During a meeting with the CEO of one of Australia’s largest corporate foundations recently, I raised the question of whether there are too many charities.
She felt the question is especially relevant in Australia today and needs to be addressed. This issue is also discussed frequently by philanthropists.
No-one stops coffee shops opening, whether there are others in the same vicinity. The best will succeed, the rest will fold. Should charities have similar freedoms? Does the private vs public funding make a difference?
This is not an article about amalgamation and creating bigger charities. Rather it is on the proliferation of new charities, some paralleling almost exactly existing charities.
Recent research by QUT Centre on Philanthropy and Nonprofit Studies highlighted that there are 21,957 charities with Deductible Gift Recipient (DGR) status and 48,000 income tax exempt charities (ITECs) in Australia, of which more than 18,000 were founded between 1990 – 2005. Half the DGRs have less than $55,304 in receipts.
In the US, Internal Revenue data shows there are over 1 million charities, including over 700 breast cancer charities. 40% of US charities were established in the decade between 1995- 2005 and most have revenues of less than $US25,000. In the UK 60% of registered charities have an income of £10,000 or less and 8% of charities receive 90% of annual income.
Per head of population, Australia has fewer charities than either the UK or the US, around one charity for every 437.5 people! Nevertheless, there is a similar trend and it’s almost inevitable that some of the international issues will surface here before too long.
In the US in 2003, for example, the number of new charities increased by 5.6% while 4.5% closed. What does this do for public confidence in charity stability and accountability?
Most growth was among organisations with a religious focus, followed by educational institutions, social services groups and arts and cultural organisations. The rapid growth in charities has meant the rise of issues such as overlapping services, challenges in differentiation and getting new causes heard above the charitable cacophony.
One to think about?
Filed under: charities, fundraising, nonprofit, philanthropy, regulation | Tagged: fundraising, nonprofit, philanthropy, regulation
It seems to me that those with the most to lose, usually the biggest will often use the duplication argument for their own sustainability. I think the question becomes, has breast cancer been eliminated? Are people in our local community all able to provide for themselves and their families? Have we secured the environmental future of this planet and its inhabitants of all species? Is the heritage of our community, nation or interest group being preserved?
While there is community need there will always be new groups springing up with people who care passionately and want to make a difference.
I would ask the question where is today’s William Booth who can provide a 21st century practical and innovative model of help for those doing it tough? Ditto for environment, health, education etc.
Corporate foundations are hardly an appropriate vehicle to drive philanthropic or social service policy. Sure they make a small contribution to the sector but their driving motivation is the efficiencies of the market. Many social services are the antithesis of everything the corporate sector stand for.
Forget reducing the not for profit sector, however in Australia there is a huge space for coming to terms with our federated structure and creating/merging some state based charities that will be able to make a better social impact as a national group.
This is a topic worthy of debate and discussion widely across the sector. There is much to be said for diversity in the sector through different organisational cultures and forms. there are some good arguments for grassroots organisations which spring from local community energy and concern.
CPNS released a PODCAST on this topic some time ago and those looking to explore this issue can listen to it or read the transcript at http://www.bus.qut.edu.au/research/cpns/podcast/shows/show2.jsp.
It has also been delat with in other Podcasts on that page as well
Myles
I think the argument that the best charities will survive, and that demand may dictate whether new entries can or should survive, is a valid one. To a point.
Where it falls down is in segments dominated by multiple organisations delivering virtually identical services to different (or even identical) groups based on State, region, age, etc. Obviously this is common among health-related charities. A health cause served by 6 geographically separate charities plus several additional organisations, in addition to national bodies often formed as a (often prickly and ineffective) collaboration of the smaller bodies – this is a woeful and woefully common situation.
Each organisation pays another executive team and management team and, typically, spends heavily on its own websites, promotions, fundraising, information service development and delivery, and so on. All without capitalising on the efficiencies and economies of scale that would be automatic if single organisations served the causes.
This situation does not place either the cause or the supporter as foremost. Let’s face it: It is perpetuated where egos, ambitions and jobs come ahead of organisations, causes, constituents and donors.
As noted, much discussion needs to happen on this topic – it’s too important not to discuss! Regulators, donors and charities all have an interest here. In the end it should be about effectiveness not efficiencies.
I hope more comments will come forward – FIA could look at providing an avenue for such discussion at our conference in February in Sydney. For current topics check
http://www.fia.org.au/AM/Template.cfm?Section=Conference_2008&Template=/CM/HTMLDisplay.cfm&ContentID=6358
I actually agree with everything said….but in every argument there are too many holes.
Instead of opening my own Charity, I sought out and existing Charity that was like minded and worked with them..We have separate Identities but share the expenses.