The Victorian Council of Social Services (VCOSS) has just released a report into community sector charities in Victoria. “More than a Charity”, the report in question, documents the hours spent on reporting to various branches of government each year by finance staff. It identified a $23 million cost that Not for Profits spend on reporting. Leading to the conclusion that reporting requirements for charities are still onerous.
The report also covered the budget position of these charities and notes that only 21% operate a budget surplus with the majority (67%) working to balanced budgets. This may be fine in the short term but a balanced budget leaves no scope for building up reserves. As many disability service providers are discovering, when the funding mix changes away from grants to consumer-directed care, reserves are vital to manage temporary shortfalls in cash (like when a payment portal isn’t available for a few weeks…).
Reporting Requirements for Charities
On average, the charities spent 291 paid hours and 47 volunteer hours on reporting requirements. In particular, large organisations spending considerably more. In addition, 523 paid hours and 117 volunteer hours for a total of 640 hours a year were consumed. Social services had the largest reporting burden (711 hours) while Income Support and Emergency Relief were the lowest. This probably reflects the relative size of the organisations.
VCOSS calculate the total cost of this reporting burden at more than $23 million – an average of over $20,000 per charity.
The case studies included in the report reveal a few issues making reporting a burden:
- Multiple funding sources
- Different government departments needing reports in varied formats
- Sometimes even the same department wanting different reporting for different types of grants.
- The is crossover in auditing requirements between state and federal departments.
The great promise of the Australian Charities and Not-for-Profit Commission (ACNC) has been that it will reduce the duplication and crossover that now appears. But, that’s not an overnight solution. There is an acknowledgement in the sector that organisations do need to be accountable for their use of public money. The ACNC highlights their charity reporting obligations here. However, the gripe is more with how this is done than the principle.
Calxa Customers Reduce Their Time
Speaking to many of our Calxa customers, it’s clear that they have reduced the time spent on reporting considerably. Trevor McFarlane of Leisure Networks in Geelong is just one who says,
“Using Calxa for my reporting saves me at least 1 day every month”.
Reporting doesn’t have to take lots of time but reducing that time does involve using the right systems.
To get started in improving your accounting and managing the reporting requirements for your charities, here are a couple of resources. Have a read of our article Which Cloud Accounting Software? and watch this video Reporting Basics with Calxa.