Collaboration must occur in the Not for Profit sector throughout both Australia and New Zealand otherwise many organisations will cease to exist, according to a comprehensive report on the sector entitled ‘Doing good and doing it well?’ undertaken by Grant Thornton.
With 176 people for every registered charity in New Zealand, the Not for Profit sector is well overdue for reform and change.
Brent Kennerley, Grant Thornton New Zealand’s Head of Not for Profit, said that like minded organisations sharing similar visions, beneficiaries or perhaps those regionally based, may well have to consider mergers, amalgamations or just start with better collaboration to ensure their survival.
“Funding continues to be the most significant challenge facing Not for Profits and unless there was some form of rationalisation casualties would be inevitable.
“The report identifies that most New Zealand respondents (84%) were almost constantly looking for innovative ways to generate revenue with 80% saying that finding consistent, regular sources of funding was increasingly difficult and 59% looking to outside sources to help them find new ways to generate revenue.
“The Australian response is strikingly similar. Eighty-six per cent are constantly looking for new ways to generate funds, 76% report that finding consistent sources of funding is increasingly difficult and 65% look to outside sources to find new ways to generate new funds.
“There is the obvious redistribution of funding back into core-services rather than continuing to pay increased administrative costs that will help, but collaboration also brings sharing of ideas, learning and opportunities for all organisations involved – it is a win-win situation,” he said.
The survey, which included 416 Not for Profit organisations in Australia and New Zealand, is one of the most comprehensive undertaken in the sector on an Australasian-wide basis.
“Forty five percent of New Zealand and 16% of Australian Not for Profits could not plan for more than 12 months ahead based on their current funding and it was clear that many would not survive for more than six months if their current funding was not renewed,” Kennerley said.
The report said that with the pressures from the global financial crisis now mostly behind us, the state of the economy is not seen as a significant constraint on fundraising.
“For organisations that are hoping an improved economy may ease their funding pressures, this finding may come as sobering news.”
When compared with a similar report of New Zealand Not-For-Profit organisations in 2011, it would appear that organisations are trying to rely less on government funding.
“Many organisations have realised that they need to stand on their own and while all funding is acknowledged, they also recognise the time involved in administration of Government funding is such that the time can be better spent back in their core delivery of services.
“In 2011, government grants and contracts were the most significant funding source for 69% of New Zealand respondents. In 2013 this dropped to 53%, behind other grants and sponsorship (72%), fundraising (59%) and donations (57%).
“In Australia, government grants and contracts are the most prominent source of funding for 79% of respondents. Donations (69%), fundraising (62%), investment income (62%), other grants and sponsorship (61%), income from service provision (60%) and bequests (54%) are significant for over half the respondents, indicating that Australian organisations receive funding from more sources than their New Zealand counterparts.
“One of the greatest pressures on funding is the sheer number of Not for Profit organisations on both sides of the Tasman competing for a limited pool of money. Collaboration, ranging from sharing resources to merging and amalgamating, to using cloud technology is a significant opportunity and it needs to happen with some urgency. We are starting to see some leadership and movement in this area, but it does need to accelerate to and for rationalisation to occur,” Kennerley said.
Brent Kennerley
Partner & Head of Not for Profit
D +64 (0)4 495 3771
M +64 (0)21 656 246
E brent.kennerley@nz.gt.com