So what does the Australian Charities and Not-for-profits Commission’s (ACNC) annual Australian Charities Report 10th Edition really tell us?

Remember, this is 2022. Australia gradually lifted its Covid-19 restrictions throughout the year, opening borders to fully vaccinated international travellers, lifting mask mandates and social distancing requirements, easing quarantine and by the end of the year mandatory isolation.

The Great Resignation phenomenon materialised through 2021 and into 2022 as employees re-evaluated their work-life balance, job satisfaction, and career goals during lockdowns and remote working. Talented employees were in demand and attracting big pay increases.

Inflation soared from mid-2021 as global supply chain disruptions led to shortages of goods and higher production costs – just as the economy reopened and consumer demand surged. And then Russia invaded Ukraine on February 24, 2022, shutting down gas pipelines and grain supplies, pushing global prices even further.

By the June quarter of 2021, the annual inflation rate had risen to 3.8%. Inflation continued to climb through 2021 and into 2022, with the annual CPI inflation rate reaching 5.1% in the March quarter of 2022, and further increasing to around 6.1% by the June quarter of 2022.

The Reserve Bank of Australia (RBA) responded by hiking interest rates, making borrowing more expensive and saving more attractive, thereby cooling demand.

All those post Covid cost-of-living pressures led to an a disproportionate growth in charity expenses ($22 bn) compared to revenue ($11 bn). Soaring charity running costs (below, right) – particularly employee costs (up 9.8%) and interest payments, reduced surpluses and widened deficits.

Growth in current liabilities also tightened so the average current ratio (a measure of the ability to pay short-term debt) fell to 1.1 for large charities in 2022.

On the plus side, charity income increased by $11 billion in 2022 (5.6%) well above the 3% growth of the Australian economy. Donations and bequests (below, left) rose to $13.9 billion, an increase of $584 million (4.4%). But for the largest charities, donations declined by over $3bn.

Rising pressure on household budgets, a slowing economy and brutal government budget cuts to retire Covid debts suggest there will be more cost increases and uncertain revenue growth during 2023 and 2024. And there is little sign of relief: the economy is slowing to a stop at 0.1% GDP growth in March 2024 (and falling on a per person basis). Inflation appears “stuck” at 3.6%, which is why the RBA is not ruling out more interest rate hikes.

Community Council for Australia CEO David Crosbie said the 2022 ACNC’s findings should be a major concern for policy makers, charities and the broader community.

“These are compelling figures. And yet in many ways they represent the tip of an iceberg. Just below the surface are a range of emerging problems that are eating into the sector’s capacity to survive and continue serving their communities … our sector is becoming unsustainable,” he said.

Crosbie called on governments – a major funder – to do more.

“Acknowledging that charities are doing it tough doesn’t address the fundamental problem – charities are being underfunded for the work they do … the charity and not-for-profit sector is largely left to try to do business as usual with less income, increased costs and, in many areas, increased demand and complexity.”

So what can you do? As the charts show, small and medium charities are successfully growing donations and bequests. But to do that well you need to be really clear about your mission (your strategy), the problem your charity is solving, and how your charity is best-placed to make an impact (your Case for Support). From there, you can build a financing (and fundraising) plan to put your organisation on the path to financial sustainability.

Make a start by exploring the tools and resources available on the bettercharity website, including access to the ACNC’s 2022 financial data. Our resouces include:

• benchmarking you charity, using 2014-2022 ACNC charity raw data
• search the database for grant-makers, including an AI prompt
• use an AI-powered grant-writer to help put a proposal together
• use an AI-powered Case for Support and Appeal Writer (under test)
• book a free no obligations meeting to discuss your needs

Finally, ending with a plea. 2022 is only a point in time. It’s now 2024 and the world has changed. If the ACNC shared its Annual Information Statement data in real time, government and charity leaders can make more timely and informed decisions now. Surely, it’s not a big ask?