THE CASE FOR INTERMEDIARIES - Navigating Australia's LGBTIQ not-for-profit landscape - Oliver Wyman
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THE CASE FOR INTERMEDIARIES Navigating Australia's LGBTIQ not-for-profit landscape Ross Eaton Remo Odermatt Georgina Ringler
The Case for Intermediaries
CONTENTS
3 About this report
4 Executive summary
7 Australia’s charity landscape
The LGBTIQ not-for-profit sector
Outlook for charities in Australia
14 Navigating Australia’s evolving charity landscape
The funders
The fund-seekers
27 The case for intermediaries in Australia
The unique position of intermediaries
Success factors for not-for-profit intermediaries
33 Conclusion
34 Endnotes
36 Acknowledgements
© Oliver Wyman 2The Case for Intermediaries | About This Report
ABOUT THIS REPORT
This report has been developed by Oliver Wyman for The Aurora Group and the Australian
philanthropic sector. The report provides information about the Australian charity sector,
how LGBTIQ organisations fit within the broader Australian charity sector and the challenges
charities face in accessing funding. It further analyses the role that an intermediary funding
mechanism model can play in addressing these challenges, particularly in relation to funding
for LGBTIQ causes.
As well as reviewing existing literature and available data, we conducted 10 interviews across
Australia’s not-for-profit sector, including philanthropic organisations, corporate foundations,
charities, and members of the LGBTIQ community.
The report is structured into three sections:
• Australia’s charity landscape
• Navigating Australia’s evolving charity landscape
• The case for intermediaries in Australia
© Oliver Wyman 3The Case for Intermediaries | Executive Summary
EXECUTIVE SUMMARY
Australia’s charity and not-for-profit sector is significant in its importance to the
community and the economy. There are more than 57,000 registered charities in Australia,
and an additional 600,000 other not-for-profit organisations (organisations without charitable
status which perform activities to benefit the broader community). In 2018, the Australian
charity sector generated $156.4 billion in revenue and employed more than 1.3 million people,
or about 10 percent of the Australian labour force. There have historically been two sides of
the Australian charity sector: The “funders” providing funds to charitable causes, and the
“fund-seekers” looking for funding to perform activities with a charitable purpose. However,
as the sector evolves, there is an increasingly clear role for a third player — intermediaries —
particularly in the LGBTIQ1 not-for-profit space.
Funding available in the not-for-profit sector is becoming increasingly “sophisticated”.
Funding from the Australian Government (federal, state and local) remains important for
the sector with the share of donations from individuals (“mass market” donations) in overall
sector funding decreasing. Philanthropic donations from High-Net-Worth Individuals (HNWIs),
Private- and Public Ancillary Funds (PAFs and PuAFs2, respectively) and private corporations
however are increasing in size, importance and influence on the sector leading to an increase
in the sophistication of funding available in the sector.
There is a growing number of charities in Australia, but the majority remains small
and faces barriers to accessing more sophisticated sources of funding. The number
of registered charities in Australia is growing around 4 percent year-on-year with most of
these organisations being “small” with less than $250,000 annual revenue (66 percent). Small
charities play a vital role in addressing specific community issues but are generally volunteer-
led and mostly rely on donations and bequests as their main source of income. Access to
more sophisticated types of funding such as from corporates, PAFs or PuAFs can be more
challenging due to limited capacities and capabilities to apply for and acquit (reporting on
the activities conducted and expenditure of funds) grants. They also often lack Deductible
Gift Recipient 1 (DGR13)status, which can further prevent access to funding, such as larger
donations from individuals and funding from PAFs. Therefore, an increasing mismatch between
the funding available in the sector and the access of smaller organisations to that funding
is evolving.
These challenges are even more pronounced for LGBTIQ organisations, for which funding
is largely under-represented relative to the community’s size in Australia. Up to 11 percent
of the Australian population identifies as LGBTIQ, and yet LGBTIQ organisations receive less
than 1 percent of overall sector funding. The small and highly unformalised LGBTIQ charity
landscape, structural barriers that make attracting and sustaining core funding a challenge
and the lack of prioritisation and knowledge of issues facing LGBTIQ communities means that
© Oliver Wyman 4The Case for Intermediaries | Executive Summary
these organisations are not able to fully access the funding they need. There is still a lot of
work to be done to better support the Australian LGBTIQ community, which continues to face
significant barriers and challenges.
Intermediaries are emerging to be well positioned to link funders and fund-seekers.
Intermediaries exist to more effectively link donors and not-for-profit organisations.
They occupy a unique position in the sector through their strong network of grassroots
organisations and philanthropic funders. Intermediaries can bridge the knowledge gap for
funders, as they are often run by people who are representative of the community and have
deep expertise in the issues that grassroots organisations are seeking to address. They also
possess the ability to lead, coordinate, and build charity capacity by directing funding to where
it is needed the most, and by providing recipient charities with the tools and resources to grow
in scale. Furthermore, intermediaries are often also able to leverage their DGR status enabling
funds to flow from funders to fund-seeking organisations where this previously would not have
been possible.
Intermediaries also provide efficiency benefits. For funders, intermediaries reduce the
burden of research and due diligence on recipient organisations. For charities, they can remove
grant acquittal barriers by aggregating reporting.
Exhibit 1: Intermediary model (illustrative)
Government
Public- and Private DGR1 charities
ancillary funds
High-net-worth- Intermediary Non-DGR1 charities
individuals (large)
Private Non-DGR1 charities
corporations (small)
Individual donors
(mass market)
Flow of funds Reporting
Source: Oliver Wyman
© Oliver Wyman 5The Case for Intermediaries | Executive Summary
The intermediary model is well-established overseas but is still emerging in Australia’s
not-for-profit sector. There are some good examples of Australian intermediaries, such as the
Foundation for Rural & Regional Renewal (FRRR), focusing on funding and capacity building to
support at the hyper-local level in rural and regional Australia, and The Sunrise Project, focusing
on the transition from fossil fuels to renewable energy. However, despite the benefits they can
bring, they still face challenges as they emerge in the Australian marketplace and establish their
purpose and presence.
Legitimacy, reputation, and trust are critical for both funders and fund-seekers.
To succeed, intermediaries need to draw on their understanding of the intricacies and unique
elements of Australian society and the not-for-profit sector, and action key learnings from
successful intermediaries from both Australia and overseas. These success factors include
social licence, clear and transparent purpose and strategy, trustful relationships, seamless
“user” experiences, and a learning mindset.
There is a clear and increasing need for intermediaries in Australia’s not-for-profit
sector, including in the LGBTIQ space, to more effectively link funders and fund-seeking
organisations. To fully tap into the potential of what intermediaries can achieve, scaling such
organisations will be an imperative to realise the benefits including more effective resource
allocation, diversity in funding to smaller organisations who may need it the most, and
increased efficiencies in the funder and fund-seeking organisation relationship.
© Oliver Wyman 6The Case for Intermediaries | Australia’s Charity Landscape
1. AUSTRALIA'S
CHARITY LANDSCAPE
Charities and other not-for-profit organisations play a vital role in supporting
the Australian community and the economy.
There are currently more than 57,000 charities registered with the Australian Charities and
Not-for-profits Commission (ACNC) in Australia. There are also an estimated 600,000 other
not-for-profit organisations without charitable status performing activities for the benefit of
the broader community. These include sporting and recreational clubs, and professional and
business organisations. 5 For the purposes of this report, we will focus on the charities sector.
Exhibit 2: Number of registered charities in Australia
60,000
58,000
56,000
54,000
52,000
2015 2016 2017 2018 2019 2020
Source: ACNC, 2021
According to the ACNC, although the charities sector is comprised of organisations varying
vastly in size, most charities are “very small” with annual revenues below $50,000. The
remaining charities are almost evenly split between “small” ($50,000–$250,000 annual
revenue), “medium” ($250,000–$1 million annual revenue) and “large” (more than $1 million
annual revenue).
© Oliver Wyman 7The Case for Intermediaries | Australia’s Charity Landscape
Exhibit 3: Size breakdown of registered Australian charities
Very small (annual revenue $1 million)
18.1%
Source: ACNC, 2018
The ACNC also requires charities to register their “main beneficiary”. By far the biggest
beneficiary group is the “general community in Australia”, with almost half of all registered
charities (44 percent) reporting this as their main beneficiary. Beyond this, 14 percent of
registered charities report children under the age of 15 as their main beneficiary, and 4 percent
report families and adults over the age of 65 as their main beneficiaries.
In contrast, only 0.2 percent of registered Australian charities report people identifying
the Australian LGBTIQ community as their main beneficiary. For reference, the LGBTIQ
community represents approximately 11 percent of the Australian population.6 It is recognised
that some charities serving a broader audience do also address several issues which also
disproportionally impact the LGBTIQ community (such as homelessness). However, overall,
these figures suggest that certain communities are significantly under-represented relative to
their share of the population, including the LGBTIQ community.
Exhibit 4: Main beneficiaries
General community in Australia
43.7%
Other causes
34.0%
Children (under 15)
14.4%
Families
4.1%
Adults (aged 65 and over)
3.5%
People who identify as LGBTIQ
0.2%
Source: ACNC, 2018
© Oliver Wyman 8The Case for Intermediaries | Australia’s Charity Landscape | The LGBTIQ Not-for-Profit Sector
As well as providing essential services and support, charities play a vital role in Australia’s
economy. In 2018, not-for-profit organisations employed more than 1.3 million people, around
10 percent of the Australian labour force.7 Meanwhile, another 3.8 million people provided
volunteer support8, representing a significant amount of unpaid labour.
In 2018, Australian charities generated $156.4 billion in total revenue, representing a seven
percent increase from 2017 ($146.1 billion).9 Almost half of this revenue (48 percent) was from
local, state, and federal government sources, and over a third (34 percent) was generated by
providing goods and services, some of which were further subsidised by government funding.10
Exhibit 5: Charities’ revenue breakdown
Revenue from government
47.5%
Revenue from goods and services
34.2%
Donations and bequests
6.7%
Revenue from investments
2.6%
All other revenue
9.0%
Source: ACNC, 2018
It is estimated that around $80 billion in grants are distributed each year.11 This is expected
to rise. While a significant proportion of this funding comes from federal, state, and local
governments, philanthropy is playing an increasingly key role in Australian grant-making,
adding further volume, variety, and independence to the grant-making landscape.
1.1 THE LGBTIQ NOT-FOR-PROFIT SECTOR
The LGBTIQ community is large and faces significant challenges
It is estimated that Australians identifying as LGBTIQ account for around 11 percent
of the Australian population.12 The exact number is difficult to derive due to the lack of
comprehensive, publicly-available data driven by the reluctance of certain sectors to collect
demographic information, and the reluctance of people who identify as LGBTIQ to provide
this information.
While the achievement of Marriage Equality may have been a major milestone for Australia,
it did not nearly address all the issues and challenges the LGBTIQ community faces. As such,
there is still a lot of work to be done to better support the Australian LGBTIQ community
© Oliver Wyman 9The Case for Intermediaries | Australia’s Charity Landscape | The LGBTIQ Not-for-Profit Sector
to address ongoing discrimination, social marginalisation and social and economic
disadvantage. Many of the social issues that the charity sector in Australia seeks to address
disproportionately impact LGBTIQ Australians. These include:
• High levels of experienced violence: A 2020 national Australian survey on the health
and wellbeing of LGBTIQ people by La Trobe University reported high levels of violence
and harassment, with one in three facing verbal abuse, one in four harassment, and
one in ten sexual assault over the previous 12 months due to their sexual orientation or
gender identity.13
• More likely to experience mental health issues: LGBTIQ people have an increased risk
of depression, anxiety, substance abuse, self-harm and suicidal thoughts.14 LGBTIQ people
aged 16 and over are nearly three times more likely to be diagnosed with depression at
some point in their lifetime, and more than twice as likely to meet the criteria for an anxiety
disorder. Within certain LGBTIQ communities, these issues are even more pronounced.
Transgender people aged 25 and under are nearly 10 times more likely to be diagnosed with
depression in their lifetime, and 10 to 13 times more likely to be diagnosed with anxiety in
their lifetime.15
• More likely to experience homelessness: The same La Trobe University study reported
that LGBTIQ people are more than twice as likely to be homeless compared to the general
population.16 This was particularly marked for trans and gender diverse people. More
than one in five LGBTIQ people reported experiencing homelessness one or more times
in their lives and a third reporting family rejection or family violence. Members of the
LGBTIQ community can also be faced with increased barriers accessing housing and
homelessness services.
• Fear of social discrimination leading to poorer outcomes: Only 32 percent of LGBTIQ
Australians are “out to all” people in their workplace. This is driven by fear of discrimination
and harassment, which in turn leads to lost productivity, poor mental health outcomes and
in some cases, people leaving their place of employment.17
LGBTIQ is often viewed as a single category which can be spoken about in broad
generalisations. However, it is vital to understand that within the LGBTIQ community there
are several distinct, but sometimes overlapping, demographics. Each have their own distinct
histories, experiences, challenges and needs. For example:
• Transgender people still experience significant barriers in accessing legal documents
such as birth certificates that reflect their gender identity in several states. This has
significant implications for their ability to access health and other social services, apply for
employment, enrol in education and travel.
• Intersex people in Australia face stigma and discrimination due to their physical
characteristics not fitting medical norms for female or male bodies, including early so-called
“normalising” surgeries and hormone treatment designed to make them appear more
typically female or male.
• LGBTIQ Australians who are indigenous or from a culturally and linguistically diverse
(CALD) background can be impacted by racism, homophobia and/or transphobia and may
face additional barriers in accessing mainstream health and social services. Along with the
need for self-representation, this has led to the emergence of Indigenous and CALD-led
LGBTIQ organisations in Australia in recent years.
© Oliver Wyman 10The Case for Intermediaries | Australia’s Charity Landscape | The LGBTIQ Not-for-Profit Sector
• LGBTIQ people living with a disability can face the dual challenge of disability support
services making assumptions about their sexuality, gender identity or sex characteristics
and LGBTIQ organisations lacking the knowledge and skills to be inclusive of people
with disabilities.
• LGBTIQ people living in regional and rural areas are less connected to most LGBTIQ-
specific services that are based in capital cities, and in general are more susceptible to
social isolation.
• Some older LGBTIQ Australians report “going back into the closet” in aged care services
because of actual or feared lack of understanding about sexuality, gender identity and
intersex variations amongst certain service providers.
LGBTIQ community-led organisations and groups as well as programs of larger organisations
have emerged in recent years to address these specific challenges. Data from The Aurora
Group’s small grants programs shows an increasing diversification in the focus of grantee
applicants, highlighting the growth in transgender, Indigenous, CALD and rural regional-
focused LGBTIQ projects in recent years.
Exhibit 6: Likelihood of LGBTIQ people to be diagnosed with depression
3x 10x
more likely to be diagnosed with depression more likely to be diagnosed with depression
if you identify as LGBTIQ if you identify as Trans
Source: LGBTI National LGBTI Health Alliance, 2020
However, LGBTIQ funding support is small
Achieving the “Yes” vote for the Marriage Equality plebiscite was no easy feat. The Marriage
Equality campaign raised nearly $20 million in donations from a relatively small number
of philanthropic donors, the Australian public and through in-kind services, such as pro-
bono legal work. This enabled the campaign to employ over 80 full-time staff and manage
15,000 volunteers, making it comparable to other law reform campaigns.18 As a result, it was
able to achieve scale, momentum, and legitimacy as the Marriage Equality campaign which
went on to be successful in achieving its aims.
This level of funding has not continued since and funding for LGBTIQ causes remains very
small. Limited reporting and publicly available data make it difficult to determine the exact
amount of funding going to LGBTIQ specific charities. However, we know that the number of
registered LGBTIQ specific charities is small, and that the respective funding is likely to mirror
this. Oliver Wyman estimates that funding for LGBTIQ specific organisations is likely to be
significantly less than one percent. For comparison, a study from the US in 2018 on the LGBTIQ
grant-making landscape found that only 0.28 percent of grants from American foundations
specifically supported LGBTIQ issues.19
© Oliver Wyman 11The Case for Intermediaries | Australia’s Charity Landscape | The LGBTIQ Not-for-Profit Sector
Many LGBTIQ organisations are community-led and volunteer run. They generally operate
on small budgets, relying on the goodwill of volunteers, families and local connections. Often,
they seek to address a specific issue within a community and intersect with other causes. This
can bring capacity and capability restraints, which impact the ability of these organisations to
apply for and acquit grants, especially those which are more competitive.
Only a small fraction of applications in Australia for grants are from LGBTIQ charities.
An analysis of the grant applications and approvals processed through SmartyGrants,
Australia’s most-used grants administration system, between 2013 and 2018 shows that out
of the almost 80,000 approved grant applications, only 209 applications (0.26 percent) were
related to LGBTIQ-specific causes. 20 This share was also significantly smaller for federal and
state government funding.
Exhibit 7: Share of approved LGBTIQ grant applications
Local government
0.37%
State government
0.10%
Federal government
0.07%
Philanthropic organisations
0.22%
Average
0.26%
Source: GiveOut
Case study 1
Sydney Queer Muslims is a non-profit organisation run by a diverse range of volunteers united
by the same faith. Sydney Queer Muslims aims to support and advocate for people of diverse
sexualities, genders and intersex status to reconcile their sexual identity with their faith. 21
© Oliver Wyman 12The Case for Intermediaries | Australia’s Charity Landscape | Outlook for Charities in Australia
The low share of approved LGBTIQ grant applications may be unsurprising given that many
LGBTIQ organisations are surviving on mere “crumbs”. Around half (48 percent) of the
independent LGBTIQ organisations operate with a budget of under $10,000, a situation even
further pronounced by the myriad of non-registered organisations and individuals supporting
LGBTIQ causes. 22
While we would not expect funding to be exactly representative of the Australian population,
there is an obvious disconnect between the numbers, and one can argue clearly that the
LGBTIQ community is relatively under-funded.
1.2 OUTLOOK FOR CHARITIES IN AUSTRALIA
The strong growth in the number of charities and their revenue (2 to 5 percent over the last
five years) is likely to stall because of COVID-19, as charitable giving tends to decline in times of
cyclical economic downturn and related financial hardship. 23 Fundraising likely declined in 2020,
and philanthropy was also likely affected due to the associated volatility in investment income
and asset values linked to the payout levels for those structures. The full extent of the impact,
however, may not be seen for another 6 to 18 months, as the required distribution spans over
the full subsequent financial year.
Many philanthropists, however, were quick to react and support charities during the current
crisis. According to Philanthropy Australia’s survey of 101 grant-makers’ responses to COVID-19,
88 percent indicated that they would change how they support the community, such as
by increasing flexibility (72 percent), untying restricted funding (48 percent), increasing
financial grant support (42 percent), and establishing dedicated COVID-19 grant programmes
(32 percent). 24 It could be expected that the success of grant-making initiatives such as these
will drive longer-term changes to grant-making practices.
Beyond impacts from COVID-19, more structural changes are expected to influence the
broader landscape of Australia’s not-for-profit sector. As will be detailed in the following
section, the increasing number of charities is creating more competition for funding, and yet
there may remain a reliance on small, grassroots charities for on-the-ground understanding
and impact.
Fundraising is likely to continue to decrease in its importance as a revenue source of charities,
particularly based on its tendency to be unreliable and cyclical. As structured giving through
philanthropy by wealthy Australians continues to grow, so too will its importance and
influence on the sector. Growth in corporate giving and strategic partnerships should also
not be underestimated.
These changes will also be underpinned by technological advancements and innovation,
albeit their progress in this respect will occur at a slower pace compared to the for-profit
sector. Ultimately, those organisations that are able to best respond to both short-term and
longer-term changes, and to navigate the evolving sector, including leveraging digital and
technological capabilities, will have the best chance of sustained success.
© Oliver Wyman 13The Case for Intermediaries | Navigating Australia’s Evolving Charity Landscape
2. NAVIGATING AUSTRALIA'S
EVOLVING CHARITY LANDSCAPE
As the Australian not-for-profit landscape continues to evolve and mature, how
funders and fund-seeking organisations operate and interact is changing. In this
section of the report, we explore both sides of the sector — the “funders” and
the “fund-seekers”.
On the “funding” side, four key segments are analysed in terms of their size and the challenges
they face. These segments are the following:
• The Government — the biggest “pot” of funding that is relied upon by the charity sector
• Individual donors — a segment with historic influence on the sector based on the flexibility
its funding allows, but with a decreasing relative importance
• Philanthropic donors — HNWIs, PAFs and PuAFs, which are increasing in their share,
importance, and influence on the sector
• Corporates — whose importance is increasing with a focus on more strategic ways of
giving, and who should not be underestimated
While many of these funders are looking to give in the best way possible to specific causes
where their support is most needed, including LGBTIQ issues, many do not have the capacity
to understand or navigate the intricacies of thousands of small, community organisations.
Nor could they be expected to.
On the “fund-seeking” side, despite the continuously increasing number of charities in Australia
(and in particular “small” organisations), many lack the capacity, capability, and structural and
operational set-up to access more sophisticated sources of funds.
As a result, there is an increasing disconnect between the funding available in Australia’s
charity sector and the ability to access such funding. Moreover, this disconnect is particularly
pronounced relating to accessing more sophisticated sources of funding by smaller
organisations. Navigating this increasingly complex and evolving landscape is therefore
becoming more of a challenge for both the funders and the fund-seekers.
© Oliver Wyman 14The Case for Intermediaries | Navigating Australia’s Evolving Charity Landscape | The Funders
2.1 THE FUNDERS
The “biggest pool” — the Government
Up until the end of World War II, charities and other not-for-profit organisations provided most
of the social services that are now offered by the government. The crucial role of charities and
not-for-profits is continued to be recognised, as is the need for the public, not-for-profit, and
for-profit sectors to work together to solve broader societal issues.
Driven by the demand of a growing charity sector and policy changes, the Australian
Government (federal, state and local) has evolved to become a significant source of revenue
for charities and provides oversight and regulation through the ACNC. In aggregate, charities
receive 48 percent of their revenue from the government (including grants and payments for
services delivered on behalf of the government), representing an available funding pool of
$73.7 billion. 25 In general, it is larger charities who get a greater proportion of their revenue
from the government, while smaller charities remain largely reliant on donations and bequests.
The overall reliance on government funding has grown almost exponentially over the past two
decades. 26 How much and where it is allocated to in the not-for-profit sector is dependent on
a number of factors, including who is in government and their priorities, economic cycles, and
demand from charities, as well as public pressure, such as for the Australian bushfire response
in 2019/20. Off the back of COVID-19, governments are expected to reduce expenditure,
and as such we may see the availability of government funding for the not-for-profit sector
to decrease.
Grant-making by the Australian government is run through a centralised system called
GrantConnect, which connects grant-seekers with available grants. Most grants require
significant “Grant Opportunity” documentation, with grant-seekers also expected to meet
the respective governmental legal and compliance requirements. In addition, reportedly the
acquittal process for government grants can be a lengthy and cumbersome process. This
red tape is especially a burden for smaller organisations already struggling with capacity
and capability constraints, and acts as a barrier to access funding. That said, there has been
recognition by the government and the ACNC, and a concerted effort to reduce unnecessary
regulation and reporting requirements for charities, particularly through the government’s
response to the ACNC Legislation Review in 2018.
State and local government support are also available. These grants can be one-off or
ongoing support and subsidies are often made to support activities that are consistent with
government policy. The support provided similarly varies in the degree of complexity and
formality in terms of application and reporting requirements.
© Oliver Wyman 15The Case for Intermediaries | Navigating Australia’s Evolving Charity Landscape | The Funders
Individual “mass market” giving is local and reactive
Donations from “mass market” donors, that is, individual members of the public donating
their own money to charitable causes, have an ongoing importance for the sector. Mass
market funding offers charities greater flexibility regarding fund use, as they are not bound
by provisions regarding how the money can be spent.
In aggregate, revenue from donations and bequests is small (7 percent) compared to other
sources. In 2018, total donations and bequests amounted to $10.5 billion27, a 6 percent increase
from 2017. Mass market donations currently contribute to almost half of all donations made
to charities in Australia. However, this share is expected to fall to around a third by 203628,
as donations and bequests made by HNWIs and through structured giving vehicles, such as
PAFs, continue to increase relative to declining fundraising returns. In addition, the average
amount donated per person declined to $378 in 201929 and is expected to further decrease in
2020 as a result of the economic downturn following COVID-19.
Exhibit 8: Mean and median donation size to charities in Australia
AUD
500
400
300
200
100
0
2014 2015 2016 2017 2018 2019
Median Mean
Source: Roy Morgan Single Source 2018, CAF Australia Giving Report 2019
© Oliver Wyman 16The Case for Intermediaries | Navigating Australia’s Evolving Charity Landscape | The Funders
Australians, by nature, are charitable. According to the CAF World Giving Index, Australia ranks
fourth in the world overall in terms of giving over the last 10 years, with 68 percent of people
participating in donating money. Younger generations are increasingly giving more as they
grow older and wealthier, with Gen Z and Gen Y/Millennials having increased their support by
35 percent and 28 percent, respectively, since 2016. However, this is not necessarily enough to
offset the overall decline in fundraising returns.
Australians are particularly quick to rally behind causes and campaigns, with “caring about the
cause” being the number-one reason as to why Australians give. 30 This was seen throughout
the 2000s, such as in relation to the mass giving by the Australian public in response to the
2004 Indian Ocean tsunami, the 2019/20 Australian bushfire crisis, and, most recently, the
COVID-19 outbreak.
There is generally increasing motivation to support disaster response, homelessness, and the
environment. In 2020, the Australian Communities Report showed that 54 percent of Australian
givers are highly motivated to support disaster response organisations, moving this cause
from fourth place to first. The environment moved the most, to seventh place in 2020 from
12th in 2019. 31 Furthermore, individual Australian donors are particularly nationalistic when
it comes to giving. Two in three Australians are more inclined to support charities with a local/
national focus.
Exhibit 9: Motivation of Australian givers to donate to causes
Disaster response in Australia
54%
Animal welfare and wildlife support
47%
Children’s charities
44%
Medical and cancer research
43%
Homelessness
35%
Environment
28%
Health and illness services
26%
Source: Australian Communities Report, 2020
© Oliver Wyman 17The Case for Intermediaries | Navigating Australia’s Evolving Charity Landscape | The Funders
The desire to support a cause does however not necessarily translate to everyday giving.
Donors often do not have the time to research suitable organisations that support causes
in line with their charitable intentions, nor could they be expected to know all charitable
organisations beyond the bigger names and the ones in their local communities. They are
also more likely to give larger donations to organisations with whom they can claim tax
deductibility, more likely leaving “gold coin” donations for smaller organisations.
Philanthropy is becoming increasingly important to the not-for-profit sector
Philanthropic practices play an important part in the not-for-profit sector, with considerable
growth observed in giving from the wealthiest Australians in the last decade.
Structured funding vehicles were first introduced in Australia in 2001 through Prescribed
Private Funds (PPFs) that later became PAFs to establish private charitable trusts with
Deductible Gift Recipient 2 (DGR2) status, allowing HNWIs to make tax deductable donations
into the charitable trust, while resuming control and responsibility over the funds, and
enabling them to be passed on through generations, thereby ensuring a much longer period
of charitable support to be established.
PAFs are required to disburse a minimum five percent of their asset value annually. They are
also only allowed to distribute funds to organisations with DGR1 status (often larger, more
sophisticated, and established charities) and are further not allowed to directly fundraise.
PuAFs exist too. Being pubic, PuAFs have a similar structure to PAFs but can fundraise and
have a lower mandatory minimum disbursement of four percent.
In 2018, the total distribution of funds by PAFs amounted to $394.4 million, or around
5.5 percent of net PAF assets. 32 With regard to their contribution to charity revenues more
broadly, grants made through PAFs and other structured giving vehicles are expected to reach
around 17 percent of the total revenue of not-for-profit organisations in Australia by 2036,
a significant jump from just seven percent in 1996.
The number of PAFs has been growing steadily in Australia since their inception. There are
now over 1,650 PAFs in Australia with the average PAF being approximately $3 million in size.
© Oliver Wyman 18The Case for Intermediaries | Navigating Australia’s Evolving Charity Landscape | The Funders
Exhibit 10: Number of PAFs and PuAFs in Australia
2000-2018
1,600
1,400
1,200
1,000
800
600
400
200
0
2000-2001
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011
2011-2012
2012-2013
2013-2014
2014-2015
2015-2016
2016-2017
2017-2018
Private ancillary funds Public ancillary funds
Source: ATO
The continued increase in giving from Australia’s wealthiest is promising for local charities.
The increasing willingness of HNWIs to be public about their giving may also encourage others
to give, further driving up the amount pledged by Australia’s wealthiest. When JBWere first
compiled a list of the top 50 philanthropists in 2015-16, total giving amounted to $470 million.
Since then, the total giving sum of the top 50 philanthropists has increased significantly,
reaching $750 million most recently in 2018-2019.
© Oliver Wyman 19The Case for Intermediaries | Navigating Australia’s Evolving Charity Landscape | The Funders
Exhibit 11: Total value of Top 50 philanthropic giving
AUD millions
800
600
400
200
0
2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 (E) 2020-2021 (E)
Actual values Forecasted values
Source: AFR
Exhibit 12: Causes supported by PAFs
EDUCATION ART HEALTH
The main recipients of PAF funding differ significantly from those of mass market donations.
PAFs tend to give to more classical areas of philanthropy, with the main beneficiaries being
universities, the arts, and health causes (which are usually also quite heavily funded by the
government). For example, donations and bequests make up a maximum of three percent of
the total revenue of universities, with reportedly half of this coming from bequests, despite
universities being one of the largest recipients of PAF grant-making. 33
© Oliver Wyman 20The Case for Intermediaries | Navigating Australia’s Evolving Charity Landscape | The Funders
Given the size of donations made by PAFs, and the more sophisticated decision-making
processes involved in funding allocation, the expectation for tangible, output-driven results on
the impact of their philanthropy should come as no surprise. Identifying quantifiable results
is generally easier to achieve for more classical recipients of PAF funding, such as universities
and health causes, as opposed to other causes where the positive impact may not be as
easily “measurable”.
This creates a circular challenge for smaller organisations that may not have the capacity or
resources to provide such reporting, or where the measure of “impact” may be more complex
to derive. This in turn may prevent them from applying for such funding in the first place and
creates challenges in the acquittal process if done so, which can impact donor relationships
and the likelihood of ongoing funding. That said, there is an increasing awareness of the
appropriateness of rigid reporting requirements for grantees given the burden and relevance,
particularly when the grants are relatively small in nature.
Beyond DGR-related limitations as to who and where PAFs can give often affecting particularly
smaller organisations, many PAFs would also not necessarily have full visibility as to which
organisations are aligned to their objectives.
Following on from this is that many PAFs must keep to their strategic giving strategies,
which may have been set when the PAFs were first established and not been regularly
refreshed since. Sticking to these founding strategies, this impedes their ability to adapt to
the current events and causes as they evolve in the sector.
Lastly, decision-makers are human, and how PAFs allocate their funding is a product of the
decisions made by those allocating the funds. Unconscious biases and normative behaviour
(that is, making decisions conforming to social norms) may influence PAF decision-making.
Not surprisingly, small, community-based organisations serving communities subject to
these biases and norms (like the LGBTIQ community) are increasingly getting a smaller share
of funding.
Corporate giving is large and growing but remains concentrated and commonly
does not reach community-led organisations
The remaining piece of Australia’s philanthropic landscape is giving by private corporations and
workplace giving.
In 2019, the top 50 corporate givers accounted for $1.25 billion of the $4 billion total in
business sector giving. 34 The annual release of such lists is also having an accelerating factor
as companies try to demonstrate their commitment and impact on society more broadly.
Workplace giving, in other words, individual donations often driven by internal support groups,
has remained “stubbornly low”, with less than five percent of employees using workplace
giving when it is available, according to the JBWere Support Report 2018.
© Oliver Wyman 21The Case for Intermediaries | Navigating Australia’s Evolving Charity Landscape | The Fund-Seekers
Corporate giving in Australia is steadily increasing. Corporates give for several reasons.
Investors are increasingly looking at ESG factors, and there is increasing public focus on
the broader contribution of “big businesses” on society. In addition, society contribution is
increasingly key for employee attraction and retention, especially among millennials. There
can also be strategic benefits from partnering with organisations with a common view or
aligned goals.
How businesses give depends quite heavily on the size of the business. 35 SMEs are more likely
to make use of donations, focusing on local organisations, including recreation and community
sport, while larger organisations are more likely to support education (especially universities),
health causes, and social services organisations, especially where there is demand for and
support from employees.
Larger corporates are also tending towards more strategic and sophisticated ways of giving,
such as establishing their own philanthropic funds or creating strategic partnerships that
are aligned to the business’ objectives. For example, the Westpac Foundation focuses on
employment by supporting social enterprises and community organisations, such as small
community businesses. The Qantas regional grants program was established to add to
existing initiatives to strengthen regional communities, tying into the organisation’s roots
in outback Queensland.
For the most part, corporate organisations, especially those with large and established
funds, are looking to support Australian communities but lack the knowledge of many of
the community-led organisations. In the meantime, these smaller organisations lack the
connections and sophistication to tap into corporate funds and relationships, creating a
disconnect between the two.
2.2 THE FUND-SEEKERS
There is an increasing number of Australian charities, accelerated by
digital transformation
The number of charities in Australia is increasing year-on-year at a rate of about four percent,
based on those registered with the ACNC. 36 This has been accelerated by digitalisation, with
new technology, including social media, allowing charities to establish themselves and quickly
enter the market and gain visibility and reach.
The importance of technology and social media was exacerbated by COVID-19, when charities
were suddenly unable to conduct many of their usual in-person activities and had to look
towards other avenues for fundraising and support.
There is generally a rather low conversion rate of social media presence to donations
and online fundraising (around 11 percent of visits to donation pages themselves convert
to donations). 37 However, social media can help charities to establish themselves as the
© Oliver Wyman 22The Case for Intermediaries | Navigating Australia’s Evolving Charity Landscape | The Fund-Seekers
“go-to” for certain causes by building trust, visibility, and awareness. This is particularly
important as charities look to create better donor experiences and improve transparency
on charity activities.
There are increasing challenges to funding access
The increasing number of charities is amplifying the competition for already-limited funding
and grants. This is particularly relevant for “small” charities (annual revenue of less than
$250,000) who rely on donations and bequests for 38 percent of their revenue. In comparison,
“large” organisations (annual revenue of more than $1 million) derive 48 percent of their
revenue from the government (including grants).
Exhibit 13: Revenue composition of “small” charities
Revenue from government
12.1%
Revenue from goods and services
37.1%
Donations and bequests
26.2%
Revenue from investments
10.4%
All other revenue
14.2%
Source: ACNC, 2018
Exhibit 14: Revenue composition of “large” charities
Revenue from government
48.3%
Revenue from goods and services
6.0%
Donations and bequests
34.4%
Revenue from investments
2.4%
All other revenue
8.9%
Source: ACNC, 2018
© Oliver Wyman 23The Case for Intermediaries | Navigating Australia’s Evolving Charity Landscape | The Fund-Seekers
There are several reasons as to why smaller charities are more reliant on donations as their
main revenue stream. As previously mentioned, smaller, community-led organisations often
face capacity and skill barriers to accessing some kinds of funding, particularly grants offered
by the government and philanthropy. Grant research, application, and acquittal takes a
significant amount of time which, for small community organisations, is precious and comes
with the opportunity cost of utilising time and resources otherwise spent on activities to
address the issues they seek to solve.
Grant application and acquittal also requires expertise that volunteers may not necessarily
have. While there are resources available to “help” grant seekers writing applications,
a shortfall in such skills further impedes the access to funding. These barriers and the
increasingly competitive environment for grant seekers bring into question whether even
considering spending time on certain applications is worth the effort.
These challenges are further pronounced for LGBTIQ organisations
For charities addressing problems at the intersection of several broader social issues, these
issues can be even more pronounced. This is particularly relevant in the LGBTIQ funding
space, as a number of LGBTIQ causes intersect with issues affecting a broader audience
(such as homelessness and health services access). This can create additional challenges for
organisations that serve the LGBTIQ community as the direct beneficiary, and organisations
with LGBTIQ projects and programs but who serve a broader beneficiary group.
For LGBTIQ organisations seeking funding, the complexities of the not-for-profit landscape and
the issues it aims to address add further challenges.
1. The Australian LGBTIQ charity landscape is small and not highly formalised
Although there are organisations serving a broader audience that do also address LGBTIQ
issues, there are only 75 charities registered with the ACNC, or 0.13 percent of all charities,
who report the LGBTIQ communities in Australia as their main beneficiary. 38 Most of these
LGBTIQ charities are considered “small” (61 percent). This may be unsurprising, as many
LGBTIQ organisations exist to address quite community-specific issues.
Exhibit 15: Size comparison of Australian LGBTIQ organisations
n=75
Small ($1 million)
20%
Source: ACNC, 2018
© Oliver Wyman 24The Case
Case For Intermediaries | Navigating Australia’s Evolving Charity Landscape | The Fund-Seekers
for Intermediaries
Case study 2
Hunter Gender Alliance is a Newcastle-based charity that focuses on improving the rights,
health and lives of transgender and gender diverse people. Hunter Gender Alliance provides
support for people who experience difference in sexual formation and/or gender expression.
One of their latest initiatives focuses on promoting all gender bathrooms and raising
awareness of their importance in ensuring that trans and gender diverse people are able to use
bathrooms that best affirm their gender regardless of where they are at in their legal, medical
or social transition. 39
As a result, the lack of resources is one of the biggest challenges for many LGBTIQ
organisations in Australia when it comes to applying for and obtaining grants. The time
involved in applying for funding, the level of information required in grant applications and the
monitoring and evaluation frameworks needed for the size of grants which enable a charity to
sustainably grow, all act as barriers for LGBTIQ organisations to successfully attract funding.
2. Structural barriers make attracting and sustaining core funding a
constant challenge
Being small, many LGBTIQ organisations do not apply for DGR1 status with the Australian Tax
Office (ATO) and ACNC given the time and cost burden. This status is often only held by larger,
more established, and sophisticated charities with a clearly articulated charitable purpose.
This is important to note given that it can thereby restrict their access to more sophisticated
and larger pools of funding. Most philanthropic organisations and corporates often can only
donate to charities with DGR1 status. Individuals are also more likely to donate larger sums
of money to organisations with DGR1 status, often only giving smaller “gold coin” donations
where there is no tax-deductible benefit.
3. Lack of prioritisation and lack of knowledge of issues facing LGBTIQ community
Although LGBTIQ Australians are more likely to face economic and social disadvantage than
the general population, grant makers in Australia are currently not focusing their support on
LGBTIQ organisations and causes. According to SmartyGrants, between 2013 and 2018 only
0.7 percent of grant programs specifically sought applications for LGBTIQ projects, with only
a further 1.2 percent mentioning LGBTIQ causes. As LGBTIQ projects are reportedly not well
targeted by funding organisations, many LGBTIQ groups and those running LGBTIQ projects
are often deterred from applying in the first place.
© Oliver Wyman 25The Case for Intermediaries | Navigating Australia’s Evolving Charity Landscape | The Fund-Seekers
Further, when LGBTIQ organisations do apply for funding, they often need to define and
describe concepts and issues to people who may not identify as LGBTIQ. This is due to
a lack of understanding across the broader community, not only about the unique and
specific challenges facing the LGBTIQ community in terms of discrimination, harassment,
homelessness and poor mental health, but also about additional challenges for nuanced
subgroups and intersections of the LGBTIQ population. Clarifying these challenges adds an
additional layer of complexity to grant applications and funding access, as these issues may not
be easily described or understood in the way required by the grant-making organisation.
As a community that has historically been marginalised, and in some parts continues to be,
the perception that certain institutions may not be LGBTIQ-inclusive can act as a barrier
to LGBTIQ organisations which then prioritise their limited time and resources to apply for
alternative funding.
© Oliver Wyman 26The Case for Intermediaries | The Case for Intermediaries in Australia
3. THE CASE FOR INTERMEDIARIES
IN AUSTRALIA
As Australia’s not-for-profit and charitable landscape continues to evolve, it will
also become increasingly challenging for both donors and charities to navigate.
There is a role for intermediaries to play in connecting charities, especially small
community-led organisations, with more sophisticated sources of funding, such
as that given via philanthropy.
Intermediaries are organisations that aim to more effectively bridge the gap between donors
and charities, usually small community-led organisations. They are often run by people who
are representative of the community which the organisation exists to serve and have vast
networks of the many organisations doing “on-the-ground” work to address critical issues.
They also have strong connections with philanthropists who have supported the cause in the
past, or for whom the cause is aligned to their giving strategy.
Exhibit 16: Comparison of funding and report models
Traditional funding flow model
Government
Public- and Private
DGR1 charities
ancillary funds
High-net-worth- Non-DGR1 charities
individuals (large)
Private Non-DGR1 charities
corporations (small)
Individual donors
(mass market)
Flow of funds Reporting
© Oliver Wyman 27The Case for Intermediaries | The Case for Intermediaries in Australia
Intermediary model
Government
Public- and Private DGR1 charities
ancillary funds
High-net-worth- Intermediary Non-DGR1 charities
individuals (large)
Private Non-DGR1 charities
corporations (small)
Individual donors
(mass market)
Flow of funds Reporting
Source: Oliver Wyman
Different models of intermediaries exist within the funding ecosystem. Each of the following
can play a different role in terms of how funds are allocated and the relationship between the
donors and grantees:
• Blind funding: Donors give directly to the intermediary who then regrants the funds onto
recipient organisations based on the intermediary’s charitable purpose. The funding is
often allocated to specific “buckets” to support more targeted causes, but overall, the
donor does not have direct control as to how the funding is allocated and trusts that the
intermediary knows how to best allocate the funding. It may also be able to utilise the
intermediary’s DGR1 status, enabling the donor to give on to organisations it would not
otherwise be able to reach.
• Hybrid model: Funding is channelled from the donor to the grantee via the intermediary.
However, the donor maintains some control over how funding is allocated, such as:
–– Granting the funding on the basis that a specific cause, charity, or group is supported
–– Granting the funding to specific projects that the intermediary may be involved in.
For example, a donor may grant money to a joint project between the intermediary and
a community organisation whereby the intermediary also provides tools and resources
to also build up the organisation’s capacity and capability
• Pure advice model: The intermediary links donors with potential grantees based on aligned
goals and objectives. However, no funds flow through the intermediary. Rather, the donor
grants funding directly to the recipient organisation.
© Oliver Wyman 28The Case for Intermediaries | The Case for Intermediaries in Australia | The Unique Position of Intermediaries
3.1 THE UNIQUE POSITION OF INTERMEDIARIES
With different models available, each intermediary needs to decide which model serves their
purpose best. However, across all models there are three key areas in which intermediaries
occupy a unique position to link donors and organisations to provide value to the sector.
Unparalleled expertise and networks
Intermediaries often have extensive understanding of the complex social issues and
intersecting causes they aim to address. As they continue to grow and mature, intermediaries
accumulate extensive “on the ground” knowledge of such issues, which go on to influence their
annual giving priorities and strategies to ensure funding and resources are allocated where
they are needed most.
Intermediaries can continue to seek out, connect with, and engage smaller, grassroots
organisations who are taking targeted action to address specific issues or challenges. The
specificity and grassroots community nature of such organisations would otherwise be too
small for either an individual or a larger organisation without such knowledge and experience
to allocate time or attention to finding and supporting.
Intermediaries are also often well-connected with donors who have previously supported the
cause, or who are looking to do so. As a result, intermediaries are able to maintain a unique
position whereby they can connect grassroots organisations doing targeted work for a cause,
with larger donors who otherwise would not have been able to connect.
Case study 3
The Foundation for Rural and Regional Renewal — FRRR (Australia), established in 2000,
focuses on providing funding and capacity-building support at the hyper-local level to align
funding to community-led solutions. FRRR is well-known for their agility in responding to
events and their expertise on where support is needed the most regarding rural and regional
Australia, including COVID-19 relief, disaster resilience and recovery, bushfire recovery, and
drought relief.
© Oliver Wyman
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