Charities facing 'existential crisis' without federal government help
One in six charities is at risk of needing a handout to stay afloat due to the coronavirus pandemic, with academics warning hundreds of thousands of jobs will be cut unless the federal government provides more help.
A report from the Centre for Social Impact and Social Ventures Australia found charities were facing an average 20 per cent drop in income during the outbreak. Almost 17 per cent were at risk of exhausting their liquid cash reserves within six months, putting about 200,000 jobs in jeopardy across the sector.
Charities need their own handouts to stay afloat, a report says.
"Charities will face increased demand to support people ... at the same time that their revenues remain low," the report said.
It proposed several options to help struggling charities including a Charities Transformation Fund providing one-off, time-limited government funding to non-profits trying to adjust, nationally consistent rules for fundraising and incentives for philanthropy.
Many government schemes introduced to help businesses through the pandemic would not help charities survive, the report warned, although it noted the JobKeeper wage subsidy had made a "significant difference" over the past few months.
The federal government expanded its $40 billion loan scheme on Sunday to help small businesses through the recession, with a four-fold increase in the cap to $1 million and extensions to the repayment times.
However, the report said discounted loans were not feasible for most charities. Figures provided by Labor found 22 loans had been approved through the loan scheme for charities compared with 15,000 in total.
Labor spokesman for charities Andrew Leigh, deputy chair of the standing committee on economics, said charities were "fiscally more cautious" and the loan scheme did not do enough to help non-profits.
"They don't have the same track record with the banks, it's much more unusual for charities to take out loans," he said. Charities made up one in 500 applications and one in 670 approvals.
"There's no harm in putting pressure on banks to help charities at the same rate as businesses."
Dr Leigh said a fund such as that suggested by the report was "worth considering".
"This is a real existential crisis for a lot of charities and it doesn't just affect them, it affects the physical and mental health of their local communities."
Assistant Minister for Charities Zed Seselja said the government had supported charities throughout the pandemic, including ensuring they were eligible for schemes such as the Boosting Cashflow program, SME Guarantee and JobKeeper. Emergency relief services had been given $200 million under the Community Support Package.
"At this time, there are no plans for additional loan schemes for the charitable sector," he said.