A "substantial number" of the nation's 600,000 not-for-profits and charities risk going under unless the federal government develops a significant rescue package, the Australian Institute of Company Directors has warned.
A day after Reserve Bank of Australia governor Philip Lowe predicted the economy would shrink by 10 per cent in the first half of the year, AICD chief executive officer Angus Armour said many not-for-profits and charities would struggle to survive without government help.
Mr Armour said the assistance provided by the government so far, though welcome, was not enough for many organisations to stay afloat.
The sector includes aged care providers, disability services, legal assistance, environmental groups, homelessness services, Indigenous organisations, sporting groups and religious bodies. It employs more than a million people and accounts for around 4 per cent of national output.
The AICD boss said many organisations were experiencing "unprecedented" demand for their services at the same time as donations, fund raising and other sources of revenue were falling and volunteer numbers were declining.
"We need to adapt to a surge in demand for many not-for-profit community services at a time when it will be difficult - if not impossible - for many NFPs to financially withstand the impact of COVID-19 without substantial additional support," Mr Armour said.
"Increased demand, decreased donations, loss of access to volunteers, inability to hold fundraising events and, in some cases, significant loss of operating revenues are examples of the difficulties this sector is facing."
Assistant Minister for Finance, Charities and Electoral Matters, Zed Seselja, said the government "sincerely values" the work being done by charities and not-for-profits, particularly the support they provide at times of crisis.
It has already announced an extra $200 million for community organisations providing food and emergency relief and an extra $24 million for mental health providers including Beyond Blue and Lifeline.
Senator Seselja said the sector also had access to cash flow assistance and small business guarantee schemes, and charities can qualify for the JobKeeper wage subsidy scheme if they suffer a decline of turnover of 15 per cent or more, which is half the threshold facing small and medium businesses.
Senator Seselja said the measures already taken constituted significant support to the sector, but Mr Armour said that because not-for-profits and charities were usually structured differently to business, much of this assistance was inaccessible.
He called on governments to immediately bring forward the payment of committed funds, extend existing financing arrangements for 12 months and relax acquittal criteria tied to measures such as the number of people physically attending organisation outlets for assistance.
Mr Armour said the government should also consider measures to help charities and not-for-profits access bank lending and a 12-month moratorium on tax, charges and rental fees.
"It is vital for the Australian economy, and society, to maintain the viability of the NFP sector during these unprecedented times," he said.
Senator Seselja did not respond directly to Mr Amour's suggestions but said he was working very closely with the sector and the government would "continue to engage with charities over the days and weeks ahead".