Like businesses, the NFP sector and world of charities changes over time and the most recent ACNC Australian Charities Report gives a good snapshot of the current state of the sector. It’s interesting reading for anyone working in or with the sector, helping to understand some of the challenges and successes.



Highlights from the latest Charities Report

This report is based on data reported to the ACNC (Australian Charities and Not-for-Profit Commission) in 2021 and so is influenced by the impact of the pandemic in that year. That had differing effects, ultimately closing some organisations for extended periods while others faced unprecedented demand for their services. Some closed forever.

State of the NFP Sector

How big are charities in Australia?

Of the 60,000 registered charities, the majority are small, with revenue under $250,000. 32% are extra-small earning less than $50,000. At the other end of the scale, 5% have revenue over $10 million. And then there are the 16% who are Basic Religious Charities that the chart above assumes are small but there are some well-known exceptions to that.


What do charities do?

Analysis of the activities of charities shows the most common are:

  • religion (22%),
  • human services (16%) and education (16%),
  • followed by health (11%)
  • and then community development (10%).

The extra-small charities are most likely to be involved in education and community development. On the other hand, small ones are chiefly in religion or education. Whilst the large (revenue over $1m), very large (over $10m) and extra large (over $100m) are dominated by human services, education and health.


Who does all the work?

It’s not all volunteers. In fact, the number of volunteers reported as been steadily declining. This changed considerably from a high of 3.77 million in 2018. Evidently, the latest report shows only 3.2 million in the 2021 year. It is likely, this could have been impacted by the COVID pandemic and the associated lockdowns in many areas.

The findings confirmed that half of the charities have no paid staff at all, which is hardly surprising given the number of small and extra-small charities.

The sector as a whole is a major employer though, covering 1.42 million employees, or 10.5% of the Australian workforce.

The employees are highly concentrated in a few extra-large charities though. Basically, it is a handful with revenue over $100m that employ 46% of the workforce. In addition, only 38% of employees in the sector work full-time, with the remainder a mix of part-time and casual.


Where does all the money go?

The 60,000 charities operating in Australia collected $190 billion in 2021, up almost 7% from the previous year.

  • Just over half of this came from government grants, with most of those going to larger organisations.
  • 31% of revenue comes from the provision of goods and services.

Surprisingly, given the increasing involvement of charities in the fee-for-service models such as NDIS and aged care, this has declined 3% since 2018.

Donations account for 40% of revenue for the small and extra-small charities but decline in importance as for larger organisations.

The $13.3 million in donations represents a 5% increase over the previous year and a 27% increase from 2018. It is not unexpected, that the larger charities have been the main beneficiaries of that increase.

As you would expect for service-based organisations, wages and other employee expenses are the biggest outgoings in the charity sector, accounting for 57% of all expenses. Whilst some 5.6% of revenue is re-distributed as grants and donations.

Overall, you can see that the asset ratio (total assets divided by total liabilities) across all charity sizes and sectors improved in 2021 to an average of 3.1. Essentially, you could suggests that is prudent building of reserves which will help with sustainability.

How does your organisation compare to the sector average? This article discusses Working Capital in more detail.



In Summary, is it a Healthy Sector?

While it’s always challenging to draw too many conclusions from one report, the charity sector does appear to be in good health overall. Revenue and employment are in creasing and it clearly makes a difference to many people’s lives.

The biggest negative in the report is the decline in volunteering but that could be pandemic-related. We will await next year’s report!