Assessing the Financial Reserves of Social Service Charities Involved in Public Service Delivery

Delivering services in partnership with government is commonly considered a source of financial stability for charities and other nonprofits. However, in liberal welfare states, government funding may also heighten financial risks, where it exposes charities to competition, austerity, and rising service demand. In these contexts, publicly funded charities’ capacity to withstand financial shock is an important consideration in implementing sustainable government programs. To deepen knowledge about the factors contributing to financial capacity among charities receiving government funding, this article analyzes the financial reserves of 4,542 Australian charities engaged by government to deliver social welfare services. Logistic regression shows how younger charities, larger charities, and those with high dependence on government funding have lower odds of holding adequate reserves, indicating poorer short-term financial capacity. The findings draw attention to potential risks associated with outsourced government service delivery, while highlighting which charities most need to strengthen their financial capacity