from large national charitable foundations to local sporting organisations. 18% of respondents reported annual revenues of more than $1 million
  • Senior representatives of not-for-profit organisations - board members, CEOs and other senior staff members - made up 80% of the sample.

Comment

Denis Moriarty - Group Managing Director, Our Community
0417 184 744 | denism@ourcommunity.com.au