The question of whether there are too many charities in Australia elicits a range of perspectives, both from the charity sector and the public more broadly.
The Australian Charities and Not-for-profits Commission (ACNC) takes the view that there are not too many charities in Australia. This information sheet provides some context on why we believe this is the case.
Background on the number of charities in Australia
In Australia there are about 60,000 registered charities.
At first glance this appears to be a large number, but it is important to consider this figure in the context of the scope and types of organisations that make up Australia’s charity sector.
The charity sector is a diverse one that works across Australia and internationally in a broad range of areas, including health, education, social welfare, religion, culture, human rights, the environment and animal welfare.
Charities range from tiny, volunteer-run groups with no funding or revenue, to very large organisations with complicated business structures and operations.
The precise number of registered charities changes from day to day as new charities are registered and others wind up, merge, or even have their registration revoked.
Organisations that make up Australia's charity sector
The charity sector is made up of organisations that differ in size, location, reach, purpose and methods.
In fact, what we call the ‘charity sector’ isn’t really a single homogenous ‘sector’ at all; it comprises a variety of industries, causes, services and organisation types.
The sector includes many organisations that people may not think of as registered charities – for example, universities, aged care centres, childcare centres, and non-government schools.
In fact, many organisations and services commonly found in towns all over Australia are registered charities, including local parish churches, rural fire services, parents and citizens associations, animal welfare organisations, environmental groups, cultural institutions such as museums and galleries, and private hospitals.
It is also worth noting that some organisations consist of multiple separately registered charities. These individual organisations may fall under a larger parent body, but they each have their own Australian Business Number (ABN) and are registered as separate charities.
Some examples include:
- The Salvation Army – around 30 separately registered charities
- University of Melbourne – more than a dozen separately registered charities
- Surf Life Saving– more than 300 separately registered charities
- Lifeline – more than 20 separately registered charities
- Returned and Services Leagues (RSLs) – more than 800 separately registered charities.
You can find out more about the diversity of the charity sector in the Australian Charities Report and explore the details with its interactive dataset.
The size and location of Australia's charities
When considering the number of charities in Australia, it is important to remember how many of them are quite small, or play an important role in servicing rural, regional or remote communities.
Around a third of Australia’s registered charities are classed as ‘very small’, with annual revenue of less than $50,000. Just over 88% employ no staff and are entirely volunteer-run.
Many charities are small, grassroots organisations comprising volunteers that have come together to service a local or specialised need – for example, groups undertaking conservation work near a local creek, or services for a local religious congregation.
Having a large number of small charities can lead to innovation, new ways of tackling complex issues, local solutions to local problems, and specialised expertise for niche issues.
Also, small charities are often effective fundraisers through local networks and can engage local volunteers eager to help their community.
In addition, Australia is a large country with a geographically-dispersed population – 33% of Australians do not live in one of the major cities.
Some charities feel that they better meet the needs of the community if they are located in remote, rural or regional areas, while others specifically provide important services or support to those living or working in these areas.
Duplicated efforts
Discussions about the number of charities in Australia indicate that it isn’t just the total number of charities that concerns people.
In many cases, the underlying concern people have is with the number of charities they feel are doing 'the same thing', duplicating efforts and competing for the same donations and funding.
Most charities are meeting a community need and generally not doing the same thing in the same area as another charity. However, there are instances where there is duplication.
The ACNC understands there are instances where charity resources could be used more effectively for better outcomes. We support an effective, robust, vibrant, independent and innovative charity sector, and recognise that there is often room to improve.
Undertaking the same charitable activities to serve the same beneficiaries in the same area can be inefficient and a duplication of effort and funds.
Collaboration or merging
Charities should regularly assess their efficiency and effectiveness. This may mean charities could consider whether it would be beneficial to collaborate, or even merge.
In some cases, charities may collaborate on projects or share resources as a way to improve efficiency and effectiveness.
In some cases, merging will bring efficiencies and expand the breadth of a charity’s service. There are no requirements or conditions that dictate a charity must merge or consider merging, and when charities do merge, it is often to consolidate resources or take advantage of new funding arrangements or contracts.
But merging may not be the right answer for every charity.
Decision like these, however, should be made by the charities themselves, rather than being dictated by the regulator.
A charity’s committee or board should always consider the best ways for a charity to fulfil its purposes.
It may be that continuing to run the charity is still the best way for it to fulfil its purposes, or it may be more effective to merge or wind the charity up and transfer the funds and assets to another charity.
However, cutting back on charity services for the sake of arbitrary numbers does not serve communities well. And there are many benefits of having a diverse charity sector that comprises many charities.
The benefits of a diverse sector
Local charities may be able to engage their communities in ways that national or international charities cannot.
We see this in the ability of smaller, local charities to recruit volunteers and collect donations from people who may not otherwise get involved or donate.
For example, parents and citizens committees are generally run by local parents, and their funds are raised through fundraising drives in their neighbourhoods.
Each charity approaches its goals in its own way. Where there are several charities working towards similar goals, there is capacity for innovation which can lead to new solutions.
While one charity may take the conventional approach to addressing an issue or a need, another may research new methods, and a third may address the issue at a legal or political level.
Charities focused on particular purposes often inspire people affected by that purpose, particularly if the charity is operating locally.
For example, a person who experienced bullying may be more motivated to volunteer or donate to a charity that works to prevent bullying in schools than to support a charity focused on general community welfare.
A diverse charity sector also brings consumer choice and competition. While some refer to competition for funding as a negative thing for charities, competition may encourage better evaluation of outcomes, increased transparency, and more effective performances.
As competition in the private sector is encouraged and accepted, similarly, competition can benefit the charity sector.
Competition for donations
Some organisations are protected from local competition, for example, pharmacies, but generally, such restrictions are not allowed by law.
No one stops coffee shops from opening if there are others in the same area – the best ones will succeed and the rest will fold. Should charities have similar freedoms? Does the difference between private and public funding make a difference?
There is a difference in that charities are the stewards of donated funds, philanthropic grants or government contracts which are provided to be spent for the public good.
However, charities also raise their own funds through trading, fees and investments. There is an onus on a charity to be able to demonstrate efficient and effective use of its money which can lead to continued or increased support.
In this context, competition for donations or grants is a good thing as it is likely to motivate a charity to better demonstrate its impact and effectiveness.
Registering a charity similar to one that already exists
Before registering a new charity, we strongly recommend checking the ACNC Charity Register to see what charities are already operating for similar purposes.
It is likely that there will be a registered charity already doing what you are thinking about doing. In such a case, giving funds to the established registered charity may be the best thing to do.
There are a range of ways you can contribute to a cause without necessarily starting a new charity. You may be able to give funds to a charity on ‘special trust’, for example, in the name of a loved one, and you may even be able to have a steering committee for the trust. You may be able to set up a sub-fund within a community foundation to help pursue your goals.
Starting and running a new charity is hard work, and raising funds is difficult. Doing so may not be the best way to achieve your objectives.
Freedom of association
The law in Australia does not limit the total number of charities that can be registered, nor does it limit the number of charities that can be registered with the same or similar purposes.
Members of the public have a right to freedom of association, and this is something that we value in our society. Charities and not-for-profits are often the vehicles that people use to form associations and undertake activities; they are rightly independent of the state and a cornerstone of civil society.
As the regulator, the ACNC needs to have legitimate grounds on which to refuse a charity application. If an organisation applies to be registered as a charity and it is eligible, the ACNC must register it.