Monday, 7 October 2013
17. Australia vs New Zealand: Comparing information charities provided to the regulators
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Last week the Australian Charities and Not-for-profits Commission (ACNC) shared its first insights into the charitable sector based on the initial 3,000 Annual Information Statements filed by Australian registered charities.
These first 3,000 returns only give an indicative view of the sector - the ACNC is expecting about 57,000 returns in total between now and mid/late 2014. But it’s interesting nonetheless to compare these insights to information provided by New Zealand’s 24,321 registered charities in their most recent returns. What stands out is how similar the charitable sector statistics are between the two countries, based on the limited amount of data released by the ACNC so far.
Charity sizes: Australia reported that 74% of its charities fall into the small category and 11% fall into the large category, with the remaining charities falling into the medium category. New Zealand's equivalent is 81% small charities and 7% large charities, using the same criteria. The proportion of small, medium and large charities is therefore fairly similar between the two countries – with New Zealand having slightly more small charities and Australia having slightly more large charities.
Beneficiaries: Both countries list the general public and children/youth as two of their top three charity beneficiary categories. Australia also lists the elderly in their top three, but New Zealand lists religious groups as the third most common beneficiary group (the elderly come in at number seven). However, beware of the problems with capturing charity beneficiaries on the regulator form – the approach differs markedly between the two countries.
International assistance: 16% of Australian charities and 13% of New Zealand charities work to help people internationally.
Charity volunteers and paid staff: By coincidence, 42% of Australian charities and 42% of New Zealand charities reported that they solely rely on volunteers. At the end of their 2013 reporting period, Australia’s 3,000 charities reported a total of 225,000 volunteers, along with 13,000 full-time employees and 18,000 part-time employees. New Zealand’s 24,321 charities reported a total of 413,000 volunteers, 112,000 full time and 440,000 part time employees. However, once again, beware of the problems with capturing information about charity employees and volunteers. The New Zealand information suggests that up to 16% of registered charities may be failing to complete the “your people” questions despite engaging paid or volunteer staff, so the aggregate totals could be materially understated.
The extent of red tape and reporting: 29% of Australian charities that have submitted an Annual Information Statement indicated how much time per annum they spent on reporting to Commonwealth, or state and territory departments and agencies. Small charities indicated that they relied heavily on volunteers, with volunteers completing 70 hours of government reporting, compared to 16 hours by paid staff. Large charities, on the other hand, indicated that they relied heavily on paid staff, with paid staff spending an average of 288 hours and volunteers spending 20 hours reporting to government. New Zealand does not ask these questions so there are no comparable figures.
Charity sizes (based on total revenue)
The ACNC reported that 74% of the 3,000 charities which have filed their 2013 Annual Information Statement were small charities (with annual revenue of less than $250 000), 15% were medium (with annual revenue of $250 000 - $999 999) and 11% were large (with annual revenue of $1m and over).
In New Zealand the figures are surprisingly similar if you apply the Australian thresholds to the New Zealand charities’ gross income. Approximately 81% of New Zealand’s 24,321 filers would be small, 12% would be medium and 7% would be large.
The only noticeable difference is that New Zealand has slightly more small charities and slightly less large charities than Australia. Which is what you might expect based on Australia’s population compared to New Zealand – Australia would naturally have more charities in the ‘large’ category.
The top three beneficiaries listed by the Australian charities were children and young people, the general community in Australia and elderly people. This is out of a total of 19 possible options (excluding ‘other’).
The top three beneficiaries listed by the New Zealand charities were the general public in New Zealand, children/young people, and religious groups. This is out of a total of 11 possible options (excluding ‘other’ which I have mostly recategorised).
Initially this may lead you to conclude:
(1) New Zealand has a bigger charitable focus on religious groups than Australia, and
(2) New Zealand is far less charitable to its elderly people compared to Australia (elderly people are actually ranked seventh out of 11 New Zealand beneficiary types).
However, on closer inspection, the conclusion about religion is incorrect. Australia’s annual charity form does not even have a beneficiary category for religious groups. Instead, it identifies religious-related charities through its purpose question (the advancement of religion) and its activities question (religious activities). So we still do not know whether New Zealand is more focused on religious groups compared to Australia, because the beneficiary data between the two countries is not comparable. [I have published more information about New Zealand's religious charities in my September 2012 blog "Religious Charities".]
The smaller proportion of charities helping older people in New Zealand is not so easily explained. One theory is that many elderly New Zealanders belong to religious groups, so charities may have nominated religious groups, rather than older people, as the appropriate beneficiary category. In any case, it’s worth keeping an eye on how the figures compare with Australia as more Australian charities file their returns.
There’s one final point worth noting about beneficiaries. The questions used by regulators to elicit charity beneficiaries are likely to have a high error rate in both countries for the following reasons:
· Too many beneficiary options: There are a lot of boxes to tick to identify the relevant beneficiaries (19 in Australia and 11 in New Zealand) – so some charities may simply give up and tick one or two, whereas more categories may be appropriate.
· Temptation to identify the widest possible number of beneficiaries: Some charities may be tempted to tick all of the boxes to show they are really there for the general community (even though both countries provide a specific ‘general community box).
· Odd beneficiary categories: Both countries suffer from odd beneficiary categories. New Zealand's category for 'family'whanau' came in as the fourth most common beneficiary, but what does it mean in the charitable context? New Zealand also has a category for "people of a certain ethnic/racial origin" - without explaining exactly what a certain ethnic/racial origin is. Are Pākehā a certain ethnic/racial origin? Who knows. But less than 2% of charities have ticked that box, so I doubt that is how charities are interpreting it. Australia also has its foibles. For example, it has separate categories for 'Children' and 'Young People' without telling us what the difference is between the two (New Zealand combined these categories). It also goes to the trouble of having separate 'men' and 'women' categories but unlike New Zealand it doesn't have a category for animals.
· Excessive use of the ‘other’ beneficiary category. Perhaps one of the advantages of Australia’s long list of beneficiaries is that charities are less likely to create their own ‘other beneficiaries’ category. In New Zealand almost 4,000 or 16% of charities listed an ‘other beneficiary’ as their main beneficiary (though well over half of these unnecessarily repeated one of the official beneficiary categories). The remaining “other” categories described by New Zealand charities are specific and varied. There are common themes, some of which tend to match the additional Australian categories. For example, a lot of charities which used an "other" category identified their main beneficiaries as:
- “school children/students/university students”
- “women/women and children”
- “hospital/hospice patients/people with cancer”
- “the local community”
- various sports club members (such as golf, tramping, deerstalking, bowling, croquet, canoeing, squash, bridge, rowing, triathlon, equestrian, football, and motorsport)
- commercial industries (such as deer farming, dairy industry, pastoral farming, fruitgrowers, and oil and gas).
There is also the occasional unusual beneficiary category, such as “income accumulation” or “land owners” or some rather annoying references to other documents such as “see section 4.1 of trust deed”. Income accumulation is unusual if it is at the extreme end of the scale. For example The Charitable Foundation Of The Bishop Of Dunedin listed its main beneficiary as “Nil current beneficiaries - still establishing capital base”. The foundation had $11m gross income in 2012, assets of $152m and equity of $119m, so potential beneficiaries may well be left wondering when its capital base will be established so it can start helping the community.
· No use of “main beneficiary” or “date of change” box in Australia: The New Zealand charity regulator seems to take the beneficiary question very seriously – not only do charities have to identify their beneficiaries but they also have to identify their ‘main’ beneficiary and if any of the beneficiaries changed, or if the main beneficiary changed, they must specify the effective date the beneficiaries changed (they have three months to notify the regulator after they become aware of this change). Australia takes a much more relaxed approach and only requires charities to identify who was helped by the charity – there is no ‘main beneficiary’ category and no date of change required.
16% of Australian charities said they worked to help people internationally. Over 150 countries were listed, with New Zealand, the US, India, the Philippines and Papua New Guinea the most popular.
New Zealand is not far behind with 13% of New Zealand charities saying they either sent a percentage of their funds overseas, made grants overseas, conducted international activities or had an overseas area of operation (or a combination of these factors).
The New Zealand regulator asks charities to list the continent they operate in, rather than a specific country (note to the New Zealand regulator: it would be great if that could change in the future – country information provides more useful insights!) The continents listed in order of frequency are Oceania, which includes Australia and the pacific islands (1,139 charities), Asia (995 charities), Africa (542 charities), Europe (405 charities), North America (297 charities), South America (282 charities) and Antarctica (45).
The most unusual insight here is that Australian charities list the US as the second most common country that they operate in, whereas it might be reasonable to expect poorer countries to rank above the US. New Zealand’s priority list is less surprising, with North America ranking behind Oceania, Asia and Africa, as you might expect.
Volunteers and employees
42% of Australian charities reported that they solely relied on volunteers. At the end of their 2013 reporting period, these 3,000 charities reported a total of 225,000 volunteers, along with 13,000 full-time employees and 18,000 part-time employees. These figures will increase as more Annual Information Statements are submitted.
By coincidence, 42% of New Zealand charities also reported that they solely relied on volunteers. That is, they did not record any paid (full time or part time) employees, but they did record one or more volunteers or volunteer hours. However the surprise statistic from New Zealand is that 18% (4,491) of total registered charities recorded that they had neither volunteers nor paid employees. Out of the 4,491, 3,900 still received some type of income. For example, Rescare Homes Trust recorded no details about employees or volunteers, but disclosed gross income of $9m (and a salary expense of $7m) for the year ending 31 March 2013. It is therefore likely that up to 3,900 (16% of total charities) are not completing the volunteer and employee statistics when they should be, so aggregate employee and volunteer numbers on the register could be materially understated. A further 591 charities (2%) appear to be inactive with no income and no paid employees or unpaid volunteers.
The New Zealand register shows an aggregate of 413,000 volunteers, 112,000 full time and 440,000 part time employees. But as mentioned above, these figures are likely to be understated due to a significant number of charities not completing the “your people” questions on the annual form.
The extent of red tape and reporting
29% of Australian charities that have submitted an Annual Information Statement indicated how much time per annum they spent on reporting to Commonwealth, or state and territory departments and agencies. This is an optional section in the form, so 29% seems to be a good response rate.
Large charities indicated that paid staff spent an average of 288 hours and volunteers spent 20 hours reporting to government. For medium charities these figures were 135 hours by paid staff and 94 hours by volunteers. Small charities relied much more heavily on volunteers, with non-paid staff completing 70 hours of government reporting, compared to 16 hours by paid staff.
How does New Zealand compare? We don’t know because the New Zealand regulator doesn’t ask the question. Perhaps that’s where Australia’s regulator really stands out compared to New Zealand. The ACNC is focused on reducing red tape for charities, so it has an interest in measuring what the burden is today and how it changes over time. Or is there simply an assumption by the New Zealand government that charities do not have a red tape problem? It would be interesting to know the answer.