Mark Peterson
Audit & Assurance Partner, Chair of BDO NZ's Audit Technology Group
For the first time, our BDO Business Wellbeing Index survey has captured sentiment across Not-for-Profit business leaders, and it’s clear that this is a sector with mixed fortunes. Although overall business performance sentiment is relatively low, with 50% of business leaders feeling positive about this measure in the past two weeks, there are certain metrics that leaders feel particularly confident about.
While proposed changes to tax charities were in place at the time of the survey, the recent step back by government makes this less of an issue. However, the Government is still looking at ways in which additional tax revenue could be generated from charities through mutual association, something Not-for-Profit leaders will be keeping a watch on.
Funding challenges have been a talking point for New Zealand’s charity sector for several years, so it’s unsurprising to see just 22% of business leaders currently feeling positive about more specialist functions, such as cyber security, and business growth. Charities often operate with limited budgets, which can result in their resources being stretched thin. Consequently, cyber security might receive less attention as other priorities take precedence. And with only 17% of business leaders expecting to feel positive about business growth in six months’ time, it seems many Not-for-Profits are more focused on staying afloat, rather than expanding.
Interestingly, Not-for-Profit business leaders broadly expect to feel more positive in six months’ time than they do now. Not only is overall business performance sentiment stronger when looking to the future, but expectations are much higher for Not-for-Profits’ business pipeline, risk management profile, and environmental and social impact on communities around them – the latter being a key success factor for purpose-driven organisations.
While financial performance remains essential for Not-for-Profits, their leading purpose for being in business is typically more about making a difference and improving communities and wider society – so it’s encouraging to see such high expectations for this measure in the future. However, the ability of Not-for-Profits to make an impact often relies on finances. The BDO Business Wellbeing Index shows Not-for-Profit business leaders are not feeling overwhelmingly positive about their future finances, which may see them refocusing on core business rather than trying to fund additional out-of-scope projects from cash reserves.
While operating challenges remain, Not-for-Profits will be hopeful that New Zealand’s reduced inflation levels will soon filter through to consumers’ discretionary spending, and that households channel some of that cash into charitable donations.
Mark Peterson
“Not-for-Profits have been adversely impacted by New Zealand’s challenging economic conditions in recent years, so it’s encouraging to see there are some areas that leaders are now feeling positive about. With lower inflation, we may soon see more money that can be channelled into donations from the private sector – but the sector will continue to rely on government support and other funding models to help keep their operations viable. We’re seeing a clear intention from government holding stronger accountability for outcomes associated with funding. With less taxpayer money, increased funding through government contracts is less likely and where measures aren't being delivered, contracts to service providers may be revised."