tag:theconversation.com,2011:/us/topics/notforprofit-1067/articlesNotforprofit – The Conversation2020-06-10T12:17:08Ztag:theconversation.com,2011:article/1387032020-06-10T12:17:08Z2020-06-10T12:17:08ZWhy some nursing homes are better than others at protecting residents and staff from COVID-19<figure><img src="https://images.theconversation.com/files/340618/original/file-20200609-21191-1k6d3gy.jpg?ixlib=rb-1.1.0&rect=116%2C85%2C2002%2C1438&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Life Care Center in Washington state was at the center of the U.S. outbreak back in early March. </span> <span class="attribution"><span class="source">AP Photo/Ted S. Warren</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>The coronavirus pandemic <a href="https://www.theguardian.com/world/2020/may/16/across-the-world-figures-reveal-horrific-covid-19-toll-of-care-home-deaths">has posed a serious threat</a> to the U.S. long-term care industry. A <a href="https://www.nytimes.com/interactive/2020/05/09/us/coronavirus-cases-nursing-homes-us.html">third of all deaths</a> have been nursing home residents or workers – in some states it’s more than half. </p>
<p>Yet some long-term care facilities have managed to keep the virus at bay. For example, <a href="https://www.latimes.com/california/story/2020-05-10/coronavirus-california-veterans-safe-homes">veterans’ homes in California</a> have seen only a handful of cases among roughly 2,100 residents. And preliminary results of our research on COVID-19 cases and deaths in nursing homes also support the idea that some homes are doing better than others at protecting clients and staff from COVID-19. </p>
<p>Why might this be?</p>
<p>As <a href="https://scholar.google.com/citations?user=07GtNFsAAAAJ&hl=en&oi=ao">scholars</a> of <a href="https://scholar.google.com/citations?user=uNjxGccAAAAJ&hl=en&oi=ao">public</a> <a href="https://scholar.google.com/citations?user=aH0e0H4AAAAJ&hl=en&oi=ao">management</a>, we have found that three factors likely play the biggest role in determining how well a nursing home responds to a disease outbreak: whether it operates for profit, the degree of government regulation and the quality of management.</p>
<h2>Profit versus quality care</h2>
<p>More than 15,000 nursing homes currently operate in the U.S. Most of them <a href="https://doi.org/10.1093/jopart/mux003">are for-profit facilities</a> backed by private investors, but a small share are operated by nonprofits or government. </p>
<p>For-profit companies selling the same product or service typically perform optimally in <a href="https://www.investopedia.com/terms/p/perfectcompetition.asp">what’s known as a perfect market</a> in which there’s plenty of competition and consumers have comprehensive information. More importantly, consumers are able to act on the information.</p>
<p>The nursing home industry, however, is <a href="https://doi.org/10.1111/j.1540-6210.2008.00906.x">far from a perfect market</a>. Residents – who require constant assistance due to serious physical and cognitive limitations – are often unable to differentiate between good and bad care, advocate for themselves or choose a better facility. Their care is often arranged and paid by others. </p>
<p>As a result, for-profit homes, which are <a href="https://doi.org/10.1097/01.MLR.0000100586.33970.58">motivated to keep costs low and profits high</a>, tend to be understaffed and, on average, <a href="https://doi.org/10.2190/EBCN-WECV-C0NT-676R">provide lower-quality care</a> compared with public and nonprofit homes. </p>
<p>In contrast, nonprofit and public homes <a href="https://doi.org/10.1002/pam.20327">tend to put higher emphasis on patient-centered care</a> and reinvest their profits into better physical spaces, equipment and responsiveness to clients’ needs. </p>
<p>The numbers back this up. Our ongoing research shows that government inspection of for-profit homes found nine violations in an average regulatory inspection cycle, compared with 6.4 at nonprofit homes and 6.8 at government homes. These trends have largely remained constant during the past <a href="https://doi.org/10.1111/j.1540-6210.2008.00906.x">two decades</a>. </p>
<p>As we examine the data on COVID-19 cases in nursing homes reported by states in real time and link them to the federal data on regulatory violations, we are observing more COVID-19 cases per capita in for-profit than nonprofit or public homes. So far, we’ve looked at homes in Illinois, Nevada, Colorado, South Carolina, Oklahoma and Oregon.</p>
<p>While it is too early to draw firm conclusions, it appears likely that fewer regulatory violations will correlate with success in managing the outbreak.</p>
<h2>Government regulation is critical</h2>
<p>Federal and state government regulation aimed at protecting residents is another critical factor that influences nursing homes’ ability to combat infection. </p>
<p>All nursing homes that accept Medicare or Medicaid must comply with federal regulations, while states are able to set their own rules for all facilities in addition to the federal minimums. A closer look at the variation among states offers strong evidence that more stringent regulation leads to better care quality. </p>
<p>That is a key finding of <a href="http://dx.doi.org/10.2139/ssrn.3604523">our recent study</a> on a voluntary federal program that provides <a href="https://help.checkr.com/hc/en-us/articles/360001910267-What-s-the-role-of-fingerprinting-or-biometrics-in-background-checks-">biometric</a> criminal background checks of front-line care workers such as nurses and health care aides. About half of U.S. states have signed on to the <a href="https://oig.hhs.gov/oei/reports/oei-07-16-00160.asp">National Background Check Program</a>. Nursing homes in those states have fewer deficiencies and higher 5-star ratings. </p>
<p>Staffing requirements in nursing homes are regulated too. <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3604822">We looked at the impact</a> of having more high-skilled nurses on the quality of care in counties hit hard by Hurricane Katrina in 2005. Facilities with a higher share of registered nurses on staff experienced little to no impact on <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3604822">residents’ health outcomes, such as mobility or personal hygiene, as well as on the number of regulatory violations</a>, while most that witnessed significant evacuations saw a large increase in violations and deteriorating health. </p>
<p>The federal government <a href="https://theconsumervoice.org/uploads/files/issues/Federal-Law-Regulations-Final.pdf">sets a minimum requirement</a> of one registered nurse on staff at least eight hours a day. States are allowed to set their own higher standards – yet even these <a href="https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4833431/pdf/hsi-9-2016-013.pdf">are considered insufficient</a> by experts. </p>
<p>One key problem is that many state regulations emphasize staffing levels, rather than staffing mix, which means there is little incentive for homes to hire more skilled and expensive personnel. While federal rules <a href="https://www.cms.gov/newsroom/press-releases/cms-finalizes-improvements-care-safety-and-consumer-protections-long-term-care-facility-residents">issued in 2016</a> would have strengthened staffing requirements, including one that required homes to have an infection specialist on staff, they have yet to take effect, and the Trump administration <a href="https://www.nytimes.com/2020/03/14/business/trump-administration-nursing-homes.html">has taken steps to weaken them</a>. </p>
<h2>Better management</h2>
<p>Our research also suggests that management plays a critical role in determining the level of care quality – and ultimately a facility’s ability to withstand COVID-19. Specifically, we have identified several key factors that make a meaningful difference and are certainly worth considering by those looking for a home for their loved one.</p>
<p>For example, nursing home administrators who are more innovative and constantly <a href="https://doi.org/10.1007/s10916-014-0022-4">looking for new ideas</a> <a href="https://doi.org/10.1093/jopart/mux003">tend to run better homes</a>, <a href="https://spaef.org/article.php?id=564">keep costs lower</a> and address organizational flaws. In addition, homes with managers who have been around for longer periods of time <a href="http://www.doi.org/10.1177/0095399719874755">usually deliver better quality of care</a> because this makes it easier to buffer external threats – such as a disease outbreak. </p>
<p>We’ve also found that homes that engage residents and their families and apply their feedback in decision-making <a href="https://doi.org/10.1177/0275074019854172">boast higher ratings</a> and fewer health violations. </p>
<h2>Understanding the pitfalls</h2>
<p>Billionaire investor and philanthropist Warren Buffet is <a href="https://www.forbes.com/sites/zackfriedman/2018/10/04/warren-buffett-best-quotes/#f85d0bc42616">credited with saying</a> that it is only when the tide goes out that you discover who has been swimming naked.</p>
<p>COVID-19 seems to be having this kind of effect on nursing homes, exposing which ones were in a better position to handle a pandemic. And that’s why it’s essential for more states that are <a href="https://www.aarp.org/caregiving/health/info-2020/coronavirus-nursing-home-cases-deaths.html">not publicly sharing their COVID-19 cases or deaths in nursing homes</a> – such as Alaska, Hawaii and Idaho – to begin doing so.</p>
<p>This will allow more research to be done and ensure that the U.S. nursing home industry is adequately prepared for the next pandemic when it inevitably comes. </p>
<p>[<em>Get facts about coronavirus and the latest research.</em> <a href="https://theconversation.com/us/newsletters?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=upper-coronavirus-facts">Sign up for The Conversation’s newsletter.</a>]</p><img src="https://counter.theconversation.com/content/138703/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The authors do not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and have disclosed no relevant affiliations beyond their academic appointment.</span></em></p>While nursing homes have accounted for more than half of COVID-19 deaths in some states, they’ve barely been a factor in others. Three experts explain why.Anna Amirkhanyan, Associate Professor of Public Administration and Policy, American University School of Public AffairsAustin McCrea, Ph.D. Student, American UniversityKenneth J Meier, Distinguished Scholar in Residence Department of Public Administration and Policy, American UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/329072014-11-06T03:09:29Z2014-11-06T03:09:29ZWhy women should not use the non-profit sector to reach corporate boardrooms<figure><img src="https://images.theconversation.com/files/62786/original/jd36bybs-1414369302.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Australian women on ASX200 boards often have strong backgrounds in law, finance, accounting and investment banking.</span> <span class="attribution"><span class="source">www.shutterstock.com</span></span></figcaption></figure><p>Australia is one of the worst performers in board gender diversity. In an attempt to combat this, women have been encouraged to head to the not-for-profit sector to gain board experience as a stepping stone to the male-dominated corporate boardroom. Yet this advice is not actually supported in practice. Research shows it is still a corporate career that counts with the big boards.</p>
<p>The opening line on the <a href="http://www.womenonboards.org.au/resources/boards/third_sector.htm">Women on Boards</a> website is:</p>
<blockquote>
<p>The Third Sector is usually a good hunting ground for women seeking directorships. It offers personal satisfaction and rewards as well as valuable experience and networks to up and coming directors. Most ASX directors have at least one Third Sector Board in their portfolio. </p>
</blockquote>
<p>In her top five strategies for cracking a corporate board, research professor <a href="http://www.unisa.edu.au/Global/business/centres/chrm/docs/press/women-on-boards.pdf">Carol Kulik</a> suggests starting small and volunteering on a local charitable board.</p>
<p>Korn Ferry managing director <a href="http://www.afr.com/p/opinion/work_longer_and_rush_slowly_into_xwoJgYQOpK67ZSrmZADu4N">Katie Lahey</a> recently included in her top ten tips for getting a board seat, experience on non-profit, government or smaller boards.</p>
<p>This emerging career strategy for women seeking corporate board membership raises two questions. Do women actually move from non-profit directorships to corporate boards? And what is the benefit for not-for-profit organisations? </p>
<h2>Do women move from non-profit directorships to corporate boards?</h2>
<p>Research conducted in the <a href="https://dspace.lib.cranfield.ac.uk/bitstream/1826/4221/1/Newly_appointed_directors_in_the_boardroom.pdf?origin=publicationDetail">United Kingdom</a> has highlighted the importance of networks and that women recruited to corporate boards are more likely to have experience as directors on boards of smaller firms. </p>
<p>However, the <a href="https://www.wgea.gov.au/sites/default/files/2012_CENSUS%20REPORT.pdf">2012 Census of Women in Leadership</a> reveals that Australian women on the boards of the ASX top 200 companies often had strong backgrounds in the fields of law, finance and accounting. Many women also had careers in investment banking. Around 25% had public sector experience as regulators, politicians or academics. </p>
<p>The question was not asked, but reviewing the figures and the backgrounds of the women on our major corporate boards, no female director had been recruited from a long career working in the non-profit sector. </p>
<p>Moreover, research suggests that when it comes to head-hunting board members, the search is predominantly <a href="https://opus.lib.uts.edu.au/research/bitstream/handle/2100/1206/01Front.pdf?sequence=1">not-for-profits seeking corporate experience</a>.</p>
<p>There are many not-for-profits that require unpaid board and management committee members such as local <a href="http://networkofcommunityactivities.org.au/wp-content/uploads/2014/03/mc_roles.pdf">Out Of School Hours</a> organisations. Some such as the <a href="http://www.ywca.org.au/about-us/our-board">YWCA</a> also specifically seek female board members. </p>
<p>Serving on the board of a not-for-profit can be an enriching experience. Aside from the satisfaction that flows from working for the public good, it can broaden one’s resume in <a href="http://idealistcareers.org/being-nonprofit-board-member/">skills and experience</a>. It may even lead to new job opportunities. </p>
<p>However, the idea that corporates look to not-for-profit boards to recruit board members is not supported by the evidence.</p>
<h2>What is the benefit for not-for-profit organisations?</h2>
<p>Not-for-profits, like women, battle unjustified prejudice. The range of not-for-profit organisations is not dissimilar to the range of for-profit businesses. There are small volunteer-operated organisations, services concentrated within states or nationally, and international organisations with Australian subsidiaries. </p>
<p>Similar to other businesses, some not-for-profits are exceptionally effective in governance and operations and some are not. Nonetheless, the sector is often regarded as amateurish, inefficient and in need of the superior expertise of the business sector. </p>
<p>Not-for-profit boards need expertise in governance, finance, strategy and risk management just like corporate boards. However, they also need expertise in <a href="http://www.companydirectors.com.au/Director-Resource-Centre/Not-for-profit/Good-Governance-Principles-and-Guidance-for-NFP-Organisations/Principle-2-Board-Composition">fund-raising, resource mobilisation and specific not-for-profit and industry knowledge</a>. Someone with skills and experience in one or more of these areas clearly has value to offer a not-for-profit board. </p>
<p>However, viewing opportunities of not-for-profit board membership primarily as a useful stepping stone to corporate boards is not only misplaced but misses the point. One of the major requirements of not-for-profit boards is a belief in the value of the sector and a commitment to the purpose of its work, whether it be reducing Indigenous disadvantage, alleviating child poverty, protecting our environment or helping the local kids at school. </p>
<p>For the vast majority of the nearly <a href="http://www.mdsi.org.au/pub/MDSI_-_Nonprofit_Fact_Sheet.pdf">one million Australians</a> serving on the boards and management committees of Australia’s 600,000-plus not-for-profits these causes are of much greater value and indeed more prestigious than being on the board of an outfit that exists primarily to make money for shareholders.</p>
<p>Encouraging women to enter the sector for the wrong reasons may undermine the goals of individual organisations. While the non-profit sector undoubtedly welcomes more experienced women on its boards, it should be on its terms. </p>
<p>The overriding requirement for any directorship needs to be a belief in the organisation’s purpose and values. Women who enter the non-profit sector with the aim of obtaining a seat on a corporate board might be better off considering a career in investment banking.</p><img src="https://counter.theconversation.com/content/32907/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Bronwen Dalton receives funding from the ARC.</span></em></p><p class="fine-print"><em><span>Jenny Green does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Australia is one of the worst performers in board gender diversity. In an attempt to combat this, women have been encouraged to head to the not-for-profit sector to gain board experience as a stepping…Bronwen Dalton, Senior Lecturer, School of Management, University of Technology SydneyJenny Green, Senior Lecturer School of Management and Director Postgraduate Community and Not-for-profit Management Program, University of Technology SydneyLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/52782012-02-14T02:49:56Z2012-02-14T02:49:56ZThe average Australian wastes 200kg of food a year - yet two million of us also go hungry. Why?<figure><img src="https://images.theconversation.com/files/7630/original/gfq9m69g-1329181029.jpg?ixlib=rb-1.1.0&rect=29%2C12%2C951%2C620&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The not-for-profit Foodbank Australia represents one of the largest distributors of food to hungry Australians. But what is the role of government?</span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>Globally, more than 800 million people are chronically undernourished. And some of these people live in Australia. </p>
<p>Of course, these people do not live in desperate refugee camps; and most do not endure long periods of famine and destitution. Yet, last year alone, some <a href="http://www.daff.gov.au/__data/assets/pdf_file/0009/1926315/issues-full.pdf">two million Australians</a> reported there have been times when they have run out of food and could not afford to buy more.</p>
<p>It may appear contradictory to write about hunger when a large proportion of the Australian population tries to reduce calorie intake. But a more perplexing question is why hunger, although a growing problem in Australia, is neglected in a country which in aggregate terms is food secure. </p>
<p><a href="http://www.abc.net.au/radionational/programs/australiatalks/hidden-hunger-in-australia/3680506">Recent research</a> indicates that 75% of Australians believe their country is immune to poverty and as such do not think of hunger as a problem. Pressures from high cost of living, whether housing or food prices, lock vulnerable households into the poverty cycle which has changed the face of hunger in Australia, increasingly affecting the aged, single households and the “working poor”. Hunger is an attribute of poverty and deprivation. </p>
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<img alt="" src="https://images.theconversation.com/files/7615/original/y8fwnn5p-1329115361.jpg?ixlib=rb-1.1.0&rect=29%2C5%2C920%2C1309&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/7615/original/y8fwnn5p-1329115361.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=811&fit=crop&dpr=1 600w, https://images.theconversation.com/files/7615/original/y8fwnn5p-1329115361.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=811&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/7615/original/y8fwnn5p-1329115361.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=811&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/7615/original/y8fwnn5p-1329115361.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1019&fit=crop&dpr=1 754w, https://images.theconversation.com/files/7615/original/y8fwnn5p-1329115361.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1019&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/7615/original/y8fwnn5p-1329115361.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1019&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Food waste has dramatic environmental consequences.</span>
<span class="attribution"><span class="source">AAP</span></span>
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<p>The pantry of Australia’s national food relief effort is a low profile outfit called <a href="http://www.foodbank.com.au/">Foodbank</a>, a national operation using a big business model to channel surplus food from the food and grocery industry onto welfare networks. </p>
<p>Its <a href="http://www.foodbank.com.au/default.asp?id=1,111,,81">board members</a> - including prominent Perth executive Peter Mansell - come mostly from high profile private sector executive positions, while its operations resemble a highly efficient distribution network with centres in all major capital cities. </p>
<p>The donors, food producers, manufacturers and retailers, supply Foodbank with excess or surplus food that would have been otherwise disposed off into landfill. </p>
<p>The food is then dispatched from Foodbank distribution centres to welfare agencies on a cost-recovery basis (a nominal service fee), to ultimately reach people in need. On the supply side, donating surplus food not only reduces food companies warehousing costs but eases expenditure associated with dumping food in landfills as well as attracting tax deductibility.</p>
<p>Despite the important expression of community altruism and other frontline welfare agencies, the problem of hunger is far from being solved. In 2011, Foodbank distributed 21 million kilograms of donated food and groceries, making the equivalent of 28 million meals to help 75,000 people a day through a network of 2,500 welfare agencies.</p>
<p>Foodbank relies upon a workforce of 3,500 volunteers to operate its warehouses across the country. From five million kilograms of food donated in 2003 the organisation is now moving more than 20 million kilograms and is hoping to increase its distribution to 50 million kilograms in 2015.</p>
<p>Occasionally, state governments and councils provide grants for specific projects but largely, the organisation survives on donations. Only recently the Australian government has started to contribute $1 million a year to assist Foodbank in providing vulnerable Australians with what most of us consider as a human right, the right to safe and nutritious food. </p>
<p>This should prompt some hard questions. It is common for liberal market economies to off-load welfare responsibilities from federal and state governments to the voluntary sector and Australia is no exception. </p>
<p>Some view increasing inequality and poverty as the unavoidable flip side of a globalised capitalism and as such the domestic politics of globalisation have increasingly sold the message that governments have limited control. Therefore expectations must be lowered about what is politically possible. </p>
<p>But allowing hunger to be de-politicised in this way fosters the notion that it should fall to non-government organisations to answer pressing social problems, while governments are best at fostering self-reliance and self-provision. </p>
<p>The silence of the Australian government around domestic food security not only confirms its denial of the issue, but indicates a failing welfare system. </p>
<p>Also at issue is the environmental consequences of rampant food wastage. It is now reported that about 4.5 million tonnes (200kg per person) of food are wasted every year in Australia. The annual retail value of Australian food waste is estimated at more than $5 billion. </p>
<p>Among the reasons at the supply end are blemishes or imperfections, over-ordering or short shelf life, while consumers demand perfectly shaped products and plan their pantries poorly. </p>
<p>This wastage has significant ramifications. For instance, dumping a kilogram of beef means wasting the 50,000 litres of water used in its production. Some 47% of municipal waste in landfill is food and green organic waste. Food waste in Australian landfills is the second largest source of methane emission – a gas 25 times more potent than carbon dioxide. If one tonne of food waste generates 3.8 tonnes of CO₂ equivalent emission, then Australian food waste is responsible for 15 million tonnes of CO₂ equivalent emissions every year.</p>
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<img alt="" src="https://images.theconversation.com/files/7629/original/njxfd56t-1329180266.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/7629/original/njxfd56t-1329180266.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=792&fit=crop&dpr=1 600w, https://images.theconversation.com/files/7629/original/njxfd56t-1329180266.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=792&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/7629/original/njxfd56t-1329180266.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=792&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/7629/original/njxfd56t-1329180266.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=995&fit=crop&dpr=1 754w, https://images.theconversation.com/files/7629/original/njxfd56t-1329180266.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=995&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/7629/original/njxfd56t-1329180266.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=995&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
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<span class="caption">Fighting global hunger is paramount, but we must recognise hunger issues here.</span>
<span class="attribution"><span class="source">AAP</span></span>
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</figure>
<p>Despite this happening in its own backyard, Australian policy makers still have ambitions to contribute to global food security initiatives.</p>
<p>Australia continues to be a vocal advocate for global food security through its association with international institutions, such as the UN but also the World Bank, IMF or the WTO. For instance, the 2010 budget committed <a href="http://www.ausaid.gov.au/keyaid/food_security.cfm">$464 million over four years</a> to assist countries in Asia, Africa, and in the Pacific region to build community resilience and improve agricultural productivity.</p>
<p>But if Australia refuses to consider hunger as an issue of public policy and continues to consistently undermine adequate financial assistance to its own people, a nagging question remains about the nature of its ambitions for addressing food security beyond its shores.</p>
<p>While fighting global hunger in the developing world is of paramount importance, it is also vital to recognise that hunger in the developed world must be understood as an attribute of primary poverty and a form of relative deprivation. The evidence is unequivocal.</p>
<p>Inadequate welfare benefits are the immediate cause of hunger in Australia. Australia is signatory to the International Covenant on Economic, Social and Cultural Rights (United Nations, 1996) and the UN Convention on the Rights of the Child (United Nations, 1989, 1990), both of which commit ratifying governments to meet the basic needs of their citizens. </p>
<p>How should we understand the Federal Government’s proclamation of rights to adequate food, clothing and shelter in international law, while hungry Australians are receiving support from privately run charity organisations?</p>
<p>If the problem of hunger in wealthy and technologically advanced Australia is to be eliminated, it must be recognised as a political question and a fundamental issue of human rights and distributive justice.</p><img src="https://counter.theconversation.com/content/5278/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Brigit Busicchia does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Globally, more than 800 million people are chronically undernourished. And some of these people live in Australia. Of course, these people do not live in desperate refugee camps; and most do not endure…Brigit Busicchia, PhD Candidate, Political Economy, Macquarie UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/24862011-08-16T20:37:31Z2011-08-16T20:37:31ZLet charities keep their income tax exemption<figure><img src="https://images.theconversation.com/files/2923/original/salvos2.jpg?ixlib=rb-1.1.0&rect=125%2C83%2C3506%2C2317&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Commercial activities by charities which don't directly fund their altruistic activities, are set to incur tax. </span> <span class="attribution"><span class="source">AAP</span></span></figcaption></figure><p>The not-for-profit sector is facing the loss of a privileged exemption that allows charities to avoid paying tax on profit-making activities.</p>
<p>Announced in May’s Budget, the changes will see not-for-profit organisations pay tax on surpluses generated from what the government describes as “unrelated commercial activities”, unless those profits are used to fund the charity’s altruistic activities. </p>
<p>On the face of it, this is being done in the name of providing a level playing field for tax-paying businesses and economic efficiency. </p>
<p>But there are strong arguments to maintain the status-quo for charities.</p>
<h2>Commercial activities</h2>
<p>In late 2008, the High Court of Australia confirmed that charities’ tax exemption extends to commercial activities that charities operate, not just funds raised to pay for their charitable activities directly.</p>
<p>Under the proposed changes though, a church that operates a bakery and sells bread at market prices to the general public would pay tax on the surpluses from the bakery. </p>
<p>However, any of the bakery’s surpluses used to fund the church’s homeless shelter would fall within the church’s income tax exemption. </p>
<p>This is the same as the situation where for-profit entities may claim a deduction for donations made to a charity.</p>
<p>Surpluses that are reinvested in the business will be subjected to tax. In our example, if the bakery was to use some of the surplus to purchase new equipment or fund the opening of a new bakery, the surpluses so used would be taxed the same as ordinary business profits.</p>
<h2>Competition </h2>
<p>The reason for the change is that businesses operated by charities frequently compete with other for-profit businesses which have to pay tax on their profits. </p>
<p>The exemption provides charity-run businesses with an apparently unfair advantage since they are not faced with this additional expense. </p>
<p>Such advantages are the ability of the charity-run business to offer lower customer prices (thereby gaining greater market share at the expense of for-profit competitors) or having additional funds to reinvest in the business, to enable faster growth.</p>
<p>Supporters of free markets are likely to agree with this sentiment. However, allowing charities to retain their full exemption is actually more in keeping with a free market philosophy. </p>
<h2>Market forces</h2>
<p>Exempting charities from tax ultimately allows market forces to identify worthwhile charitable causes, rather than a bureaucratic central authority.</p>
<p>This result comes about since most, if not all, of the work performed by charities would otherwise be expected to be done by governments. Consequently, charities relieve pressure on the public purse. </p>
<p>Every dollar that a charity spends on providing shelter or food and clothing to the poor is another dollar that the government now has to spend on roads, hospitals and schools.</p>
<h2>Financial relief</h2>
<p>This justifies allowing charities their income tax exemption. The exemption acknowledges the financial relief charities provide to the government. Assuming a tax rate of 30%, the government foregoes 30 cents in revenue and saves a dollar for every dollar’s worth of service that the charity provides. </p>
<p>It is here that market forces exert their influence over what services charities provide. To attract donations, charities need to provide services that the donating public regards as worthy. </p>
<p>Using compulsorily levied taxes to fund public services raises the usual concerns about vested interests capturing the bureaucracies administering those services and deciding which services get funded, with the very real prospect of inappropriate allocations being made.</p>
<p>Where a charity seeks to raise its funding through operating a business instead of direct donations, the same analysis applies. </p>
<h2>Shortsighted</h2>
<p>A charity can raise funds in this way only by providing goods or services that the public demands. The charity may seek to attract additional custom by advertising that the business profits are used to fund charitable activities. But this will work only if the public approve of those activities.</p>
<p>Returning to the church-run bakery example, under the proposed changes, the bakery will need to pay tax on any surpluses that it decides to reinvest the surpluses in its business rather than pass on to the charity. </p>
<p>However, this is short-sighted. All income from the bakery must ultimately be funding the charity. Any reinvestment necessarily is designed to increase the income-producing capacity of the business. </p>
<p>As the charity’s work relieves the government of spending pressures, the government should be willing to see charities be as well funded as possible. </p>
<p>Allowing retained surpluses to remain tax-free improves the income-producing capacity of the business, increases the long-term funding source for the charity and provides increased relief on the government’s spending programs. </p>
<p>The current tax treatment, which has been approved of by the High Court, should be retained. </p>
<p>Charities should be allowed to continue doing their good works without additional costs being imposed on them and, ultimately, on the government itself, all in a misguided attempt to improve competition in sectors that are presently functioning fine.</p><img src="https://counter.theconversation.com/content/2486/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Keith Kendall does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The not-for-profit sector is facing the loss of a privileged exemption that allows charities to avoid paying tax on profit-making activities. Announced in May’s Budget, the changes will see not-for-profit…Keith Kendall, Senior Lecturer, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.