Virus could land charities in dire straits

Australia's most vulnerable would lose vital services with charities falling victim to COVID-19.
Australia's most vulnerable would lose vital services with charities falling victim to COVID-19.

The coronavirus pandemic could force about one in six Australian charities to shut their doors within six months, leaving many of Australia's most vulnerable people without vital services.

The pandemic could also see 200,000 jobs go as the $155 billion sector cuts costs and charities close.

Nearly 90 per cent of charities would be operating at a loss as a result of the fallout.

The figures come from a new report released on Wednesday by Social Ventures Australia and the Centre for Social Impact, modelled on a 20 per cent loss in revenue for the sector.

Contributor Kristy Muir says the modelling was based on what charities were already reporting, with 20 per cent being a conservative figure.

"In the climate that we're in, do we want our charities to be partners in the recovery from COVID ... or will they become casualties too?" Ms Muir told AAP.

"Charities play a really important role in ensuring that we can build back better and come back stronger."

She warned one in 10 people across the country were employed by charities, which accounted for eight per cent of Australia's GDP.

While 65 per cent of charities had an operating surplus in 2018, only 40 per cent had a surplus higher than five per cent.

"Their margins have been decreasing over the last few years already and this was before COVID hit," Ms Muir said.

The report calls on the government to "ramp" JobKeeper payments rather than sticking to the hard September end date, putting in place temporary extensions in sub-sectors facing long recovery times.

Australian Council of Social Service chief executive Cassandra Goldie warned ending JobKeeper too early could harm the economy.

"The last thing we need now is to be ripping the guts out of the social fabric," Dr Goldie said.

The report also recommends keeping JobSeeker payments at the current levels - which have been temporarily boosted during the pandemic period - and establishing a new transformation fund to help charities restructure.

The fund would help train staff, buy new equipment, invest in new revenue-raising strategies and establish a web presence.

Ms Muir said some charities were barred from spending money on boosting their own capabilities or couldn't afford to.

"Really, what we're looking at is how do we tap capital so charities can be the best they can be."

The report also recommends cutting red tape for the sector by making it easier to raise funds and encourage philanthropy.

"Charities were already in a financially vulnerable position because of the challenges they faced with their operating environments," Ms Muir said.

"We need to actually pull a couple of these triggers at once."

Federal Labor's charities spokesman Andrew Leigh backed the transformation fund.

Assistant Charities Minister Zed Seselja said the government had provided unparalleled support to the sector.

This included setting a lower threshold for JobKeeper access as well as a $200 million fund for people to access food and financial help through charities.

Australian Associated Press