Keeping your charity afloat during challenging economic times

It is no secret that one of the most pressing current issues is the cost-of-living crisis, here in Australia and across the world. In times of economic decline, charities and not-for-profit (NFP) struggle to fulfill their missions and maintain financial stability. These challenging circumstances necessitate strategic planning, adaptability, and a keen understanding of the legal landscape.

It is vital that charities remain resilient and find new ways to drive donations and build their brand, so they can continue to support those who need it most. Here are some actions you can take to safeguard your charity or NFP.

Review and Optimise Governance Structures

It is crucial for charities and NFPs to evaluate and optimise their governance structures. By conducting a comprehensive review, organisations can ensure compliance with legal obligations, enhance transparency, and mitigate potential risks. Assess your organisation’s bylaws, policies, and procedures to ensure they align with your current practices and future strategy.

Diversify Funding Sources

Overreliance on a single funding source can put charities and NFPs at greater risk. To stay ahead, it is essential to diversify funding sources and explore alternative revenue streams. Legal advisors can help identify opportunities, such as grant programs, partnerships, fundraising events, and earned income ventures, while ensuring compliance with relevant regulations.

Monitor and Adapt to Regulatory Changes

In times of economic turbulence, governments may implement new policies, tax laws, or reporting requirements that impact the non-profit sector. Staying informed about these changes is crucial. Be sure to monitor regulatory developments, your compliance obligations, and potential risks associated with new legislation. 

In addition, it is paramount that your organisation is on top of its reporting. Earlier this year, the ACNC revoked the registration of 700 charities for repeatedly failing to submit annual information statements and comply with other reporting requirements. 

While the ACNC is typically more collaborative than other regulators, it has publicly stated that ‘accountability and transparency are critical to maintain public trust and confidence in the sector’ and so will no doubt be ensuring charities comply with their regulatory obligations.

Prioritise Donor and Stakeholder Communication

Transparent and effective communication with donors and stakeholders is always important, but especially critical now. Regularly update supporters about your organisation’s activities, financial health, and impact. During this time, your organisation should seek to ensure compliance with privacy laws, maintain ethical fundraising practices, and communicate any necessary adjustments to your programs or services due to economic challenges.

Proactively Manage Financial Risks

As the economy slows, managing financial risks becomes imperative. Conduct a thorough financial analysis and implement risk management strategies tailored to your organisation’s needs. Legal advisors can assist in drafting and negotiating contracts, leases, and financial agreements to safeguard your organisation’s interests and preserve financial stability.

Protect Intellectual Property and Brand

Safeguarding your organisation’s intellectual property (IP) and brand is essential, especially during challenging periods of financial decline. Consult legal professionals to secure trademarks, copyrights, and patents, ensuring the protection of your organisation’s assets. Additionally, legal guidance can help enforce IP rights and prevent unauthorised use of your organisation’s name and brand elements.

Embrace Technology and Innovation

Leveraging technology and embracing innovation can provide significant advantages, particularly during challenging economic times. Explore digital platforms, online fundraising tools, and virtual engagement strategies to expand your reach, enhance efficiency, and diversify revenue streams. Establish a social media and digital marketing strategy to help promote your organisation.  

Conclusion

As the economy suffers, demand for charitable aid heightens. However, fewer, and fewer charities are equipped to manage the overwhelming strain being placed upon them.  During these times, charities and NFPs face an array of challenges that require strategic planning. At FAL Lawyers we are committed to supporting the non-profit sector, we offer legal guidance, to help you navigate these complexities.

Book a free consultation today, to discuss your charity or not-for-profit organisation with our team of experts at FAL Lawyers. We offer our services on a fixed fee basis to help accommodate budget constraints.

Note: The contents of this article do not constitute legal advice and should not be relied upon as such. If this article pertains to any matters, you or your organisation may have, it is essential that you seek legal and relevant professional advice.