Jobs, charities and building back better

To create jobs, boost economic activity and strengthen support for our communities Government should turn its ‘laser-like focus’ on job creation towards charities, writes CCA CEO David Crosbie in Pro Bono News:

Jobs, charities and building back better, Pro Bono News, 11 June 2020

“Always remember – your focus determines your reality.” – George Lucas 

Charities are facing a much tougher time over the next year and beyond. 

Fundraising revenue is set to drop by at least 20 per cent – after the Global Financial Crisis giving as a percentage of our average income fell by close to 20 per cent for the next three years. 

Governments are already seeking to withdraw from support packages and make savings. While some governments have acknowledged the critical role charities play in our economy and our lives through concessional access to JobKeeper and other support packages, there is no guarantee this acknowledgement will continue in the post-COVID-19 rebuilding phase. 

Many charities will struggle to survive even with the support that has been provided to date, many more will have to close programs and services, and consider winding up over the coming 12 months. 

In the Liberal National party room meeting prior to the current sitting of federal parliament, the prime minister said the Coalition must have a “laser-like focus” on job generation to lift the economy. Treasurer Josh Frydenberg used the same lines in his press conferencein Eden Monaro on Tuesday: Jobs, jobs, jobs; that is what the Morrison government is about.

Economists have pointed out that the best return on government investment in terms of creating jobs is in labour intensive service industries including childcare, education, health, welfare, and aged care. Most of these areas involve charities, most have a largely female workforce. It would seem appropriate to target government investment in these areas.

In practice, so far the government focus on jobs has translated into a cut-back in childcare (a predominantly female labour intensive workforce) while offering stimulus packages for construction and business instant write offs, neither of which translate into a huge number of jobs. 

The disconnect between the government’s laser-like focus and evidence on job creation suggests that the days of evidence informing national policy may be waning. Recent government investment decisions seem to reflect a distorted “blokey” 1950s era view of what a job is. Australia needs to get more women back into work because more women have lost jobs through COVID-19. 

As part of our work, CCA and the Charities Crisis Cabinet have both advocated for a number of priority initiatives that would not only create jobs but boost economic activity and strengthen the level of support available to our communities. Each deserves serious consideration.

JobKeeper

The charities sector cannot afford for JobKeeper to end in a cliff at the start of October. Thousands of charities remain viable and continue to employ thousands more staff primarily because of the support the government has offered charities through concessional eligibility for JobKeeper.

For as many charities to survive and keep employing people as is possible, JobKeeper should not end suddenly, but be phased out over a six to 12-month period.

Encouraging giving and fixing fundraising

Governments also need to consider measures to encourage giving. A 20 per cent drop in giving translates into between 25,000 and 45,000 less charity jobs.

In some countries, special government tax concessions and matched government funding are provided in times of crisis to encourage greater giving. 

There are many groups across Australia that believe now is an opportune time to encourage giving by providing a 150 per cent tax deductibility for donations to charities for a limited period of time. While this initiative means the federal government might forgo some government revenue, encouraging giving has many benefits including job creation and the development of more lasting giving patterns to support the work of charities.

Governments should also take yet another look at the dog’s breakfast of dysfunctional red tape strangling any charity seeking to pivot to online fundraising. No business sector would put up with the current set of unenforced regulations jealously guarded by precious jurisdictional sensitivities. The solutions are clear, but government officials keep playing tip toe on the merry go round, pretending they are getting somewhere while we just keep circling back to the same spot. 

Contractual certainty

Another job saving initiative would be to end the high level of uncertainty around future government funding. Where strong performance of government contracts can be demonstrated, it makes little sense to re-tender or create uncertain contract renewal processes. Short-term contracts, six month and 12 month roll overs of contracts with no future certainty are effective ways to increase risk and reduce investment in programs and services. Many charities are forced to employ people on short-term and temporary contracts when they would prefer to have the certainty to offer longer-term employment and invest in staff.

Getting more capital into the sector

Many charities would be much more able to employ and retain staff if they could smooth out inconsistent income streams (like bequests, delayed government payments) through access to medium- to longer-term capital at subsidised rates (less than 2 per cent). This form of longer-term capital would make all the difference to many charities struggling with the peaks and troughs of what are largely cash-based finance systems with variable income streams.

Transformational investment 

We keep being told charities need to be more productive (more business-like). Given the miserly investment in productivity across the charities sector, I think charities generally do remarkably well at using their resources effectively. But with additional resources a lot more could be achieved. This is especially true in critical areas like information technology, energy efficiency, collaboration, measurement of impact, and other productivity focused areas. A transformation / productivity investment fund would significantly boost employment and effectiveness across the charities sector. 

Charities large and small are a critical part of Australia’s economic and social infrastructure. Governments have recognised this role in some of the measures put in place during the COVID-19 pandemic. 

Over the next 12 months and beyond, charities and not for profits can be part of the solution, part of rebuilding our communities and boosting our economy. If the focus really is on jobs, charities should be front and centre in building back better post-COVID-19.

Read on Pro Bono News: jobs-charities-and-building-back-better