The State of the Social Economy in Australia: Wave 2 report
The latest findings from the Centre for Social Impact's landmark Social Economy Survey provide the most comprehensive picture yet of the sector's priorities, challenges and emerging trends.
Now in its second year, the study has grown significantly, with a 56% increase in participation from 140 to 219 organisations across Australia's social economy, spanning charities, not-for-profits, social enterprises, co-operatives, mutuals and philanthropic organisations.
Around one-third of respondents also took part in Wave 1 , strengthening the evidence base and enabling the study to track how Australia's social economy is changing over time.
Internationally, organisations have developed frameworks to support the social economy as a model for sustainable development. Australia, by contrast, lacks a cohesive policy approach, leaving significant gaps in both understanding and strengthening the sector’s impact.
Collectively, Australia’s social economy organisations make a significant contribution to the nation’s economy and communities. Charities alone employ 1.6 million people, which is more than the manufacturing, construction and retail trade sectors.
The State of the Social Economy in Australia: Wave 2 Report , presents fresh insights into where and how government can support this growing global movement toward more inclusive and sustainable economies.
"This year's survey expanded on our first study to provide a much richer picture of Australia's social economy. As we build this evidence over three years, we're beginning to see not only where the sector is under pressure, but how its priorities, capabilities and challenges are evolving over time," said lead author Associate Professor Melissa Edwards , from CSI UNSW .
KEY INSIGHTS
Across both organisational priorities and external risks, Wave 2 data points to a sector focused on stabilisation and consolidation rather than innovation and growth. These are some of the key insights:
- Cyber security has surged as a major concern. Widespread cybercrime surged into the top five external risks facing the sector, alongside growing societal polarisation.
- Workforce challenges are intensifying. Recruiting and retaining staff or volunteers has become one of the sector's top three priorities, while building staff capability has risen significantly from tenth to sixth.
- Funding remains the sector's biggest challenge. Against a backdrop of economic uncertainty and increasing demand, maintaining funding and diversifying income sources, remain the sector's two biggest priorities. Yet the survey reveals a financial paradox: despite the push to diversify, most organisations still rely on traditional income sources such as government funding, fundraising, contracts, and the sale of goods and services.
- Organisations are being asked to prove impact without adequate resources. Despite growing expectations to demonstrate impact, almost half say they lack the dedicated funding needed to measure it properly.
At the same time, 60% of respondents reported performing better against their goals than the previous year, and a substantial proportion remain actively engaged in education and training (58.4%), advocacy and public policy (56.5%), and research and knowledge sharing (53.3%). This indicates organisations are not just coping but continuing to pursue system-level influence and evidence-building alongside day-to-day service delivery.
PRIORITY AREAS FOR SECTOR DEVELOPMENT
Beyond these key insights, Wave 2 findings also highlight several priority areas where investment could strengthen Australia's social economy.
- Consistent investment in people: staff capability, wellbeing, recruitment and retention as organisations stretch to cope with funding cuts alongside rising costs and demand.
- Capability building for new financing mechanisms: including knowledge and awareness of emerging finance models, education and board-level upskilling, and funded capacity-building support, addressing what the report identifies as a persistent "financial paradox”.
- Structured learning opportunities: strong demand was identified for mentoring and coaching programs, professional networks, and workshops and training.
- Addressing the hidden costs of compliance: complex funding submissions, data collection for reporting, mandatory climate reporting, and barriers specific to micro-charities.
- Modernising legal recognition: current legal frameworks lag behind hybrid "for-purpose" models, with continued barriers to social enterprise recognition, DGR status, and alternative governance and cultural/community models.
- Sector-wide measurement infrastructure: greater aggregation of outcomes, standardised frameworks and shared measurement approaches would ease the burden on under-resourced impact measurement and management (IMM) practices, reducing reliance on bespoke, organisation-by-organisation approaches.
The next wave will be the third and final of the study, consolidating these findings into a fuller picture of the contributions and challenges facing Australia's social economy.