Australia's charity sector has warned 200,000 job cuts may need to be made if government support programs end in October.
Analysis by Social Ventures Australia (SVA) and the Centre for Social Impact (CSI) shows 88% of JobKeeper eligible entities would instantly be operating at a loss if their revenues fell by 20%.
Almost one in five wouldn't be financially viable under such a scenario, the sector estimates.
The charity sector is facing an existential crisis as it urges the Australian government to step up to the plate.
Social Ventures Australia (SVA) and the Centre for Social Impact (CSI) have released a report warning many charitable organisations and their many workers are skating towards a cliff.
"Our financial analysis shows that thousands of charities are at risk of closing and more than 200,000 jobs lost at a time when we should be pump-priming charities to aid the recovery," SVA chief executive officer Suzie Riddell said in a statement issued to Business Insider Australia.
According to the analysis, almost one in five charities risk financial failure if the Morrison government ends its JobKeeper wage subsidy in October as planned.
A 20% revenue loss would put 88% of all charities at an operational loss, according to the reported forecasts. As a result, 200,000 jobs would potentially need to be cut to pull them back into the green.
While those charities provide essential services in ordinary circumstances, Riddell said charities are even more critical during a crisis such as the one Australia currently finds itself.
"They deliver vital services on behalf of governments and taxpayers. As a community, we also rely on charities during a crisis and to support a recovery – we’ve seen this over the past months, confronted by bushfires, a health pandemic and financial turmoil. That’s why almost half of our charities identify the general community in Australia as their main beneficiary," she said.
Charities have seen both donations and volunteer numbers decrease during COVID-19, as Australians have been encouraged to stay home to prevent the spread of infection. However given the very nature of charities, most have very little financial buffer in order to deploy what resources they have to the causes they support, according to CSI chief executive Kristy Muir.
"While most charities and not-for-profits are creative, agile and efficient, their funding models are often not viable for impact. They are often cross-subsidising, unable to invest in organisational capacity and innovation and were already on very thin margins before COVID-19," Muir said.
"This impending crisis of an ‘October cliff’ could disrupt the provision of services to some of Australia’s most vulnerable, including those directly affected by the COVID crisis."
As a result, the sector is now urging the government not to simply pull the rug out from under it when it comes time to wind back the JobKeeper program. Instead, it is asking Treasury to temporarily extend the program for those sectors facing a long recovery.
"While this report highlights how many jobs are at risk, we are urgently asking government to understand that this is bigger than jobs alone," Community Council of Australia chair Tim Costello said.
Just as the crisis is demanding reform in other sectors such as property and industrial relations, charities are also calling for an overhaul. Specifically, a simplification of national fundraising laws and philanthropic incentives, and the creation of a one-off 'Transformation Fund' to help charities transition to a new normal, including online migration and restructuring.
The group is also requesting the unemployment benefit JobSeeker be maintained at above Newstart levels to mitigate otherwise surging demand on charities. It's also asking the government not cut, and where appropriate increase, funding to charities that deliver government services.
The calls echo the Reserve Bank's frank assessment of the so-called 'critical point' approaching in October when – under current arrangements – government programs and repayment holidays will simply cease.
While the JobKeeper program is due for review this month, without an extension, charities and businesses alike are warning the consequences could be dire.