Across New Zealand, charities and not-for-profit organisations play a critical role in supporting communities, delivering essential services, and helping some of our most vulnerable people. Whether it is providing food assistance, housing support, mental health services, youth development programmes, or community advocacy, the sector is often called upon to step in where need is greatest.
Yet while demand for services continues to rise, many organisations are finding themselves under increasing financial pressure.
The reality is that charities and not-for-profits are facing many of the same cost challenges as the private sector, but often without the same ability to generate additional revenue or pass costs on to customers. Rising insurance premiums, higher utility costs, increased rents, growing compliance requirements, and ongoing inflation have significantly increased the cost of delivering services. Every dollar spent on overheads is a dollar that cannot be directed toward frontline support.
At the same time, organisations are under pressure to ensure their employees are paid fairly and competitively. The not-for-profit sector has traditionally relied on people who are deeply committed to making a difference, often accepting lower salaries than they might earn elsewhere. However, as the cost of living continues to rise, charities can no longer assume goodwill alone will attract and retain skilled staff.
This presents a significant challenge. The sector competes with government agencies and private businesses for talented professionals, yet many organisations operate under funding agreements that have not kept pace with increasing employment costs. When wages rise across the economy, charities must follow if they want to retain their people, but the funding to support those increases is not always available.
The same challenge applies to KiwiSaver contributions and other employment-related costs. While stronger retirement savings and better employment conditions are positive outcomes for New Zealand workers, they create additional financial obligations for organisations already operating on extremely tight budgets. Unlike commercial businesses, charities often have limited flexibility to absorb these increases.
Adding to the pressure is the growing demand for services. During periods of economic uncertainty, more individuals and families turn to community organisations for support. In many cases, the very conditions that increase operating costs for charities are also driving increased demand for their services. Organisations are therefore facing a double challenge: costs are rising at the same time as the need for support grows.
Many not-for-profit leaders are finding themselves making difficult decisions. Investments in technology, infrastructure, and organisational capability may be delayed. Vacant positions are not always replaced. Programmes are stretched further than intended. In some cases, services may be reduced despite demand continuing to increase.
This is not sustainable in the long term.
If New Zealand values the contribution of its not-for-profit sector, then we must recognise the financial realities organisations face. Funding arrangements need to reflect the true cost of service delivery, including rising wages, KiwiSaver contributions, compliance requirements, and inflationary pressures. Expectations cannot continue to grow while funding remains static.
The sector has demonstrated remarkable resilience, innovation, and commitment through challenging times. Every day, charities and community organisations deliver outcomes that strengthen communities and improve lives. However, their ability to continue doing so depends on their financial sustainability.
Supporting the not-for-profit sector is not simply about supporting organisations. It is about supporting the people, families, and communities who rely on them. As costs continue to rise and expectations continue to increase, we need a broader conversation about how we ensure the organisations doing some of New Zealand’s most important work have the resources they need to thrive, not just survive.