Whether it is delivering early learning for our youngest, providing education for our adults, caring for our elderly and those who are differently abled, supporting those who are most vulnerable in our community from here and abroad, advocating for change, fundraising for a passion, driving changes for the environment, promoting the interests of members and the value of our professions, showcasing our rich arts and cultural identity or promoting connection through sports and social activities – this unwavering commitment to the cause can never be overstated.
Grant Thornton is proud to be a leader in supporting the for-purpose sector. We work with organisations to navigate challenges and to help them achieve their mission.
One of the challenges for social impact organisations is to deliver their purpose in an increasingly dynamic and data-driven space. Stakeholders, including members, funders, governments or investors, are craving outcomes-based decision-making. Whether it be businesses advancing their ESG agenda or social impact organisations advancing their purpose, the realisation of social impact and the test of one’s social identity is dependent on the harmonisation of strategic, financial and social objectives coupled with the ability of organisations to effectively measure and report the outcomes to their stakeholders.
This is all happening against a backdrop of increasing demand for services and limitations on how these can be delivered.
COVID has seen an increase in demand for services in some areas – like mental health and domestic violence support. We risk losing valuable services and skills that we may not be able to use to their full potential now, but will require again once a sense of normalcy is reclaimed. We are seeing some social impact organisations challenge the way that they provide services and support, while others are forming alliances or consolidating with like-minded organisations to better weather the current uncertainty.
Watch On-Demand how NFPs have transformed through COVID
The structure, purpose and accounting for social purpose entities is considerably different in practice to the private sector. In response, the Australian Accounting Standards Board (AASB) has historically issued multiple industry-specific standards to support consistent financial reporting across the not for profit sector – for instance volunteer services can be excluded from recognition or recognised either as an expense or as an asset. Even within the specific guidelines for the sector, there is complexity – choices that need to be made based on the unique circumstances of your entity.
Learn more about financial reporting for Not for Profit entities
Fringe benefits and salary packaging is an important remuneration tool for the not-for-profit sector – benefits that came under pressure in 2020. For instance, many not-for-profit employers offer salary packaging of meal entertainment to employees, such as health care workers, within an annual capped amount. With the closure of restaurants for dine-in options, it became almost impossible for employees to access meal entertainment salary packaging in the traditional way. Presented with this problem, we proposed a solution to the Australian Taxation Office which they have since provided guidance on. For 2021, employees can use their meal entertainment salary packaging cap on takeaway meals, provided the supplier previously had a dine-in option. This includes purchases from those suppliers through delivery companies.
Learn more about our Fringe Benefits Tax team
Not for profits and charities around Australia are highly reliant on donations and bequeaths to keep their programs running – with a significant proportion of their funding coming from trusts. However, it’s important to keep abreast of changes to State and Territory legislation as it can directly impact future funding. As an example, the question of whether a trustee of a discretionary or testamentary trust can make a distribution to a particular charity can actually be quite difficult for the trustee to resolve if the trust deed includes exclusionary clauses to prevent it from becoming subject to foreign surcharges.
Read more about making trust distributions to charities
We continually hear from our not-for-profit clients about the barriers and challenges that exist in pursuing outcomes measurement as part of their broader organisational strategy – for example, lack of measurement tools, funding, skillset and knowhow, particularly when tackling large-scale issues such as homelessness. As a sector, however, the benefits of obtaining this data are hard to ignore – measuring achievement of mission, demonstration of impact, business improvement, resourcing analysis, just to name a few. To help simplify the process, Grant Thornton Australia together with Professor David Gilchrist of the University of Western Australia (UWA) Business School have invested significantly in the Outcomes Measurement Research Agenda.
How can you demonstrate impact in your organisation?
Established social impact organisations as well as new entrants are faced with increasing regulatory and reporting requirements. As you grow, the more complex it becomes. Our tax, risk and audit teams understand how to navigate the ambiguity of a sector that traverses the wide diversity of for purpose entities operating throughout the various sectors.
We’re pleased to invite you to watch our Not for Profit Virtual Seminar where we distil the key regulatory and industry updates impacting the not for profit sector for sector leaders, ahead of the new calendar year. Developed specifically for NFP Board and Executives, our webinar covers regulatory agenda, tax updates, governance concerns, with our industry experts accompanied by guest speakers from the ACNC and ATO.
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