COVID-19, charities and misplaced stimulus

The news is all about coronavirus. But, what does this mean for charities, asks CCA CEO David Crosbie writing in Pro Bono News.

COVID-19, charities and misplaced stimulus, Pro Bono News, 5 March 2020 

I think it is important to start any discussion about coronavirus with a little perspective.

Each year in Australia, influenza kills on average 3,500 people. The best predictor of who is susceptible is age – 3,000 of these deaths are people aged over 50. Death rates for influenza in Australia are below 0.2 per cent of people who contract the disease. Estimates suggest close to half a million people die each year from influenza worldwide. 

The last global pandemic – the H1N1 or swine flu – resulted in around 19,000 hospitalisations and 200 deaths in Australia. It is estimated that one in five people worldwide contracted swine flu and the death rate was 0.02 per cent (less in Australia). 

Coronavirus (properly known as COVID-19 or SARS-CoV-2) has so far resulted in one death in Australia and less than 20 hospitalisations. Reports indicate COVID-19 is more deadly than influenza – early estimates suggest death rates from COVID-19 are close to 1 per cent. This may change over time as it is likely that many people with COVID-19 only experience mild symptoms not requiring any medical intervention and are therefore not counted in the statistics. Many experts believe it is now inevitable that COVID-19 will continue to increase in prevalence. Although many of us may eventually contract COVID-19, most of us will experience relatively minor symptoms. As with influenza, the most susceptible to COVID-19 are the elderly. 

These alarming statistics about influenza (a death rate higher than our road toll) are exactly the reason governments and health experts are so concerned about COVID-19. No-one wants a disease equivalent to influenza spreading widely in our communities, even if most of us will only experience mild symptoms. Clearly, preventative measures are warranted and the likely increase in the disease will place increased pressure on our health services, so we need our health system to be prepared as best it can. This does not mean everyone stocking up on toilet paper.

While health and wellbeing are important for all of us, in practice Australian charities are most likely to experience the effect of COVID-19 more in relation to its impact on our economy than our health. 

“If cuts are made to support a business stimulus package it is the poorest that are likely to face a reduction in government support.”

The cumulative impact of bushfires and COVID-19 means an already brittle economy is now facing the very real possibility of a recession – two quarters in a row with negative GDP growth. The loss of economic activity (tourism, international trade, etc.) will translate into a loss of government revenue at exactly the time when governments need to stimulate investment and job creation to maintain growth.

History suggests governments look to business incentives and tax cuts to drive increases in economic activity, while at the same time seeking to make as many cuts to their expenditure as possible. This approach would not be good news for charities.

In a more evidence-based world, governments might recognise the economic benefits of providing increased spending power to the poorest in our community, significantly raise Newstart, and boost the funding of charities. It should be noted here that charities are more likely to use increased funding to employ people, unlike business where government incentives may well be used to deliver increased dividends for company owners. 

If cuts are made to support a business stimulus package it is the poorest that are likely to face a reduction in government support, and it is charities that will likely face a reduction in the government funding available to support their programs and services.

Many charities are already doing it tough. In some cases, charities have been waiting over a year for promised government funding. Some areas of government funding have already become so competitive and uncertain that charities relying on government support no longer feel confident in offering ongoing employment contracts. Casualisation of the charity workforce is increasing. Charities trade in trust. The casualisation of staff can reduce the opportunities for organisations to develop strong ongoing relationships with their communities.

What governments have repeatedly failed to recognise or accept is that the charities sector is the biggest employer in the country with over 1.3 million people employed across the sector. Any boost in the activity of charities not only provides more employment, it also delivers real community benefit through increased community support and activity. 

Even within the government’s short-term stimulus frame of reference, there are many opportunities to provide leveraged community benefit as well as boosting employment and the economy. If a capital fund could be established to enable charities to upgrade their facilities, improve their work environments, or offer more dignified surroundings to their clients, the benefits to the economy and our communities would be far greater than a similar investment in business infrastructure. There is a huge unmet need in this area as most charities would sooner offer more services to their community than invest money into their capacity in areas like purpose-built facilities, a more efficient computer system, or safer work environments.

Some in government bemoan what they describe as the inefficiency of charities, but there is rarely any acknowledgement that their own government’s approach to charities often drives increased inefficiency. If you reduce funding in real terms to charities while expecting them to provide the same level of programs and services, the inevitable outcome will be that charities have to cannibalise their organisational infrastructure in order to stay viable and continue to offer services to their communities. Achieving increased organisational efficiency invariably requires some up-front investment in infrastructure and capacity. Where is the investment coming from to support a more efficient charitable sector?

Governments often see the work of charities as discretionary, an area where cuts can be made without significant harm. Support for stimulating business activity on the other hand is seen as a high priority.

We can all look forward to the day when governments think beyond the politics of a short-term crisis, beyond the desires of business to be more profitable, and genuinely focus on broader economic and community investment opportunities. Ensuring adequate social safety nets and enabling charities to be more effective in their work are good starting points.

The real impact of COVID-19 and bushfires is likely to mean more charities go out of business, not because that makes sense for our economy, not because it makes sense for our communities, but because the government myopia prevents them from seeing the huge potential for genuine economic and social stimulus through the charities sector. 

How good would it be if COVID-19 helped remove blind spots?

Read on Pro Bono News: covid-19-charities-and-misplaced-stimulus