An article in the UK press recently caught our attention, aligning as it did with comment in an earlier article on this site. The headline stated: “Charities at risk due to donors’ reluctance to cover ‘unexciting’ running costs.” Suspecting this to be the case in NZ, we searched online to determine whether this issue really is also relevant in the New Zealand context.
We found that there is strong evidence that the challenge described in the UK is mirrored in New Zealand.
Funding Challenges and Donor Reluctance
- New Zealand’s charity sector faces a difficult financial landscape, with reduced funding from traditional sources and increased competition among approximately 29,000 registered charities, in addition to numerous public-good organisations not registered with DIA Charities. Many organisations report that securing reliable, stable funding is one of their greatest challenges.
- Charities frequently struggle to cover operational and administrative costs, as donors and funders tend to prefer supporting tangible projects or direct service delivery rather than “overheads”.
- Fundraising is becoming more expensive and competitive, with some charities spending up to 25–30% of donations on fundraising itself, further reducing the funds available for core operations.
- Surveys and sector commentary highlight that donors in New Zealand are motivated by seeing a direct impact from their giving and want assurance that their money is “well used” and reaches the intended cause. This preference makes it harder for charities to secure funding for essential but less visible costs such as administration, staff salaries, and infrastructure. This closely mirrors the UK situation, where donors are similarly reluctant to fund running costs, despite the fact that sound administrative practices are vital for well-run organisations.
Along with these funding challenges, New Zealand’s exceptionally high charity-to-population ratio also has significant implications for the efficiency of charitable services:
| Country | Charity to population ratio |
|---|---|
| New Zealand | 1:183 |
| USA | 1:221 |
| UK | 1:396 |
| Australia | 1:460 |
The large number of charities creates intense competition for a relatively stagnant pool of donations and government grants. “In 2022, philanthropic funding in New Zealand totalled around $3.8 billion, with government grants making up 57% of this amount. However, these figures are not keeping pace with inflation and the growing needs of communities” (2). In addition most (60%?) funding is captured by a few large organisations, leaving many smaller and grassroots charities struggling to survive. These smaller charities often lack the profile or resources to compete for limited funding, and are forced to focus on survival – securing enough funding to continue – rather than long-term impact or innovation.
Up to 74% of charities reportedly provide services in overlapping areas. Overlapping missions and a lack of coordination mean that many charities offer similar services in the same communities. This duplication leads to confusion for beneficiaries, wasted resources, and fragmented impact.
The high number of charities spreads the pool of skilled professionals and volunteers thinly. Smaller organisations, in particular, struggle to attract and retain qualified and experienced staff, leading to overburdened teams and reduced service quality.
Conclusion
The pattern seen in the UK – where charities are at risk due to donors’ reluctance to cover running costs – is clearly echoed in New Zealand. The sector faces significant funding constraints, and the preference for project-based giving over operational support is a well-documented challenge for public-good entities across New Zealand.
Funders need to realise the need to support long-term, sustainable projects and to recognise the importance of reasonable operational costs in delivering effective services.