Charities in push for access to unclaimed funds

ONE in five Australian charities and non-profit organisations are in dire financial straits but the sector's peak body believes it has found a solution - more than half a billion dollars in unclaimed superannuation, insurance policies and abandoned savings accounts.

By InvestSMART · 3 Nov 2011

By InvestSMART ·
3 Nov 2011

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ONE in five Australian charities and non-profit organisations are in dire financial straits but the sector's peak body believes it has found a solution more than half a billion dollars in unclaimed superannuation, insurance policies and abandoned savings accounts.

Twenty per cent of Australian charities, or more than 12,000 entities, are considering merging because they are worried about their future, a survey commissioned by the Community Council for Australia found. Staff shortages and funding uncertainty are key woes.

The sector, which employs 900,000 workers, more than any other area except retailing, contributes more than $43 billion to the economy each year, but struggled to secure capital and investment opportunities, council chief executive David Crosbie said.

Mr Crosbie wants the federal government to consider a proposal to move more than $500 million of unclaimed bank funds, super and insurance policies to bankroll a "big society" lending institution.

The proposal included only "dead funds" languishing in unused accounts for more than 20 years. A similar banking venture is being set up in Britain. Mr Crosbie said if Australian organisations were unable to have proper access to capital, the nation risked a dropoff in community services.

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Frequently Asked Questions about this Article…

What financial challenges are Australian charities currently facing?

Around one in five Australian charities — more than 12,000 organisations — are considering merging because they worry about their future. The sector is dealing with staff shortages and funding uncertainty, which is putting pressure on services and long-term sustainability.

What proposal has the Community Council for Australia put forward to help charities access capital?

The Community Council for Australia, led by CEO David Crosbie, wants the federal government to consider redirecting more than $500 million of unclaimed bank funds, superannuation and insurance policies into a “big society” lending institution to provide charities with better access to capital.

What exactly are ‘unclaimed funds’ or ‘dead funds’ in this proposal?

In this context, ‘unclaimed funds’ or ‘dead funds’ are bank balances, superannuation, insurance policies and abandoned savings accounts that have been unused or inactive for more than 20 years.

How much money could be available from unclaimed superannuation, insurance and bank funds?

The proposal cites more than $500 million in unclaimed bank funds, superannuation and insurance policies that could potentially be redirected to support a lending institution for charities.

Who is David Crosbie and what role does he play in the proposal?

David Crosbie is the chief executive of the Community Council for Australia. He is advocating for the federal government to consider the proposal to use unclaimed funds to bankroll a lending institution that would improve charities’ access to capital and help sustain community services.

How large is the charity sector and why does access to capital matter for everyday Australians?

The sector employs about 900,000 workers — more than any area except retailing — and contributes more than $43 billion to the economy each year. Adequate access to capital matters because charities deliver vital community services; if organisations can’t secure funding, community services risk being cut back.

Is there an international precedent for using unclaimed funds this way?

Yes. The article notes a similar banking venture is being set up in Britain, suggesting an international example of using dormant funds to support social or community lending.

If the proposal goes ahead, how might it affect charities and donors?

If adopted, the plan would redirect dormant or ‘dead’ funds into a dedicated lending institution aimed at giving charities better access to capital. That could help stabilise organisations, reduce the need for mergers, and support ongoing community services — outcomes that matter to donors and everyday Australians who rely on those services.