Working for purpose deserves its own reward

Staff skills, recruitment and retention is an area of concern that has been regularly raised with the Community Council for Australia (CCA) by charity CEOs over recent months.

Of course, charities and not-for-profits (NFPs) are not alone: a national skills shortage is already affecting productivity in Australia across the business and government sectors.

It is not unusual that staffing is one of the issues keeping CEOs awake at night, and nor is it new.

For as long as I can remember, the fact that charities and NFPs couldn’t afford to match what governments or business could pay staff has been a concern. But now the workforce challenges appear to be even more demanding.

Cost-of-living pressures seem to have pushed the remuneration side of salary packaging to the fore for many charity workers. Housing, transport, energy, and other living costs have become more expensive in recent years.

It is not surprising that many employees are seeking greater income to deal with their changing financial circumstances.

The ATO has ruled that employees of most charities and eligible NFPs can salary package up to $15,900 of their salary annually in approved household expenses, such as rent, mortgage, credit card payments and school fees.

In practice this means each year employees of eligible charities and NFPs can spend $15,900 of their salary tax-free.

This salary sacrificing used to be a major advantage for charities and NFPs.

I can well remember as a CEO in the late 1990s and early 2000s presenting salary packaging options to potential staff.

Often it was not until the figures were laid out in front of the potential recruit that they realised how much better off they would be with our remuneration package than with the slightly higher salaries offered by competing government agencies or for-profit organisations.

In 2003, average weekly earnings were approximately $920. Charities and NFPs could offer a salary sacrifice that was around one third of the average weekly salary ($15,900 or $306 a week) – in other words, one third of an employee’s salary could be tax free.

Average weekly earnings are now approximately $1840, yet charities and NFPs can still only offer the same amount in salary sacrifice – $15,900.

In practice, this means the charity employee on the average weekly income can salary sacrifice only one sixth of their income. It is still a significant benefit, but much less so than 20 years ago.

The same applies to meals and entertainment allowances for eligible charity and NFP employees, which have been capped at $2650 per annum. They offer a benefit, but a benefit that has reduced in real terms over time.

A lack of any indexing means the value of the salary sacrifice concessions to charities and NFPs has effectively been diminished over the last 20 years.

Another employee benefit that has diminished in value over recent years is flexibility.

As a charity CEO I could offer more flexibility to employees than would usually be provided by most businesses or government organisations.

For employees wanting to study, spend time with family, or care for someone, charities and NFPs could often accommodate their needs better than other workplaces.

Following the covid pandemic, when so many employees had to work from home, flexibility is no longer unusual in most workplaces. Companies are now more likely to go out of their way to meet staff needs as part of their recruitment approach across many more workplaces.

One area where charities and NFPs tend to lag other workplaces is in the provision of training opportunities.

This is not surprising, as most charities and NFPs operate on narrow margins and lack the kind of resources required to engage in leadership development and workforce capacity building at the same scale as government agencies and many businesses.

Allowances for staff training are rarely factored into contracting and other service agreements with charities. Professional development is rightly one of the indirect costs highlighted in the ‘pay what it takes’ argument.

Another important factor for many charities and NFPs is the loss of volunteers in recent years. At a time of increased competition to attract qualified staff, it’s also become more difficult to recruit and retain volunteers.

Despite all these challenges, many charities and NFPs have developed strong employee value propositions by listening to their staff and developing programs and support that are responsive and beneficial to both employees and the organisation.

Working in our sector can bring wonderful rewards beyond the individual remuneration package in terms of a sense of value and purpose in our lives.

Many of us enjoy our work not because it is fun or easy, but because we are a part of making a difference, part of driving positive change in the world. And that alone can mean charities and NFPs become employers of choice.

In a highly competitive employment market, and at a time when many charities will have to significantly increase their workforce over the next ten years to meet growing demand, there appears to be no considered investment in the workforce that charities and NFPs require in the short term, let alone in five or ten years.

Where is the workforce strategy for our sector?

A good starting point for a strategic workforce plan might be to acknowledge that some of the benefits of working in the charities and NFP sector have been significantly eroded over time.

If governments, funders, and the broader community are not prepared to invest more in our sector’s workforce capacity, the quality and accessibility of critical services across all our communities will diminish.

And that’s a scenario we should all be concerned about.

David Crosbie has been CEO of the Community Council for Australia for the past decade and has spent more than a quarter of a century leading significant not-for-profit organisations, including the Mental Health Council of Australia, the Alcohol and other Drugs Council of Australia, and Odyssey House Victoria.