Australian Evangelical Alliance Inc (Missions Interlink), charity review

This is a charity review, a review for those with an interest in the Australian charity Australian Evangelical Alliance Incorporated (Missions Interlink (MI)).

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 MI.

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

Ministry response

Prior to publishing this review, I sent my observations, on 11 July 2016, to the charity and invited them to comment. They did not respond.

Organisation of this review

  • 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.

Sources

  • The ACNC Register entry (including links)
  • Google search on the charity’s names.
  • The MI website.
  • Facebook is the only social media button on the website.
  • Not on LinkedIn.
  • State government fundraising licence registers.
  • No reviews of the Australian organisation on Glassdoor.

REGISTRATION DETAILS

  • A Subtype that is consistent with sharing the Gospel.
  • And the Gospel is what MI is all about:
    • As a catalyst for Christian unity, cooperation and mission, the object of the Association is…to advance, propagate, promote or defend the Christian faith globally and to serve the Christian community by all such means being charitable as the Association shall determine..

CHARITY DETAILS

Legal Name

  • MI is a Victorian incorporated association (A0012495P).
  • Not to be confused with three other organisations on the Register with ‘Evangelical Alliance’ in their name:
    • One with almost the same name, registration of which has been ‘voluntarily revoked’,
    • Ea (sic) Foundation (The Trustee for Evangelical Alliance Foundation Trust Fund) , and
    • The Trustee for Evangelical Alliance Foundation Trust Fund (EA Foundation).
    • EA Foundation says that MI is an ‘affiliate’.
  • Google is confused: the website link in its box on the right hand side of the search results goes to Ea Foundation, not MI.
  • MI itself appears to be confused, saying that it is ‘a ministry of the Australian Evangelical Alliance Inc.’ But that’s its own name!

Other Name(s)

  • There are also three other organisations on the Register with ‘Missions Interlink’ in their name:
    • The first of the three above,
    • The ‘Voluntarily revoked’ Missions Interlink Victoria.
    • Missions Interlink NSW.
      • Missions Interlink NSW is a State branch of MI. There is no explanation of why the Victorian branch deregistered, or why the other State branches are not registered. (Or, alternatively, why NSW is still registered.)

Charity ABN

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

Charity Address for Service

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

Charity Street Address

  • Postal address: PO Box 175, Box Hill VIC 3128

Email

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

ANNUAL REPORTING

  • AIS 2015
    • This is MI’s compulsory Annual Information Statement 2015 (AIS 2015).
    • It gives basic financial information. If you think that this might be sufficient for you, the figures match those in the Financial Report.
  • Financial Report 2015
    • The accounts were signed three months after year end.
    • The Report was then lodged a month later, two months before the normal deadline.
    • 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 the link in ‘Our Basis of Faith’, have way down here.
    • The Supplement that is there is additional to what is in the constitution.

Date Established

Who the Charity Benefits

  • Vision
  • Mission: the second two thirds of the Vision section?
  • Activities (What does MI do?)
    • From the AIS 2015’s Description of charity’s activities and outcomes:
      • It linked, equipped, served, and represented organisations and churches across Australia to help them engage together in effective cross-cultural and global mission.
        • This is identical last year, so not a very helpful description of 2015’s activities.
    • The Annual Report provides a brief report on the activities of the year.
      • Training Programs
      • Training Workshops
      • National Networks
      • MI Not-For-Profit Events
      • Other National MI Events
      • Resources & Information
      • MI Standards Compliance
      • Dealing with Government
    • The two best benefits are not available to Associates, only Members:
      • Only approved Members are entitled to:
        • Use the Member of Missions Interlink and Standards Compliant logos on stationery and publications.
        • Exemption from Australian income tax for organisations and personnel serving overseas, through recognition by the ATO as a member of a prescribed institution under Section 50.50 (d) of the Income Tax Assessment Act 1936 [Income Tax Assessment Regulations 1997 (Regulation 50.50.02)]. See here for more information.
      • This is the claimed value of the logos:
        • Member use of the Missions Interlink logo implies high standards of governance and financial accountability, giving the Christian public assurance of their integrity.
          • This is currently the only such certification or rating for Christian organisations in Australia.
          • Its value depends a good deal on MI’s enforcement of the standards, particularly those applicable only to Members.
          • This enforcement was an expectation of the Government when MI and its members were granted their special income tax exemption mentioned above.
          • This is what they did in the way of compliance in 2015:
            • Individual compliance assistance and advice has been given to some, mostly smaller, Member organisations. The ACNC register has been monitored for Member information, reporting and documents, and more comprehensive Member compliance reviews will commence in the coming year.
          • Independent evidence of Member compliance, and therefore ‘assurance of…integrity’, can be seen by selecting the category ‘Mission Interlink members’ here.
            • The non-compliance shown by many members is despite (a) MI’s compliance monitoring and education, and (b) a declaration by the Member at the time of renewal that it is compliant.
  • Outcomes (What was delivered?)
    • Unfortunately, in the AIS 2015, in response to the request to describe outcomes, nothing is given.
    • Nothing found.
  • Impacts (How are people’s lives improved?)
    • Nothing found

Size of Charity

  • MI revenue was $273K, just exceeding the $250K threshold for the middle size of charity.

Financial Year End

  • This means that the next financial report is due by 31 December 2016 – or 31 January if the ACNC again gives its (generous) extension (to all charities). 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]

  • With no branch in the ACT or Tasmania, and no events listed for these states, it is not clear why they are included in this list.
  • MI has the required Registered Australian Body registration[2] (ARBN 056 007 820).
  • MI appears not to solicit donations from the public. The lack of fundraising licences therefore seems reasonable.

CHARITY’S DOCUMENT (sic)

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions[3]

John ANDERSON                           31

Borneman, BARRY                           4 (after correcting the MI name reversal)

Geoffrey COLTON                             2

Glenda De JAGER                             4 (but Mukti Australia Inc have entered her twice)

Richard DICKINS                              2 (including the Ea (sic) Foundation)

Judith KAY                                          3 (including Missions Interlink NSW)

  • This list matches the one on the website. That list is subsumed in the list of the members of something called the National Leadership Team (NLT).
  • There is no explanation on the website of the relationship between the board and the NLT.
  • MI’s governing document, its Rules (see Charity’s Document (sic), below) say that
    • The affairs of the Association shall be managed by a Board of Management (Clause 18.1).
  • This is supported and amplified by the MI Regulations:
    • The affairs of Missions Interlink shall be managed by the Board as assisted by recommendations from the NLT (Clause 18.1).
      • However, it doesn’t appear that this is the way MI operates. For instance,
        • the Mission Leaders letter sent to members and associates at renewal time was signed by the NLT, not the board.
        • The decision on a major new program, the Mission Matching Service, was made by the NLT, not the board [Annual Report, page 3].
  • The Rules require a Secretary. Not a member of the board?

(End of review of the ACNC Register information)

Latest financial report – detail[4]

  • This is where you can see how MI itself complies with the requirements it has set for its Members.

Cover page

  • Neither the name ‘ea’ nor the logo belong to MI. In fact they are not registered to anybody, just used by Ea Foundation to describe the unregistered ‘family’ of organisations called the Evangelical Alliance.

What was earned, what was consumed during the year – the Statement of Comprehensive Income (page 1 of the Financial Report)

  • Revenue should be disclosed, and classified sales versus other.
  • The classification of income has, without explanation, been changed from last year. As a consequence, we no longer know how much was earned
    • in grants (2014: $13K; 2013: $23K).
    • from training (2014: $52K; 2013: $zero).
    • on deposits (2014: $5K; 2014 $5K).
    • from the sale of ‘resources’ (2014: $5k; 2013: $4K).
  • Donations & Grants $87K
    • There is no explanation why, for “a membership-based organisation” that doesn’t seek donations on its website, donations should be such a large – and apparently growing – proportion of the revenue.
  • Events Income $79K
    • There is no explanation why this income has fallen from $117K.
  • Membership & Affiliation Fees $100K
    • With approximately 120 Members and 40 Associates, this revenue represents an average fee of $625 p.a.
    • 2015-16 fees ranged from $420 to $1826 for Members and $121 to $1496 for Associates.
  • The classification of expenses has, without explanation, been changed from last year. As a consequence, we no longer know how much
    • events cost to run.
    • ‘Transition Training’, and other training, cost to run.
    • money was given to state branches.
    • gross profit was made on the sale of ‘resources’.
    • the audit cost [2014:$4K; 2013: $1K].
    • was incurred for travel (and accommodation). Or consultants.
  • The expenses are a mixed of the two permissible classifications.
  • Administration Expenses $9K: what is included?
  • Employee Expenses $158K
    • This represents 60% of expenses.
    • The AIS 2015 says there were six part-time and three casual employees. If part-timers averaged 50% of full-time, and casual 10%, that’s average benefits of $48K pa.
  • Less Cost of Activities $80K
    • The items above this line are not all activities.
  • Net income for the year $194K
    • This is not a proper calculation in accounting.

What’s left at the end of the year – the Statement of Financial Position (page 2 of the Financial Report)

  • Cash at Bank $167K
  • Cash on Hand
  • Investments $31K
    • This disclosure does not comply with the Accounting Standards. Nor with MI’s own policy Notes.
  • Deferred Income $70K
    • There is no explanation of this item.
    • Nor why it is has increased from $28K.
    • Or why the 2014 figure does not match last year’s statements.
  • Special Reserves $84K
    • There is no explanation as to why they are ‘special’.
    • Perhaps they are not special – they are called ‘General’ in the Statement of Changes in Equity.

Movements in the net wealth of the charity – the Statement of Changes in Equity (page 3 of the Financial Report)

  • The description of the surplus differs from the same amount in the Statement of Comprehensive Income.
  • ‘Other comprehensive income’ and ‘Total comprehensive income’ is missing.

Essential information to go with the figures: the Notes to and forming part of the Accounts (page 5 of the Financial Report)

  • 1. Statement of significant accounting policies
    • The decision to produce ‘a special purpose financial report’
      • The directors give no reason for this decision, a decision that results in a report that doesn’t have to comply with all the Australian Accounting Standards, and therefore one deemed not suitable for those people who rely on MI’s financial statements as their major source of financial information.
      • The type of report they have produced implies that all their users, both current and prospective, are in a position to command MI to tailor a report to their needs. This is unlikely, probably highly unlikely.
      • For a professionally-managed organisation with over 160 organisational members, and that is promoting membership publicly, one might reasonably have expected the opposite decision.
      • An example of the information that do not get as a result is the disclosure of the result of its relationship to related parties.
    • The directors do not say how they chose the accounting policies they use.
      • There is no listing of the Accounting Standards that were followed.
    • The following information is missing: individual entity? historical cost? functional and presentation currency, and the date the report was authorised for issue.
    • a.  Income tax: on what grounds?
    • b. Revenue: what about the policy for the first and third largest sources of revenue?
    • c. Cash and cash equivalents: no equivalents are mentioned.
    • d. Trade and other receivables: tThe possibility of bad debts is not mentioned.
    • e. Fixed Assets:
      • a term that is well out-of-date.
      • Missing information: the rates, method, review processes, and derecognition.
    • g. Investments:
      • not classified according to the Accounting Standards.
      • What are they?
    • h. Employee Benefits: the usual distinction between short-term and long-term is missing.
    • j. Goods and Services Tax (GST): policies for cash flows and commitments and contingencies are missing.
    • Missing policy Notes:
      • New, revised or amending Accounting Standards and Interpretations adopted
      • Current and non-current classification
      • Impairment of non-financial assets
      • Fair value measurement
      • New Accounting Standards and Interpretations not yet mandatory or early adopted
  • Missing Notes
    • Critical accounting judgements, estimates and assumptions
    • Property, plant and equipment
    • Remuneration of auditors
    • Contingencies
    • Commitments

Where the directors put their name to the Report – the ‘Annual Statements Give (sic) True and Fair View of Financial Position and Performance of Incorporated Association’ (page 8 of the Financial Report)

  • The title is incorrect. (Even as a description of the contents it is incorrect.) It should be ‘Directors’ Declaration’.

An independent opinion on the financial statements : the Independent Auditor’s Report (page 9 of the Financial Report)

  • The auditor, in accepting the engagement, has assessed the directors’ decision that MI is not a ‘reporting entity’, and agreed with it. That is, they also think that MI doesn’t have any users (either existing or prospective) who are dependent on a general purpose report (that is, a report prepared for those who are not in a position to require MI to produce a report tailored to their needs).
  • This is a ‘clean’ opinion. Read here and here to draw the right conclusions from this.

Membership of accountability organisations

  • None claimed.
  • MI holds its members accountable, but who holds MI accountable?
    • For instance, all its directors are senior employees (mostly CEOs) of its own Members.

(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. Required because it operates outside its home state.
  3. 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.
  4. 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.