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Not for profits need to diversify revenue according to Deloitte report


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14 March 2012: The recent spate of natural disasters across Australia has increased demand for services supporting national and international communities, according to Deloitte’s inaugural survey into the Not for Profit Sector - Fundraising in 2012.

According to Deloitte Private partner, Alison Brown, this increase in demand for their services will mean that not for profits will need to diversify their operations to reduce reliance on Government funding.

"It is vital for not for profit organisations to diversify their revenues to avoid over reliance on one main income stream,” she said.

“Given the current economic uncertainty, not for profit organisations must be innovative in how they attract revenue. This means fundraising activities should be cost effective and operations need to be managed in a more efficient manner,” said Ms Brown.

“Over the last decade, the sector has experienced a demand for retail based operations including fashion recycling outlets and homeware outlets. This is a smart way of reducing reliance on Government funding,” said Ms Brown.

The report also highlights that other creative and cost effective techniques are now being used for fundraising such as online campaigns, effective data base management and electronic communications.

“We have observed a trend within the industry of moving away from high cost labour intensive campaigns such as call centres, door knocking and public space presence. The report highlights this trend where respondents had identified the need to revise their fundraising models to new methods, which will ensure talented and motivated staff are recruited and retained in an industry that is continuously subject to wage pressures,” added Ms Brown.

The report also highlights that the sector has challenges when addressing changes such as the new compliance requirements or the establishment of the Australian Charities and Not-For-Profits Commission as the sector’s new regulatory body.

“The sector is very diverse with a variety of entity types. Their different reporting and compliance requirements will present a challenge for the Commission,” said Ms Brown.

According to Gerard Menses, Chief Executive Officer of Vision Australia and Chair of the National Roundtable of Nonprofit Organisations (NRNO), the spate of natural disasters has highlighted the pressure the sector is already under and the demand for services generally.  

“The report highlights that the main response available to not for profit organisations is further cost reductions combined with a more assertive fundraising strategy.  Most organisations report they will be increasing investment in fundraising. As the cost of compliance and fundraising increases, the most effective measure will not be short term return on investment but the long term net return.  

“The focus of the new Charities Commission should be on transparency and ethical fundraising practice,” said Mr Menses.

“The report also highlights the Australian public’s generosity and understanding in a time of increased need,” he added.

Key highlights of the report are:

  • Challenges in obtaining increases in Government funding, economic uncertainty and increasing wage pressures will likely mean the not for profit sector will have to do more with less
  • Delivering on strategic direction and ensuring ongoing revenue streams will remain a high priority in the sector
  • Some not for profits remain under strain to provide services, especially where demand increased
  • Survey respondents were positive overall about the future for their sector
  • Organisations which embrace challenges and adapt quickly to changing economic conditions will emerge as the winners in the sector
  • A significant portion of respondents reported that reducing costs would be a strong focus for 2012
  • Operational efficiency is a key requirement in the not for profit space for 2012.

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Contacts

Name:
Jane Kneebone
Company:
Deloitte Australia
Job Title:
Corporate Affairs & Communications
Phone:
Tel: +61 3 9671 7389, Mobile: +61 416 148 845
Email
jakneebone@deloitte.com.au
Name:
Alison Brown
Company:
Deloitte Private
Job Title:
Partner
Phone:
+61 3 9671 6120
Email
alisonbrown@deloitte.com.au
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Company:
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