I spent a few hours trawling through submissions to the Productivity Commission’s Inquiry into Philanthropy. Most raise the usual issues, particularly opening up DGR status (hopefully while protecting the integrity of public donations).
Social Ventures Australia (SVA) focused on an issue dear to my heart: overhead recovery. In a nutshell, philanthropy needs to shift its focus from “low overhead” to “high impact.”
Charities incur administrative and operational costs which are essential to deliver programs, while supporting effective governance and sustainable finances.
Some charities I know claim to operate with a 10% or less overhead and discretely rubbish competitors who disclose their costs honestly and transparently. Firstly, I don’t believe them. Secondly, it diminishes the charity sector by setting unrealistic donor expectations.
In many sectors, the Australian Government caps project overhead charges at 10%. As a result, charities are delivering vital government services at a loss. It is counterproductive: underfunding risks less efficient and effective projects.
Full and transparent overhead recovery is a positive to celebrate. It allows nonprofit organisations to invest in staff training, implement better systems to manage projects, and evaluate outcomes. SVA rightly calls for standards for reasonable and appropriate overhead rates and reporting.
A number of submissions also challenge the limited application of Fringe Benefits Tax (FBT) exemptions to the public health sector. Employee FBT benefits include items such as vehicles, housing, and entertainment. Extending those benefits more widely would allow the nonprofit sector to attract higher calibre employees and deliver greater social impact for everyone, including donors looking to maximise the impact of their gifts.
One response to “OPINION: focus on impact not overheads”
I don’t understand why FBT reform is not pushed more widely by the charity lobby