Australian charities – should they merge? Let’s get real

November 29, 2015

Earlier this month, the Community Council of Australia (CCA) Chief Executive David Crosbie said that with an estimated 600,000 not-for-profit organisations and almost 60,000 registered charities, there was a real duplication of work, as well as having to compete harder for fundraising and government contracts.

The answer, according to Crosbie:  cut the number and create efficiencies, especially federated charities, where “charitable cash is being wasted on duplicated management roles, infrastructure and back office systems.”

This statement stimulated lots of media discussion here in Australia.  There’s a lot in this statement, but it’s important to set aside some misleading figures.  First, a very large proportion of the 600,000 not-for-profits mentioned above are very small, community-based sporting clubs, without any ability to make donations tax deductible and only undertaking very minor fundraising (cake sales, sausage sizzles and the like).  In my northern Sydney suburb, I can easily count about ten different sporting clubs, and I haven’t even tried to search for them.  Nobody should be suggesting that somehow they would be more efficient to merge; it would create enormous governance problems:  does the netball club and the Aussie Rules footy club really want to become the same organisation?  No, they don’t.

Second, of the 60,000 “charities” – and I am not a fan of that word, as a very large proportion do not, actually request “charity” from individuals – there are only just under 17,500 organisations that hold full Australian organisational “deductible gift recipient” (DGR) status, and another 11,000 that are part of a larger institution that does not have DGR status, but they have a special DGR fund.  A good example of the latter category is the “library fund” of local primary schools:  while the school is not tax-deductible, donations to the library fund are.  Schools use this tax deductibility to allow/encourage (and sometimes require) parents to make donations to the school that their children attend.  From my experience, very few, if any, of these 11,000 special DGR funds actually engage in “fundraising”, and operate more as passive vehicles for accepting tax deductible donations.

That leaves the final 17,500 full DGR organisations.  But how many of them actually undertake active fundraising?  Have a look at the list – as well as the other DGR list – on this page of the Australian Government’s Australian Business Register.  You will find them all in a simple 5.5MB text file, easy to download and read.  I have not analysed all of these organisations, but from a skim through them, I suspect that only a small minority actively campaign for funds.  How many?  Let’s say about 5,000.  Still a large number, but no where near the “scary” figure of 600,000 organisations all wasting our money competing with each other, or even 60,000 charities (by the way, where did the CCA obtain the 60,000 figure?).

Criticisms of not-for-profit fundraising are fine (and parts of the sector certainly could be more efficient), but not when the criticisms exaggerate the numbers involved.