The Ebbing Tide of Donations to Australian Charities

Givewell’s recent analysis of the financial statements of a representative sample of charities has shown a rise in fundraising income that is much less than the rate of inflation, as well as a lower rate of return for fundraising dollars spent. These trends must cause concern for charities.

On the other hand, total net assets, including investments and property, showed a healthy increase, which is a positive sign in a difficult financial environment.

Data was collected from the financial statements of a total of 255 charitable organisations for the last three years: 2000, 2001 and 2002. This sample included charities with large gross revenues, such as World Vision, The Smith Family, Diabetes Australia and the Endeavour Foundation; as well as those representative of the middle and lower range income earners.

Key Findings that are presented in the report include:

· Increase in Total Income
· Fewer organisations reporting an increase in Total Income
· Reduced flow of Fundraising Income (in real terms)
· Increase in value of Net Assets

Givewell’s Research Analyst, Dr Jill G Thomson, warns, “Although an increase in total income might look healthy, charities remain dependent on government funds and organisations are showing a decreased net surplus. Also, one third of those sampled were operating at a loss. In this hostile environment, charities are competing for a shrinking pool of fundraising income. When more data has been collected later this year, it will be interesting to see if the decrease in donations, reported here, is merely representative of a falling tide that will inevitably rise again; or if it means that the well of compassion is drying up.”

However, it must be remembered that this ebb in the tide of donations is occurring when the financial seas are rough. The year has shown a decline in corporate profits and difficult times for the white collar sectors, such as information technology and financial services. In these uncertain conditions, charities have shown remarkable buoyancy.

The full survey is available to subscribers to the Givewell Research Centre.

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