Omura, Teruyo and Forster, John (2011) The sustainability of charitable organisations. In: 12th Asian Accounting Academic Association Annual Conference, 8-12 Oct 2011, Bali, Indonesia.
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The major problem of sustainability for most charities and philanthropic organisations is that they do not produce commercially viable outputs. The problem is highlighted by the fact that many not-for-profit organisations that do produce a saleable commodity, such as sports clubs, stock exchanges, insurance clubs and community banks frequently convert to for-profit organisations. Those that cannot or do not produce saleable commodities rely on donations from individuals, organisations and governments, for which they cannot usually offer any direct exchange of goods. Nevertheless these organisations provide vital services such as family welfare services and counselling, and emergency relief. They provide both public and private goods that caring societies desire, but these providing organisations have enormous difficulties is sustaining themselves.
Charitable organisations carry out fundraising as a source of income. They operate in an increasingly competitive context where being a sustainable organisation has emerged as a critical issue. However, sustainability studies are virtually absent in the not-for-profit (excluding government) sector. It is believed that this is either the first or one of the first studies of economic sustainability of charitable organisations. It uses organisational data.
For sustained donations these organisations rely on either some continuing form of self-interest on the part of donors or, if the self-interest motive is not available, some form of altruism. This problem is further compounded by the existence of competition for funds among charities operating in the same areas e.g. disaster and emergency relief, medicine and family welfare. It is argued in this paper using data from Australia that competition for funds diminishes sustainability.
Non-profit organisations compete for donations in two ways. The first is by an efficient and effective service to the charitable organisations‘ recipients. This is often but not always directly observable by the donating public. The second form of competition is the public provision of information, services and marketing and
promotion to potential donor. Competition in this form, of course, raises the fundraising expenditures of charitable organisations.
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