Cuts to community services are feared as a new poll shows one in three charities unsure of their survival.
A poll of 56 leaders and chief executives of key charity and not-for-profit organisations found 37 per cent were more uncertain about their body's future than three years ago.
Only 55 per cent of respondents to the survey, conducted by Piazza Research in September, were somewhat or highly confident their organisation's future was in hand.
The findings signalled a need for stronger government support, said the Community Council of Australia which commissioned the report.
"When more than a third of charities are talking about having an uncertain future, you're highlighting a high level of unmet need," chair Tim Costello said.
"That can only mean frustration for charities and the communities they serve."
Some 93 per cent of respondents expect the cost of their operations to worsen over the next year.
Among the biggest challenges identified are competition for resources such as funding, skilled staff, and volunteers (73 per cent), economic downturns (71 per cent), environmental factors including climate change and natural disasters (56 per cent) and social and demographics trends (52 per cent).
There was some hope of technological advancements (27 per cent) and positive attitude shifts from funders (16 per cent) but they were outweighed by broader concerns.
The sector employs more than 1.4 million Australians, mobilises 3.5 million volunteers and turns over more than $200 billion each year.
Some charities might have to consider withdrawing some of their services to survive, the council's chief executive David Crosbie said.
"For years charities have been saying the real costs of providing services to our communities is much higher than the funding being provided," he said.
"This new research reinforces previous findings that the biggest issue confronting charities is the lack of support to meet rising costs and increasing demand."
The Salvation Army is one charity in particular that is feeling the heat of surging demand amid the festive season.
A separate poll of 2004 people by Pureprofile on behalf of the Salvos suggests 6.3 million Australians (29.9 per cent) will struggle to pay their rent or mortgage this Christmas.
More than one in three (35.8 per cent) of those surveyed said they will have less people over on Christmas Day due to the cost-of-living crisis and 9.3 per cent are reaching out to charity for help this Christmas, including 54 per cent for the first time.
Major Bruce Harmer said the charity had never seen such volume and widespread need across the country in its 140-year history.
"It is truly heartbreaking to see the despair and devastating decisions Australians are having to make in order to provide for their families this Christmas," he said.
"As we see the devastating results of this research, we are reminded that every number and statistic represents real people, and we see that every day of the year amongst those who reach out to the Salvos for support."
