Understanding Charity Metrics
How can general charity statistics be used to help inform your decision on which charity to support? This is the first article in a series that will help assess the accountability of a charity, what their reported financial information could mean and how it relates to their mission.
Most of the information about a charity is provided in Annual Information Statements (AIS). These documents are the main source of communication from charities to the Australia Charities and Not-for-profits Commission (ACNC). All registered charities have to submit AIS statements, unless they meet specific requirements.
Giving Guide utilises this information to provide donors a broad overview of the charity and presents the information in an alternate way. Charity reporting is complex and currently no common baseline exists for which to compare one charity to another. As two similar charities aiding the same beneficiary may go about their mission in different ways.
To start, let’s review the information and metrics provided by Giving Guide for each charity.
The first half of the Key Information listed for charities on Giving Guide includes:
- Charity Status: Provides you with the security that the charity is meeting the minimum governance standards set out by the ACNC. It also informs you the charity has complied with the necessary reporting and provision of information. There are three tiles that could be viewed far any given charity: Green = Charity Registration is up to date; Orange = Reporting is late; and Red = Registration is temporarily, voluntarily or permanently revoked. Very few charities have enforcement actions, but this would be noted in red as well. We would advise sticking to the Green tiles, not excluding the Orange tiles for late reporting but proceed with caution on any red tiles.
- Charity Size: Size is based on the amount of the charity’s annual revenue. For more information about how charity size plays out in the sector, read our article on big vs small charities. Small charities have annual revenue below $250,000 where medium charities have annual revenue over $250,000 but under $1 million and large charities have annual revenue greater than $1 million. Giving Guide has further categorised revenue size: Extra Small (<$50k); Small ($50k-$250k); Medium ($250k-$1m); Large ($1m-$10m); Very Large ($10m-$100m); and Extra Large (>$100m).
- Years in Operation: This tile shows the year the charity was established and number of years in operation. You may wish to support an established charity or help a newly created charity.
- Operating State(s): This tile shows the State(s) where the charity operates and/or is based in Australia. While some charities are more focused on local issues and will be represented by one State, others may help communities across Australia. Some charities may select one state as in where they are based but serve and operate in a combination of states or nationwide.
- Overseas Operations: Some charities have operations outside of Australia. However, they must have a physical presence in Australia to be registered. The countries where the charity operates are listed below the second set of tiles.
- Number of Employees: This tile shows the number of paid employees in terms of Full-Time Equivalent (FTE) staff and the number of volunteers. The employee information section further down the page may provide further information on part time and/or casual employees.
The second half of the Key Information offers some financial statistics about the charity:
- Per cent (%) Revenue from Government: Provides the amount of revenue from government and the proportion in relation to total revenue, which may include funding from grants, contracts, rebates and subsidies provided by Commonwealth, State, Territory or local governments.
- Total Expenses: Shows all operating expenses over the year, as well as what percentage of the charity’s revenue this represents. Categories can include expenses from paying employees, interest payments, administration costs and “other” expenses.
- Per cent (%) Revenue from Donations: Indicates the percentage of revenue received from donations (including fundraising, trusts, non-government grants, member/supporter/employee donations and bequests) and the charity’s total revenue.
- Grants for Use in Australia: Information includes the amount provided and the per cent in relation to the charity’s total expenses (charities can make grants to other charities, individuals or beneficiaries, while some provide scholarships).
- Grants for Use Outside Australia: This category may include sponsorship programs or projects, donations (including goods and services) to sister organisations or governing bodies either by directly sending money overseas or indirectly through other Australian organisations or charities. Charities must report which country received a grant or donation. If an organisation has provided support to a particular country, it will be listed in the Overseas Operations in the Key Information section below the tiles.
- Per cent (%) Employee Expenses: Shows the percentage of revenue allocated to employee expenses in relation to the charity’s total expenses.
The remaining items in the Key Information section are “Who They Help” (i.e., the charity’s main recipients) and “How They Help” (i.e., the charity’s main mission(s)). The activities that charities choose to describe their mission are based on the International Classification of Non-profit organisations. All charities must select a main beneficiary (i.e., who they help) but other beneficiaries are also be listed.
Further details are provided about the charity. The information is divided into 5 sections: Key information; Basic information; Financial data; People; and Reports. If a section or sections are missing the charity either has yet to submit any information, is not required to provide this information or has requested their information is not shared publicly.
The Basic Information section provides further detail about the structure and purpose of the charity, including the charity’s Australian Business Number (ABN), their contact information and purpose statement. This is where they explain their mission and the support they have been providing to the community. Some of the more technical information includes:
- Entity Type and Incorporation Type: Charities must make sure their governing documents are in line with their legal structure. Legal structures may be incorporated (i.e., incorporated associations, companies limited by guarantee, non-trading co-operatives, indigenous corporations) or unincorporated (i.e., trusts, unincorporated associations).
- Tax Concession Status: Tells you whether the charity has been endorsed by the ATO (including the date) for one or more of the following tax concessions: exempt from income tax, eligible for GST concessions or qualified to receive fringe benefit tax rebates or exemptions, up to a certain capping threshold.
- DGR Status: Shows whether the charity has Deductible Gift Recipient (DGR) status: Item 1, 2 or 4. Item 1 refers you to lists of funds, authorities and institutions such as public hospitals, overseas aid funds and public museums (including entities listed by name). While Item 2 DGRs are called ancillary funds and describes funds set up solely for: providing money, property or benefits for deductible gift recipient (DGR) covered by item 1, or the establishment of such DGRs. Item 4 DGRs describes Funds, Authorities or Institutions that may receive donations of property under the cultural gifts program.
- Fundraising: Provides the fundraising licence number(s) for States that require the charity to register to fund raise in that State. Depending on the amount of funds raised in a particular State a licence may not be required.
Under More Details, we find Financial Data and information about staff, including:
- Revenue vs Expenses Graph: Displays the total revenue and expenses for each year since 2013.
- Revenue and Expenses Breakdown: Shows you the percentage and the amount from various sources of revenue/expenses and the total revenue/expenses from the previous reporting year. You can also see the current net surplus or deficit of the charity.
- Assets and Liabilities Breakdown: Like above, giving you net assets/liabilities.
- Breakdown of Employee Structure Graph: Presents the number of full time/part time/casual employees and volunteers for each year since 2013.
- Staff Costs: This differs from the employee expenses metric as it gives employee costs as a percentage of revenue, rather than as a percentage of expenses.
- Full Time Equivalent Employees: A charity’s full-time equivalent (FTE) staff figure refers to the number of full-time employees it would have if it combined the hours of all full-time, part-time and casual employees.
- Average Expense per Employee: Takes the total amount of revenue spent on employees and divides it by the number of full-time equivalent employees. While employees will usually be paid differently depending on their role, this gives you a rough measure of the average employee cost for the charity.
- Full-Time, Part-Time and Casual Employees: Gives both the number of people in each category and percentage of all employees. The number of volunteers is also provided below.
The People section also lists the name and title of up to 16 Responsible People who make up the governing body, board or committee responsible for the governance of a charity. This covers 99% of all charities. Some have boards consisting of 97 responsible people, while the average is approximately 7.
The Reports and Documents section is where you can download and read a charity’s governing documents, financial reports, annual reports (which give more information about a charity’s work as well as its finances) and annual information statements (which must be provided to the ACNC). This is where you can get a feel for the detail of the charity and the effort put into their documents. Small charities (<$250K) are not required to provide financial reports however they can be provided. Only medium (>$250k to $1m) or large (>$1m) charities must provide financial reports. A medium sized charity must provide a signed and dated reviewer’s report or auditor’s report and a large charity is required to submit a signed and dated auditor’s report.
Charities registered by the ACNC have agreed to the Governance Standards imposed. However, being registered and receiving the ACNC charity tick is not evidence proving the charity is efficiently run and effective. It is up to the donor to investigate the charity and determine if they meet their standards.
The regulation of charities in Australia is focused mainly on financial information. Please look at our article on “The Overhead Myth” to explain the intricacies of charity legislation and reporting. Efforts are being made to look at what impact a charity is having in the community. Our Search by Location feature can help donors find charities in their community.
We will continue to explain the information available on charities that we provide. Keep a look out for the next article.
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Integrity, honesty and unbiased assessment are at the core of Giving Guide’s mission. The charity sector is important to the economy and culture of Australia, We believe independently assessing the accountability, transparency and effectiveness of the sector beyond what is currently available is important to it's future.
Giving Guide anticipates enhancing the level of governance and transparency in the Australian charity sector. An independent charity advisor would benefit the sector by helping charities consider exceeding the existing governance standards of the Australian Charities and Not-for-profits Commission (ACNC) to the benefit of donors.
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