NFPs and impacts from COVID-19

COVID-19 - Small not-for-profit organisations with big challenges.

With COVID-19 the extra pressure placed on NFPs and charities has been unavoidable. In normal circumstances smaller NFPs are already close to capacity, the crisis impacting their capability in a multitude of ways. From reduction in head count due to staffing issues arisen from isolation as well as limitations with technology to work from home, to a spike in work and requests for support during such a trying time.

A recent study and report conducted by Social Ventures Australia and the Centre for Social Impact in conjunction with UNSW supports some bleak outcomes driven specifically by the COVID-19 crisis. Before COVID-19 many were already in a lean financial position. Whilst 65% of charities are operating at a surplus – for 25% of this figure, the surplus is less than 5%. A small buffer considering the impact of COVID-19. When added to the 35% of charities in deficit, 60% of charities could be considered in a precarious financial position pre COVID-19.

The full picture of the COVID-19 impact is still to be seen however, as of April 2020, 85% of charities indicated social distancing has impacted their ability to carry on their work. Financially 78% of charities surveyed reported a downturn in revenue in the same period.

To simulate the impact of COVID-19, the report modelled a 20% drop in income across the board, this would, using baseline data, indicate that only 12% of charities would be operating with surplus. 17% would be considered at high risk “with an operating deficit, and not enough net current assets to cover six months of deficits”. Whilst grim, this doesn’t account for influence of the Government’s JobKeeper subsidy – with JobKeeper payments included in the model, this would leave 47% operating in surplus and 9% at high risk. The remaining 44% still considered vulnerable by “operating with deficit, but enough net current assets so to cover six months of deficit.”

In the report, it is apparent that both JobKeeper and the higher rate of JobSeeker will ease the pressure on the NFP sector – As part of the reports recommendations, JobKeeper should ramp down rather than simply end in October. The interim level of support provided by JobSeeker should also be retained – the hope to mitigate increase in service demand for NFPs.

Other recommendations drawn from the report include a Charities Transformation Fund to help NFPs transition to the new normal, simplification of fundraising and philanthropy to encourage increased giving, retaining funding for services that reflects increased costs and demand and to support further research to help build back the charities sector.

Here at NfP Business Services we’re in awe of the great work done by NFPs. We’re also passionate about supporting as well as increasing capacity in the NFP sector. We can offer services for any budget. Be it bookkeeping and CFO services, administration support, governance support or IT support and IT security, we can help.

Bookkeeping and Accounting

Vital for both government requirements and growth of an organisation. Where the primary aim is to support the community, being a non for profit doesn’t mean it can’t be successful. Accurate and transparent bookkeeping will also instill confidence and trust from the public, in part helping the organisation grow.

Administration Support

Even NFPs have overhead costs to pay. How are they capturing and handling sensitive data? Are they effectively communicating with stakeholders and the general public? Successful management of administrative side of the organisation with efficient use of operating funds, meaning there’s more capacity to support the community.

Governance

Governance is the procedures that a board of directors use to oversee and regulate an organisation. The Australian Institute of Company Directors suggests good governance of NFPs consists of systems and processes in place that are appropriate to its circumstances, and which enable the organisation to pursue its purpose effectively and meet its obligations under the law.

Opportunities often involve risk, it’s fundamental that the board member’s roles and responsibilities are clearly defined, they have an appropriate level of financial knowledge as well as accountability and transparency to stakeholders.

IT support and security

Many small NFPs would believe their IT requirements to be minimal. What about everything outside the normal day to day though? Where there’s growth, more scope within IT systems must be considered. Also, contrary to belief, NFPs are also seen as viable targets for cybercrime. The Australian Federal Government estimates cybersecurity incidents cost Australian businesses including NFPs, $29 billion each year.

Speak to us today to see how we can support your organisation to better support our community.