Act for Peace: charity review

This is a review in the series ‘Australian Council for International Development (ACFID) Members’. ACFID ‘is the peak body for Australian non government organisations (NGOs) involved in international development and humanitarian action.’ It requires Members to adhere to a Code of Conduct. ‘Act for Peace – NCCA’ is one such Member.

Donors

The name in the ACFID membership list links to the website for ‘Act for Peace’. Here they seek donations from the public.

The ACNC, in their article, Donating to Legitimate Charities, gives “some things to consider to help you make sure your donation is going where it is intended”:

1. Check the charity’s name.
2. Ask for identification from anyone seeking a donation.
3. Be careful of online requests for donations.
4. No tax deduction doesn’t mean the charity is not a legitimate one, and
5. Find out more about how the charity says it uses donations.

Here’s the results for ‘Act for Peace – NCCA’, with #5 supplemented by the essentials of the ACNC’s What should I consider when deciding which charity to support?^[1]

 1.  There’s no charity registered in the name ‘Act for Peace – NCCA’. The closest is one for Act for Peace Ltd^[2]. The reconciliation lies the fact that Act for Peace is an organ of National Council of Churches in Australia (NCCA), and that Act for Peace Ltd has the provisions in its constitution necessary to allow it to drop ‘Ltd’/’Limited’ from the end of it name.

Act for Peace is a member, along with four other charities (including NCCA), of an ACNC Group.

Charity comment: ‘Act for Peace Ltd is a legal sub-entity of the National Council of Churches in Australia (NCCA). Because of our association some organisations refer to both Act for Peace and the NCCA in the way they reference us.’

_ ________________________________________________________

2.  Act for Peace’s AfP Marketing, Communications and Fundraising Policy allows for the possibility of face-to-face fundraising, and the outsourcing of that fundraising to third parties.

_________________________________________________________

3.  The web address begins with a closed padlock symbol, so the website is secure [the ACNC article above^[3]]. But there is no mention of the security of your information on the giving pages.

Charity comment: ‘We take credit card security very seriously. Our online donations are processed by Stripe, an industry leading gateway with the highest level of security. Like many leading charities, we don’t display details of our payment gateway on our donation pages, although we acknowledge some supporters might find it reassuring if we did. We are currently in the process of updating our website, and will consider adding information about our payment gateway to our donation pages as part of this update.

Our privacy policy, which is noted on our giving pages, includes the required information.’

_________________________________________________________

4.  Act for Peace’s ABN record says that it is entitled to receive tax-deductible gifts. That ‘Gifts of $2 or more are tax deductible. ‘is in the small print at the bottom of each giving page.

_________________________________________________________

5.  The use of your donations

As context, read here what Act for Peace does.

An ACNC group submits just Annual Information Statement (AIS) and one financial report to the ACNC Register. There is a group AIS and financial report on the Register, but Act for Peace has also submitted, and the ACNC has allowed, an AIS and financial report just about itself.

The audited account of how donations are used is the Financial Report 2019.  Since it is available, we will use Act for Peace’s report^[4].

Directors have a choice between two kinds of reports, special purpose or general purpose. The requirements of the former are less onerous than the latter. In particular, preparing special purpose reports means that charities do not need to consolidate (produce a combined picture if they control over entities), and do not need to disclose related parties and transactions with related parties.

Act for Peace’s auditor, J.G. Ryan, is a partner in a firm of chartered accountants, Thomas Davis & Co. This is what their professional body, Chartered Accountants Australia & New Zealand, has to say about the choice between the two types of reports^[5]:

With a diverse range of donors all over Australia providing $7.57 million, millions in government grants, and 40 employees, it is hard to see how a special purpose report is the right choice. But that is the choice that the directors of Act for Peace made.

And the auditor, a Chartered Accountant, agreed with them.

One of the implications of their choice is that you can ring Act for Peace’s office and request that they prepare financial statements that answer the question or questions you have about the charity. Good luck with that^[6].

The bottom line is that the accounts presented by the directors are not for you. In fact, by saying that the company is ‘not a reporting entity’, they have effectively said that you don’t exist:

Charity comment: ‘The Agency will review this for 2020 and most possibly prepare General Purpose Financial Reports or Reduced Disclosure Reports which is available to not-for-profit entities.’

This is far from the only issue with the accounts. Equally concerning is that there is a big hole in the internal controls that the directors have put in place. In the ‘Statement of Accounting Policies’ (in the Notes to and forming part of the accounts…), there is this small note:

What this means is that the directors cannot be sure that all the money given by donors to Act for Peace made it into the company’s bank account.

Compounding this concern is the fact that the auditor, contrary to common practice, thought that it was still OK to issue an unqualified opinion on the accounts:

These were the directors who signed the accounts on behalf of the board:

John Gilmore

Paul Nicholls^[7]

The membership of the board at this time is not disclosed.

The ACNC Register lists the current directors:

Alison Preston

Elizabeth Stone

Jamieson Davies

Janet Cousens (the CEO)

John Charles Gilmore

Leigh Cleave

Mar Sonia (sic) (the COO)

Marcus Sandmann

Paul Nichols

Virginia Udy

Neither Janet Cousens nor Mar Sonia are in the list on the company’s website. Both are senior executives of Act for Peace, suggesting that the Register is incorrect.

Charity comment: ‘Act for Peace has written to the ACNC to request that Janet Cousens and Sonia Mar be taken off the ACNC listing so that there is no mistake that they are Directors. Janet Cousens is listed as our CEO on the Act for Peace website. Sonia Mar has recently joined Act for Peace and will be added to our website: https://www.actforpeace.org.au/Learn/Our-team

Reviewer response: Any charity can, at any time, amend their list of responsible persons via the Charity Portal.

The use of your donations

If you are still willing to consider donating to Act for Peace, here is how your donations were used:

Cash spent

Contrary to what is required by the law, the statement that gives this information, a Statement of Cash Flows, is missing from the financial report. (Again, the auditor was OK with this.)

Charity comment: ‘We will review the need for this for 2020 and prepare a separate Statement of Cash Flows based on professional advice.’

Resources consumed (i.e. accrual)

This, from the Statement of Profit and Loss and Other Comprehensive Income, is how the activities translated into expenses (with last year’s figures in the second column):

This is the only information about the destination of the money sent overseas (from the Notes to and forming part of the accounts…):

There is nothing in the Financial Report 2019 on how Act for Peace ensures that (a) the money reaches the overseas organisation, and (b) it is used for the purposes given.

Charity comment: ‘Our Annual report provides information on how the funds noted in our financial statements are used. Act for Peace employs Chartered Accountants who work with our overseas aid partners to ensure funds are used for the purposes they are transferred for. All oversees aid partners receiving funds must provide externally audited accounts. Act for Peace also conducts finance checks as part of our routine monitoring.’

Reviewer response: An Annual Report, however informative, is not a substitute for giving a reader of the Financial Report the information necessary to understand your financial position and performance and present a true and fair view.  (For one thing, the Annual Report is not audited.)

Charity response

Act for Peace says that they ‘really value and welcome your feedback. We strive to fulfil our mission with passion and to the highest possible standards of effectiveness and integrity. But we know we don’t always get everything right first time. Your feedback helps us to improve.’

I sent a draft of this review to them on 21 March 2020. Their final responses, received on 17 April 2020, are included above.

1. A section in the article, Donating and Volunteering:

   • Focus on the nature of the charity’s work, its beneficiaries and the impact the charity is having in the community.
   • Is it clear what the charity is trying to achieve and how its activities work towards its objectives?
   • Would you like to spend your money, or time if volunteering, to support these objectives?
   • Is the charity being transparent about its activities?

   ↑

2. The ACNC implies, therefore, that it is a ‘legitimate’ charity. But this is not correct – as the ACNC itself points out, registration is voluntary. ↑

3. The ACNC’s information (in its article above) is out-of-date. ↑

4. Act for Peace’s revenue comprises 95% of group revenue. ↑

5. Enhancing Not-for-Profit Annual and Financial Reporting, March 2013, accessed from their website March 2020. ↑

6. The accounting profession says that you are therefore ‘potentially interested in the information provided in general purpose financial reports’. [From Objective of General Purpose Financial Reporting (SAC2), www.aasb.gov.au]. ↑

7. The directors are accountable to the members. The company was established with only one member, NCCA. It is likely that no further members have been added. ↑