The sector is facing increased financial strain at the moment, which could see insolvency appointments spike in 12 to 18 months, an insolvency specialist has warned.

Wexted partner and insolvency specialist, Chris Sequeira, has warned that across all industries, one of the more rapidly changing sectors in relation to insolvency risk at present is the not-for-profit sector.

"There's increased financial pressure points for the not-for-profit sector, and I believe in the next 12 to 18 months we may see that transcend into formal appointments," Sequeira said in an episode of the Under the Hood podcast.

Sequeira said while the NFP sector was often an underappreciated sector in Australia, it was a relatively large industry, accounting for 8 per cent of gross domestic product, and included roughly 300,000 organisations of varying sizes.

His firm has seen parts of this sector under greater financial strain, particularly health service providers.

"We recently got appointed to a large private hospital in Victoria. We've also had requests for safe harbour advisory work for aged care providers and NDIS providers," he said.

"That gives a bit of flavour as to what is coming down the pathway in terms of insolvency."

Last week, Toowong Private Hospital in Queensland also entered voluntary administration, after the owners were unable to find a buyer in a recent sale attempt.

The latest insolvency statistics from ASIC indicated that as of 27 April 2025, there were 353 insolvencies for the heathcare and social services industry sector for the 2024–25 financial year. This represented a 64.2 per cent increase from the same period in the previous financial year.

Sequeira said the rise in cost of living constrained people's ability to donate to community and cultural art organisations, and those organisations were also now competing more intensely for that dollar.

"What you'll probably see in that segment of the economy is consolidation. You might see some mergers amongst those types of organisations, which might be facilitated through a formal restructuring appointment," he said.

Other industry sectors such as construction and hospitality also continued to face financial pressures, Sequeira said.

Construction and accommodation and food services remain the two industries with the most insolvencies, based on recent ASIC statistics.

The construction sector has recorded 2,986 insolvencies for the 2024–25 year so far, while accommodation and food services have had 1,996 insolvencies.

Sequeira said that shipping delays, labour costs and the cost of doing business in certain states were still creating challenges for the construction sector.

In terms of hospitality and food services, Sequeira said there was currently a two-tier marketplace where fine dining establishments were doing well, but smaller local businesses were finding it difficult.

"The spending is still there, but it's been reduced at the mid to lower level marketplace," he said.