Every day we are seeing the impact of the COVID-19 pandemic: lives lost, individuals in quarantine and frontline healthcare workers saving lives. Social (or physical) distancing measures, businesses standing down their employees, reduction of wages or work hours, enforced leave and moving employees to work from home. 

Like other industries, the for-purpose sector is reeling from COVID-19.  The Equity Trustees team has been speaking with beneficiaries and for-purpose sector clients over the past few weeks to better understand the key challenges and how we’re all responding to them.

Two key challenges

Funding squeeze

• In the second half of March 2020, unemployment and underemployment experienced massive increases. With redundancies or reduced hours, Australians have less discretionary income available to support their favourite charities. 
• Corporate giving may fluctuate as businesses find ways to survive the pandemic
• For charities that sustained a reduction in fundraising income as a result of the bushfires (with donors redirecting their support to recovery and relief efforts), COVID-19 is another blow.

RISING DEMAND

• Medical research institutes and universities have redeployed researchers and labs to focus efforts on COVID-19; that includes more efficient and effective detection methods, finding effective treatment protocols, investigating development pathways of the virus, and finding a vaccine.
• Increased engagement with donors through social media and direct conversations with funders and stakeholders.
• Health and medical services directly supporting patients and victims of COVID-19, as well as carers for those in high-risk categories, are managing additional service burdens.
• Media reports generally are reinforced by what we found in conversations with key for-purpose partners highlighting that there is:
  • Greater demand for emergency housing and homelessness services
  • Significant increase in calls to mental health helplines
  • Rise in domestic and family violence incidents
  • Clear exposure of the ‘digital divide’ as the move to home schooling was implemented and the numbers of students who have no access to internet or computer devices were starkly highlighted
  • Significant concern for older Australians and those with disabilities on the impacts of social isolation as the community complies with ‘social distancing’ and restraints on gathering
  • Food scarcity for the more vulnerable members of community created by panic buying.
• Engaging with donors through social media and direct conversations with funders and stakeholders
• Reviewing their mission and purpose.  Many for-purpose organisations are taking the opportunity to ask themselves: Who are we here to serve?  Are our core services delivering on our purpose?  Many are using the crisis to fast-track plans for digital transformation or pivot their service delivery in innovative ways. Read more about how charities are responding.
• Carefully managing cash flows (even more).  For some organisations this has meant immediate reductions in pay and hours, for others leave balances have been reduced.  For some, employees and contractors have been stood down.  For those organisations with some cash reserves, COVID-19 has activated policies around accessing these funds.  For all, the key question Boards and leadership teams are asking themselves is:  How do we retain talent, continue to fulfil our purpose and survive this crisis?  For smaller organisations, the awful reality is that they may not survive COVID-19.
• Actively seeking alternative revenue sources.  The majority of organisations are eligible for the Government relief measures but, similar to commercial businesses, it is a challenging time for management as they navigate the path to this relief.  For those with the appropriate tax status (DGR1), many are turning to philanthropy for new – or additional - support.  Many organisations have also launched emergency funding appeals to the general public.

how we’re responding

What are for-purpose organisations doing as a result?

A Charities Crisis Cabinet has also been formed, with representation from some of the biggest names in the sector.  Co-chaired by Reverend Tim Costello and Susan Pascoe, the Cabinet aims to share knowledge and experience, and develop cross-sector strategies to help more charities continue to serve their communities.

How is Philanthropy responding?

Australian philanthropists are being encouraged to step up to the challenge of the pandemic and flexibility needs to be at the heart of any collective response. Flexibility can include:

• Reducing or removing restrictions on current grants / donations 
• Converting, where possible, project specific grants to “untied” funding
• Releasing funds to meet COVID-19 needs, to be applied flexibly as needed
• Extending acquittal timelines and adopting more flexible reporting arrangements
• Maintaining partnership commitments
• Responding quickly to initiatives, aiming to address areas of immediate need.