…Presbyterian World Mission Committee: mini-charity review for donors

Mini-review of Presbyterian Church of Australia Aust (sic) Presbyterian World Mission Committee (PWMC), as an organisation that seeks donations. (Including the answers to the questions that the Australian charity regulator, the ACNC, suggests that you ask.)

Is PWMC registered?

  • As a charity, yes.
  • Other registrations:
    • The ABN record says that PWMC is incorporated, but this is incorrect.
    • Not licensed to fundraise in the six states in which it says it operates. However, PWMC may argue that it is exempt in the ACT because they are accredited with AusAID, in Queensland because they are a ‘religious order’, and in Victoria because they can marry people. Plus the law in this area is not straightforward – is an internet invitation ‘fundraising’ for instance? – and advice varies, so check with the charity before drawing any conclusions.

What do they do?

  • ‘What do we do?
    • aid and refugee work
    • audio distribution of the Bible
    • Bible translation
    • church planting
    • teaching English as a Second Language
    • Evangelism
    • IT support
    • mission aviation
    • primary/secondary education
    • short term work parties to Vanuatu
    • theological education
    • training Australian indigenous leaders
    • university lecturing
    • …and many other activities that help spread the gospel [APWM Information Leaflet, here.]

Do they share the Gospel?

  • Although it is only one thing in this long list, one would expect that at least some of the missionaries doing good works are also sharing the Gospel.

What impact are they having?

  • There is no indication that they are assessing their impact. (I searched for ‘outcomes’ too.)

What do they spend outside the costs directly incurred in delivering the above impact, that is, administration?

  • The figures for PWMC are contained within those of the Presbyterian Church (New South Wales) Property Trust, along with those for eight other Presbyterian organisations.
    • You might ask them why, if they are a national organisation, their figures are they included in the accounts for a NSW organisation?

Can you get a tax deduction?

  • No.

Is their online giving secure?

  • PayPal is used, so yes.

What choices do you have in how your donation is used?

  • There are choices, but they are not specified on the website.

Is their reporting up-to-date?

  • They don’t have to report, their figures being included in a Group Financial Report. (That Report was submitted six days before the final date.)

Does their reporting comply with the regulator’s requirements?

  • AIS 2015: Yes – because none is required.
  • Financial Report: Yes – because none is required.
  • Group Financial Report (the report that includes PWMC’s figures):
    • You might ask how a true and fair view is shown if accounts that cover nine separate entities, including PWMC, don’t give any information about those organisations and, more particularly, their financial situation, and
    • You might question the decision that for an organisation as large, far-reaching and complex as the Presbyterian Church (New South Wales) Property Trust, there is nobody who relies or will rely on the financial statements to help them make decisions, and therefore that the directors’ decision to produce the type of financial statements that don’t comply with all the Accounting Standards is correct.

What financial situation was shown in that Report?

  • NA. (Not shown.)

What did the auditor say about the last financial statements?

  • She gave a ‘clean’ opinion. But as it’s on the consolidated financial statements, statements where PWMC is mentioned only on the cover as one of nine other entities whose figures have been included, you might question how much comfort you can take from that.

If a charity, is their information on the ACNC Register complete?

  • No. The following sections are blank: ‘Phone’, ‘Website, ‘Who the Charity Benefits’, and ‘Operates in (Countries)’.

Who are the people controlling the organisation?

  • There’s nothing about directors or a governing body on the website. ‘Responsible Persons’ on the Register shows two people.
    • Given that it’s a body belonging to an institutional church, it’s likely that these two are not in control, at least not on their own. The answer, at least formally, lies in the governing document.
      • The governing document on the ACNC Register is a sheet of paper with a link to a collection of documents on the church’s website. I have not read these in order to find the answer.

To whom is PWMC accountable?

  • They are, apart from the ACNC, accountable because of their membership of Missions Interlink.
    • However, when they describe their membership, they make no mention of the accountability aspect.
      • For one opinion on the strength of this accountability, see the section Activities in this review.

Is it responsive to feedback?

  • When sent a draft of this review, they did not respond.

 

 

Entrust Foundation: mini-review for donors

Mini-review of Entrust Foundation (Entrust) as an organisation that seeks donations. (Including the answers to the questions that the Australian charity regulator, the ACNC, suggests that you ask.)

Is Entrust registered?

  • As a charity, yes. But under its legal name, Mission Enterprises (Victoria) Ltd.
    • The website link leads to the website of Entrust Foundation. With nothing on the home page to say why.
      • The only reference to Mission Enterprises (Victoria) Ltd is in a FAQ:
        • Entrust was established to enable new donors to tap into our expertise, experience and partnerships that we have developed whilst running the not-for-profit company called ‘Mission Enterprises (Vic) (sic) Ltd’ for over 30 years[2]
  • Other registrations:
    • As a public company, a company limited by guarantee.
      • Not licensed to fundraise in the state in which it says it operates, Victoria. Nor in the other three that its trust (see below) operates in. Under either name. Nor in any of the other three states that have a licensing regime.
        • The law in this area is not straightforward – is an internet invitation ‘fundraising’ for instance? – and advice varies, so check with the charity before drawing any conclusions.

What do they do?

  • ‘Entrust is about identifying and funding projects that bring transformation to individuals and communities in the developing world amongst the poor and oppressed…We work closely through in-country implementing partners who identify, manage and report on our projects.  These partners and projects are spread across fifteen under-developed nations and Australia.  We cover the costs of doing this from our own resources, so 100% of donor’s money goes directly to the project! [About Us].

Do they share the Gospel?

  • Not according to information on the website.
    • In fact, there is no evidence that Entrust is a Christian organisation.
    • The objects in the constitution cannot be checked because Entrust has yet to comply with the ACNC’s requirement to lodge a governing document.

What impact are they making?

  • There is no indication that they are assessing their impact. (I searched for ‘outcomes’ too.)

What do they spend outside the costs directly incurred in delivering the above impact, that is, administration?

  • 32% of expenses.
    • However, these expenses do not come out of your donations:
      • We cover the costs of doing this [project work] from our own resources, so 100% of donor’s money goes directly to the project!
      • Revenue other than donations totalled $650K this year, easily covering administration expenses of $371K[3].

Can you get a tax deduction?

Is their online giving secure?

  • PayPal is used, so yes.

Is their reporting up-to-date?

  • Yes (but a week late.)
    • But if you are considering a large donation, I would ask for more up-to-date financial information – the accounts are for a year end that is now over 13 months ago.

Does their reporting comply with the regulator’s requirements?

  • AIS 2015: Except for the absence of outcomes, yes.
  • Financial Report 2015: No
    • Neither the Directors’ Declaration nor the Independent Audit Report are signed.
    • Only if you believe that there’s nobody who relies or will rely on Entrust’s financial statements to help them make decisions, is the directors’ decision to produce the type of financial statements that don’t comply with all the Accounting Standards correct.
    • You could also legitimately question the decision, without explanation, to not incorporate the business of their associates and subsidiaries in the accounts.

What financial situation was shown by that Report?

  • The very large surplus of current (short-term) assets over current (short-term) liabilities is due to the unexplained holding of $4.15 m in shares and managed funds that are traded for profit.
    • The much safer option of term deposits went from $1.01 m to zero.
  • There is an unexplained allowance for bad debts totalling 24% of the $995K short-term receivables.
  • There are unexplained loans of $1.58 m. This has not reduced from last year.
  • There are no long-term liabilities – including employee benefits – so with low current liabilities, equity is high.
  • See What do they spend…, above.
  • A very large surplus the previous year (31% return on revenue) was further increased (to 48%). There is no explanation.
  • There was an unexplained 30% increase in ‘Employee benefits expense’.

What did the auditor say about the last financial statements?

  • He gave a ‘clean’ opinion. To take the right amount of comfort for this finding, please read here and here.
    • But his report is unsigned.
    • And he agrees with the directors’ decisions that,
      • in effect, all users, both present and prospective, can request Entrust to tailor a financial report for them, and
      • the inclusion of associates and subsidiaries is not necessary for a true and fair view.

If a charity, is their information on the ACNC Register complete?

  • No, Entrust has not lodged a governing document. (It has been a requirement since the start of the ACNC in 2012.)
  • Less important:
    • Entrust is missing, under ‘Other Name(s)’, its two business names, Entrust Foundation and Entrust Projects.
    • M E Foundation for Aid and Relief Ltd is missing its size, phone and website, and incorrectly claims Entrust Foundation as one of its names.
    • The Trustee for Entrust Foundation has yet to select an Entity Subtype, and also claims Entrust Foundation as a name.

What choices do you have in how your donation is used?

  • Apart from ‘General Entrust Foundation’ you can choose from 61 projects, each of which can be also be reached by selecting from countries (14) or ‘causes’ (five).

Who are the people controlling the organisation?

  • The people listed under the label ‘Motivation’, here.
  • With the addition maybe of the other two shown on the Register: David Veith and Richard Beaumont.

To whom are they accountable?

Are they responsive to feedback?

  • When sent a draft of this review, this was the Project Manager’s response: ‘Thank you for this.  I have discussed it with our CEO.  Many of your comments[1] are items we are aware of and have actions already in place.  We will review all comments and where necessary we will take further action.’

 

 

  1. Only editorial changes have been made to the review since the comment.
  2. This implies that it is a separate organisation. It isn’t – Entrust Foundation is a business name owned by MEV.
  3. Last year, ‘Donations paid’ were 6% higher than donations received; this year only $774 K of the $1.56 m donations revenue was paid.
  4. With Entrust Foundation being a trading name of MEV, it doesn’t make sense for Entrust to be the trustee for Entrust Foundation.
  5. In fact, the two tax-deductible funds are nowhere mentioned on the website.

MMM Australia: mini-review for donors

Mini-review of MMM Australia (MMM) as an organisation that seeks donations. (Including the answers to the questions that the Australian charity regulator, the ACNC, suggests that you ask.)

Is MMM registered?

  • As a charity, yes.
  • Other registrations:
    • As a public company (a company limited by guarantee).
    • Operating in five of the seven states that have a fundraising licence regime, but not licensed in any of them. (A public request for donations – in the website header – may also, for some or all of the states, be an argument for being licensed.)

What do they do?

Do they share the Gospel?

  • No.

What impact are they having?

  • There is no indication that they are even assessing their impact. (I searched for ‘outcomes’ too.)

What do they spend outside the costs directly incurred in delivering the above impact, that is, administration?

  • From the classification of expenses used by MMM there is no clear way to even estimate this percentage.

Can you get a tax deduction?

  • No.
    • Not to MMM anyway. But to the fund run by the international association of MMM organisations, the charity M M M International Development Fund, yes.
      • There’s no link, or instructions though.

Is their online giving secure?

  • PayPal is used, so yes.

What choices do you have in how your donation is used?

  • None.

Is their reporting up-to-date?

  • Yes (and a month and a half before the final date)[1].
    • But if you are considering a large donation, I would ask for more up-to-date financial information – the accounts are for a year end that is now over 11 months ago.

Does their reporting comply with the regulator’s requirements?

  • AIS 2015: Not quite. No outcomes are reported, and it completed question 14(a) when it shouldn’t have.
  • Financial Report 2015: Questionable:
    • Do the directors’ realise that, by saying that “there are no users who are dependent on its general purpose financial statements” , they are also effectively saying that all current and prospective donors, staff and suppliers are able to command the preparation of a report tailored to their needs?
    • The accounting for ‘Special projects’ (Note 1o) and ‘Retirement funds held in trust’ (Note 1p) is questionable, but unlikely to be material.

What financial situation was shown in that Report?

  • MMM was unprofitable again this year, but at least the deficit was reduced by 59%.
    • I suspect that profitability will return now that MMM Build Pty Ltd has been closed.
  • Financial structure, both short-term (working capital) and long term (debt versus assets) is not obviously an issue.

What did the auditor say about the last financial statements?

  • He gave a ‘clean’ opinion. To take the right amount of comfort for this finding, please read here and here.
    • But he agrees with the directors’ decision – see Does their reporting.., above, – that the lower standard special purpose financial statements are appropriate.

If a charity, is their information on the ACNC Register complete?

  • Almost. It is missing information under ‘Other Name(s)’ and MMM Build Pty Ltd is overdue to select an Entity Subtype.

Who are the people controlling the organisation?

  • These people.
    • Or maybe Roderick McGarvie instead of Dale Richardson, as it says on the ACNC Register under ‘Responsible Persons’?

To whom is MMM accountable?

  • Although they make no mention of it, they are, apart from the ACNC, accountable because of their membership of Missions Interlink.

Is it responsive to feedback?

  • When sent a draft of this review, they did not respond.

 

 

  1. The document recorded as a Financial Report on both MMM Australia and MMM Build Pty Ltd is not a financial report, but a copy of the Group AIS.

Sydney Missionary & Bible College: mini-review for donors

Mini-review of Sydney Missionary & Bible College (SMBC) as an organisation that seeks donations. (Including the answers to the questions that the Australian charity regulator, the ACNC, suggests that you ask.)

Is SMBC registered?

  • Yes, as a charity.
  • Other registrations:
    • As a public company (limited by guarantee).
    • Operating in all seven states that have a fundraising licence regime, but licensed in only NSW. (A public request for donations may also, for some or all of the other states, be an argument for being licensed.)

What do they do?

  • Start with its name then
    • ‘SMBC is thoroughly evangelical and Bible-centred, interdenominational in character, strongly cross culturally mission minded and underpinned by a committment (sic) to learning and being transformed in the context of caring community.’

Do they share the Gospel?

  • Not directly, but one of the College’s two Schools is the School of Cross-Cultural Mission:
    • ‘At the core of the School is the belief that it is God’s mission to reach every tribe, nation and language with his gospel – and his people are called and privileged to participate in it.’

What impact are they making?

  • There is no indication that they are even assessing their impact. (I searched for ‘outcomes’ too.)

What do they spend outside the costs directly incurred in delivering the above impact, that is, administration?

  • From the classification of expenses used by SMBC there is no clear way to even estimate this percentage.

Can you get a tax deduction?

  • Yes, both to SMBC and its fund, the Sydney Missionary & Bible College Building & Maintenance Fund.
    • It is not clear, then, why only three of the seven funds for which it seeks donations are marked as being ‘tax deductible’.

Is their online giving secure?

  • Westpac’s Secure Portal is used, so yes.

What choices do you have in how your donation is used?

  • Seven different funds.
    • However, it appears that not a dollar was received last year in other than the ‘Building & Maintenance Fund’. A bit strange.

Is their reporting up-to-date?

  • Yes (and two months before the last date).
    • But if you are considering a large donation, I would ask for more up-to-date financial information – the accounts are for a year end that is now over 7 months ago.

Does their reporting comply with the regulator’s requirements?

  • AIS 2015: No
    • No outcomes are reported.
    • It says that general purpose financial statements were prepared whereas it was the lower standard special purpose statements.
    • ‘Employee expenses’ are $510K understated.
    • It says that their Financial Report was submitted to a state/territory regulator because SMBC is an incorporated association (which it isn’t).
  • Financial Report 2015: Questionable:
    • Do the directors’ realise that, by saying that “there are no users who are dependent on its general purpose financial statements” , they are also effectively saying that all current and prospective donors, students, staff and suppliers are able to command the preparation of a report tailored to their needs?

What financial situation was shown in that Report?

  • The financial situation was such that the directors thought it necessary to address whether the company was a going concern, that is, whether it was able to pay its debts as and when they were due and continue to operate for the next 12 months.
    • Their positive answer was based on the existence of a largely unused $350K overdraft facility, and no need to repay their $600K loan until April 2018 and their $850K loan until July 2019. You may question where the cash to make these repayments is to come from, especially as only $300K was repaid this year.
  • Revenue declined 41%, largely due to a decline in donations. However, the previous year appears to have been an aberration, so there doesn’t appear to have been grounds for having allowed ‘Faculty expenses’ to increase 23% and ‘Employee benefits and related costs’ to increase 10%. In fact, all expenses except two increased. And for one of those, ‘Finance costs’, the 54% decrease is, given the increased borrowings, unexpected.
    • A $1.18 m increase to land and buildings also contributed to the tight cashflow.
  • $30.21 m of land and buildings – and that is at cost – easily assures a sound longer-term financial structure.
  • The auditor’s independence was threatened by his involvement in the preparation of the report he was auditing. You may ask how this was countered.

What did the auditor say about the last financial statements?

  • He gave a ‘clean’ opinion. To take the right amount of comfort for this finding, please read here and here.
    • But he agrees with the directors’ decision – see Does their reporting.., above, – that the lower standard special purpose financial statements are appropriate.

If a charity, is their information on the ACNC Register complete?

  • Almost. It is missing information under ‘Other Name(s)’ and ‘Date Established’.

Who are the people controlling the organisation?

  • The directors, who, as the board, are accountable to the members, are not mentioned on the website. From the ACNC Register they are:
    • Kirrily Brown
    • Graham Bunn
    • Andrew Chen
    • Geoffrey Deane
    • Jennifer Fallon
    • Mark Freeman
    • Stuart Gow
    • James Lane
    • Simon Longden
    • Dean Rerekura
    • Scott Sanders

To whom is SMBC accountable?

Are they responsive to feedback?

  • When sent a draft of this review, they didn’t respond.

 

 

Reach Beyond: mini-review for donors

Mini-review of Reach Beyond as an organisation that seeks donations. (Including the answers to the questions that the Australian charity regulator, the ACNC, suggests that you ask.)

Is Reach Beyond registered?

  • Yes, as a charity.
  • Also as a public company (limited by guarantee).
  • Operating in all seven states that have a fundraising licensing regime, but not licensed in any of them. (They seek donations on the internet, so this may be another reason for a licence.)

What do they do?

  • ‘Since 2003 Reach Beyond (Australia) formerly HCJB Australia has been transmitting from far North West Australia to the Asia Pacific region through short wave radio and today broadcasts programs for 9 hours a day in 29 languages, including 17 South Asia languages [Who we are].
  • ‘To serve with global partners as the voice and hands of Jesus. Transforming individuals and communities, not only through dynamic media but also healthcare and community development’ [Our Mission].

Do they share the Gospel?

  • Yes. (Listen to a sample of the programs here[1].)

What impact are they making?

  • A search on ‘impact’ on the website produces seven hits. Only one describes an impact of the work, and that is about one person. Nothing for ‘outcomes’.
  • There is nothing relevant in the newsletters issued since July 2015 (March 2016 was partly unreadable.)

What do they spend outside the costs directly incurred in delivering the above impact, that is, administration?

  • There is insufficient information disclosed in the last accounts to even estimate this.

Can you get a tax deduction?

  • No.

Is their online giving secure?

  • PayPal is used, so yes.

Is their reporting up-to-date?

  • Yes.
    • But if you are considering a large donation, I would ask for more up-to-date financial information – the accounts are for a year end that is now nearly a year ago.

Does their reporting comply with the regulator’s requirements?

  • AIS 2015: Except for the absence of outcomes, yes.
  • Financial Report 2015: Questionable.
    • The directors’ decision (with the auditor’s agreement) to produce the type of financial statements that don’t comply with all the Accounting Standards is questionable.
      • At least 77%[2] of revenue is from donations, and from the picture painted by the Register, combined with the website, there are many donors, and they are spread far and wide. And then there are the prospective donors envisaged by the public request for money. Do the directors realise that they are saying that any of these donors, both present and prospective, can request Reach Beyond to tailor a financial report to suit their particular needs?

What was the financial situation shown by that Report?

  • Working capital – the excess of current (short-term) assets over current (short-term) liabilities – is negative. Superficially it appears that ‘Trade and other payables’ (creditors) has increased at the expense of the loan repayment. Cash may be at a premium.
  • The longer term financial structure appears sound[3].

What did the auditor say about the last financial statements?

  • He gave a ‘clean’ opinion. To take the right amount of comfort for this finding, please read here and here.
    • Note, however, that he approved the decision to issue the lower standard financial statements.

If a charity, is their information on the ACNC Register complete?

  • Yes.

What choices do you have in how your donation is used?

  • Although not supported by information elsewhere on the website, a message on the Donate page implies that you do:
    • To allocate your gift, when you reach the review donation page, please leave us a message.

Who are the people controlling the organisation?

  • These people[4]. (Who answer to the members.)

To whom is Reach Beyond accountable?

  • Apart from the ACNC, it is a Member of Missions Interlink.
    • This membership is put forward by Reach Beyond to support you giving to them.
    • About the accountability this provides: see the section Activities in this review.

Are they responsive to feedback?

  • When sent a draft of this review, they did not respond.

 

 

  1. Evangelism is required by the first object in the constitution: ‘to proclaim the gospel of Jesus Christ, by the making and broadcasting of programs by radio, other communicating technologies or other mean’.
  2. The revenue items ‘Receipts from Kununurra’ $126K and ‘Share the Cost Programs’ $44K may include some donations.
  3. There is some confusion in the Notes about what items have been revalued, and the valuation mentioned is well out-of-date.
  4. I assume that John Wilson on the Register is the same person as Ian Wilson here.

W.E.C. International: mini-review for donors

 Mini-review of W.E.C. International (WEC) as an organisation that seeks donations. (Including the answers to the questions that the Australian charity regulator, the ACNC, suggests that you ask.)

  • Ministry ‘bottom line’: ‘we prefer to speak to anyone who wants to know more of our purpose or support WEC in any way, (sic) we like to form long term relationships with supporters’ [see last question below].

Is WEC registered?

  • Yes, as a charity.
  • Also as a public company (a company limited by guarantee).
  • Operating in six states, but not licensed to fundraise in any of them.

What do they do?

  • ‘WEC Australia is made up of 6 teams that are here to help you & us achieve our vision of: Seeing Australians & their churches passionately involved in strategic roles so that multiplying churches are planted among unreached people throughout the world.
    • The six teams are mobilisation, support services, member care, Worldview, and the Australian leadership team [How we work].
    • All working towards this aim:
      • We aim to go to the least evangelised people and give them the opportunity to hear why Jesus came and why He had to die.

Do they share the Gospel?

What impact are they having?

  • A search on ‘impact’ and ‘outcome(s)’ produced no relevant hits.
  • Nor is there anything relevant in the last two quarterly newsletters.

What do they spend outside the costs directly incurred in delivering the above impact, that is, administration?

  • Excluding ‘Gifts and Donations’ and ‘Events & (the unexplained) Ministry’ from total expenses, the figure is 83%.

Can you get a tax deduction?

  • No, not according to the ABN record.
    • But that is contradicted, without explanation, on the giving page:
      • Donations to WEC are generally NOT tax deductible, although a few of our ministries are.

Is their online giving secure?

  • NA. (You have to send a completed form to them.)

Is their reporting up-to-date?

  • Yes. (Lodged a week before the last day.)
    • But if you are considering a large donation, I would ask for more up-to-date financial information – the accounts are for a year end that is now over seven months ago.

Does their reporting comply with the regulator’s requirements?

  • Ministry response: ‘Compliant reporting according to Government regulations will never manage to get into the organisations culture as it is at a high level and for general purposes.’
  • AIS 2015: Except for the absence of outcomes, it complies.
  • Financial Report 2015: Questionable compliance.
    • There is no mention of its fully owned subsidiary[2] Worldview Centre for Intercultural Studies.
    • Nor mention of its two ministries, BETEL and Rainbows of Hope.
    • Neither the Directors’ Declaration nor the Independent Audit Report make any reference to the legislation under which WEC report, the ACNC Act.
    • ‘Other Comprehensive Income’ is missing from the Comprehensive Statement of Income (and consequently, the Statement of Changes in Equity.)
    • The treatment of Financial Assets does not comply with the Accounting Standards.
    • There is no explanation why a charity with revenue of $803K, and that is involved only with sending missionaries overseas, would have a $20.42 m property portfolio.
    • Ditto financial assets of $2.16 m.
    • There is no explanation for the absence of employees.
      • Ministry response: Each WEC member is totally self supported by their own gifts and donations or personal jobs, which is why there is no employment status for any of our workers. While this may impose pressures on each worker, it enforces the development of personal relationships with our churches and supporters and releases the organisation to focus on training, sending and member care.’
    • The majority of the $315K non-current Payables should be reserves instead.
    • Note 9 says that there was a revaluation yet there is no change in the Asset Revaluation Reserve.
    • There is no explanation for how the loan, for 15 years, of $250K to Betel Australia Ltd is consistent with the mission.

What was the financial situation shown by that Report?

  • There is nothing obviously threatening either short-term or long-term stability.
    • This is helped by the fact that it has no paid staff.
    • The property holdings (see above) appear to be responsible for over 60% of WEC’s expenses. Is it getting sufficient return on these assets?

What did the auditor say about the last financial statements?

  • He gave a ‘clean’ opinion. To take the right amount of comfort for this finding, please read here and here.

If a charity, is their information on the ACNC Register complete?

  • The claim that it has no overseas operations does not fit with its mission.

What choices do you have in how your donation is used?

  • They are shown on the ‘Donate’ page of the website:
    • A general donation to help our Team in Australia Care, Mobilise and send workers to other countries to Reach People and plant Churches (sic),
    • A donation to a team of WEC workers overseas,
    • A donation to a WEC person you know and want to support their ministry [Donate].
  • Ministry comment on income: All money that comets us in (sic) is given, 100%, to the intended recipient and any member who incurs living costs paid by WEC is then required to reimburse WEC, so any WEC member achieves a zero personal benefit from WEC income. Much of the income reported is the reimbursements from WEC members.’

Who are the people controlling the organisation?

  • There’s a page Meet our team on the website, but it doesn’t even mention the Board.
  • See instead the Responsible Persons section on the Register.

To whom is WEC accountable?

  • Apart from the ACNC, it is a Member of Missions Interlink.
    • WEC doesn’t claim membership of Missions Interlink, but its subsidiary, Worldview Centre for Intercultural Studies does.
    • About the accountability this provides: see the section Activities in this review.

Are they responsive to feedback?

  • When sent a draft of this review, they responded quickly, challenging many of the comments. However, apart from one minor change, there was no reason to change the review. When I explained how I had come to this conclusion, they sent a general response, the appropriate sections of which have been included above.

 

 

  1. It is required by the first object in the constitution: to promote the speediest possible fulfilment of the command of our Lord Jesus Christ by a definite attempt to evangelise the remaining unevangelised parts of the Earth as enunciated in the Principles and Practice.
  2. Support for this view: (1) the statement on the website: “Worldview is a team of WEC Australia”, (2) the fact that the members of Worldview are members of WEC, and (3) Worldview’s statement that ‘the centre is an integral division of the missionary society WEC…

MAF International: mini-review for donors

Mini-review of MAF International as an organisation that seeks donations. (Including the answers to the questions that the Australian charity regulator, the ACNC, suggests that you ask.)

Note: MAF International does not seek donations for itself. The ‘Donate’ ‘Donate to MAF’ and ‘Give’ buttons on the website lead to a list of MAF organisations around the world. Selecting MAF Australia will take you to https://www.maf.org.au/. However, given that 45% of MAF Australia’s 2014-15 revenue, $1.67 m, was sent to MAF International, read on.

Is MAF International registered?

  • Yes, as a charity.
  • And, from ABN link in the ACNC Register, also registered as a public company.
  • Licensed to fundraise only in Queensland.
  • No licence required in the other state in which they operate, NT, but what about the fact that they seek donations on the internet?

What do they do?

  • ‘Mission Aviation Fellowship is an international Christian organisation whose mission is to fly light aircraft, and to use other technologies to bring help and hope to people in some of the world’s poorest communities’ [http://www.mafint.org/].

Do they share the Gospel?

  • No, this is not part of their mission (or objects in the constitution). They define ‘witness’ (one of their six values) as ‘Christ-like behaviour’.

What impact are they making?

  • ‘Impact’ is one of their values – ‘We value ministry that transforms lives and multiplies the effectiveness of those we serve, seizing opportunities to serve the living God in a fast-changing world’ – but there’s no information on the website about that impact.

What do they spend outside the costs directly incurred in delivering the above impact, that is, administration?

  • 32% of expenses.

Can you get a tax deduction?

  • Yes, you can.

Is their online giving secure?

  • NA. (It’s MAF Australia’s giving that has to be secure (see above)).

What choices do you have in how your donation is used?

  • NA. (See review of MAF Australia)

Is their reporting up-to-date?

  • Yes (and although over five months after the year end, not late)[3].
    • But if you are considering a large donation, I would ask for more up-to-date financial information – the accounts were signed in May 2016 for a year ending on 31 December 2015.

Does their reporting comply with the regulator’s requirements?

  • AIS 2015: No
    • No outcomes are reported.
    • The Financial Information is in Australia dollars, yet the attached financial statements are in US dollars. Doesn’t seem right.
      • If the transactions were in Australian dollars, why the need to ‘convert’ the financial statements for the AIS?
    • The figures are rounded to the nearest thousand, not the nearest dollar.
  • Financial Report 2015: Doubtful.
    • Only if you think the directors’ decision to say that there are no users who are dependent on general purpose financial statements is reasonable.
    • Only if you think that the directors show a true and fair view even though
      • There is no disclosure of the related party transactions and balances, which in MAF International’s case are probably extensive.
      • The financial statements do not include MAF International’s two wholly owned subsidiaries, MAF Aviation Services Pty Ltd and MAF PNG Holding Ltd.
        • The first is an Australian charity holding assets of $7.91 m and liabilities of $7.76 m. Because it is a small charity, there are no further details. MAF International’s Notes disclose that the asset is a long-term loan to the other subsidiary. But there is no disclosure on the liabilities.
        • The other subsidiary, thePNG registered MAF PNG Holdings Ltd, itself has a wholly-owned PNG subsidiary. Ask the PNG Government if you need more information

What is their financial situation?

  • Revenue declined 13%, principally due to lower operating revenue (not donations). Expenses were constant, so only a small surplus. (But reserves are high.)
  • Current (short-term) assets are over three times current (short-term) liabilities.
  • They have a heavy dependence on subsidiaries:
    • 69% of non-current assets rely on subsidiaries staying healthy.
    • 33% of non-current assets are amounts owing by subsidiaries not expected to be collected in the next 12 months. And on which no interest is earned.

What did the auditor say about the last financial statements?

  • This report is a ‘clean’ opinion. To take the right amount of comfort for this finding, please read here and here.
    • Note, however, that he approved of the directors’ decision to produce the type of financial statements that require less disclosure. These are only a correct choice if they are no users, present or prospective, who are dependent on the fuller statements to make their decisions about MAF International[1]. With expenses of $8.59 m, spread across 14 (ACNC) / 11 (website) countries[2], you might question this.
    • And he also approved of the decision to leave the two subsidiaries out of the accounts. With airplanes and debt involved, do you think that you get a proper picture of MAF International?

If a charity, is their information on the ACNC Register complete?

  • Almost. They are long overdue in selecting an ‘Entity subtype’ and there’s nothing under ‘Phone’ and ‘Website’.

Who are the people controlling the organisation?

  • MAF International is a wholly owned subsidiary of a UK MAF group company, so ultimately the control rests with them. We don’t know how much direction that company exercises.
  • Ignoring that, in Australia MAF International is controlled by the people shown here.
    • On the Register, there’s also William Harding[4].

To whom are they accountable?

Are they responsive feedback?

When sent a draft of this review, they did not respond.

 

 

  1. They are effectively saying that any user, current or prospective, can request MAF International to tailor a set of financial statements to suit them.
  2. Only eleven are listed on the website.
  3. The website has yet to be updated for the latest financial statements (issued on 20 May 2016).
  4. and two directors have a different first name to that on the website.

Interserve Australia Inc, charity review

N.B.  Upon learning that the charity was disappointed that I did not wait until the return from holidays of the owner of the Charity Address for Service email address before publishing, I immediately offered to incorporate their comments.  I am now waiting for those comments.

This is a charity review, a review for those with an interest in the Australian charity Interserve Australia Inc (Interserve).

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

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 8 August 2016, 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. This also applies to the information in the Financial Report.)
  • There is then a more detailed comment on the Financial Report.
  • Lastly, there is a section Membership of accountability organisations.

Sources

  • ACNC Register (including links)
  • Google search on the charity’s names.
  • Interserve website.
  • Social media: according to the website, only Facebook (as Interserve Australia).
  • Not on LinkedIn.
  • State government fundraising licence registers.
  • No reviews on Glassdoor.

REGISTRATION DETAILS

Entity Subtype

  • The first subtype is one that is consistent with sharing the Gospel.
  • Sharing the Gospel is required by the company’s first object:
    • To work in partnership with Australian churches to recruit suitably qualified people to make Christ known by word and action throughout the world, especially in Asia and the Middle East.

CHARITY DETAILS

Legal Name

  • Interserve is a Victorian incorporated association (No. A0025704J).

Other Name(s)

  • Interserve does not have any name registered other than its legal name (above). It therefore cannot use a name other than this in anything official. Therefore it’s use of ‘Interserve’, on Facebook for instance, is questionable, especially as there is another entity called Interserve Pty Ltd.

Charity ABN

  • Tax deductibility: No, you cannot claim a tax deduction for a donation to Interserve itself. However, you can for a donation to its fund, Interserve Overseas Aid Fund.
  • This is recognised in the answer to a ‘Giving FAQ’ on the website:
    • In Australia, a tax deduction can be claimed for donations to certain types of work only. Donations supporting Interserve Partners working in community aid and development are paid into our Overseas Aid Fund and are tax-deductible. Donations supporting Partners doing non-development work (such as theological education, classroom teaching or pastoral work) are not tax-deductible. Other income received by Interserve – including unallocated donations, income from special appeals and bequests – is paid into the Overseas Aid Fund and is tax-deductible for the giver.
      • However, it isn’t possible to tell which workers do work that is eligible for a tax deduction when you give via the website.

Charity Address for Service

  • I have no reason to believe that this does not work.

Charity Street Address

  • From the website: PO Box 231 Bayswater VIC 3153.

Phone

  • A free one, from the website: 1800 067 100.

Email

  • I have no reason to believe that this does not work.

ANNUAL REPORTING

  • AIS 2015
    • This is Interserve’s compulsory Annual Information Statement 2015 (AIS 2015).
    • It gives basic financial information. If you think that this might be sufficient for you,
      • The financial statements are not the general purpose ones declared here, but the ones drawn up to a lesser standard, special purpose financial statements.
      • The financial statements show $2.98 m ‘Funds to international programs’ and their support costs, yet no grants are shown here.
      • ‘Employee expenses’ is $43K larger than ‘Staff benefits’ in the financial statements.
      • ‘Total current liabilities’ is much larger in the financial statements ($597K).
      • ‘Non-current loans’ are actually current loans.
  • Financial Report 2015
    • The Report was signed three and a half months after the year end.
    • It was nearly two months after that before it was lodged.
    • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below). (Go straight there.)

ABOUT THE CHARITY

  • Statement of Faith
    • This is much longer than the one in the constitution.
      • I have not checked whether the content matches.

Date Established

  • There is no history on the website. (The history here, is of Interserve internationally.)

Who the Charity Benefits

  • Vision
    • ‘Lives and communities transformed through encounter with Jesus Christ.’
  • Mission
    • ‘to make Jesus Christ known through wholistic ministry, in partnership with the global church, amongst the neediest peoples of Asia and the Arab World.’
  • Goals
    • A search of the website shows a number of incidental references to Interserve’s goals, but nowhere are they given.
  • Activities (What did Interserve do?)
    • In the AIS 2015:
      • Our personnel serve in a broad range of organisations throughout Asia and the Arab world. Working to promote child protection, training local workers in conflict resolution in nations without peace. They fill broad roles including engineers, educators, medical research, counselling, agronomy and community development, IT and administration, traiing and Media (sic) professionals.
        • At this level of generality, each year the AIS is going to say the same. What was different about 2015?
        • No mention of the Gospel.
  • Outcomes/Impact (How were people’s lives improved?)
    • Unfortunately Interserve did not respond to the ACNC’s request, in the AIS, to describe its outcomes.
    • Nothing found on the website.

Size of Charity

  • With revenue of $4.84 m, Interserve easily qualifies for this category.

Financial Year End

  • This means that the next financial report is due by 30 June 2017. Before that the financial information on the Register will be up to 18 months out-of-date.
    • You may therefore need to ask for more up-to-date information.

WHERE THE CHARITY OPERATES

Operating State(s)[1]

  • Interserve has the necessary registration (an ARBN) to allow it to legally trade interstate.
  • It has a fundraising licence in the two of the three states in which it has a physical office. Why not the third?
  • And, given it operates in the other four states that have a licensing regime, why not in them too?
  • Interserve makes a prominent call for donations from the public on its website. It may be that one or more state fundraising authorities believe that this means that a licence is necessary.

Operates in (Countries)

  • There is no listing of countries on the website.
  • Five countries, but only four ‘partners’.

CHARITY’S DOCUMENT (SIC)

  • An Annual Report/Review can be lodged on the ACNC Register, but Interserve hasn’t done this.
  • There isn’t one on the website either.

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions[2]

Ricky Campbell-Allen                1

Joel Erkkila                                  1

Greg Horth                                  1

Allan Mathews                           1

Alison Morgan                            1

Lorraine Taylor                          2

Ruth Thorne                                1

Kim Vanden Hengel                  1

Pamela Winstanley                   1

    • Is Ricky Campbell-Allen this one?
    • Is Joel Erkkila this one?
    • Is Allan Mathews this one?
    • Is Kim Vanden Hengel this one?
    • Campbell-Allen and Winstanley are new since the Director’s Report (see below).
    • There is no listing of the directors on the website.

(End of review of the ACNC Register information)

Latest financial report – detail[3]

  • For a $5m charity supported principally by donors, and operating all over Australia, the directors’ decision that Interserve is not a reporting entity is highly questionable. Do they realise that they are saying that any donor or potential donor is able to get from Interserve a financial report that is tailored to their needs?

The Director’s (sic) Report – the first page of the Financial Report

  • This is not required by the ACNC. (Nor is the Statement by National Director & Operations Manager to the Board on the fourth page.)
  • Compared to good practice:
    • Some sections are missing:
      • Objectives
      • Strategy, and
      • Performance measures.
    • ‘Principal activities’
      • is too general to be very helpful, and
      • says that Interserve works in 20+ countries yet only five are listed on the ACNC Register.
    • Contrary to what is stated under ‘Board Members’, two directors were not on the board at the date of the report.
    • Three of the six sections are unnecessary.

Where the directors put their name to the report – the Director’s (sic) Declaration – the third page of the Financial Report

  • Given that Interserve has been reporting under the ACNC Act for a few years now, that Act should at least be mentioned.

An independent opinion on the financial statements – the Independent Auditor’s Report…– the fifth page 29 of the Financial Report

  • This report is a ‘clean’ opinion. To take the right amount of comfort for this finding, please read here and here.
  • The auditor says that Interserve is reporting under the ‘Accounting Standards – Reduced Disclosure Requirements’, but these apply to general purpose financial statements, not the special purpose statements that the directors said they have followed. Confusing.

What’s left at the end of the year – the Statement of financial position – the seventh page of the Financial Report

  • Where’s the GST liability/asset?
  • Total Cash $3.19 m
    • This should be, as acknowledged in the Notes, ‘Cash and cash equivalents’.
    • It equals 7.5 months of revenue.
  • Debtors $37K
    • What is sold on credit?
  • Staff Loan $5K
    • It’s not much, but not typical. Why lend to staff?
  • Available for Sale Financial Assets – Shares at Market Value $779K
    • What is the justification for holding shares, a relatively risky asset class?
  • Furniture, Office Equipment and Vehicles at Cost $312K
  • Freehold Land & Buildings at Cost $654K
    • The above two classes (line items) should be combined under ‘Property, Plant and Equipment’.
    • In Note 2, there is no explanation of the ‘Improvements after adjustment of Re-class (sic) to Renovations of $10200’ or the ‘Reclassification of assets’.
  • CURRENT LIABILITIES
    • No total is shown.
  • Provision for Resettlement $248K (current) and $699K (non-current)
    • Why is this not included in ‘Provision for Employee Entitlement?
  • Unsecured Borrowings
    • Why borrow when there is surplus cash? Especially at interest.
  • Provision for Employee Entitlement (sic) $110K
    • Are there really no non-current employee entitlements?
  • Total Current Liabilities
    • This figure is for liabilities, not current liabilities.
  • Accumulated Funds
    • This has a different name, Retained Earnings, in the Statement of Changes in Equity.
  • Provisions
    • Provisions are not reserves; they are liabilities.
  • International Expense Reserve (USA Special Donation)
    • There is no explanation of this unusual item.

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

  • The # in the heading: the ‘ACFID Code of Conduct’ cannot overrule what is required by the Accounting Standards.
  • This statement is not particularly easy to read.
  • It is not possible to tell how much was received for the Overseas Aid Fund (see Charity ABN, above).
  • There is a graphic on the ninth page of the Financial Report that allows one to see how much was donated in most of the giving categories on the website.
  • Support for Volunteers $2.53 m
    • How is it right to call them ‘volunteers’? The ‘workers’ are paid a living wage.
    • If ‘All donations are placed into a pool from which all allowances and costs are paid’, why is the worker’s name asked for when one is donating to the category ‘Interserve Worker’ on the website?
      • And doesn’t this make them employees just like the Australian staff?
  • Other Income $104K
    • This is not revenue, but gains, a separate component of income.

‘Expenditure’ (should be ‘expenses’), including Note 5

  • Disclosures missing:
    • Superannuation expense
    • Finance costs
    • Administration (in total), and perhaps fundraising too (in total).
  • Staff benefits $924K
    • Using the number of employees shown in the AIS 2015 (10 full-time, 11 part-time, and two casuals), and assuming that part-timers work 50% of full-time hours, and casuals 10%, this represents average benefits of $59K p.a.
    • Why is this $967K under ‘Employee expenses’ in the AIS 2015?
    • Why ‘Staff benefits’ when the provision is ‘Employee entitlement’?
  • Partner benefits $2.03m
    • Why call the workers ‘partners’ when the industry commonly uses this term to refer to donors?
    • Interserve says that it is responsible for supporting its ‘partners’:
      • Interserve Australia carries responsibility for partners’ financial needs whilst on the field, as well as providing general administrative support and pastoral care particularly whilst partners are on home assignment. In all its actions Interserve seeks to encourage the sending church(es) to participate fully in the ministry and care of their missionaries.
        • What, therefore, is the distinction between those working in Australia versus those working overseas that allows Interserve to exclude the latter from disclosures about employees?
          • Does this exclusion extend to the legal obligations of employers, for instance, superannuation?
  • Funds to international programs $1.97 m
    • The revenue is called ‘Support for Volunteers’ (see above). Why is there no mention of this when the money is spent?
      • How much of this is for the ‘partners”?
    • Why is the money that is sent to the ‘partners’ not classified as employee expenses?
    • Together with the other program expense item (‘International Theology and Education Programs’), this represents 70% of revenue.
    • Why doesn’t this appear as grants in the AIS 2015?
  • Program support costs $1.00 m
    • This represents 20% of income.
    • If the program consists of supporting individual workers, what is needed outside paying them?
    • Why is the cost of supporting the workers outside their entitlements another 51% of those entitlements?
    • Why isn’t domestic programs expenditure similarly split between funds disbursed and support costs?
    • There is no disclosure of where this money goes.
  • Community Education $189K
    • This represents 4% of income.
    • There is no description of what is being taught.
    • One would think that much community education serves the fundraising effort as well. How therefore are the expenses distinguished?
    • How is the impact of this expenditure measured?
  • Fundraising Costs – Public $93K
    • This represents 2% of income.
  • Accountability & Administration expenses $243K
    • This represents 5% of income.
    • What’s the dividing line between this item, and the costs to administer the programs included in ‘Program support expenses’ (above)?
  • International Theology and Education Programs
    • Programs Expenditure $1.44 m
    • Domestic Programs Expenditure $163K
      • Why don’t these show as grants in the AIS 2015?

The two charts on the 5th last page

  • Where’s the asterisk for the footnote ‘*Excluding designated gifts’?
    • Why should either chart exclude such a large component of the total?
  • What is done overseas that is ‘Non Developmental’ (sic)?

Essential information to go with the figures – the Notes to the financial statements – the third last page of the Financial Report)

  • Note 1 Statement of Accounting Policies
    • (a) Basis of Preparation
      • If Interserve, as the directors say here, is not a reporting entity, reduced disclosure requirements do not apply.
      • The Accounting Standards that have been followed are not specified.
      • The directors do not say why they think that Interserve is not a reporting entity.
      • The governing Act is the ACNC Act. It is under that Act that Interserve is allowed to continue to submit its accounts prepared for the state associations authority.
    • (b) The Statement of Comprehensive Income
      • There are no ‘Welfare Funds’ shown.
    • (c) Available for sale financial assets
      • What ‘other financial instrument assets’?
    • (e) The policies on reviewing depreciation factors and derecognition of assets are missing.
    • (f) There is no evidence of any leases.
    • (g) Why wait six years before accruing long service leave? How is it estimated?
    • (k) Why include deposits of up to one year when the norm is three months?
    • (i) The policies for receivables/payables, cash flows and commitments and contingencies are missing.
    • Policy Notes normally included but not in these accounts:
      • New, revised or amending Accounting Standards and Interpretations adopted
      • Current and non-current classification
      • Trade and other receivables
      • Trade and other payables
      • Fair value measurement
      • New Accounting Standards and Interpretations not yet mandatory or early adopted
  • Missing Notes:
    • Critical accounting judgements, estimates and assumptions
    • Trade and other receivables – the provision
    • Contingent liabilities
    • Commitments
    • Events after the reporting period
    • Reconciliation of surplus after income tax to net cash from operating activities

Membership of accountability organisations claimed

  • In part answer to the FAQ ‘Who is Interserve accountable to?’, on the website, Interserve says that it is
    • registered with and accountable to the Australian Charities and Not-for-Profits Commission (ACNC). Interserve is a member of Missions Interlink and the international Micah Network.
      • The accountability provided by the ACNC is at a high-level, and mostly not particularly timely.
      • Missions Interlink membership confirmed. Missions Interlink provides very limited accountability.
      • The Micah Network provides no accountability.

(End of review)

 

 

  1. 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.’
  2. 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.
  3. I use Pinnacle Financial Statements, respected in the profession as providing a very sound basis for producing compliant financial reports. To this I add an assessment of materiality (both quantitative and qualitative), where the users being considered are donors.

TEAR Australia, charity review

This is a charity review, a review for those with an interest in the Australian charity TEAR Australia (TEAR).

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

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[1].

Ministry response

Prior to publishing this review, I sent my observations to the charity, on 1 August 2016. Their comments have been incorporated below.

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 name.
  • TEAR websites, here, here, and here.
    • There appears to be something wrong with the search facility on the main TEAR website. For instance, a search on ‘our vision’, gives 782 hits, but despite the term being used under Mission Statement (see Vision, below), it doesn’t occur in the first page of results.
      • Ministry comment: ‘We took a look at this and found it a bit complicated to easily change on our website but our Mission Statement is easily found under “About TEAR”.’
  • Facebook: TEAR, The Justice Conference
  • Vimeo Twitter, Instagram, Pinterest, YouTube.
  • LinkedIn.
  • State government fundraising licence registers.
  • No reviews of the Australian organisation on Glassdoor.
  • TEAR’s Submission to the Independent Review of Aid Effectiveness, February 2011
  • The 2009 paper by the Centre for Policy and Development Systems, ‘Aiding the World’s Poorest: Some Suggestions to Tear Australia’.

REGISTRATION DETAILS

Entity Subtype

  • Not a Subtype that is consistent with the sharing of the Gospel.
  • Which is consistent with its absence in TEAR’s objects, the first of which is
    • to provide direct relief of persons in necessitous circumstances in Australia and throughout the world by reason of poverty, sickness, destitution or helplessness whether in consequence of natural disaster or otherwise but in all circumstances in response to the love of our Lord Jesus Christ and to demonstrate His compassion; [punctuation is copied accurately]
  • Not only does TEAR not fund proselytization, but it equates the sharing of the Gospel while practising community development as efforts to ‘manipulate people into the church’:
    • …TEAR’s policy is to finance the relief, development and advocacy activities of organisations who are motivated by their faith in Christ, and by their desire to demonstrate the depth of God’s commitment to justice, to mercy, to the poor. We do not fund proselytizing activities, but we rejoice and celebrate when we know of people whose lives have been wonderfully and beautifully enriched by the embrace of God in Christ. But we will not support any attempt to misuse relief and development activities to manipulate people into the church. We believe such attempts lack integrity, result in poor development, and dishonour the One who is our motivation.
  • How, then, is TEAR any different to a secular public benevolent institution that’s also trying to bring about ‘a just and compassionate world in which all people have the opportunity to achieve their God-given potential’ (TEAR vision, see below)?
    • Ministry comment: ‘TEAR’s theological underpinnings shape the way we approach the work we do both in Australia and overseas. In practical terms this means we only work with local Christian partner agencies (local church, Christian NGOs and CBOs) who share our approach and ethos to holistic development projects. For more on our theology of development see our publication Target magazine and forTomorrow website.’

CHARITY DETAILS

Legal Name

  • TEAR is a public company limited by guarantee.
  • It is entitled to omit ‘Ltd/Limited’ at the end of its name.

Other Name(s)

Charity ABN

  • Tax deductibility: You can claim a tax deduction for a donation to either TEAR itself, or the fund that it operates, Tear Fund (Australia) Developing Countires Aid Fund.

Charity Street Address

  • It appears that they may have another office: the Victorian government’s ‘fundraiser details’ page for TEAR gives its address as 6 Holly Court, Mitcham 3132.
    • Ministry comment: ‘We will amend this when lodging next return – this was linked to one of our directors.’
  • The postal address, from the website: PO Box 164, Blackburn, VIC, 3130, Australia.

Phone

  • From the website: 03 9264 7000 or 1800 244 986 (Free call).
  • From the Google search: 03 9877 7444. The website shows this as the number for the Victorian contact – but at the same address as the National office.

Website

ANNUAL REPORTING

  • AIS 2015
    • This is TEAR’s compulsory Annual Information Statement 2015 (AIS 2015).
    • It gives basic financial information. If you think that this might be sufficient for you, you only need note that the ‘Employee expenses’ cannot be confirmed in the financial statements because they are not disclosed there.
  • Financial Report 2015
    • The accounts were signed two and a half months after year end.
    • The Report was then lodged one and a half months after that.
    • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below). (Go straight there.)

ABOUT THE CHARITY

  • Statement of Faith
    • See ‘Statement of Belief’, here.
    • The constitution, adopted in 2014, requires applicants for membership to sign an ‘agreement to the Basis of Belief and Charter’. However, the Charter is in neither the constitution or on the website.

Date Established

  • There’s a brief history on the website.

Who the Charity Benefits

  • Vision
    • Under Mission Statement (see below):
      • Our vision is for a just and compassionate world in which all people have the opportunity to achieve their God-given potential.
  • Mission
    • You might question how excluding the Gospel (see Entity Subtype, above) is consistent with TEAR’s mission to encourage ‘biblically-shaped responses to poverty and injustice’, and to work ‘holistically’.
      • TEAR acknowledges that ‘Poverty in much of the contemporary Christian literature is understood as a complex web of broken relationships and sinful systems.’ How then can it justify – other than by the decision to go for government grants – to omit from ‘holistic’ development the most important broken relationship of them all?
  • Activities (What did TEAR do?)
    • From the AIS 2015:
      • Community development in disadvantaged communities with international and Australian partners. Fundraising from Australian public (primarily Christian public). Speaking engagements at churches, schools and community groups. All of this work is done to help build a more just and compassionate world.
        • Except for the addition of the last sentence, this is identical to last year, so not a helpful response to the ACNC’s request for 2015’s activities.
    • See the website for the ‘Areas of Focus’.
  • Outcomes (What was delivered?)
    • Unfortunately, in the AIS 2015, in response to the request to describe activities and outcomes, there are only activities (see above).
      • Ministry comment: ‘We will review the 2016 AIS return and update accordingly to include both.’
    • Nothing systematic found.
  • Impact: (How were people’s lives improved?)[2]
    • No systematic evidence found.
    • The ‘Impact Report, Sector Analysis For Basic Health, 2014-15’, apart from a short description of the impact of a project on seven individuals, merely describes who received services.
    • Projects are evaluated – see Frequently Asked Questions under www.tear.org.au/about – but we are not told whether impact is one of the measures.
      • Ministry comment: ‘All TEAR funded projects include rigorous design (at the start), monitoring (throughout) and evaluation (at the end). Given the diversity of these projects, each has its own unique outcome measurements which are reported.’

Size of Charity

  • With revenue of $17.80 m, TEAR is a mega-charity, even when compared with just those in this category.

Financial Year End

  • This means that the next financial report is due by 31 January (following the ACNC’s repeat of its (generous) extension (to all charities)). Before that the financial information on the Register will be up to 19 months out-of-date.
    • You may therefore need to ask for more up-to-date information.

WHERE THE CHARITY OPERATES

Operating State(s)[3]

  • Although TEAR operates in all six of the states that require it to have a licence, it doesn’t have a licence in SA.
    • Ministry comment: ‘…SA information was delayed due to SA Govt. processing delays, now updated.’
    • And three of its licences are in its former name (changed in 2012).
      • Ministry comment: ‘WA and Qld – we will update when lodging next return. Tasmania now corrected.’
    • The Victorian government’s ‘Fundraiser details’ for TEAR show that all beneficiaries are overseas, which is not the case.
      • Ministry comment: ‘Will check when the next annual renewal is submitted.
  • TEAR has a prominent call for donations on its website. And seeks donations on Donations.com.au, GiveNow.com.au, and via crowdfunding.
    • This is perhaps, depending on the view of the state authorities, another reason for having a fundraising licence in each state.

Operates in (Countries)

  • This matches the number mentioned in the Annual Report.

CHARITY’S DOCUMENT (sic)

  • An Annual Report/Review can be lodged on the ACNC Register, but TEAR hasn’t done this.
  • There is, however, one on the website.

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions[4]

David Bartlett                                8

Helen Beazley                                1

Joanna Betteridge                         1

Jane Furniss                                   1

Brett Gresham                               1

Elizabeth Hill                                 3

Gregory Manning                         2

Matthew Maury                            1

Peter Noble                                    4

Brooke Prentis                              1

  • If it is the same David Bartlett for all eight charities, you may reasonably question how somebody who is a partner in accounting firm and a director of at least one other organization can successfully discharge their fiduciary responsibilities.
    • Ministry comment: ‘ACNC list updated (this is usually done annually when the finance statements are finalised). David Bartlett is no longer a member of the board however he provided insightful and valuable service during his tenure.
      • Reviewer response: It is a legislative requirement to tell the ACNC of any change in responsible persons ‘as soon as you reasonably can’, or within 28 days at the latest.
  • There is no listing of the directors on the website.
    • Ministry comment: ‘A full list of directors is contained in the Annual Report, which is loaded on the website. We are investigating listing board members under a separate page.’
  • Two people shown in the Annual Report as being part of the board, Mikaela Belling and Elaine Stops, are, in fact, not directors, but observers.
    • Ministry comment: ‘The report notes that they are Associate Board members. However, we have noted to clarify this for 2016 annual report.’
  • Under ‘Position’:
    • What is the distinction between ‘Board member’ and ‘Director’?
      • Ministry comment: ‘Will be updated.’

(End of review of the ACNC Register information)

Latest financial report – detail[5]

Directors’ Report (page 1 of the Financial Report)[6]  and Auditor’s Independence Declaration…(the fifth page of the Financial Report)

  • Neither are required by the ACNC.

What was earned, what was consumed during the year – the Statement of Profit or Loss and The Statement of Comprehensive Income (page 5 of the Financial Report)

  • Revenue from Operating Activities $17.80 m (including Note 2)
    • This does not match Note 2; that Note shows that some of this revenue was ‘non-operating’.
      • Ministry comment: ‘Page 8 of 2016 Financial Report now splits Revenue between Operating Activities and Non-Operating Activities.’
    • Donations $11.28 m
      • There is no breakup of this amount, so a match, even at the fundamental level of (a) general giving, monthly giving, and gifts on the website, and (b) the two tax deductible options, is not possible.
    • Legacies and Bequests $505K
      • This means that total donations comprise 66% of revenue.
    • DFAT Grants
      • ‘DFAT’ stands for the Department of Foreign Affairs and Trade, an Australian Government department.
      • This is 31% of revenue.

Expenses

  • Employee benefits expense is not disclosed
    • From the AIS 2015 we know that it is $3.16 m
      • Deducting the $642K benefits paid to ‘key management personnel’ (see Note 4, below), and assuming that the other 26 part-timers shown in the AIS 2015 work 50% of full-time, and the 10 casuals work 10%, this represents an average of $55K per employee.
    • Superannuation expense.
  • Funds to Overseas Projects $12.51 m
    • There is no disclosure of the destination of this money, so a match to either the countries or the projects shown on the website is not possible.
    • How much of this money is sent directly to ‘partners’, and how much is sent via an intermediary?
    • How do we know that this money got to the destination intended by the donor? This is one of the ‘Frequently Asked Questions’ under www.tear.org.au/about:
      • All projects are audited by independent local auditors and are regularly reviewed by TEAR project workers and finance staff. TEAR is also audited by Saward Dawson registered company auditors and is fully accredited by The Department of Foreign Affairs and Trade (DFAT) which manages the Australian Government’s overseas aid program. TEAR is a signatory to the ACFID (Australian Council for International Development) Code of Conduct, representing our commitment to ethical standards in governance, financial management and public accountability.
        • Let’s look at these one-by-one:
          • audited by independent local auditors’: which auditors? When? For whom do they work? Can a donor see the results?
          • regularly reviewed by TEAR project workers and finance staff’: what is the nature of this review? Can a donor see the results? What is done to counter the effect of self-interest?
          • ‘registered company auditors’: given the limitations of an audit and the extra risk in the audit of payments made to overseas parties, it would be interesting to know how much comfort TEAR can legitimately take from this type of audit.
          • DFAT: a link to their procedures on which TEAR is relying would be helpful. (Do they in fact do any compliance work, especially overseas?)
          • AICD: they do minimal compliance work in Australia, none overseas?
    • When combined with the local projects (see Australian Indigenous Projects, below), this represents 72% of revenue.
      • In order to get anywhere near the 83% claimed on the website, one has to add the $1.13 m of ‘Other Projects Expenses’ (see below). The ‘Projects’ items total 79% of revenue.
  • Australian Indigenous Projects $345K
    • Presumably this is the same as the giving option ‘Dhumba’?
  • Other Projects Expenses $1.13 m
    • This represents 6.3% of revenue.
    • There is no explanation of what is included in this item.
      • Does it include an allocation of overhead? What are the major components? How much was spent overseas?
      • If this is the same as ‘Program Support Costs’, the Annual Report (page 25) says that these are monitoring and evaluation costs. The other questions above remain.
        • Ministry comment: ‘Other Project Expenses is described in the annual report (which is on the website), rather than in the body of the Financial Report.’
          • Reviewer response: If they are going to make you go elsewhere to find out something reasonably needed for your understanding of the statement, then they should at least provide a link. And if it’s something needed in order to present a true and fair view, then it needs to be within the Financial Report.
  • Community Education $1.60 m
    • This represents 9.0% of revenue.
    • There is no explanation of what is included in this item.
      • Education about what?
      • How does this differ from fundraising?
      • Direct costs only, is overhead included?
    • The Annual Report (page 25) says that it includes ‘education staff salaries, advocacy campaigns, and the production and distribution of TEAR’s education resources.’
      • Ministry comment: ‘Community Education is described in the annual report (which is on the website), rather than in the body of the Financial Report.’
          • Reviewer response: If they are going to make you go elsewhere to find out something reasonably needed for your understanding of the statement, then they should at least provide a link. And if it’s something needed in order to present a true and fair view, then it needs to be within the Financia Report.
  • Fundraising – Public $669K
  • Fundraising – Government $27K
    • The total of the two types of fundraising represents 3.9% of revenue.
    • Is the second item the cost of getting the government grants? Direct costs only, or is overhead included?
  • Administration $1.29 m
    • This represents 7.3% of revenue.
    • Employee benefits expense alone is 2.44 times this figure. What is the relationship between employee benefits expense and all the other significant expenses?
    • So this is not ‘administration’ expense as defined by many other charities. Or as explained by the ACNC:
      • Generally, the ‘administration costs’ of charities are understood to be costs that are not directly incurred by charities in delivering charitable services’.
    • Presumably ‘Administration’ is the same as ‘Accountability and Administration’ in the Annual Report (page 25)?

Essential information to go with the figures – the Notes to Financial Statements…(page 9 of the Financial Report)

  • Note 1 Summary of Significant Accounting Policies
    • Basis of Preparation: the type of company and the functional and presentation currency is missing.
      • Ministry comment: ‘Note 1 for 2016 Financial Report includes a reference to presentation currency.’
    • Accounting Policies: Revenue (Note k): This Note is of little help unless one knows whether the DFAT grant is a reciprocal or a non-reciprocal grant.
    • Missing policy Notes:
      • New, revised or amending Accounting Standards
      • Current and non-current classification
      • Trade and other receivables
      • Fair value measurement
        • Ministry comment: ‘2016 financial report Note 1 now has reference to new or amended standards. Auditors have advised TEAR that the rest of Note 1 is compliant with reporting under the general purpose – reduced disclosure requirements and no further adjustment is needed.’
  • Note 3 There is no Note 3 in the financial statements.
  • Note 15 Reserves: The policy for revaluations is contrary to the Accounting Standards.
    • Ministry comment: ‘Raised with auditors, they can’t see any problem with the Revaluation Reserve policy.
      • Reviewer response: TEAR says that if they deem revaluations to represent profits of a permanent nature, they may be ‘shifted to the statement of profit or loss’. The applicable Accounting Standard though doesn’t permit the wholesale shifting of revaluations based on an assessment of permanency, and certainly not to ‘the statement of profit or loss’. The limited transfers that are allowed go to retained earnings, not profits.
  • Note 17 Related Party Transactions: What about loans and receivables between related parties?
  • Missing Note: Contingent liabilities (even if there aren’t any).
    • Ministry comment: ‘A note describing Contingent Liabilities is listed in the 2016 Financial Report.’

An independent opinion on the financial statement – the Independent Audit Report… (the third last page of the Financial Report)

  • This is a ‘clean’ opinion. Read here and here to draw the right conclusions from this.

Membership of accountability organisations claimed

  • Under ‘Accreditation and Strategic Alliances’ (under www.tear.org.au/about), five accountability relationships are mentioned:
    • Department of Foreign Affairs and Trade (DFAT)
    • Australian Council for International Development (ACFID).
    • Micah Global, and
    • Integral Alliance
    • Missions Interlink.  Confirmed.
  • There’s a fifth shown on page 01 of the Annual Report.
    • Ministry comment: ‘Website is up to date, 2015 annual report is now obviously over a year old (TEAR is no longer a partner with People in Aid Code of Practice, but were a partner when the 2015 annual report was issued).’

(End of review)

  1. I am encouraged by TEAR’s own advice: ‘As donors, Australian Christians have enormous “purchasing power”. We need to be careful that our assumptions don’t drive the way we give; we need to be informed about the issues of development practice and the organisations we give to…’
  2. This is how the ACNC explains ‘impact’: ‘The changes produced in individuals and their communities’.
  3. 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.’
  4. 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.
  5. I use the Pinnacle Financial Statements, respected in the profession as providing a very sound basis for producing compliant financial reports. To this I add an assessment of materiality (both quantitative and qualitative), where the users being considered are donors.
  6. Two minor things compared to good practice: the ‘Principal activities’ are not specific to 2015, and the Company Secretary is not identified.

Compassion Australia, charity review

This is a charity review, a review for those with an interest in the Australian charity Compassion Australia (Compassion).

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

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 5 August 2016, 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. This also applies to the information in the Financial Report.)
  • There is then a more detailed comment on the Financial Report.
  • Lastly, there is a section Membership of accountability organisations.

Sources

  • ACNC Register (including links)
  • Google search on the charity’s names.
  • Compassion website.
  • Social media at the top of the website home page.
    • And one missing from there: Vimeo.
  • LinkedIn.
  • State government fundraising licence registers.
  • The reviews on Glassdoor.

REGISTRATION DETAILS

Entity Subtype

  • Not a subtype consistent with sharing the Gospel.
  • The company’s objects – clause 2.2 of the constitution – say nothing about sharing the Gospel.
  • Although the website doesn’t actually say that they share the Gospel with the sponsored children, the Annual Report – a little hidden under ‘Financials’ – does:
    • Compassion’s holistic child development model has three key distinctives:
      • Christ-centered. Every child has an opportunity to hear and respond to the life-changing gospel message in a culturally relevant way.

CHARITY DETAILS

Legal Name

  • Compassion is a public company limited by guarantee.
    • It is permitted to omit ‘Limited/Ltd’ at the end of its name.

Other Name(s)

  • Two business names are missing here[1]: Compassion Child Sponsorship and Partners of Compassion.

Charity ABN

  • Tax deductibility: Yes, the ABN record shows that you can claim a tax deduction for a donation to Compassion. And also to its two funds, Compassion Australia Necessitous Circumstances Fund and The Compassion Overseas Aid and Development Fund.
    • This is not what Compassion says in answer to a FAQ on its website:
      • Compassion Australia has Deductible Gift Recipient (DGR) status for its Overseas Aid and Development Fund, as listed on the Australian Business Register under our ABN 67 001 692 566. Donations of $2…
        • Why the difference?

Charity Address for Service

  • I have no reason to believe that this doesn’t work.

Charity Street Address

  • Postal address, from the website: PO Box 1 Hunter Region Mail Centre NSW 2310.

Email

  • I have no reason to believe that this doesn’t work.

Phone

  • From the website: 1300 22 44 53 and 02 4935 5000.

Website

  • From the Google search: www.compassion.com.au.

ANNUAL REPORTING

  • AIS 2015
    • This is Compassion’s compulsory Annual Information Statement 2015 (AIS 2015).
    • It gives basic financial information. If you think that this might be sufficient for you
      • ‘Grants…for use in Australia’ has no comparable item in the financial statements; ‘Local program expenses’ are $2.21 m, considerably short of the amount here.
      • ‘Grants…for use outside Australia’ compares with $48.45 m ‘Program expenses’ in the financial statements, again considerably short of the amount here.
  • Financial Report 2015
    • The Report was signed four months after the year end.
    • It was nearly two months after that before it was lodged.
    • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below). (Go straight there.)

ABOUT THE CHARITY

Date Established

  • There is no history on the website.
  • There’s a short one on Wikapedia.

Who the Charity Benefits

  • Vision
    • Not on the website – why? – but in the Annual Report:
      • Transformation of lives, communities and nations through releasing children from poverty in Jesus’ name.
  • Mission
    • Again, surprisingly, not on the website, but again, in the Annual Report:
      • Compassion exists as an advocate for children – to partner with, equip and inspire the Church to release children from poverty in Jesus’ name.
  • Goals
    • A search of the website shows a number of incidental references to Compassion’s goals, but nowhere are they given.
    • The Annual Report has a chapter ‘Ministry Goals’, but these are ‘overarching goals’ applying to a three-year period, motherhood statements that need definition and quantification:
      • Acquiring and engaging new supporters’
      • ‘Delighting and retaining existing supporters’
      • ‘Revolutionising systems and processes’
      • ‘Developing staff and culture’
  • Activities (What did Compassion do?)
    • In the AIS 2015:
      • All activities conducted during this period were targeted at achieving our purpose of assisting children in poverty in developing countries around the world. Our work has been primarily raising funds via child sponsorship, church engagement and other campaigns to generate funds for distribution in countries where we work. These funds go toward operating child development centres that aim to assist children in poverty.
        • At this level of generality, each year the AIS is going to say the same. What was different about 2015?
  • There’s more than one way of doing child sponsorship. This is Compassions’ way.
    • Make up your own mind. Start with this article. (For instance, did the authors consider the negative consequences of sponsoring the child rather than the family/community?)
  • Outcomes/Impact (How were people’s lives improved?)
    • Unfortunately Compassion did not respond to the ACNC’s request, in the AIS, to describe its outcomes.
    • Other than a report of the 2013 study mentioned above, in the Annual Report, nothing systematic found.

Size of Charity

  • Compared to the majority of charities in this group, Compassion is a mega-charity. In fact it is – or at least was in 2014 – Australia’s fourth-largest fundraiser.

Financial Year End

  • This means that the next financial report is due, following a repeat of the ACNC’s generous extension for all charities, by 31 January 2017. Before that the financial information on the Register will be up to 19 months out-of-date.
    • You may therefore need to ask for more up-to-date information.

WHERE THE CHARITY OPERATES

Operating State(s)[2]

  • Apart from Victoria, Compassion has a fundraising licence in all the seven states that have a licensing regime. Why the exception?

Operates in (Countries)

  • For an easier to read list, see the website.

CHARITY’S DOCUMENT (SIC)

  • An Annual Report/Review can be lodged on the ACNC Register, but Compassion hasn’t done this.
  • There is one on the website though.

RESPONSIBLE PERSONS

  • The lack of names here, a legislative requirement, three and a half years after the Register began, is surprising.
  • From the website:                No. of responsible person positions
    • John Bond                               4
    • Mike Jeffs                                1
    • Isaac Moody                            2
    • Amanda Jackson                    1
    • Mabel Chua                             1
    • Kent Medwin                          2

(End of review of the ACNC Register information)

Latest financial report – detail[3]

The Directors’ Report – page 1 of the Financial Report

  • This is not required by the ACNC. (Nor is the Auditor’s Independence Declaration on page 6.)
  • Compared to good practice:
    • Some sections are missing:
      • Performance measures, and
      • the identification of the company secretary.
    • ‘Principal activities’ is too general.
    • ‘Objectives’ should be divided into short-term and long-term objectives.
    • Six sections are included unnecessarily.

The Contents page – page 7 of the Financial Report

  • Missing are the identification of the functional and presentation currency and the company as a not-for-profit.

What was earned, what was consumed during the year – the Statement of profit and loss and other comprehensive income page 8 of the Financial Report

  • Revenue from continuing operations $75.80 m, including Note 2
    • What operations are non-continuing?
      • Do they mean ‘ordinary operations? That would fit with the definition of revenue in the accounting standards.
  • There is no disclosure of the source of these donations. For instance, Compassion raises money via mycause, goodcompany, gofundraise, Karma Currency, and everydayhero.
  • There is a classification of income in Note 15 (‘Funds movement schedule’). However, with the possible exception of one, none of the donation options on the website match the categories, so it is not possible to see how much was raised for each option.
  • Other income $226K, including Note 2
    • By definition these arose outside Compassion’s ordinary activities. Not a material amount, but it would be interesting to know what they were.

Expenses, including Notes 3 and 4

  • Program expenses $48.45 m
    • This represents 64% of income.
    • What is the distinction between this item and ‘Local program expenses’ below?
    • There is no disclosure of where this money goes.
    • Given that overseas local churches are responsible for spending the bulk of the donations, and given that they would often not have well-developed governance (including internal control), what gives the donor comfort that the money is spent for the purpose for which it was given in Australia?
  • Program support expenses $8.26 m
    • This represents 11% of income.
    • How is overhead divided between this item and the last three expenses below?
    • How much of this is spent by Compassion here compared to Compassion overseas and to the overseas church?
    • Assuming that ‘Local program expenses’ (below) does not include any ‘program support expenses (which I suspect is not the case), donations delivered to the children represent only 68% of expenses.
  • Local program expenses $2.21 m
    • This represents 3% of income.
    • There is no disclosure of where this money goes.
    • How do we know that it is spent for the purpose for which it was given?
  • Administration expenses $4.69 m
    • This represents 6% of income.
    • What’s the dividing line between this item, and the costs to administer the programs included in ‘Program support expenses’ (above)?
  • Fundraising expenses $10.04 m
    • This represents 13% of income.
    • If most of the money comes from the members of local churches, why is this so high?
  • Advocacy expenses $1.10 m
    • This represents 1% of income.
    • There is no explanation of this term.
    • One would think that much advocacy serves the fundraising effort as well.
      • Note 14, by including ‘Advocates under ‘Fundraising appeals’, confirms this.
      • How therefore are these two expenses distinguished?
    • How is the impact of this expenditure measured?
  • Employee benefits expense (Note 3) $11.12 m
    • Why the 8% increase over last year?
    • The 19 ‘key management personnel’ (see Note 17) account for $1.98 m of this $11.12 m.
      • Their average employee benefits are therefore $104K p.a.
    • Using the figures for employees declared in the AIS 2015 (124 full-time, 29 part-time, and 8 casuals), and assuming that part-timers work 50% and casuals 10% of full-time hours, the non-key personnel average $66K p.a. in benefits.
    • Superannuation expense is not disclosed.
  • Depreciation expense
    • Given that there are intangibles, why no amortisation expense?

What’s left at the end of the year – the Statement of financial position – page 9 of the Financial Report

  • Other Receivables $1.07 m, including Note 6
    • This is too large amount for their nature to be left unexplained – especially given the 161% increase over last year.
  • Property, plant and equipment $10.56 m, including Note 7
    • $1.10 m ($1.25 m last year) of ‘Office furniture and equipment’ seems relatively large (especially as it doesn’t include the $894K of ‘computer equipment’).
    • Fundraising equipment’ is an unusual term not explained.
  • Investment properties $1.53 m, including Note 8
    • Why is a charity holding investment properties?
    • What and where are they?
    • Why are they not earning any rent?
    • How did an investment property have a written down value of only $3K?
  • Trade and other payables $10.93 m
    • Why are there some employee benefits included here rather than under provisions?

Movements in the net wealth of the charity – the Statement of changes in equity – page 10 of the Financial Report

  • The components of other comprehensive income should be shown.

Where the cash came from and where it went – the Statement of cash flows – page 11 of the Financial Report

  • Lack of disclosure in the operating activities section means that the purpose of a cash flow statement is thwarted somewhat; for instance, the figures cannot be compared to those in the profit or loss statement.

Essential information to go with the figures – the Notes to the financial statements – page 12 of the Financial Report

  • Note 1 Summary of significant accounting policies
    • (q) Intangibles: The classification decision – plant and equipment versus intangibles – is not mentioned.
    • Policy Notes normally included but not in these accounts:
      • New, revised or amending Accounting Standards and Interpretations adopted
      • Current and non-current classification
      • Fair value measurement
  • Note 14 Additional disclosures…
    • This is confusing set of numbers: (a) “’Net surplus.. plus ‘Other income’ does not equal ‘Gross income’, and (b) the ‘Statement showing how…’ does not explain ‘Gross income’.
    • ‘Total cost of services’ includes ‘Program support expenses’. On what basis are some costs of service delivery included yet others excluded?
  • Note 16 Related party transactions
    • It is good practice to also disclose whether there are any loans or receivables between the related parties.

An independent opinion on the financial statements – the Independent Auditor’s Report…– page 29 of the Financial Report

  • This report is a ‘clean’ opinion. To take the right amount of comfort for this finding, please read here and here.

Membership of accountability organisations claimed

  • In answer to the FAQ ‘How do I know I can trust you with my money?, Compassion says that
    • As an organisational partner of the Fundraising Institute of Australia, we comply with the standards of Missions Interlink (sic)…
      • The Fundraising Institute’s code is principally about fundraising, that is, the practices that Compassion uses to get your donation, not what they do with your donation once they’ve got it. So not really relevant here.
      • Missions Interlink has some standards about post-fundraising behaviour. But read here for how much comfort you should take from this accountability.

(End of review)

 

 

  1. There’s also a trading name, but trading names are of little importance nowadays.
  2. 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.’
  3. I use the Pinnacle Financial Statements, respected in the profession as providing a very sound basis for producing compliant financial reports. To this I add an assessment of materiality (both quantitative and qualitative), where the users being considered are donors.