I NSTITUCIONALIDAD : ARTICULACIÓN ENTRE E STADO Y SOCIEDAD

Throughout Australia’s history, people have come together for the purpose of promoting social cohesion, serving the needy, or providing social goods an d services not provided by eith er govern ment or business organisations. Many of these organisations are motivated by altruistic concerns through their social mission. Their own rules prevent them from distributing any surplus income to their members,¹ focus on community action at a local level, and invariably rely on work performed without pay by their members. This collection of privately-controlled, social-purpose

organisations, which are considered separate from the public or business sectors, has been variously referred to as the “independent”, “voluntary”,

“non-government”, “social” or “third” sector.²

A number of alternative legal forms at the Commonwealth and state levels of government control organisations within the Australian non-profit sector. In general terms, non-profit organisations may take on the form of an unincorporated association, a charitable trust, an incorporated association or a company limited by guarantee.³ There are also non-profits created by specific acts of the various Australian Parliaments, or through Commonwealth legislation providing for a small number of specialist non-profit associations (such as indigenous councils and associations).

Significant variation in the legal definitions of non-profit organisations remains an issue of considerable interest in Australia, as policy makers look to ensure that the legal status of non-profit organisations properly reflects changing social and economic conditions. The Commonwealth Government announced an independent inquiry on 18 September 2000 into definitional issues relating to charitable, religious and community service non-profit organisations. The final Report of the Inquiry into the Definition of Charities was released in June 2001, and the government is currently considering the recommendations of this final report.⁴

Economic contribution

The non-profit sector makes a significant contribution to the Australian economy. While data relating to the economic contribution of the Australian non-profit sector is not available on a consistent basis, data produced by the Australian Non-profit Data Project (ANDP)⁵ for 1995-96 showed that.⁶

● There were 31 764 non-profit sector entities in June 1996. According to separate analysis by the Industry Commission, the size structure of the non-profit sector varies markedly, with the largest organisations possessing annual revenue well in excess of $100 million⁷ while the smallest organisations receive less than $100 000 annually.⁸

● In June 1996, the non-profit sector employed 579 367 people, or 6.9 per cent of all people employed in Australia. In employment terms, the Australian non-profit sector was larger than the tourism sector, and also greater than the agricultural and mining sectors combined.

● In 1995-96, the non-profit sector contributed around $14.6 billion, or three per cent, to Australian Gross Domestic Product (GDP). This sector was larger than the accommodation, cafes and restaurants, communications, cultural and recreational services, or personal services sectors of the economy.

● The non-profit sector raised around $27.4 billion in revenue in 1995-96, with commercial sales, government funding and proceeds from fundraising accounting for 31 per cent, 30.3 per cent and 7.4 per cent of total non-profit sector income respectively.

● In terms of operating expenditure, the non-profit sector spent over

$26.1 billion for the twelve months to June 1996. Labour costs accounted for around 51.3 per cent of total expenses, with other expenses accounting for the remainder.⁹

Table 3.1 provides a summary of the economic contribution of the Australian non-profit sector in 1995-96.

Welfare services provision

The Australian non-profit sector has played a longstanding role in the delivery of welfare services to the community, and remains actively involved in many aspects of Australian life. It provides a wide range of services, in cludin g th e distribution of food an d c lothing, educa tion, h ealth, accommodation, childcare, counselling, legal advice, and religious services.

Non-profit organisations provide these services to a wide range of people including families, the aged, young people, people with low incomes, the unemployed, the homeless, and people with disabilities.

A key trend for Australian non-profit service providers over the past decade is the increasing willingness of governments to seek the wider involvement of the community to deliver welfare services. These reforms to the “welfare state” have broadly reflected a desire to reduce public sector monopoly provision of social services, and to exploit the inherent advantages that non-governmental organisations can bring to social service delivery frameworks in the form of diversity, innovation, flexibility and sensitivity to the task of providing services to local communities. At the same time there are debates about public sector accountability and whether the goals of non-profit organisations are always in alignment with government objectives. There is also a debate about whether flexibility in non-profit welfare services provision creates inequities in terms of access to services. In particular, governmental funding and support to the sector is being provided increasingly through outcome-based contractual funding agreements for the provision of defined services. This trend towards the use of the “purchaser-provider” model is reflected in recent Australian Institute of Health and Welfare (AIHW) data, which sh ow th at, of the $3.9 billion funded by the Common wealth Government for welfare services in 1999-2000, only four per cent of Commonwealth funding (or $525 million) was directly provided to the community. Around 51.4 per cent (or $1.99 billion) of Commonwealth funding was transferred to the non-government community service organisations

I.3NEW TRENDS IN THE NON-PROFIT SECTOR IN AUST

ON-PROFIT SECTOR IN A CHANGING ECONOMY – ISBN 92-64-19953-5 – © OECD 2003

Table 3.1. Key economic statistics – Australian non-profit sector, 1995-96

Source: Lyons and Hocking, (2000, p. 51).

Community

services Health Education Education related

Other human

services Religion Philanthropic intermediaries

Arts and culture

Sport and recreation

Interest

groups Other Total

Organisations (nq) 4 898 824 5 256 1 576 2 261 5 789 158 612 5 668 3 737 985 31 764

Employment (nq) 132 247 111 104 134 569 9 265 12 405 17 000 434 6 677 98 341 46 982 10 383 579 367

In $ m

GDP 2 309.0 2 806.4 4 229.8 266.5 190.6 327.5 9.6 191.3 2 602.9 1 236.6 388.8 14 558.6

Income 3 870.4 4 382.5 6 033.9 947.7 376.1 659.5 12.0 466.0 6 491.2 3 251.1 902.2 27 392.5

Government funding 1 918.7 1 963.1 3 171.7 189.7 163.7 – 3.0 176.5 99.8 465.6 144.1 8 295.9

Fundraising 610.5 108.6 300.9 106.7 4.7 502.1 0.6 37.5 264.9 87.0 16.9 2 040.5

Fees for service 769.9 2 011.2 1 892.9 – 2.5 – 0.5 – – – 0.1 4 677.1

Commercial sales 325.0 81.7 382.3 443.5 190.6 157.4 – 212.5 5 430.8 848.4 439.8 8 512.0

Membership dues – 5.2 41.9 158.5 – – 0.5 – 584.6 1 321.5 155.3 2 267.4

Interest income 107.5 60.3 35.2 19.4 1.8 – 5.9 – 54.6 190.4 5.9 481.0

Other 138.8 152.4 208.9 29.9 12.8 – 1.5 39.5 56.5 338.2 140.1 1 118.6

Expenditure 3 699.8 4 191.8 6 137.6 870.3 362.5 550.2 14.5 433.7 5 941.5 3 001.5 905.6 26 108.9

Labour costs 2 204.6 2 734.6 4 229.8 266.5 190.6 327.5 9.6 180.6 1 656.7 1 236.6 356.0 13 393.2

Other expenses 1 495.2 1 457.1 1 907.8 603.7 171.9 222.7 4.9 253.1 4 284.8 1 764.9 549.5 12 715.7

(NGCSOs)¹² to directly provide social services (with the remainder transferred to other levels of government).

T he fundin g relationship between governmen t an d n on-p rofit organisations has diversified to incorporate a range of funding instruments, ranging from grants through to competitive tendering processes.¹³ This has created a “social economy” of welfare services with non-profits coexisting with other providers (particularly for-profit enterprises) in the provision of welfare services. ABS data on community services expenditure (see Table 3.2) illustrates that the non-profit sector has increased its share of expenditure¹⁴ from 48.7 per cent in 1995-96 to 55.9 per cent in 1999-2000. Major contributors to the increase in non-profit community services expenditure include residential care and accommodation placements (up by 41.7 per cent to

$3.59 billion) followed by personal and social support (up by 107.9 per cent to nearly $1.3 billion) and training and employment services for disabled people (up by 33 per cent to $496.9 million). In comparison, despite a significant increase in childcare expenditure (up by 58.5 per cent to $216.5 million), for-profit organisations experienced a reduction in their overall share of community services expenditure by 2.1 per cent in the three years to 1999-2000.

The government sector experienced an even larger reduction in its share of overall community services spending (5.1 per cent) from 1995-96 to 1999-2000, in spite of increased funding in most areas of community services.

There is some evidence to suggest that increasing competition in the provision of welfare services has encouraged non-profit organisations to deliver these services in an innovative fashion (see Box 3.1), which will in turn help to effectively meet new community needs and to build local community capacity.