According to Foodbank’s latest Hunger Report, 3.7 million households in Australia experienced food insecurity in the last 12 months; many for the first time. More than 160,000 people are being turned away from crisis accomodation as rising rent and mortgages bite.

The ‘cost of living crisis’ is testing Australian charities as demand grows for their services, donations decline, thefts increase and operating costs increase. More and more people are queuing outside charity shops and Foodbanks.

Datasets for ACNC 2022 annual financial returns are unfortunately not publicly available (and should be). But the anecdotal evidence is there: charities are struggling. A recent survey of UK charities says 1 in 5 five could be forced to close their doors this Winter, leaving the people and communities they serve at risk.

Ideally, your organisation has set aside a cash reserve to help ride through financial adversity. A cash buffer buys time to manage change before any cash flow and going concern issues arise. If your nonprofit is facing a financial cash crunch, you need urgent professional help.

For board members, it is essential that you understand and comply with your legal obligation to provide effective financial stewardship, and ensure board decisions are legally sound, mission-aligned and in the best interests of the charity.

For charity and nonprofit leaders, there are levers you can pull to survive. First you need an accurate and ongoing assessment of your financial situation, including cash flow scenarios to review whether the organisation can cover future payments as they fall due. Some of the levers include:

Minimising costs: The difficult decision to make temporary or permanent cuts to your operations or services in order to remain financially viable. This could include deferring plans, investing in technology to save costs, removing complexity, sharing resources or facilities, selling assets etc. It may require an honest evaluation of your programs and their alignment with your mission and money.

Maximising income: It’s important to understand your mix of restricted and unrestricted funds, contract tenures and risk. An income exploration analysis can help you understand options to grow and diversify income. The funds are out there, but they are not reaching your programs. Why?

Mergers or collaborative working: many charities with the same mission are competing for funding and duplicating resources and infrastructure. A larger merged charity or collaborative MoU could help ensure scarce resources are used more effectively and scale impact.

Change is difficult, but you can use a crisis as an opportunity to make decisions that would be otherwise taboo. A chance to bounce back stronger! It’s important to understand the resources, risk and financial implications of your options and to seek professional advice, particularly regarding impacts on your people.