Australia’s not-for-profit (NFP) sector sits at the heart of community wellbeing. These organisations feed families, advocate for vulnerable groups, respond to crises, and deliver needed services. Despite this critical role, the sector is under extraordinary strain. Demand for services is rising, funding is unpredictable, costs are escalating, and the operational environment is becoming more complex.

Each year, the Project Management Institute of Queensland (PMIQ) hosts a Project Management Day of Service (PMDoS) event. PMDoS is a one-day community service event where project management professionals and advisory providers deliver pro bono services to local charities and NFP organisations. BDO has collaborated with PMDoS for five years, assisting NFP organisations to plan critical projects and activities across a range of challenges, including diversifying funding through sponsorships and partnerships, developing governance frameworks that help prioritise projects and resources, and planning key projects.

Insights from the NFP sector

The NFP sector is navigating a complex landscape, with financial insecurity, cost-of-living pressures, workforce shortages, rising governance expectations, evolving digital transformation requirements, and challenges in impact measurement


Financial uncertainty

Financial uncertainty is the new normal

Financial insecurity is a consistent reality for many NFP organisations. Unstable or short-term funding is one of the largest challenges, with annual income fluctuations restricting long-term planning. Smaller charities face significant funding inequity, despite comprising a large proportion of the sector. Many NFPs rely heavily on philanthropy and hold reserves in low-yield assets due to risk aversion. Cash flow is often a challenge with some funding provided in arrears.


Demand is increasing faster than capacity

Increasing community demand for services has left many NFPs overstretched. This is compounded by the overarching cost-of-living crisis and rising operational costs. NFPs report a sustained increase in service demand, with the trend expected to continue.


Workforce and volunteer shortages are worsening

NFPs are faced with persistent staff shortages, skills shortages, paired with remuneration constraints and difficulty attracting and retaining talent. Some NFPs report declining volunteer numbers, impacting their operations, which are often reliant on these roles to operate. This increased dependence on limited resources heightens the risk of burnout, impacting workforce and organisational wellbeing. Value propositions of these organisations need to be genuine, clear and meaningful.


Cyber security and digital capability lag behind

Improving cyber security remains a key opportunity for many NFPs, with high cyber incident rates in the sectors of social services, health and residential aged care, and education. Many NFPs underinvest in digital resources that could mitigate these risks. AI is an emerging area that needs strong governance to reduce information fragmentation, to minimise risks, and to enhance productivity in order to realise workforce capacity improvements. The cost of innovation and implementation of new technologies needs to be well considered and planned to ensure return on investment in a risk-managed manner.


Impact measurement challenges

Some NFPs struggle to articulate their mission and value proposition in a crowded sector. Strategic planning can be challenging with shifting compliance expectations and resource constraints. Some organisations lack a clear system for measuring social or economic impact, limiting their ability to communicate progress and secure ongoing funding.

Enabling long-term impact in the NFP sector

While the challenges facing NFP organisations are complex, they can be solved. With the right support and direction, these organisations can strengthen their impact, build resilience, and achieve long-term sustainability.

Building sustainable financial models

Depending on the individual NFP’s situation and with heightened global inflation, rolling term deposits may no longer be an effective investment strategy for long-term financial growth and sustainability. However, the financial sustainability of NFP organisations can be strengthened through the development of diversified funding strategies, revenue models and having effective cash reserve and investment policies in place. Long-term budgeting, scenario modelling, cashflow forecasting, and seeking advice and education for the board on investment strategies for surplus funds can further support long-term financial health. Ensuring grant readiness and fundraising capacity building can also improve finances.


Strengthening strategy and organisational effectiveness

Developing strategies beyond day-to-day survival is key to building long-term organisational resilience. Strategic planning helps leaders align priorities and focus efforts. Organisational reviews, business model development and capability assessments ensure strategies can be effectively implemented. Seeking advice on strategic partnerships or merging with other organisations can further support NFP growth and resource sharing.


Enhancing governance and risk management

Strengthening governance and risk management capability can allow NFPs to operate with greater accountability. Key activities NFPs can undertake include defining risk management frameworks, developing risk appetite statements, and regularly monitoring risks and issues.


Supporting digital transformation and cyber security

Digital transformation, data protection, information management and cyber security are critical to expanding and protecting NFP service delivery. Conducting cyber security reviews and response planning can reduce exposure to cyber threats and support compliance. The development of digital transformation strategies to modernise systems can enhance service effectiveness. Donor engagement can also be supported through the implementation of systems and data analysis to unlock insights.


Addressing workforce and culture challenges

People and culture support, including HR advisory, workforce planning, performance management, and recruitment strategies, can help NFPs build sustainable workforces. Leadership development workshops and cultural assessments can be effective in embedding shared values. NFPs can also draw on volunteer management and stakeholder engagement services to improve workforce retention and strengthen key organisational relationships.


Impact measurement and evaluation

Clearly defining an NFP’s social and economic impact can assist in articulating their value proposition and demonstrating accountability to funders, stakeholders, and supporters. NFPs can further benefit from building reporting and measurement systems to track performance and evidence impact.


Benefits realised through partnership and support

Seeking external advice and engaging in partnerships can permit NFPs to actively meet current and future challenges. Key benefits of such engagements include:

  • Access to specialist expertise: Obtaining specialised knowledge and experience can fill capability gaps and accelerate progress on key initiatives
  • Short-term capacity uplift: Seeking external support can assist organisations in progressing critical initiatives without permanent resourcing requirements
  • Independent perspective: External voices that can identify blind spots and challenge core assumptions permit boards and leaders to make more informed decisions
  • Enhanced organisational capability: Improving organisational systems and operating models better supports service delivery and enhances social impact
  • Increased efficiency: Streamlining processes and focusing effort on high-impact work can maximise the use of limited resources
  • Stronger funding and investment cases: Development of clear strategies and evidence-based plans can strengthen grant applications and funder confidence.

The path forward is collaboration, not competition

The future of the not‑for‑profit sector depends on collaboration over competition, underpinned by clear strategy and capability. With effectively tailored support, Australia’s NFPs can shift from being overstretched responders to resilient, high‑impact organisations that drive long‑term social change. If the not‑for‑profit sector fails, the consequences will be felt far beyond individual organisations—impacting government, communities, our friends and families, and ultimately all of us.

To learn more about how BDO supports not-for-profit organisations to build capability, resilience and impact, please contact our not-for-profit team.

Key takeaways

NFPs face rising demand amid financial and workforce strain
  • Not‑for‑profit organisations are under pressure from growing service demand, unstable funding, rising costs and worsening staff and volunteer shortages, limiting their capacity to plan and scale.
Governance, cyber and digital capability gaps are increasing risk
  • Heightened compliance expectations, climate and cyber risks, and underinvestment in digital capability are creating material governance and operational challenges across the sector.
Long‑term impact requires strategy, collaboration and capability uplift
  • Sustainable funding models, stronger governance, digital transformation and external partnerships can help NFPs move beyond survival mode and build long‑term resilience and social impact.

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