The COVID-19 pandemic has had a far-reaching impact on the non-profit sector.
Research from Salesforce.org has revealed that 78 per cent of Australian non-profit organisations will only exist and operate virtually within the next three years, and 33 per cent are concerned about retaining existing donors.
Charities have been impacted by rising demand for their services. Some struggle to fund their operation due to lockdowns and changes in individual volunteering behaviours.
Another survey conducted by the Centre for Social Impact (CSI) revealed that nearly 80 per cent of service providers in the social services sector could not meet requests for support.
“Organisations across the for-purpose sector are finding that there is a huge demand for their services, but they have limited capacity to adequately handle it,” Dr Megan Weier, Senior Research Fellow at CSI, said.
She also pointed out that the sector was already overburdened long before COVID-19, indicating a broader systemic issue.
“These issues existed before 2020 as a result of the prohibitive nature of short-cycle funding – the pandemic has only exacerbated the situation,” Dr Weier said.
“Due to the immense shocks of COVID-19, organisations have been required to respond reactively rather than being able to plan. This means that they are currently very operations-focused, which raises concerns about how our charities will fare in the future.”
Adapt to survive – Go digital
Charities have been more open to taking drastic measures to remain afloat during the lockdowns.
Amid a surge in demand for their services, non-profits were forced to act as first responders during the pandemic while at the same time adapting to become virtual organisations.
“By taking a digital-first approach, non-profits can build much-needed resilience into their operations to future-proof against further disruption and ensure that they can continue to support their communities,” Andrew Hill, Regional Vice President of Non-profit and Education, Salesforce.org, told Dynamic Business.
“The digital shift means non-profits now can automate time-consuming manual processes that have often plagued their ability to remain agile, as well as digitise their services to reach new donors, tailor outreach, and drive more robust engagement.”
In the last year, 36 per cent of non-profits have invested in new technologies such as customer relationship management (CRM), collaboration and productivity tools, analytics, artificial intelligence, and automation.
Meanwhile, 87 per cent of respondents reported that the investment had impacted their organisation, as the pandemic forces a digital transformation on optimising revenue best and delivering consistent interactions across digital channels.
“As we get into a rhythm of a new-normal, digital tools will continue to be the linchpin of success,” Andrew said.
“Leaders will need to ensure that their organisations have the tools to streamline processes and create connected experiences that make their donors feel like they are making an impact whether it’s face-to-face or online.”
Salesforce research found that 82 per cent of non-profits now have a greater reliance on technology to run their operations and streamline day to day activities.
Additionally, 81 per cent are already looking to the next step in their digital transformation and plan to implement artificial intelligence (AI) into their operations within the next three years to automate manual processes further.
Youth Insearch, an organisation that helps at-risk Aussie youths, is one example of how a shift to digital is helping the organisation by providing virtual support to hundreds of youth by bringing its face-to-face support groups online.
“By doing so, it was able to make nearly 3,800 support calls to 448 young people and conduct almost 320 weekly support group sessions – all of which would have been cancelled or not possible with restrictions to in-person events,” he added.
The initial shift to digital may have been for many non-profits’ short-term survival. Still, it has triggered something much more significant within the sector.
Non-profits can build much-needed resilience into their operations by going digital-first, ensuring that they can continue to support their communities in the face of further disruption.
Growing disparities
The charity sector is vastly diverse — many charities are small scale. They rely entirely on volunteer trustees, while others run complex national or international operations that employ hundreds of people.
Some organisations, such as the Australian Red Cross, the Salvation Army, and the Sydney City Mission, are big, employing hundreds of paid employees and volunteers across multiple locations. The largest organisations have yearly revenues and asset values over $100 million.
The top 50 organisations each have recurring yearly spending over $10 million, totalling $1.6 billion, over half of which comes from governments. Many of the largest organisations have had religious sponsorships for over a century.
You can find out more about the diversity of the charity sector in the Australian Charities Report.
On the other hand, most social service organisations are small, employing fewer than five employees and spending less than $100k per year. These organisations are often based in local communities, and they operate in what they call a community development model.
They generally provide only one service and depend heavily on government aid. Some of the smallest social services organisations are self-help groups that operate out of someone’s house. The group members bear all human resources and financial expenditures.
The Australian Charities and Not-for-profits Commission revised regulations for Australian charitable organisations last week. This included charity size thresholds based on revenue, disclosure of key management personnel salaries, and disclosure of related party transactions.
Its yearly revenue determines the ACNC financial reporting duties of a charity and whether it is a small, medium, or large charity. Medium and large organisations must file an annual financial report, but smaller charities must only file an Annual Information Statement.
From the 2022 Annual Information Statement reporting period, revenue thresholds will rise for all three categories as follows:
Covid-19 impact on the charitable sector
According to the CSI’s Pulse of the For-Purpose Sector report, operating conditions remain a significant source of strain in the social services sector this year.
In 2020, 74 per cent of organisations reported that the operating environment for the non-profit sector had worsened over the previous year. The following year, just under half (43 per cent) of community or social service organisations reported that operating conditions had worsened between December 2020 and July 2021.
Furthermore, service demand continues to outpace provision capability. According to the survey:
- Approximately 80 per cent of service providers were receiving requests for support that they were unable to meet.
- Additionally, 15 per cent experienced a large number of unmet services for their clients or communities.
- Furthermore, nearly three-quarters (74 per cent) of responding organisations reported financial strain or stress during COVID-19, with organisations reporting significant changes to volunteering.
- Nearly one-third of organisations that use volunteers (31 per cent) reported having fewer volunteers than six months prior.
- At the time of the survey, only half of these organisations’ volunteer programmes were fully operational.
Professor Gemma Carey, CSI’s National Research Director, emphasised the importance of maintaining visibility of the for-purpose sector to ensure its long-term survival.
“The sector needs evidence and knowledge to recover from the challenges of the last few years. By equipping charities, community-based organisations, and social enterprises with these resources, we can assist them in moving forward.
“Not only are such surveys vital for shedding light on the many challenges and impacts as an outcome of COVID-19, but they can help us in working towards a sustainable future for the sector,” Professor Carey said.
Less volunteering activity
With state and local governments issuing stay-at-home orders to limit the spread of the COVID-19, many NGOs that rely on volunteers to perform critical services have noticed a dip in volunteering activity as the number of volunteers has decreased.
The Salesforce report found that 33 per cent of non-profits say raising awareness for their organisation and upgrading or retaining existing donors is a major challenge that will persist over the next year.
About 24 per cent have adjusted their fundraising approach to cooperate with other non-profits. Furthermore, 58 per cent intend to permanently supplement or replace in-person events with online events as part of their fundraising strategy.
For a brighter future
According to Andrew, in the rhythm of a new normal, digital technologies will continue to be critical to the success of both small and large charitable organisations.
“Non- profit leaders need to make sure their organisations have the tools to streamline processes and create connected experiences that make their donors feel like they are making an impact — whether it’s face-to-face or online.
“To get there, leaders need to ensure that staff have the resources to upskill in digital and data capabilities to deliver these new experiences.
“For example, Salesforce platform Trailhead is a free resource available to anyone to upskill in the digital skills needed to build successful virtual organisations,” he said.
The new fundraising techniques
As the pandemic’s effects continue to evolve, non-profits are reconsidering how to raise funds.
While there may be some nostalgia for the traditional fundraising techniques, non-profits increasingly acknowledge that a virtual approach, in addition to an in-person plan, will be required in the future.
Organisations are becoming increasingly aware that data is the connective tissue that supports this work, whether sending out mailers, organising charity events, building online fundraisers, or digitally connecting donations from abroad with recipients in the United States.
However, 76 per cent of the respondents stated their organisation still needs to develop a data strategy, and 72 per cent agreed or strongly agreed that donors demand remote access to critical impact performance measures.
Globally, 33 per cent of large- and mid-sized non-profit organisations exceeded the fundraising goals they set out to achieve in the last year, as per the Salesforce Study.
A crucial part of this is that many organisations are more transparent, with 31 per cent providing existing and prospective donors access to an online dashboard showing their donations in action. Of those who have made this change, 86 per cent say it was impactful.
We can’t forecast what trade-offs non-profits will make as global conditions continue to change in 2022. But one thing is sure: digital channels are here to stay.
Similarly, PayPal recently announced a new way for customers to create customised fundraisers through its Generosity Network. Through this network, customers can raise funds for themselves, their community, or a charity.
Erica McLernon, Executive Director of PayPal Giving Fund, said: “We know that many charitable organisations have experienced enormous challenges during the pandemic, which cancelled or disrupted so much of their fundraising activities while impacting how much people can afford to give.
“The Generosity Network will help charities as it’s designed to make fundraising accessible, easy and secure while helping fundraisers connect with others and combine their shared generosity.”
A surge in the use of charity registers
The head of the Australian Charities and Not-for-profits Commission said that significant achievements in a year of change and uncertainty had been set out in the annual report of the Australian Charities and Not-for-profits Commission.
Dr Gary Johns, the commissioner, stated that the pandemic is still putting charities to the test. “The pandemic is forcing much of Australian charities’ work online, reducing their ability to raise funds, engage volunteers, and meet increased demand for services,” Dr Johns said.
“Despite these challenges, the sector showed great resilience and continued to deliver essential services through thousands of programs offered by churches, schools, hospitals, and local charities across Australia.
“The Register is a valuable source of information about charities for people working in the sector and for Australians who support it.
“In 2020-21, we implemented a new way for charities to provide information about their programs.
“Soon, the register’s search features will be enhanced to allow donors and supporters to find organisations easily and to allow charities to showcase their incredible work,” he said.
The Charity Register received over 4.2 million searches, a significant increase from 3.2 million in the previous fiscal year and a million the year before.
In 2020-21, it received 2,001 concerns about charities, a slight fall on the previous year’s total of 2,102. The most common concerns were perceived mismanagement of funds or an individual obtaining private benefit from a charity.
Don’t forget to submit your charity’s 2021 Annual Information Statement. The due date for most charities is 31 January. Submit via the Charity Portal: charity.acnc.gov.au
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