Inflation and the effects of Covid are hitting community organisations and charities hard, according to research by SociaLink, the umbrella organisation for the Western Bay’s social agencies.
SociaLink surveyed organisations about the impact of increasing inflation on community organisations and communities to better understand pressure points and provide insight to funders.
It collated relevant research and surveyed local not-for-profits to see the impact of inflation locally.
The survey asked about implications of the pandemic and inflation, including organisational costs, income and demand for services. It also developed suggestions for the sector to address inflation, and recommendations for funders, says SociaLink general manager Liz Davies.
Annual inflation hit a three-decade high at 5.9 per cent from the December 2020 quarter to the December 2021 quarter – the biggest movement since a 7.6 per cent annual increase in the year to the June 1990 quarter.
“The main drivers are housing and household utilities, transport, with increased prices for petrol and second-hand cars, and petrol prices which increased 30 per cent in the year to December 2021 quarter,” says Liz.
“Unemployment has fallen to a record low of 3.2 per cent while wage inflation has risen to its highest level in a decade.”
Liz says the Covid-19 pandemic has already had a significant impact on community and social sector groups, as well as the communities they serve, and inflation is compounding this.
“Lockdowns and alert levels have shut down all or part of social sector activities. Hospices have had no trading revenue from their shops – a significant source of income.
“Most charities do not have significant resources to fall back on and rely on ongoing revenue streams. “They rely on donations, grants and other fundraising, fees and subscriptions, trading revenue, interest and dividends.”
Liz says gaming trust proceeds have diminished as pubs and bars have closed or are operating under restrictions.
“Philanthropic organisations have reduced revenues with less to pass on to charities, people have tightened their belts and donations are likely to reduce.
“Many fundraising events can’t happen, op shops and cultural and artistic events have been closed down or operating under restrictions.”
Returns on investment have also taken a hit, which may be temporary, and other equity-type investments have been rocked with volatile share market fluctuations.
“Organisations are operating on tight margins, which leaves little room to improve overall resilience and explore innovation.”
The hardest hit, with 50 per cent loss of revenue were event-heavy sectors like sport and recreation and arts, culture and heritage, as well as social services working with the most vulnerable. Government wage subsidies helped some, but not uniformly.
“As a whole, the sector is ‘doing even more for less’, with already thin operating margins and only modest reserves to draw on to meet any Covid-triggered operating deficits.”
Other effects from Covid include exhaustion and burnout in some sectors, including child welfare, mental health and other direct services where demand has soared, straining already stretched staff.
Suggestions from a collective of charity, non-profit and community groups to Government about how it could assist include an emergency stabilisation fund, special low interest loans and tax relief to incentivise donations.