Australian Fellowship of Evangelical Students, charity review

This is a charity review, a review, for supporters and potential supporters, of the Australian charity Australian Fellowship of Evangelical Students (AFES).

It is structured according to the charity’s entry on the ACNC[i]Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your giving decision.

It is up to you to decide whether any or all of the information presented here is what you need in order to make that decision, and whether you should seek any other information, either from the charity itself or from other sources.

Ministry response

Prior to publishing this review, I sent my observations to the charity, on 2 December 2015, and invited them to comment. Given that one of their ‘Non Negotiable’ strategies cited in the Directors Report 2014 (see below) is ‘Excellent Governance’, I expected a quick acknowledgement and an interest in what I had found. I got the former, from Dave Dorman, the National Administrator, but the interest was limited to the fact that they needed to complete their AIS 2014 and submit a Financial Report that included an audit report. (Both of which they did.)

Organisation of this review

  • The first part of this review is organised according to the headings in the register entry. This is how to use this section of the review:
    1. For each heading in the register entry, first read the information under that heading.
    2. Then check if that heading is included below. (Headings for which there is no comment are not included.)
  • There is then a more detailed comment on the Financial Report.
  • Lastly, there is a section Membership of accountability organisations claimed.

Sources

  • ACNC Register (including links)
  • Google search on the charity’s names (see Charity Details, below).
  • Websites for AFES, National Training Event (NTE), and their gospel presentation site, Uncover. And the associated social media sites for each – bottom right on the first site, and in the footer in the other two. Plus AFES on LinkedIn.
  • State government fundraising licence registers.
  • www.glassdoor.com

REGISTRATION DETAILS

Entity Subtype

  • A type consistent with sharing the Gospel.
  • As is the company’s prime object in its constitution:

AFES is an Interdenominational (sic) Christian organisation that has been established for the following objects:

      1. to promote the mission of Jesus Christ in Australian Universities (sic) by building evangelical student groups that:
        1. Evangelise students by proclaiming Jesus as Lord;
        2. Encourage growth toward Christian maturity;
        3. Train students in the skills and character to serve Jesus and His people; and
        4. Send graduates throughout Australia and the world to serve Christ…

CHARITY DETAILS

Legal Name

  • AFES is a public company, a company limited by guarantee.
  • It is permitted to omit ‘Ltd’ on the end of its name.

Other Name(s)

  • There are two names that AFES uses for its programs, Uncover and National Training Event (see Sources, above). Unless AFES owns this one, then both are unregistered. Whether or not they should be depends on whether they are ‘carrying on business’ under the name. And

Generally, if you are entitled to an ABN based upon the nature of your activities…you will be carrying on a business for the purposes of the Business Names Registration Act[ii].

Charity ABN

  • Tax deductibility: You cannot claim a tax deduction for a donation to AFES.

Charity Street Address

  • The postal address, from the website, is PO Box 684 Kingsford NSW 2032

ANNUAL REPORTING

  • AIS 2014
    • This is the compulsory Annual Information Statement 2014 (AIS 2014).
    • It gives basic financial information.
  • Financial Report 2014
    • This is actually more than a Financial Report, containing some information that would normally be in an annual report. (And that is what it is called.)
    • The Directors’ Declaration was signed only five weeks after year end.
    • But it wasn’t lodged with the ACNC until nearly three months after that.
    • The coverage of finances in this review is left until the financial report proper (Latest financial report – detail, below).

ABOUT THE CHARITY

  • Statement of Faith
    • This is a copy of paragraph 2.2 of the constitution (see Charity’s Document (sic), below).

Date Established

  • Here’s a history of AFES, including where you can read more.

Who the Charity Benefits

  • Vision
    • “Proclaiming Jesus Christ at university to present everyone mature in Him.”
  • Mission
    • A duplicate of the constitution (see Entity Subtype, above).
  • Activities (What did AFES do?)
    • From the Description of charity’s activities and outcomes in the AIS 2014:
      • Teaching university students about the bible and training them to do this with other students.
    • If the Annual Campus Group report is still used, then AFES should have a good idea of what has happened during the year:
      • How many main meetings do you run per week?
      • Average number attending main meetings per week (total)
      • How many small groups do you run per week?
      • Average small group size
      • Average number attending small groups per week (total)
      • How many from your campus went to NTE [National Training Event] last year?
      • NTE Mission last December: Church attended/No. in team/What did you do on mission
      • Conferences/camps – give details of events your group ran/attended last year
  • Outcomes (What did AFES deliver?)
    • Unfortunately AFES did not respond to the request to describe its outcomes in the AIS 2014.
  • Impact (How were people’s lives improved?)
    • Nothing found.

Financial Year End

  • This means that the next financial report is due by 31 March 2016. Before that the financial information on the Register will be up to 18 months out-of-date.

Basic Religious Charity

  • This is incorrect – AFES doesn’t qualify.

WHERE THE CHARITY OPERATES

Operating State(s)[iii]

  • Although not described on the website, we know from here that there are ‘area and state support committees’.
  • From their statement in the Notes to the Financial Statements (see below) that the figures for ‘areas’ are included in the figures for AFES, it is reasonable to conclude that AFES raises funds in all States. However, it holds a fundraising licence in NSW only.

Size of Charity

  • With a revenue of $9.62 m, AFES easily qualifies in the largest of the ACNC three size categories (‘Large’).

CHARITY’S DOCUMENT (SIC)

  • Other than the financial report labelled ‘Annual Report’, there is no Annual Report/Review available on the ACNC Register.
  • Nor is there one on the website.

RESPONSIBLE PERSONS

No. of Australian charity ‘responsible person’ positions[iv]

Daniel Anderson                          2

Richard Chin                                 2

Hunt Jeffrey                                  2

Claire Jones                                   2

Michael Lin                                   2

Stephen Mason                            5 (but two are duplicates)

Alan Reader                                 2

Andrew Reid                                4

Susan Shiner                                3

Howard Spencer                          5

Craig Tucker                                 3

Cheng Vivian                                1

Scott Woodward                          2

Phillip Zamagias                          1

  • At 14 directors, this board has two more than the number fixed by the constitution (clause 12.1).
  • Clause 12.4 says that ‘A person is ineligible to be a Board Director if they are an employee of AFES’. Richard Chin is both.
  • There are six directors on this list that are not in the Directors’ Report, and four extra in that Report.
  • The constitution provides for
    • six directors nominated by the members in the states: one by NSW and ACT members together, one for QLD and NT together, and one by the members in each of the other four states; and
    • six to be ‘elected by the Members from nominations’ by the members [clause 12.2].
    • Neither the Register nor the website shows which directors are State representatives.
  • There is a description of ‘governance’ on the website, but this does not include a listing of the directors.
    • That section says that the second set of six directors ‘are nominated for their skill set in relevant theological, ministry and business management areas’. This does not agree with the qualifications specified in the constitution (clause 12.5).
  • No reason was found for the ‘Positions’ to vary between ‘Board Member’, ‘Director’, and ‘Other’.

(End of review of the ACNC Register information)

Latest financial report – detail

  • What is the relationship between the two trust funds in Note 14 and these accounts?

Directors’ Report 2014 (page 2 of the Financial Report)

  • No such report is required by the ACNC.
  • Errors:
    • ‘Financial Position’ (page 3): accumulated funds are $2.86 m, not $2.93 m.
    • There are 14 directors shown on the Register (see Responsible Persons, below), not twelve (‘Board Directors’, page 4).
  • Missing:
    • A list of the directors during the whole of the year and up to the date of the report.
    • Objectives, short-term and long-term.
    • The qualifications, experience, and special responsibilities are not given for each of the directors.
    • Identification of the Secretary.
  • Sections not required: ‘Indemnifying Directors or Officers’

Where the directors put their name to the Report – the Directors’ Declaration – page 9 of the Financial Report

  • The reference should be to the ACNC Act, not the Corporations Act.
  • The declaration about fundraising should be ‘in addition to the directors’ declaration’[v].

The Auditors (sic) Independence Declaration – page 9 of the Financial Report

  • The ACNC does not require this to be lodged.
  • The reference should be to the ACNC Act, not the Corporations Act.

What’s left at the end of the year – the Statement of Financial Position (Balance Sheet) – page 10 of the Financial Report

  • Cash $5.10 m (including Note 2)
    • This should be ‘Cash and cash equivalents’.
    • There is no explanation for why such a large amount is held, and particularly why there is $1.46 m at call.
  • ‘Receivables’ and ‘Prepayments’: the name of the Note doesn’t match the financial statement.
  • ‘Motor Vehicles’ should be included in Property, Plant and Equipment.
  • Payables $709K (including Note 7)Normally titled ‘Trade and other payables’.
    • Where are the trade creditors?
    • Net NTE future income $189K: There is no explanation of this item.
    • Other Payables $409K: This is too large an amount to be unidentified.
    • Deposit Fund $154K: The components are not all ‘payables’. Borrowings, for instance, should be separate.
  • Provisions, current, $646K (including Note 8)
    • An estimate should be made of the non-current portion. (Note 1 says that this is impossible, but the company’s peers are able to do it.)
    • The prior period amount should have been re-stated for the effect of the error disclosed in Note 1.
  • Designated Funds (including Notes 1(d) and 14) $590K
    • Note 1(d) conflicts with Note 14: Note 1 gives a range of reasons for the existence of this total, whereas Note 14 says they are trust monies.
    • Trust assets, if included in the AFES figures, should be shown separately in the balance sheet.

What was earned, what was consumed during the year – the Statement of Comprehensive Income (page 12 of the Financial Report)

  • The item ‘Other Comprehensive Income’ is missing.
  • The classification of expenses should be either by function or by nature, not a mixture.
  • The following expenses are not disclosed:
    • Fundraising
    • Administration
    • Cost of sales
    • Superannuation
    • Amortisation

Where the money came from

  • Donations $8.55 m: presumably this includes bequests.
  • Interest on financial assets not at fair value – from banks $104K
    • There are no ‘financial assets’ in the balance sheet.
  • Recovery of office costs $40K: recovery from whom? And why?
  • Income from Conferences and Events $834K
    • Although not included in the Note column, there is a Note – Note 9
  • Bookstall & CD Sales $1K: Why is there no inventory in the Balance Sheet? Or Cost of Sales in the Statement of Comprehensive Income?
  • Other revenue and projects $87K: Is there anything material in this relatively large amount?

Where the money went to (reordered by size)

  • Staffing Costs $7.79 m
    • ‘Employee expenses’ in the AIS 2014 is the total of this item plus the last two below. Why are payments to suppliers included in ‘Employee expenses’.
    • Assuming that the 90 part-time employees (AIS 2014) average half-time, ‘Employee expenses’ represents $57K per employee.
    • How does ‘Employee expenses’ relate to the term in the Accounting Standards, ‘Employee benefits’?
  • Expenses from Conferences and Events $864K
    • Deducting this from the similar revenue item above gives a loss. If the ‘expenses’ were only direct expenses then the true loss is even greater.
  • Other payments to suppliers and employees $456K
    • Why aren’t the ‘payments to…employees’ included under ‘staffing costs’?
  • Provision for Long Service Leave – funds paid to/(from) Deposit Fund $126K
    • The increase to a provision should not affect cash.

Where the cash came from and went to – the Statement of Cash Flows (page 13 of the Financial Report)

  • Funds used in investment activities’ include items that are not changes to investments.
  • The borrowing changes should be included under financing activities.

Essential information to go with the figures – the Notes to the Financial Statements – page 15 of the financial report

  • 1 Summary of Significant Accounting Policies
    • The ACNC Act should be mentioned.
    • Missing:
      • “The financial statements were authorised for issue on…”.
      • Functional and presentation currency
    • (a) Donated Labour, Materials and Equipment: how much is ‘significant’?
    • (b) Area Accounts
      • Nowhere is ‘areas’ explained.
    • (c)   Deposit Fund
      • Nowhere is ‘Deposit Fund’ explained.
    • (e)   Depreciation and Amortisation
      • The heading should be ‘Property, Plant and Equipment’.
      • ‘Intangibles’ should be a separate Note.
    • (g)   Financial Instruments
      • There are no financial instruments, as described here, in the balance sheet.
    • (j)     Staff Entitlements
      • Are these equivalent to ‘employee entitlements’ in the Accounting Standards?
      • Why is provision for long service leave made for all staff, but provision for annual leave only made for National Office staff?
    • Missing Notes in Note 1:
      • New, revised or amending Accounting Standards and Interpretations adopted
      • Revenue recognition
      • Current and non-current classification
      • Cash and cash equivalentsGoods and Services Tax (‘GST’) and other similar taxes
      • Fair value measurement
      • Trade and other receivables
      • Impairment of non-financial assets
      • Trade and other payables
  • Note 11   Related Parties
    • The directors are not the only possible related parties.
    • Benefits to the directors are not the only related party transactions possible. There can also be
      • Receivables and payables to related parties
      • Loans to and from related parties
  • Note 13   Financial Risk Management
    • Not required.
  • Notes 14 Trust and Designated Funds
    • Monash Houses $369K
      • There is no disclosure that this is a separate charity, Monash Evangelical Union House Trust.
      • There is no mention of the trust on the website.
      • Have the transactions and balances been included with those of AFES?
    • Leslie Griffiths Fund $220K
      • Why does this trust not even have an ABN?
      • There is no mention of the trust on the website.
      • Have the transactions and balances been included with those of AFES?
  • Missing Notes:
    • Contingent liabilities
    • Commitments
    • Events after the reporting period

Another statement of what was earned, what was consumed during the year – the Income Statement (page 22 of the Financial Report)

  • This statement is not required.
  • This statement is unaudited.

Membership of accountability organisations claimed

(End of review)

 

 

 

[i] Australian Charities and Not-for-profits Commission, Australia’s national regulator of charities.

[ii] ASIC Regulatory Guide 235, www.asic.gov.au

[iii] This is how the ACNC explains ‘operating locations’ in their application guide: ‘You need to give details about where in Australia your organisation conducts (or plans to conduct) its activities.’

[iv] Because of the possibility of two (or more) directors having the same name on the register of responsible persons, it is not possible to be definitive about the number of directorships held.

[v] Charitable Fundraising Authority Conditions – 31 July 2015, Fair Trading, NSW Government, accessed 2 December 2015 from www.fairtrading.nsw.gov.au

SIM Australia, charity review

This is a charity review, a review, for supporters and potential supporters, of the Australian charity Sim Australia (SIM).

It is structured according to the charity’s entry on the ACNC[i]Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your giving decision.

It is up to you to decide whether any or all of the information presented here is what you need in order to make that decision, and whether you should seek any other information, either from the charity itself or from other sources.

Ministry response

Prior to publishing this review, I sent my observations to the charity, on 16 November 2015, and invited them to comment. They did not reply.

Organisation of this review

  • The first part of this review is organised according to the headings in the register entry. This is how to use this section of the review:
    1. For each heading in the register entry, first read the information under that heading.
    2. Then check if that heading is included below. (Headings for which there is no comment are not included.)
  • There is then a more detailed comment on the Financial Report.
  • Lastly, there is a section Membership of accountability organisations claimed.

Sources

  • ACNC Register (including links)
  • Google search on the charity’s names (see Charity Details, below).
  • SIM website. SIM social media sites, just before the footer here. Plus SIM on LinkedIn.
  • State government fundraising licence registers.
  • www.glassdoor.com

REGISTRATION DETAILS

Entity Subtype

  • A type consistent with sharing the Gospel.
  • The company’s prime object in its constitution is also consistent with sharing the Gospel:

Motivated by Christian faith in God and Jesus Christ as set out in the bible, the objects of the Company are to glorify God by planting, strengthening, and partnering with churches around the world, as we evangelise the unreached, minister to human need, disciple believers into churches and equip churches to fulfil Christ’s Commission…

CHARITY DETAILS

Legal Name

  • Not to be confused with another charity, Simaid Trust, a trust controlled by SIM, and consolidated with SIM in the financial statements below.
    • Although Simaid’s four financial statements, in abbreviated form, are included in SIM’s financial statements as Notes, Simaid has not lodged its financial statements with the ACNC as required.
  • SIM is a public company, a company limited by guarantee.
  • It is permitted to omit ‘Ltd’ on the end of its name.
  • Also consolidated are two other companies: International Christian Fellowship and Africa Evangelical Fellowship. Said to be ‘dormant’, no explanation is given why they remain registered 26 and 17 years after being taken over.

Charity ABN

  • Tax deductibility: You cannot claim a tax deduction for a donation to SIM. (Although you can for one to Simaid Trust.)

Charity Street Address

  • The postal address, from the website: PO Box 42, Penshurst NSW 2222.

Email

  • Blank. Try, from the website, sending.director@sim.org.au.

ANNUAL REPORTING

  • AIS 2014
    • This is SIM’s compulsory Annual Information Statement 2014 (AIS 2014).
    • It gives basic financial information.
    • If you think that this is sufficient for you then you should note that
      • ‘Employee expenses’ is ‘Other Staff’ in the Income Statement. There is also $1.88 m of Missionary Salaries & Taxes, and $712K of Missionary Housing.
  • Financial Report 2014
    • The report was signed two and a half months after the year end.
    • It was then lodged three months after that.
    • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below).

ABOUT THE CHARITY

  • Statement of Faith
    • Here.
    • But there isn’t one in the Constitution (see Charity’s Document (sic), below).

Date Established

  • Here’s a history of the broader SIM organisation.

Who the Charity Benefits

  • Vision
    • None found.
  • Mission
    • SIM’s ‘purpose’ is here.
  • Activities (What did SIM do?)
    • From Description of charity’s activities and outcomes in the AIS 2014:
      • SIM Australia has been empowered by God to facilitate people, prayer and funds for Christ’s global mission.
        • For some examples of the what was done with these resources, see the annual report, The SIM Effect.
  • Outcomes (What did SIM deliver?)
    • From Description of charity’s activities and outcomes in the AIS 2014:
      • Praise God that SIM continues to grow in this period, with 10 new members, 41 associates, 5 teams and 119 active missionaries (as at 30Sep14), serving in 30 countries. Each person who serves in Australia results in more churches, people and prayer for His mission.
        • Unfortunately this doesn’t distinguish growth in numbers from the position at year end, so we can’t tell whether or not SIM increased the number of ‘associates’, ‘teams’, ‘active missionaries’, and countries this year. (And whether, therefore, there were ‘more churches, people and prayer’.)
          • However, from last year’s AIS, we can calculate that this year the number of missionaries increased by six, the number of countries increased by five, and the number of teams remained the same. None of the other indicators were reported last year.
        • Nowhere is the term ‘associates’ explained.
        • Nor is ‘member’.
        • How is an inactive missionary still a missionary?
        • For a few examples of what these people delivered, see the annual report, The SIM Effect.
  • Impact (How were people’s lives improved?)
    • Nothing systematic found.
    • There are a few anecdotal accounts in the annual report, The SIM Effect

Financial Year End

  • This means that the next financial report is due by 31 March 2016. Before that the financial information on the Register will be up to 18 months out-of-date.

WHERE THE CHARITY OPERATES

Operating State(s)[ii]

  • Here’s the details for the representatives for each state.
    • And a page of its own for Vic/Tas.

Size of Charity

  • With a revenue of $7.03 m, SIM easily qualifies in the largest of the ACNC three size categories (‘Large’).

CHARITY’S DOCUMENT (SIC)

  • There is no Annual Report/Review available on the ACNC Register.
  • But it is available on the SIM website.

RESPONSIBLE PERSONS

No. of Australian charity directorships[iii]

Jonathan Cheung                                   2

Stephen Early                                          2

Alyson Hicks                                           2

Christopher Seddon                              4

Russell Ricketts                                      3

Michael Gordon                                    12

Robert Cole                                             6

Amelia Antognelli                                  2

  • Robert Cole is missing from Our Board on the website. Maybe this is because he is the Secretary, not a member of the Board, and therefore incorrectly listed on the ACNC Register?
  • No reason was found for the ‘Positions’ to vary between ‘Board Member’, ‘Director’, and ‘Other’. 

 

(End of review of the ACNC Register information)

 

Latest financial report – detail

  • The declaration required by the NSW Charitable Fundraising Authority Conditions has not been included.

Directors’ Report (page 2 of the Financial Report)

  • No such report is required by the ACNC.
  • The qualifications, experience, and special responsibilities are not given for each of the directors.
  • ‘Performance measures’ is missing, the Secretary is not identified, Committee meetings are missing from ‘Meeting (sic) of Directors’, and ‘Review and Results of Operations’ is not required.
  • The company has 14 members, the same as last year. There are 13 directors, all of whom have to be members. Have all but one of the past directors resigned membership?

A letter from the auditors about their independence – page 6 of the Financial Report

  • The ACNC does not require this to be lodged.

An independent opinion on the financial statements – the Independent Auditor’s Report (the ninth page of the Financial Report)

  • Reports by Australian NFPs that follow the Australian Accounting Standards are unlikely to comply with International Financial Reporting Standards. The auditor’s opinion here that they do comply is therefore unusual.
  • Whatever day in November the auditor signed his report – this information is missing – the directors’ signature a month later means that his signature was premature.
  • This is a ‘clean’ opinion.  Read here and here to draw the right conclusions from this.

What’s left at the end of the year – the Balance Sheet (page 11 of the Financial Report

  • Cash $1.32 M (including Note 4)
    • This should be ‘Cash and cash equivalents’.
    • There is no explanation for why this large an amount is held, and particularly why there is $1.27 m in ‘Current Accounts’.
    • When the tax deductible money belonging to Simaid has to be kept separate, why is the balance zero?
  • Receivables $93K (including Note 5)
    • This includes assets that are normally in a group of their own.
    • Are any of these amounts of doubtful collectability?
  • Investments $5.13 M (current) plus $1.07 m (non-current) (including Note 6)
    • There is no explanation for why so much has been invested.
    • If any of the term deposits are for three months or less they should have been included in ‘Cash and cash equivalents’ (see above), not here.
    • This presentation matches neither the Accounting Standards nor the policy described in Note 1.
    • Why is ‘Staff Housing Loan’ an investment, but ‘Staff Car Loans – Unsecured’ a receivable?
      • Why are there no repayments due on the housing loan in the next 12 months?
  • Property, Plant & Equipment $2.05 m (including Note 7)
    • Freehold Land & Buildings $1.86 m
      • This class appears to use neither of the two permitted valuation models consistently.
      • Why are four of the five properties not depreciated?
    • Furniture & Equipment / Motor Vehicles: the deduction is not a provision.
    • Intangible Assets
      • These are not properly part of Property, Plant and Equipment.
    • There is no reconciliation of written down values.
  • Bank Overdraft $54K (including Note 8)
    • Note 8 explains Payables of $566K, not just bank overdraft.
    • There is no explanation why, with so much money in the bank, there is the need for the expense of an overdraft.
  • Provisions $40K (current) plus $27K (non-current) (including Note 9)
    • These are all employee benefits.
  • Payables $511K (including Note 8)
    • There is no explanation for the bulk of this total: ‘Missionary Personal Accounts’ and ‘Missionary Fringe Benefits’.
    • Normally titled ‘Trade and other payables’.
  • Loans $148K (including Note 10)
    • There is no explanation for an increasing amount owed not earning interest and not secured.
      • Why is this all repayable beyond 12 months?
  • Accumulated Funds & Reserves $8.89 m
    • There is no Note explaining this amount.

What was earned, what was consumed during the year – the Income Statement (page 12 of the Financial Report)

  • The title of this statement does not comply with the Accounting Standards.
  • The format is long out-of-date.
    • ‘Other comprehensive income’ is missing.
  • There are no Notes to explain the material items.

Where the money came from

  • No ‘Other income’ or dividends?
  • Local Gifts & Donations $5.72 m
    • Despite there being a choice between ‘SIM Australia’, ‘Projects’, and ‘Missionaries’ on the website, and then two, 62, and 113 options respectively under each of those, there is no further disclosure of the intended destination of these donations.
    • There is no separate total for the Overseas Aid Fund.
  • Overseas Gifts & Donations $817K
    • There is no explanation of this item.
  • Local Legacies & Bequests $136K
    • None from overseas?

Where the money went to

  • SIM says that it ‘aims to ensure that 85% of each dollar donated is directed to the field’, but because ‘field’ is not defined, we can’t check this figure.
    • Even if we assume that ‘field’ means ‘sent overseas’, there is still insufficient information.
  • The expenses classification is a mixture of the two permitted methods.
  • The following expenses have not been disclosed:
    • Employee benefits expense
    • Superannuation expense
    • Finance expense
    • Cost of sales
    • Fundraising
  • In which of the line items below are the bequests sent to SIM International (see Note 3)?
  • Missionary Salaries & Taxes $1.88 m
  • Missionary Housing $712K
  • Missionary Other Expenses $1.08 m
    • Given that the missionaries are not employed by SIM, why is it paying over 55% of money raised for missionaries and their support
  • Ministry Fund Expenses $445K
    • There is no explanation of this item.
  • Project Expenses $1.30 m
    • There is no explanation of this item. Is it money sent to partners overseas or expenses incurred by SIM itself overseas?
  • Personnel Expenses – Other Staff $550K
    • This implies that the missionaries, above, are ‘staff’. Why then report this figure as ‘Employee expenses’ in the AIS 2014 (see above)?
    • Based on the number of employees shown in their AIS 2014, and assuming that all six part-time employees work 2/3 time, and ignoring the casual wages, this represents an average expense per employee of only $29K.
  • Depreciation – Included in Admin Expenses $50K
    • If this is included in ‘Admin Expenses’ then including it here is double-counting.
  • Administration Expense $305K
    • This represents 4.3% of Revenue.
      • However, some expenses that many other charities would include under ‘administration’ appear separately.
  • Promotion & Fundraising Expense $260K
  • Community Education Expense $260K
    • No explanation is given for the unusual result of two separate items having exactly the same total at the end of the year. And for the second year in a row.
      • Is it because it is not actual expenses that are recorded, but an arbitrary allocation?

Where the cash came from and went to – the Statement of Cash Flows (page 13 of the Financial Report)

  • Cash Flow From Operating Activities
    • No sales, bequests or dividends?
    • Why is the cash from interest identical to the amount earned
  • Cash flows (sic) used in Financing Activities
    • Why are ‘Missionary Personal Funds’ included under ‘financing’?
    • The ‘Closing Balance’ does not match (by a long way) the amount for ‘Cash’ in the Balance Sheet.

Movements in the net wealth of the charity – the Statement of Changes in Equity – page 14 of the Financial Report

  • This statement diverges markedly from what is required by the Accounting Standards.

Essential information to go with the figures – the Notes to the Financial Statements – page 15 of the financial report

Note 1   Reporting Entity

  • From the description here, it is more likely that SIM acquired these other two missionary companies, not merged with them.

 Note 2   Basis of Preparation

  • For a NFP, like SIM, that followed the Australian Accounting Standards, it is unlikely that their statements are compliant with the International Financial Reporting Standards.

 Note 3   Statement of Significant Accounting Policies

  • Basis of Consolidation
    • The policy on inter-company transactions and balances is missing.
  • Revenue
    • The ‘cash basis’ is not a revenue recognition basis.
    • The solicitation for bequests on the website does not mention the possible transfer to SIM International.
    • Interest is not mentioned.
  • Depreciation
    • The heading should be ‘Property, plant and equipment’.
    • ‘Deemed cost’ is only relevant where the item is not actually purchased, which is unlikely to be the case for all these properties.
    • No policy is disclosed on the review of the figures or on derecognition.
  • Missing Notes:
    • Cash and cash equivalents
    • Trade and other receivables
    • Impairment of non-financial assets
    • Trade and other payables
    • Intangibles
    • Fair value measurement
    • New, revised or amending Accounting Standards and Interpretations adopted
    • Goods and Services Tax (‘GST’) and other similar taxes
    • New Accounting Standards and Interpretations not yet mandatory or early adopted
    • Critical accounting judgements, estimates and assumptions

Note 13   Foreign Currency

  • There is no explanation for the existence of a bank account for Simaid in US dollars. Or why an overdraft is needed for that account.

 Notes 14-17   SIMaid

  • Because SIMaid has not lodged its accounts with the ACNC as required, it is not possible to confirm these figures.

 Note 18   Related Party Disclosures

  • Note 18a Remuneration of Directors
    • When the Constitution says that ‘The Directors must not be paid any remuneration for their services as Directors’, how were these payments possible?
  • Note 18c Loans to Directors and Executives
    • Presumably this disclosure doesn’t match the figures in the balance sheet because some of the loans there are not to ‘executives’.
  • Note 18d Transactions with SIM International and other SIM Field Offices
    • How is Australia a ‘field office’?
    • The relationship between these disclosures and the SIM financial statements is not given.

Note 19   Financial Risk Management

  • Note 19b Credit Risk
    • 71% of the $7.62 m of financial assets are held in unspecified ‘Non-Bank Financial Institutions’ without any security.
  • Note 19c Exchange Rate Risk
    • The fact that the USD account has been overdrawn for the last two years at balance date does not support the statement that the normal balance of the account is USD250K.
  • Note 19d Interest Rate Risk
    • The need to hold funds in ‘bank deposits and other investments’ in order to pay for expenses prior to the receipt of funds does not explain the holding of $7.62 m.

Note 21   Retirement Commitments

  • Where are these liabilities in the balance sheet?

Note 22 Charitable Fundraising Donations

  • Note 22b How appeal monies are applied
    • What document contains the ‘fund charter limits’ for administration and promotion expenses?

Membership of accountability organisations claimed

 

(End of review)

 

 

[i] Australian Charities and Not-for-profits Commission, Australia’s national regulator of charities.

[ii] This is how the ACNC explains ‘operating locations’ in their application guide: ‘You need to give details about where in Australia your organisation conducts (or plans to conduct) its activities.’

[iii] Because of the possibility of two (or more) directors having the same name on the register of responsible persons, it is not possible to be definitive about the number of directorships held.

Gospel for Asia (Australia) Inc, charity review

Updated 10 December 2015

This is a charity review, a review, for supporters and potential supporters, of the Australian charity Gospel for Asia (Australia) Inc (GFAA).

It is structured according to the charity’s entry on the ACNC[i] Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your giving decision.

It is up to you to decide whether any or all of the information presented here is what you need in order to make that decision, and whether to seek any other information, either from the charity itself or from other sources.

Ministry response

Prior to first publishing a review of GFAA on 9 June 2015, I sent my observations to the charity and invited them to comment. Monica Darr responded by email on 5 June 2015, not with a direct response to any of the observations, but a collection of comments.

The day after publication, in response to new information, I asked Monica, by email, about the destination and use of the money shown as being transferred overseas. The ensuing conversation ended when she didn’t respond to my emails of 13 June and  14 June[ii]. I updated the review on 25 August 2015.

GFAA is a member of Missions Interlink, the closest we have in Australia to the ECFA:

Member use of the Missions Interlink logo implies high standards of governance and financial accountability, giving the Christian public assurance of their integrity[iii].

On 27 August 2015 I sent a link to my review to the National Director, Pam Thyer, suggesting that GFAA was in breach of one or more of their standards. On 3 December 2015, in response to my suggestion that donors should be alerted to GFAA’s misrepresentation when soliciting donations, Pam said that she had discussed the matters I raised in the review with GFAA and had concluded that ‘they do not contravene the MI Standards’.

Given the above history, I did not seek GFAA’s comments on this updated review.

Organisation of this review

  • With the exception of a section inserted after Legal Name, this review is organised according to the headings in the register entry. This is how to use this section of the review:
    1. For each heading in the register entry, first read the information under that heading.
    2. Then check if that heading is included below. (Headings for which there is no comment are not included.)
  • There is then a more detailed comment on the Financial Report.
  • Lastly, there is a section Membership of accountability organisations claimed.

Sources

  • Internet search on the names under Charity Details, below.
  • GFAA website, and Facebook. Not on LinkedIn.
  • State government fundraising licence registers.
  • Email responses from GFAA’s Monica Darr (see Ministry Response, above).
  • Glassdoor

       GFA elsewhere

REGISTRATION DETAILS

Entity Subtype (‘charitable purposes’)

  • Note that, despite its name, and a ‘primary aim’ of sharing the Gospel (see below), ‘Advancing religion’ is last in a list of four purposes. 
  • The objects in the constitution do not mention sharing the Gospel.

CHARITY DETAILS

Legal name

  • GFAA is a Queensland incorporated association.
  • Unless GFAA has been granted an exemption under Sect 33 of the enabling legislation[iv], Sect 32 requires it to use the full name on all documents, including advertising material. GFAA is not complying with this requirement.
    • This means that it is non-compliant with Missions Interlink Standards (4.2.4).
  • GFAA is associated with Gospel for Asia (GFA). Given all the revelations about GFA over the last eight months – click on the category ‘Gospel for Asia’ at the bottom here, and then read the post titles – and the fact that the office across the Tasman has been seriously affected, it would be reasonable to believe that the Australian office is implicated too.
  • However, Missions Interlink, as part of their response to my suggestion that GFAA had breached one or more of its standards, said that GFAA was “a completely separate entity to GFA”. Given that GFAA exists to raise money for GFA (see Where the money went, below), it is important for Australian donors to understand the relationship between the two entities, so I address this claim in the next section.

Is GFAA “a completely separate entity to GFA”?

  • Yes, in a strictly legal sense, GFAA is separate to GFA. But this doesn’t mean that GFAA is not heavily influenced, even controlled, by GFA. (Consolidation accounting recognises the reality of the difference between legal separation – the form of the relationship – and practical separation – the substance of the relationship.)
  • GFA New Zealand is also a separate entity to GFA; however, when it got into trouble recently, GFA sent two of its staff to turn it around.
  • GFA itself describes GFAA as a GFA office.
  • The GFA shared website, for instance GFA Canada, describes GFAA as an ‘international office’, a term that most people would associate with an office with very close working relationship with its head or home office.
  • GFAA was founded by GFA.
  • The public think that GFAA
  • represents GFA.
  • The website gives the impression that it is an inseparable part of GFA.
  • It’s a fundraiser for GFA: see ‘Beneficiary’ in this information submitted to Consumer Affairs Victoria:

'Beneficiary' with Consumer Affairs Victoria

  • And last, but far from least, a former senior staffer of GFA gave this answer to my question here on the connection:

chainsbroken2xsays:

December 4, 2015 at 4:59 pm

@21 Ted, Geoff and Monica Darr, and Bryson (Thomas is last name I believe) were in the US office in 2013 for an international leaders meeting. The Austrailian office most definitely reports to KP. All the international office report to him even if it is through John Beers or David Carroll. Those two won’t use the restroom without running it by KP. The Austrailian office fell under John’s responsibility and as I said John is simply a channel to KP. If The Austrailian office is claiming independence that is just nonsense.

Other Name(s)

  • GFAA operates in Australia under the name ‘Gospel for Asia’. See, for example, the footer in their regular promotional email:

Footer of promotional email

  • In order to continue to operate, at least legally, under this name, GFAA needs to register it as a business name.
    • Until it does so GFAA is therefore non-compliant with Missions Interlink Standards (4.2.4).

Charity ABN

  • Tax deductibility: No tax deduction can be claimed for a donation to GFAA.

Charity Street Address

  • Postal address, from their email signature block: PO Box 3587, TOOWOOMBA QLD 435

ANNUAL REPORTING

AIS 2015

  • This is GFAA’s compulsory Annual Information Statement (AIS 2015)
  • It gives basic financial information.
    • If you think that’s all you need then there’s only one minor mistake – both income and expenses are understated by $628.

Financial Report 2015

  • This report can be opened either from here or from within AIS 2015 under Annual Reporting (above).
  • The report was completed three months after year end[v]and submitted one month later – four months into the six month period normally allowed for submission.
  • The coverage of finances in this review is left until the section Latest financial report – detail, below.

ABOUT THE CHARITY

  • Statement of Faith
    • None found[vi].
    • As members of Missions Interlink, they are required to accept and adhere to the AEA Statement of Faith. (If interested, you will need to ask Missions Interlink whether it is the one in their Standards Statement, or the one with much extra on the EA website.)

Date Established

  • According to this article, Geoff and Monica Darr, after visiting the headquarters of Gospel for Asia in the US, were asked to open up an ‘international office’ here in Australia. Both still work for the charity, and both are Responsible Persons (see below).

Who the Charity Benefits

  • Vision
    • None found.
    • GFAA exists to fundraise for GFA, so their vision is relevant: “Reaching the most unreached in our generation is the vision God has given to Gospel for Asia.” [vii]
  • Mission
    • None found.
      • Assuming that ‘available to the Christian public’ means on a website – a reasonable interpretation in this day-and-age – then GFAA’s lack of ‘a written Mission or Purpose Statement’ is a contravention of the Mission Interlink Standards.
    • GFAA exists to fundraise for GFA, so their mission is relevant: “Our mission in life is to be devout followers of Christ and to fulfill the Great Commission among the unreached in Asia through training, sending out and assisting qualified laborers in partnership with the Body of Christ”.
  • Activities (What does GFAA do?)
    • GFAA was asked to describe its activities in the AIS 2015. Unfortunately, they describe what GFA does instead:
      • Gospel for Asia is a ministry of charity linking Christians of Australia with the people of the Asian and Indian sub-continents by: * recruiting, training and sending national workers * literature production and distribution * providing free primary schools to the slum children of India and Asia *teaching basic preventative medicine to those caught in poverty, sickness and hopelessness * providing relief assistance in times of natural disaster
    •  GFAA expenditure – see below – shows that GFAA is simply a fundraiser for GFA.
      • This is confirmed by GFAA themselves on their website:
        • Gospel for Asia (Australia) Inc. functions to provide a cost effective, transparent, and reliable means for its Australian donors and sponsors to support the ministry of its indigenous partners, with a view to transform communities in South Asia through Christ’s love. 
    • Here are the major programs of GFA:
      • Bible College Scholarships
      • Bible Colleges
      • Church Building
      • Dalit Outreach
      • Field Ministries
      • Film Ministry
      • Jesus Wells
      • Muslim Ministry
      • Persecution Relief Fund
      • Radio Programs
      • Support a Woman Missionary for One Year
      • Unsponsored Children
      • Unsponsored Missionaries
        • This list matches neither the donations options elsewhere on the site, nor the line items of revenue disclosed in the Financial Report (see below).
  • Outcomes (What was delivered?)
    • GFAA was asked to describe its outcomes in the AIS 2015. Nothing was given – even for GFA.
  • Impacts (How are people’s lives improved?)
    • None found.

Size of Charity

  • 2014-15 ‘Revenue’ was $2.96 m[viii] (up from $2.41 m), easily exceeding the $1 million threshold for the top size of charity (‘Large’).

Financial Year End

  • This means that the next financial report is due by 31 December 2016. Before that the financial information on the Register will be up to 18 months out-of-date.

WHERE THE CHARITY OPERATES

Operating State(s)[ix]

  • As an association GFAA is a registrable Australian body. If GFAA have understood this section, they are saying that they are conducting business outside Queensland – in fact all over Australia. This means that, as a ‘registrable Australian body’, GFAA needs to register under Part 5B.2 of the Corporations Act 2001. It’s lack of an ARBN shows that it’s not registered.
    • This means that it is non-compliant with Missions Interlink Standards (4.2.4).
  • Even though GFAA, at least according to its website, has only one office and no representatives, it raises money via its website and with the help of churches throughout Australia. However, GFAA holds a fundraising licence in only five of the seven states that have a licensing regime[x].
    • If it requires a licence in one or both the other States it is therefore non-compliant with Missions Interlink Standards (4.2.4).

Operates in (Countries)

  • Even it was about GFA, the list on the Register -– five countries – matches neither the website, six countries, nor the number stated in GFAA’s first email, 12.
  • Just to add to the confusion, operates in’ is not to be confused with ‘has an office in’: GFA, according to the website, has seven other ‘International Offices’. (Care: two sites in the list are not offices, but languages.)
  •  But following the ACNC’s advice to include any country to which a grant or donation has been made, India can legitimately be listed here.

CHARITY’S DOCUMENT (SIC)

  • The ACNC allows charities to put their Annual Report or similar on the Register. GFAA has not taken advantage of this, nor is there one on their website, or an invitation there to request one.

RESPONSIBLE PERSONS

No. of Australian charity directorships[xi]

Geoffrey DARR                                1

Monica DARR                                 1

Malcolm MACKELLAR                   1

Bryson THOMAS                             4 (three of which are for the same charity![xii])

  • This list matches the one on the website.
  • Is Malcolm Mackellar this one?
  • ‘Position’:
    • The Secretary, a position required by the GFAA enabling legislation, is not necessarily a member of the Committee – and therefore not necessarily a ‘responsible person’.
    • There is no position of ‘Public Officer’ in Queensland. (There is, for instance, in the ACT, but that person is not automatically a member of the committee.)
    • A Vice-President, a requirement of the constitution, is missing[xiii].
      • According to the website, the appointment is ‘pending’. In the meantime, GFAA is non-compliant with Missions Interlink Standards (4.2.4).
  • The constitution does not specify a minimum size for the management committee.
    • With four members – less if either or both of the Secretary and Public Officer are not members (see above) – the GFAA committee is smaller than usual for a charity with this level of revenue and responsibility.
  • On the presumption that Geoff and Monica Darr are closely related, it is questionable whether they should be on the committee together, especially when there are only two – maybe fewer – other members.
  • Although the occupations of the directors are not shown on the website, we know from elsewhere – see the list above – that three of the four work for GFAA. That leaves a maximum of one independent director. (And that one may live in the same city as the GFAA office.)
    • GFAA is therefore contravening Accreditation Standard 3, the requirement to “have a board structure that provides for a demonstrated satisfactory composition.’

(End of review of the ACNC Register information)

Latest financial report – detail

  • The directors don’t say why, for a professionally-managed organisation receiving $2.93 m from thousands of donors all over Australia, they can conclude that all current and prospective users of financial statements have the capacity to command the preparation of financial statements tailored to their needs.
    • This decision meant that GFAA could produce special purpose as opposed to general purpose financial statements, statements that did not need to comply with all the Australian Accounting Standards, and therefore could produce statements that the Australian standard setters have deemed not suitable for those people who rely on GFAA’s financial statements as their major source of financial information.
    • An example of the information that you might not get as a consequence is the relationship that GFA has with ‘related parties’.
    • This decision is not consistent with the Accounting Standards. GFAA is therefore contravening the Missions Interlink Standards (number 4.2) and Accreditation Standards (number 2).
  • There are a number of instances below where GFAA has contravened generally accepted accounting principles and practices and, as such, has contravened Mission Interlink’s Standard 4.2.

What was earned, what was consumed during the year – the Statement of Comprehensive Income (the second page of the Financial Report)

  • The line ‘Other comprehensive income for the year, net of tax’ is missing. (As it was last year).
  • The calculation of gross profit is part of a classification of expenses by function. However, GFAA immediately switches to a classification by nature of the expense, which is contrary to the Accounting Standards.

Where the money came from

  • Revenue $2.96 m (including Note 2)
    • The website uses the following categories under Donate/Ways to Give:
      • Tools for Missionaries
      • Major Ministries
      • Empower the Poor
      • From the Stable
      • Compassion Services
      • Women
      • Where Most Needed
      • Home Team
      • Manage Existing Sponsorship
      • Christmas Catalogue
    • These categories under ‘Sponsorship’:
      • Missionary Sponsorship
      • Sponsor a Missionary
      • Child Sponsorship
      • Sponsor a ChildWomen’s Ministry
      • Sponsor a Woman Missionary
    • And these under ‘Get Involved/My GFA’:
      • Start a Personal Giving Campaign
      • Have some fun and motivate your friend, all while changing the world.
      • Raise funds for Jesus (-) Wells, Water Buffalo and more.
    • However, despite a detailed breakdown of revenue in the Note, only three line items match the categories above. So it is not possible to see how much was raised in each category.
  • Cost of sales $1K
    • By definition, this is the cost of getting the goods into a condition ready for sale. Presumably the ‘goods’ are those that generated the ‘Merchandise sales’ below, in which case that is the only revenue from which this item should be deducted.
  • Gross Profit $2.96 m
    • The bulk of GFAA’s revenue is not the kind from which one normally deducts ‘Cost of sales’ to arrive at gross profit. The resulting figure therefore makes little sense.
  • In the Note (reordered by size)
    • The line items should be divided between ‘Sales revenue’ and ‘Other revenue’.
    • Native Workers fundraising program $1.34m
      • It is not possible to relate this total to the requests for money on the website.
    • Empower the Poor (‘Dalit Projects’ last year) $588K
    • Administration Revenue $398K
      • This unusual term is not explained.
    • Where Most Needed fundraising program $188K
      • GFAA says that, to allow it to send 100% of what is given towards sponsoring to the field, “Our administrative costs are covered through donations designated “Home Office” or sometimes “Where Most Needed”.
        • With ‘Home Office’ raising less than $1K (see below), ‘sometimes’ has become ‘most often’.
    • GFA Aid Developmental donations $154K
      • There is no explanation of this item.
      • If it refers to GFA Aid Australia Ltd, this company had ceased being a charity by the close of 2013-14.
      • ‘GFA Aid’ does not appear on the website.
    • The Bridge Sponsorship $49K
      • A search of the website reveals that this is the same thing as ‘Child Sponsorship’, above.
    • Walk administration $7K
      • This unusual term is not explained.
    • Home Office fundraising program $260 (i.e. less than $1K)
      • How does this relate to (a) ‘Home Team’ as a giving option, and (b) ‘Home Team Support’ below?
    • Education fundraising program $287K
      • It is not possible to relate this total to the requests for money on the website.
    • Home Team Support $221K
      • GFAA says that, to allow it to send 100% of what is given towards sponsoring to the field, “home office staff members raise their own financial support, which covers their salary and benefits”. Presumably this revenue is the money raised by these staff members?
        • If so, it is $6K short.
      • How does this relate to (a) ‘Home Office here, and (b) ‘Home Office fundraising program’ above?
    • Emergency Relief fundraising program $70K
      • It is not possible to relate this total to the requests for money on the website.
    • Social Justice fundraising program $11K
      • It is not possible to relate this total to the requests for money on the website.
    • Interest Received $11K
      • Why has this increased from almost nothing last year to $11K this year?
      • Why is there no difference between the accrual (Statement of Comprehensive Income) and cash (Statement of Cash Flows) amounts.
    • Health and Medical fundraising program $9K
      • It is not possible to relate this total to the requests for money on the website.
    • Merchandise sales – books and tapes $4K
      • Presumably this is the revenue from which cost of sales should be properly deducted?

Where the money went (reordered by size)

  • Donations $2.33 m (including Note 3) – Donations to field** $2.33 m
    • This comprises 87% of expenses.
    • The Financial Report doesn’t give any breakdown of this $2.33 m; therefore, as is the case for revenue – see above – it is not possible to relate the total sent to India to the categories on the website.
    • To whom is this money sent? The **note gives the answer:
      • Gospel for Asia (Australia) Inc. has an agreement with GFA India, a registered NGO in India, to distribute donations in accordance with the donors’ intent[xiv].
        • The name of the organisation is ‘Gospel for Asia’, not Gospel for Asia India. A small but important distinction. The first places it as a part of GFA headquartered in the US, the second as potentially a more independent entity.
        • The website of GFA in India – see their Facebook page for confirmation of the name – has been showing a ‘Maintenance. Please check back soon’ message for three now. But at the time of my last review it said that GFA in India was a ‘charitable trust’. The FaceBook page confirms this.
          • According to these two sources – persuasive but not authoritative – it is not compulsory, or even possible in some States, to register a charitable trust in India.
          • Maybe that is why the Facebook page does not mention registration, and is probably why I was unable to find an official listing of Indian charitable trusts on the internet.
    • The website confirms the claim that it is ‘GFA India’ that receives all the Australian money given for South Asia:
      • At regular intervals, funds as designated from donors and sponsors for supporting the goals and aims of the ministry in South Asia, are transferred directly from the Australian bank of Gospel for Asia (Australia) Inc, to the Indian based bank nominated by the administration of Gospel for Asia India.
    • Was the money received by ‘GFA India’? Assuming that GFA in India has complied with Indian law, the answer is given by inspecting a report that GFA India has to file with the Indian Government by 31 December each year.
      • Gospel for Asia in India has yet to submit that report[xv].
      • Last year, two transfers were made, totalling approximately $2.1 m. (The expense was $2.2 m, but without the exact transfer dates and translation rates, I couldn’t be more accurate.)[xvi]
        • With only two transfers, GFAA are open to the same finding as made by the ECFA: transfers were not frequent enough, ‘particularly given the urgent nature of many GFA gift solicitations’.
      • There is no record though of the $2.2 m sent in 2012-13. Or the money sent in 2011-12. Where did it go? Perhaps it went to Hong Kong?
        • Others have had the same problem tracing donations.
        • It’s all part of a much larger sum that is unaccounted for.
      • The 2013-14 donations might have gone to India, but only 48% went to GFA in India. 52% went to a church, Believers Church[xvii].
        • Since my last review, GFAA have, at least on their website, disclosed that “Gospel for Asia India is a ministry of the Believers Church.”
        • But this doesn’t explain why they have, quite contrary to any of the information given to Australian donors, sent over half of those donors’ money to a church. And all the money has ended up under the control of that church.
        • The money was donated for specific projects described as projects controlled by a ministry called Gospel for Asia (GFA); first they tell the donors that the money has been sent direct to a ministry in India without explaining the relationship between that ministry and Gospel for Asia; then it transpires that over half that money didn’t go to that ministry, but to the parent organisation in India, a church. And the other half is, indirectly, within the control of that same church.
        • But not to any church, but a church with practices, for instance ring kissing and a communion liturgy, that appear to be un-evangelical. And practices that, at least some donors who are donating to spread the Gospel may not be completely comfortable with, and which, when they came to light, contributed to the resignation of GFA board members, including a 30-year veteran.
    • Was the money used for the purposes for which Australian donors gave it? The **note again gives GFAA’s answer:
      • Gospel for Asia (Australia) Inc. has an agreement with GFA India, a registered NGO in India, to distribute donations in accordance with the donors’ intent.…All donations are transferred to the field through GFA International offices including a detailed breakdown of donations outlining how they are to be distributed.
        • One would be entitled to expect that use of the donations in India would match GFAA’s instructions for distribution, which in turn would match the donor’s intent. However, their use in 2013-14 for Australia didn’t match the giving options in Australia. The return filed with the government (see above) shows that the purposes of donations included
          • $488K for hospital construction
          • $138K for environment programs, and
          • $54K for the celebration of national events, none of which were a donation option on the website.
        • Here’s a list for all the monies from GFA worldwide. The divergence was significant enough in the US for it to be one of the reasons the ECFA had for terminating GFA’s membership.
      • The **note attempts to give donors confidence in the use of their donations in India:
        • GFA India is audited internally by certified auditors, and also by Indian Government auditors to ensure all funds received are used in accordance with the transfer details and directions sent by international offices.
          • This confidence is only warranted if (a) the ‘transfer details’ matched donor intentions – and the evidence from the ECFA is that they didn’t – and (b) the donors could rely on the auditors.
          • Internal auditors are part of management’s internal controls, so that’s good. But they are not independent, so give limited comfort to Australian donors.
            • Do they really mean internal auditors?
            • Indian government auditors? Are they the ‘independent authorities’ referred to on the GFAA website?
              • The financials and operating practices of Gospel for Asia India are rigorously audited by independent authorities in India to confirm that funds are dispersed to the areas of ministry designated by the donors and sponsors of Gospel for Asia (Australia) Inc.
                • Note the assumption that the ‘transfer details’ (see above) exactly match the designation by the donors.
      • GFAA’s membership of Missions Interlink means that it has to (a) “ensure that (funds sent overseas) are used in a manner consistent with the charitable purposes of the Member” (Accreditation Standards) and (b) use “designated funds according to designated purposes” (Standards). The information presented above shows that GFAA is contravening these standards.
  • Employee Costs $227K (including Note 4
    • The item, according to the Accounting Standards, is ‘employee benefits’.
    • Given the evidence of more than 100 former GFA staff and leaders of a toxic culture in GFA in the US, almost entirely substantiated by an internal review by a GFA board member, one wonders how much of this culture affected, and continues to affect, Australia.
    • Wages $180K ($213K last year)
      • How did wages decrease, and significantly, when the number of employees increased (AIS 2014)?
    • Increase in employee entitlements $30K (zero last year)
      • With zero last year this appears to be more like the introduction of benefits, not an increase. An accounting policy change?
  • Other expenses $57K (including Note 6
    • Why did ‘Travel, accommodation and conference’ increase from less than $1K to $25K?
    • Why did ‘Bridge Marathon’ cost $15K this year compared to $4K last year?
  • General and administrative $32K (including Note 5
    • What is the difference between ‘Office expenses’ and ‘Office supplies’? Is this the reason why nothing was spent on the latter this year?
  • Advertising and promotion $19K
    • Missions Interlink Standards require that “All communications designed to raise funds shall avoid creating a false impression and be truthful as to fact, description and time frame” (Standard 3). Apart from the contravention in soliciting for one purpose then spending on another (see above), both the speed of sending donations and the speed of using them once they arrive do not match the sense of urgency for souls and needs painted in the promotional materials. (There is a good description of this issue in this article.) Standard 3 is therefore contravened.
    • GFAA says that ‘100% of all donations preferenced for use on the mission field are sent to the mission field’. But even if nothing is deducted from the donation in Australia before it reaches ‘the mission field’, are there any deductions in the spending country for overhead?
    • Even though GFAA claims that “Gospel for Asia has complete discretion and control over the use of all donated funds”, and all GFAA materials represent GFAA as an agent of GFA, we can’t answer the question from the GFAA accounts.
      • The research has been done though, and the answer is yes, deductions are made.
        • Missions Interlink Standard 3 (see above) is therefore contravened.
  • Rent $11K
  • Legal and professional costs $6K
  • Technology and communication $5K
  • Depreciation $3K

What’s left at the end of the year – the Statement of Financial Position (the third page of the Financial Report)

  • Current Assets $638K
    • It is unusual not to have any prepayments.
  • Cash Assets $636K (including Note 7)
    • This item should be ‘Cash and cash equivalents’. (This is acknowledged by the title of Note 1(d)).
    • This is 21% of Revenue. Why is so much held in cash?
      • GFAA’s Indian ‘partner’ also holds a lot of cash.
    • How can so much cash be held when 100% of donations (other than Home Team and some of Where Most Needed) are sent to ‘the field’?
  • Online Saver – Trust $234K (last year: $30K)
    • There is no mention of a current trust, either in the Financial Report or on the website.
      • What is the relationship between this trust and the small amount, unchanged from last year, held in the ‘GFA Trust account’[xviii]?
  • Inventories $2K (zero last year)
    • Why has this increased from zero last year to $2K this year? A mistake? A policy change? If so, has AASB 108 been followed?
  • Property, plant and equipment $6K (including Note 8)
    • The required reconciliation of written down values is missing.
  • Other creditors and liabilities $12K
    • Normally these are called ‘Trade and other payables’.
    • ‘Amounts withheld from salaries and wages’ $2K: there is no explanation for the unusual item.
  • Employee entitlements $30K (last year: zero)
    • Why has this increased from zero last year to $30K this year? A mistake? A policy change? If so, has AASB 108 been followed?
    • All employee benefits are expected to be settled within 12 months?

Where the cash came from and where it went to – the Statement of Cash Flows – the fourth page of the Financial Report)

  • Not all the receipts are from ‘donors’.

How the wealth of the charity has changed – the Statement of Changes in Equity (the fifth page of the Financial Report)

  • This uses an out-of-date format – instead of the second line it should show ‘Surplus after income tax expense for the year’ and ‘Other comprehensive income for the year, net of tax.’[xix]

Essential information to go with the figures – the Notes to Financial Statements (the sixth page of the Financial Report)

  • Note 1: Summary of Significant Accounting Policies
    • Missing from the first part:
      • The reason for saying that GFAA is not a reporting entity.
      • The Accounting Standards followed.
      • The functional and presentation currency used.
      • The date the statements were authorised for issue.
    • (a) Property, Plant and Equipment (PPE)
      • Missing: depreciation rate, review policy, derecognition policy
    • (c) Employee Benefits
      • Missing: short-term versus long-term, defined contribution superannuation expense
    • (e) Revenue and Other Income
      • There are no dividends shown in the financial statements.
    • (f)   Goods and Services Tax (GST)
      • Missing: receivables and payables, cash flows, commitments and contingencies.
    • (h) Comparative amounts: What is the relevance to these statements of the second paragraph?
    • Missing Notes:
      • New, revised or amending Accounting Standards and Interpretations adopted
      • Current and non-current classification
      • Fair value measurement
      • New Accounting Standards and Interpretations not yet mandatory or early adopted
      • Critical accounting judgements, estimates and assumptions
      • Trade and other payables
  • Note 11: Events Subsequent to Reporting Date
    • On the day that the Report was signed, 2 October 2015, the ECFA terminated GFA’s membership. Given that GFA was a charter member of GFA, GFAA is one of GFA’s ‘international offices’, GFAA exists to raise funds for GFA, termination was an unusual step, and that the investigation by the ECFA leading to the termination had been going on since 6 May 2015, it would be reasonable to expect a mention of at least the investigation in this Note.
  • Missing Notes:
    • Remuneration of auditors
    • Contingent liabilities
    • Commitments

Statement by Management Committee – the eleventh page of the Financial Report

  • This declaration does not comply with ACNC requirements.

An independent opinion on the financial statements: Independent Auditor’s Report (the twelfth page of the Financial Report)

  • In order to accept the engagement the auditor assessed the directors’ decision that GFAA is not a ‘reporting entity’ – and agreed with it. He therefore agrees that GFAA’s users (both existing and prospective) are able to command the preparation of a financial report tailored to their needs. This is implausible.
  • This is a ‘clean’ opinion. Read here and here to draw the right conclusions from this.

Membership of accountability organisations, claimed

  • Missions Interlink Accredited Member, here. Confirmed, here.
  • GFA as an ECFA Charter Member, here. Since 2 October 2015, no longer a true claim. On that date the ECFA– in a decision only taken with one other organisation in the prior three years – terminated GFA’s membership for non-compliance with not one (like the other organisation), but five of its Seven Standards of Responsible Stewardship™.
    • GFA also continued to claim membership after it was terminated (here, here, here).

 

(End of review)

 

 

 

[i] Australian Charities and Not-for-profits Commission, Australia’s national regulator of charities.

[ii] In the US, GFA stopped responding to Warren Throckmorton on 7 May 2015, saying that responding had ‘become a distraction from our mission work’.

[iii] http://missionsinterlink.org.au/about/our-foundations

[iv] Associations Incorporation Act 1981 (Qld), www.legislation.qld.gov.au.

[v] One month earlier than last year.

[vi] Nor for GFA. There is one, however, for ‘a church that GFA is affiliated with on the mission field’.

[vii] From a search of the GFAA site.

[viii] More precisely, $2,960,388.96. Please GFAA, drop the cents in your figures!

[ix] This is how the ACNC explains ‘operating locations’ in their application guide: ‘You need to give details about where in Australia your organisation conducts (or plans to conduct) its activities.’

[x] There is a registration in Tasmania in the name ‘GFA Aid Australia’, one of the two charity registrations that GFAA revoked last year. There is no licence in WA – and no obvious reason to be exempt.

[xi] Because of the possibility of two (or more) directors having the same name on the register of responsible persons, it is not possible to be definitive about the number of directorships held.

[xii] Unchanged from my last review.

[xiii] Unchanged from my last review.

[xiv] One would be entitled to assume that this money went by the conventional route of a bank transfer. But following the revelation that GFA USA has been smurfing, maybe not?

[xv] To confirm go to this website, and select the year and Kerala as the State. (Based on last year’s submissions, the timing of its ubmission puts it in the last 26% of charities to submit their return.)

[xvi] With the recent revelation of a significant discrepancy between the US and Indian financial statements, it would be interesting to check the amount of the Australia contribution in the accounts of the GFA India and Believers Church.

[xvii] Unlike GFAA in Australia, GFA in the US is a ‘religious order’ – like the Jesuits, for instance, in Australia – and, like a basic religious entity in Australia, doesn’t have to file accounts.

[xviii] There is no explanation for the inclusion of ‘GFA Trust Account’. Presumably these monies belong to the GFAA charity The Trustee for Gospel For Asia Trust Fund. Registration was ‘voluntarily revoked’ on 30 June 2014, which means that it operated during 2013-14. The trustee was GFAA, and the deed requires audited financial statements, but there wasn’t last year, and still isn’t this year, any no mention of the trust anywhere in the GFAA material.

[xix] Unchanged from my last review.

Destiny Rescue Inc, charity review

This is a review, a charity review, for supporters, and potential supporters, of the Australian charity Destiny Rescue Inc (DR).

It is structured according to the charity’s entry on the ACNC[i]Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your giving decision.

It is up to you to decide whether any or all of the information presented here is what you need in order to make that decision, and whether you should seek any other information, either from the charity itself or from other sources.

Ministry response

Prior to publishing this review, I sent my observations to the charity, on 2 November 2015, and invited them to comment. At the end of the 10 days I gave for a response, Tenille Nugent, the General Manager, replied to ask for another two weeks. I agreed. I then heard nothing further from DR.

Reviewer’s Comments: (1) DR’s response is not consistent with their stated commitment to “maintaining the highest level of financial integrity and transparency with the resources it has been entrusted”; and (2) DR’s constitution (see Charity Document (sic), below) requires the Management Committee to “ensure that a mechanism is established that will properly and effectively deal with complaints made by members of the public and grievances from employees.” Has this been established? And if it has, is it being used?

Organisation of this review

  • The first part of this review is organised according to the headings in the register entry. This is how to use that section:
    1. For each heading in the register entry, first read the information under that heading.
    2. Then check if that heading is included below. (Headings for which there is no comment are not included.)
  • There is then a more detailed comment on the Financial Report.
  • Lastly, there is a section Membership of accountability organisations claimed.

Sources

  • ACNC Register (including links)
  • Google search on the charity’s names (see Charity Details, below).
  • DR website. (Care: there is also one for the US, and one for New Zealand, both of which look the same as the Australian site.)
  • DR on social media, on the right on this page, and LinkedIn.
  • State government fundraising licence registers.
  • www.glassdoor.com.au

REGISTRATION DETAILS

Entity Subtype

  • Not a type that requires the Gospel to be shared.
  • The company’s primary object is similarly silent on the Gospel:

To provide a Christ-centred ministry for the relief of poverty, suffering, distress, misfortune and helplessness of people wheresoever found in Australia and overseas regardless of age, sex, race, ethnic background, religion, political beliefs or marital status;

CHARITY DETAILS

Legal Name

  • Not to be confused with the trust Destiny Rescue Overseas Aid Fund (DROAF), a separate charity run from the same address by the same four directors.
    • DR – see the website and Activities (below) – treats them as one operating entity, yet there is no explanation why DROAF’s figures are not consolidated with those of DR.

Other Name(s)

  • The second one is not another name for DR but the name of another charity (see Legal Name, above).
  • The first name is a trading name. In order to continue to operate, at least legally, under this name, DR needs to register it as a business name.

Charity ABN

  • Tax deductibility: Despite what DR claims, you cannot claim a tax deduction for a donation to DR.
    • You can to DROAF though.

Charity Street Address

  • Postal address, from the website: PO BOX 1197 Buddina Queensland 4575

Email

ANNUAL REPORTING

  • AIS 2014
    • This is DR’s compulsory Annual Information Statement 2014 (AIS 2014).
    • It gives basic financial information.
      • If you think that this is sufficient for you then you should note that
        • The full picture is not obtained without looking at the Financial Report of DROAF at the same time.
          • For instance, 92% of the ‘Donations and bequests’ came from DROAF.
        • Although DR is an organisation that raises funds to help people overseas, ‘Grants and donations made by the registered entity for use outside Australia’ were zero. (None were made for use in Australia either.)
        • They paid $54K to an Overseas Aid Fund (not DROAF) as ‘commission’.
          • This is despite appearing to operate in their own name overseas. (And see Operates in (Countries), below.)
        • Because the expenses in the profit and loss statement are more disaggregated than in the AIS 2014, it is not possible to verify ‘Employee expenses’.
        • Other income is slightly misstated. (It should be $8175.)
  • Financial Report 2014
    • The report was signed nearly eight (8) months after the year end.
    • It was lodged two days after being signed. This was, according to the ACNC, only 20 days late.
    • The coverage of finances in this review is left until the financial report proper (Latest financial report – in detail, below).

ABOUT THE CHARITY

Who the Charity Benefits

  • Statement of Faith
    • None found. (There is no search function to confirm.)
    • Despite DR saying that it is ‘Christian based’, and a ‘Christ-centred ministry’ (see Entity Subtype, above), I can find no explanation in any of its materials to explain how this makes it different to a secular Public Benevolent Institution that rescues children.
    • Despite a ‘restoration’ program for the rescued girls, there is no mention of the Gospel.
  • Vision
    • None found for Australia.
    • What they call a vision, here, is actually a goal (or series of goals). And not specifically for Australia, but for Destiny Rescue worldwide.
  • Mission
    • None found for Australia.
    • For Destiny Rescue worldwide:   “Destiny Rescue exists to Rescue, Restore, Protect, Empower and be a Voice for the Voiceless.”
      • The fullest description is here
  • Activities (What did DR do?)
    • From General activities in the AIS 2014:
      • …Destiny Rescue is an International Aid & Development Organisation that rescues, restores and reintegrates children who have been trafficked, lured or sold into sexual slavery around the world. Destiny Rescue Inc helps raise funds and awareness for our overseas projects by selling jewellery & merchandise hand made by rescued girls, raising awareness and funds through our Advocacy Program, Team Trips & generating tax deductible donations for our Public Ancilliary Fund – Destiny Rescue Overseas Aid Fund (ABN: 15 454 771 860), which then distributes funds to our beneficiaries.
    • From the Description of charity’s activities and outcomes in the AIS 2014
      • Through the sale of handmade jewellery/merchandise, team trips and other donations, Destiny Rescue Inc helped generate much needed funds for both Destiny Rescue Inc and Destiny Rescue Overseas Aid Fund so that we could continue our vision of rescuing 100,000 children from sexual slavery by 2020. In 2014 Destiny Rescue celebrated our 1000th rescue since it started this vision in 2011! As we continue to raise much needed funds and awareness within Australia, we can continue to strive towards our 2020 Vision!
  • Outcomes (What did DR deliver?)
    • None found for Australia.
    • For Destiny Rescue worldwide, see Activities, above.
      • And informally in their blog.
  • Impact (How were people’s lives improved?)
    • None found for Australia.
    • For Destiny Rescue worldwide, nothing formal or systematic found.
      • But there are examples in their blog.

Size of Charity

  • With a revenue of $1.63 m, DR qualifies in the largest of the ACNC three size categories (‘Large’).
    • This is dwarfed by the $3.4 m generated by DROAF.

Financial Year End

  • This means that the next financial report is due by 30 June 2016. Before that the financial information on the Register will be up to 18 months out-of-date.

WHERE THE CHARITY OPERATES

Operating State(s)[ii]

  • DR holds a licence to fundraise in all the seven states that have a licensing regime.
  • As an association DR is a registrable Australian body. It is carrying on business outside Queensland; it therefore needs to register under Part 5B.2 of the Corporations Act 2001 – the lack of an ARBN shows that it has not so registered

Operates in (Countries)

  • Myanmar is not included in the list on the website (in the footer of every page).

CHARITY’S DOCUMENT (SIC)

  • There is no Annual Report/Review available on the ACNC Register.
  • Nor on the website.

RESPONSIBLE PERSONS

No. of Australian charity directorships[iii]

Jennifer Kirwan                                   2

Michelle Winser                                   2

Tony Kirwan                                         2

Lachlan Anderson                               2

  • This is an identical board to DROAF.
  • With a board of only four, there is a strong argument that a husband and wife should not be members together.
  • Only if Lachlan is independent does this board have any independence.
  • This list is quite different from the one on the website; there it says that only Tony Kirwan, and Thor and Jo-Ellen Bouttell are board members.
    • The Bouttells were appointed in March 2014 but had left within 18 months.

(End of review of the ACNC Register information)

 

Latest financial report – detail

Warning

  • The DR website reads as if DR and DROAF operate as one. They have the same board members. The description of ‘General activities’ in the AIS 2014 for each begins ‘Destiny Rescue is an International (sic) Aid & Development Organisation…”. DR gives no money to beneficiaries but has significant expenses; DROAF gives millions to beneficiaries – including DR – but has minimal expenses.
    • Despite this, here is no explanation in the Financial Report for why the directors have chosen to present only the DR financial picture, that is, not to consolidate DROAF with DR.
    • To get the full picture on the DR operation in Australia, therefore, it would be advisable to look at the Financial Report for DROAF while you are looking at DR’s Report. The information below is on DR alone.

On DR as a separate entity

  • Although DR is an organisation that raises funds to help people overseas, ‘Grants and donations made by the registered entity for use outside Australia’ were zero. (None were made for use in Australia either.)
    • Nor do the expenses show that they did the overseas work themselves.
  • DROF is a public ancillary fund, and therefore must only give to charities with Deductible Gift Recipient (DGR) status. When then did they give DR, an organisation without DGR, $993K (and $615K the previous six months)?
  • The company collects millions of dollars from thousands of donors all over Australia, yet the directors have decided that all these donors, and any prospective donors, have the capacity to ask DR to prepare a financial report tailored to their needs.
  • The Financial Report is missing one of the four compulsory statements, a Statement of Cash Flows, (and therefore also two reconciliations with other statements).
  • The auditor only audited two of the other three statements.

Committee’s Report (page 1 of the Financial Report)

  • The ACNC does not require this report.
  • The description of the ‘principal activity’ shows DR’s treatment of DR and DROAF as a single operating entity.
  • Three sections normally included are missing:
    • Objectives, short-term and long-term
    • Strategy to achieve those objectives
    • Performance measures

What was earned, what was consumed during the year – the Statement of Profit and Loss and Other Comprehensive Income (page 3 of the Financial Report)

What was earned:

  • The website says that all donations over $2 are tax deductible. The only way that this can be correct, is if DR is collecting for DROAF.
  • Therefore it is not possible to see how much was earned for each of the donation options on the website, because the money was accounted for by DROAF, not DR.
  • For instance, these are the six options under ‘One Time’:
    • Greatest Need
    • Child Trafficking Prevention
    • Aftercare Program For Rescued Children
    • Administration
    • Overseas Project (Enter details below_
    • Celebration Fund
    • (Other)
  • DR solicits both child and corporate sponsorship yet shows revenue from neither.
  • No bequests or events?
  • Awareness/Donations $90K
    • This is the only money that DR shows as being received from donors.
    • What is ‘awareness’ revenue?
  • Sales $241K
    • Presumably this is a major contributor.
  • Team Fees $296K
    • There is no explanation of this revenue.
    • Presumably it is from this activity.
  • Donation from DROAF $993K
    • This is 61% of revenue, yet nowhere in the Financial Report is ‘DROAF’ explained.
    • DROF is a public ancillary fund, and therefore must only give to charities with Deductible Gift Recipient (DGR) status. When then is it giving to DR?

What was consumed in the course of earning the revenue (see above):

  • Do these expenses include the cost of operating overseas?
  • Neither fundraising expense nor administration expenses are separately disclosed.
  • Cost of Sales $39
    • Cost of sales are all those costs necessary to get the goods into a condition ready for sale. Do ‘Other Direct Costs’ and ‘Delivery’ qualify?
  • Advertising & Promotion $22K
    • Is this equivalent to ‘Fundraising expenses’?
  • Community Awareness $35K
    • How does this differ from ‘Promotion’ (above)?
  • Commission – Global Development Group $54
    • This is an Overseas Aid Fund. Why, when DR has such a fund itself, did it need to employ one?
    • What service did they perform?
    • What is the rate of commission?
  • Lease Payments $5K
    • There is no mention of leases in Note 1.
  • New Zealand Establishment costs $80K (32K last half year
    • There is no mention in the statements of establishing a new office.
    • Did donors fund this? If not, how was it funded?
    • What is the relationship between this office and the Australian charity?
  • Team Expenses $215K (last half year $111K
    • Are only direct expenses included in this?
    • Does this mean that ‘teams’ contributed $296K less 215K = $81K to overhead?
  • Wages $659K
    • Based on the number of staff shown in the AIS 2014, this represents an average salary of less than $30K p.a.

What’s left at the end of the year – the Statement of Financial Position (page 5 of the Financial Report

  • Financial Liabilities $64K (including Note 7)
    • There is nothing in Note 1 about hire purchase (or a chattel mortgage).

Essential information to go with the figures – the Notes to the Financial Statements… – page 7 of the financial report

  • Note 1: Summary of Significant Accounting Policies
    • The directors say the company is a ‘not a reporting entity’, but they don’t say why.
      • They are in effect saying that anybody who is interested in this company has the power to contact the company and request a report tailored to their particular needs.
        • This is despite the fact that DR operates all over Australia and has, on the internet, a standing invitation to donate.
      • The result of the decision is that the accounts don’t comply with the Australian Accounting Standards, and can disclose considerably less than that required for a general purpose report, a report designed for those people who are dependent on the charity’s report for the information they need.
      • You can compare the directors’ decision to this advice from the ACNC:
        • If people use and rely on your charity’s financial statements to help them make decisions (for example, about how to spend money) then your charity is most likely a reporting entity.
          • Although not clear from this, the directors should also consider prospective users.
    • The Accounting Standards that were followed are not disclosed.
    • a. Revenue
      • There are no grant $ under revenue.
      • Nor are there any bequests or dividends.
    • b. Inventories on hand
      • There is no description of the inventories.
    • c. Property, Plant and Equipment
      • There are no buildings, leased assets or leasehold improvements in the statements.
  • Note 8: Change in Reporting Period
    • Who are these ‘funding providers’? (There were no grants received.)
  • Missing Notes
    • New, revised or amending Accounting Standards and Interpretations adopted
    • Current and non-current classification
    • Impairment of non-financial assets
    • Fair value measurement
    • New Accounting Standards and Interpretations not yet mandatory or early adopted.
    • Contingent liabilities
    • Commitments
    • Events after the reporting period
  • Incomplete Notes:
    • ‘Employee provisions’: long-term benefits
    • ‘Critical Accounting Estimates and Judgements’: none disclosed.
    • ‘Plant and Equipment’: the movement reconciliations.

Where the board members put their name behind the report – the Statement by the Members of the Committee – page 14 of the Financial Report

  • This is missing three of the four usual assertions.

An independent opinion on the financial statements – the Independent Auditor’s Report (page 15 of the Financial Report)

  • For some reason the auditors didn’t audit one of the statements that’s included in the report, the Statement of Changes in Equity, and didn’t comment on the fact that one of the required statements, the cash flow statement, has not been included in the report.
  • This is a ‘clean’ opinion.  Read here and here to draw the right conclusions from this.

Membership of accountability organisations claimed

  • None claimed.
  • Neither DR or DROAF are members of Missions Interlink (at 3 August 2015).
  • Neither DR or DROAF are members of ACFID.
  • Neither DR or DROAF are an accredited NGO.
  • Destiny Rescue USA is a member of the ECFA.

 

(End of review)

 

[i] Australian Charities and Not-for-profits Commission, Australia’s national regulator of charities.

[ii] This is how the ACNC explains ‘operating locations’ in their application guide: ‘You need to give details about where in Australia your organisation conducts (or plans to conduct) its activities.’

[iii] Because of the possibility of two (or more) directors having the same name on the register of responsible persons, it is not possible to be definitive about the number of directorships held.

Every Home Global Concern Limited, charity review

This is a charity review, a review, for supporters and potential supporters, of the Australian charity Every Home Global Concern Limited (EHGC).

It is structured according to the charity’s entry on the ACNC[i]Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your giving decision.

It is up to you to decide whether any or all of the information presented here is what you need in order to make that decision, and whether you should seek any other information, either from the charity itself or from other sources.

Ministry response

Prior to publishing this review, I sent my observations to the charity, on 18 November 2015, and invited them to comment. They did not respond.

Organisation of this review

  • The first part of this review is organised according to the headings in the register entry. This is how to use this section of the review:
    1. For each heading in the register entry, first read the information under that heading.
    2. Then check if that heading is included below. (Headings for which there is no comment are not included.)
  • There is then a more detailed comment on the Financial Report.
  • Lastly, there is a section Membership of accountability organisations claimed.

Sources

  • ACNC Register (including links)
  • Google search on the charity’s names (see Charity Details, below).
  • EHGC websites: Global Concern and Every Home for Christ.
  • Global Concern social media in the right of each webpage header. Not on LinkedIn.
  • Every Home for Christ social media sites, excluding FaceBook, in the footer of each webpage. Facebook here.   Not on LinkedIn.
  • State government fundraising licence registers.
  • www.glassdoor.com

REGISTRATION DETAILS

Entity Subtype

  • Neither of these types, despite the company’s name, is consistent with sharing the Gospel.
    • EHGC does, however, share the gospel – last year’s annual report (see below) records how many people have responded since the ministry began.
  • The company’s objects cannot be checked because it has not lodged its Memorandum of Association with the ACNC.

CHARITY DETAILS

Legal Name

  • EHGC is a public company, a company limited by guarantee.
  • Because it does not have an explicit prohibition against paying directors’ fees, it is not permitted to omit ‘Ltd’ on the end of its name.

Other Name(s)

  • The search result for the charity shows this to be separate names, Every Home for Christ and Global Concern, not one.
    • Despite the claim in last year’s annual report (see Charity’s Document (sic), below), that they are registered trading names, this is not supported by the register of such names – neither is registered as either a trading name or a business name.

Charity ABN

  • Tax deductibility: You cannot claim a tax deduction for a donation to EHGC.
    • But you can for a donation to its fund Every Home Global Concern Ltd Australia Overseas Aid Fund.

Charity Street Address

  • The postal address, from the website, is PO Box 168 Penshurst, NSW 2222 Australia. (Or PO Box 31-260 Milford, Auckland, 1330 NZ if you are in New Zealand.)

ANNUAL REPORTING

  • AIS 2015
    • This is EHGC’s compulsory Annual Information Statement 2015 (AIS 2015).
    • It gives basic financial information.
    • If you think that this is sufficient for you then you should note that:
      • Donations and bequests is, as far as can be calculated, $186K understated. All other revenue is therefore understated by the same amount.
      • There has been a small mistake in transcribing ‘Employee expenses’.
      • Grants and donations…for use outside Australia doesn’t match what’s shown in Section B in the same document, and cannot be checked with the Income Statement because it is not disclosed there.
      • All other expenses will therefore be correspondingly affected.
  • Financial Report 2015
    • The report was signed just over three and a half months after the year end.
    • It was then lodged one month after that.
    • The coverage of finances in this review is left until the financial report proper (Latest financial report – detail, below).

ABOUT THE CHARITY

  • Statement of Faith
    • Every Home for Christ: None found.
    • EHGC: NA
    • If there is one in the governing document (see Charity’s Document (sic), below), it would be in the Memorandum of Association. However, this has not been lodged with the ACNC.

Date Established

  • Here’s a history of the global Every Home for Christ organisation.
  • EHGC’s Story is not a history but a brief general description of what it does and how it does it.

Who the Charity Benefits

  • Vision
    • Every Home for Christ: None found.
    • EHGC: None found.
  • Mission
    • Every Home for Christ: None found.
    • EHGC: None found.
  • Activities (What did EHGC do?)
    • EHGC: See Date Established, above.
    • EHGC apparently is able to ordain people – the Executive Director is an ‘Ordained Minister of Every Home for Christ’.
    • Unfortunately all we can learn from EHGC’s Description of charity’s activities and outcomes in the AIS 2015 is that it sent money overseas to some countries and distributed ‘literature’ in some others:
      • $1,583,410 was sent overseas for community development or relief assistance in countries such as Nepal, Iraq, Bangladesh, India, Malawi, Zambia, Togo, Ethiopia, Madagascar, Swaziland, Cambodia and the Amazon with literature distribution in many other countries.
  • Outcomes (What did EHGC deliver?)
    • Unfortunately, although the AIS 2015 asked for a description of outcomes, EHGC gave only activities (see above).
  • Impact (How were people’s lives improved?)
    • Nothing systematic found.

Financial Year End

  • This means that the next financial report is due by 31 December 2016. Before that the financial information on the Register will be up to 18 months out-of-date.

WHERE THE CHARITY OPERATES

Operating State(s)[ii]

  • Licensed in all seven states except for Tasmania.
  • No State offices or representatives.

Size of Charity

  • With a revenue of $2.40 m, EHGC easily qualifies in the largest of the ACNC three size categories (‘Large’).

CHARITY’S DOCUMENT (SIC)

  • There is no Annual Report/Review available on the ACNC Register.
  • Neither is one available yet on the website. (Last year’s is on each website: Every Home for Christ and EHGC.

RESPONSIBLE PERSONS

  • Once appointed, EHGC directors serve for their lifetime. (See the company’s Articles of Association (Charity’s Document (sic), below)).

No. of Australian charity directorships[iii]

John Ealand                             1

Ken Koh                                    2

Roger Mackay                          1

Alexander Thomas                  1

D’arcy Watson                          2 (one D arcy, one D’arcy)

Steven Skorobogaty                2

Eric Leach                                 1

Davidson James                      1

  • It appears that neither website (EHGC and Every Home for Christ) has been updated for the latest changes (see the Directors’ Report, below).
  • James, Leach, Skorobogaty and Thomas have been on the board since the inception of the company. 

(End of review of the ACNC Register information)

Latest financial report – detail

  • Both the NZ organisations, Every Home Global Concern Incorporated and Every Home for Christ New Zealand, (a) have the same CEO as EHGC, and (b) three of the same directors as EHGC, one of whom is the Chairman of both companies.   The email address and website for Every Home for Christ are Australian. Despite these connections, there is no mention of related parties, let alone control and consolidation.

Directors’ Report (page 1 of the Financial Report)

  • No such report is required by the ACNC.
  • The qualifications, experience, and special responsibilities are not given for each of the directors.
  • ‘Director’ is not a ‘special responsibility’.
  • The following sections are missing: ‘Objectives’, ‘Strategy for achieving the objectives’, ‘Performance measures’, and ‘Contributions on winding up’.
  • Most of the sections included by EHGC are not required.

Auditor’s Independence Declaration…(page 5 of the Financial Report)

  • The ACNC does not require this to be lodged.
  • If an Act is referenced it should be the ACNC Act, not the Corporations Act.

What was earned, what was consumed during the year – the Income Statement (page 6 of the Financial Report)

  • The title of this statement does not comply with the Accounting Standards.
  • The format is long out-of-date.
    • ‘Other comprehensive income’ is missing.

Where the money came from

  • Revenues from ordinary activities $2.40 m (including Note 2)
    • This implies that revenue can also arise from extraordinary activities, a distinction that has long since gone from the Accounting Standards.
    • Besides, revenue is itself defined in the Standards as inflows that arise from ordinary activities.
    • There is no separate total for the Overseas Aid Fund.
    • Contributions received $1.69 m
      • There is no disclosure of bequests.Why are the contributions from ‘Every Home for Christ NZ’ and ‘Every Home for Christ UK’ not included in this total?
      • Why is ‘Spain funds for overseas’ not included in this total?
      • An unaudited additional statement, a Detailed Profit & Loss Account, is included at page 24.
        • Why was Israel Tour Income $84K included as ‘contributions’ in the Income Statement?
    • Interest received $10K
      • This should be ‘interest revenue’
      • Why is the amount identical to the cash received?
    • Contribution received from Every Home for Christ NZ $64K
    • Contribution received from Every Home for Christ UK $25K
      • Why are these two organisations making ‘contributions’ to EHGC?
    • Government grant received $598K
    • Spain funds for overseas $13K
      • Why is and the previous item not from operating activities?
    • Interest revenue from: other persons?
      • As opposed to interest from whom?

Where the money went

  • The following expenses are not disclosed:
    • Fundraising
      • In the ‘Information and Declarations to be Furnished under the Charitable Fundraising Act 1991’ (Note 12 of the Notes), ‘Fundraising expenses’ $62K are deducted from the income raised by fundraising to give a ‘Net income from fundraising’. However, in part (b) of the same statement ‘Total cost of fundraising’ includes ‘Administration’ of $494K.
    • Superannuation
    • Auditor’s fee
    • Administration
      • ‘Administration’ is shown as $494K in the ‘Information and Declarations to be Furnished under the Charitable Fundraising Act 1991’ (Note 12 of the Notes).
  • Employee benefits expense $382K (including Note 3)
    • Assuming that part-time employees average half-time, and ignoring the casual employees, this represents $85K per employee.
  • Borrowing costs expense $2K (including Note 3)
    • ‘Other persons’: as opposed to whom?
  • Other expenses from ordinary activities $1.98 m
    • This is 83% of expenses yet there is no explanation.

What’s left at the end of the year – the Balance Sheet (page 7 of the Financial Report

  • Cash and Cash Equivalents $738K (including Note 14)
    • There is no separate total for the Overseas Aid Fund.
    • These accounts should be summarised; a common classification is Cash on hand, Cash at bank, and Cash on deposit.
    • Why so many accounts anyway? Except for tax deductible versus not tax deductible, why not use the accounting system to provide the separation?
    • What is ‘No TDR’?
  • Receivables $117K (including Note 15)
    • The title is usually ‘Trade and other receivables’.
    • What are the material amounts in ‘Other Debtors’ $112K?
    • Are any of these amounts of doubtful collectability?
  • Property, Plant & Equipment $764K (including Note 17)
    • Why is the Queensland property not depreciated?
    • A reconciliation of written down values is missing.
    • The valuations were done four and nine years ago. Is this sufficiently recent so as to comply with AASB 116?
  • Payables $106K (including Note 18)
    • With money in the bank, why is an overdraft necessary?
    • If ‘Other Creditors’ $91K is accrued expenses, it is normally shown separately.
    • Normally titled ‘Trade and other payables’.
  • Borrowings $137K (including Note 18)
    • There is no explanation why the ‘Interest Free Loans’ are interest free.
      • Are they from related parties?
    • There is no explanation why the ‘Unsecured Loans for Investment’ are unsecured.
      • Are they from related parties?
    • Why are all these borrowings repayable beyond 12 months?

Movements in the net wealth of the charity – the Statement of Changes in Equity – page 8 of the Financial Report

  • This statement diverges markedly from what is required by the Accounting Standards.
    • Other comprehensive income is missing.
    • Reserves are missing.

Essential information to go with the figures – the Notes to the Financial Statements – page 10 of the financial report

Note 1   Statement of Significant Accounting Policies

  • It is unlikely that an Australian not-for-profit complying with the Australian Accounting Standards will also be in compliance with the International Financial Reporting Standards.
  • ‘Income’ should be ‘Revenue’.   The policy on ‘contributions’ (donations), and grants should be disclosed.
  • ‘Employee Benefits’ is missing the distinction between short-term and long-term benefits. And the policy on defined contribution superannuation payments.
  • ‘Goods and Services Tax (GST)’ is missing the policy on GST and (a) cash flows and (b) commitments and contingencies.
  • Missing from Note 1:
    • New, revised or amending Accounting Standards and Interpretations adopted
    • Current and non-current classification
    • Trade and other receivables
    • Impairment of non-financial assets
    • Trade and other payables
    • Fair value measurement
    • New Accounting Standards and Interpretations not yet mandatory or early adopted
    • Critical accounting judgments and estimates
    • Financial instruments
    • Related party information
    • Events after the reporting period

Note 5 Remuneration and Retirement Benefits

  • Two directors are being paid directors’ fees yet this is not authorised by the Articles of Association.
  • How can ‘Executive remuneration’ be zero?

Where the directors put their name to the Report again – the second Declaration by Directors of the Company (page 21 of the Financial Report)

  • The Act referenced should be the ACNC Act, not the Corporations Act.

An independent opinion on the financial statements – the Independent Auditor’s Report (page 22 of the Financial Report)

  • The Act referenced should be the ACNC Act, not the Corporations Act.
  • Reports by Australian NFPs that follow the Australian Accounting Standards are unlikely to comply with International Financial Reporting Standards.
  • This is a ‘clean’ opinion.  Read here and here to draw the right conclusions from this.

Membership of accountability organisations claimed

  • Each website (here and here) says that EHGC is accredited with AusAid/DFAT and ACFID.
    • You can confirm the first here, and the second here
  • Although the charity doesn’t refer to it, this listing of members shows that EHGC is a member of Missions Interlink.

(End of review)

 

 

[i] Australian Charities and Not-for-profits Commission, Australia’s national regulator of charities.

[ii] This is how the ACNC explains ‘operating locations’ in their application guide: ‘You need to give details about where in Australia your organisation conducts (or plans to conduct) its activities.’

[iii] Because of the possibility of two (or more) directors having the same name on the register of responsible persons, it is not possible to be definitive about the number of directorships held.