Arrow Leadership Australia Limited

This is a review^[1] in the series ‘Organisations accredited by the CMA Standards Council’. The CMA Standards Council is ‘a ministry of Christian Ministry Advancement’^[2], with a mission “to help build faith and trust in Christian organisations, be they churches, charities, schools or otherwise, to enable them to achieve more effective outcomes^[3]. ‘Arrow Leadership’ is one of these accredited organisations^[4]:

Donors

‘Arrow Leadership’ is an organisation that seeks donations online. The charities’ regulator, 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 organisation’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.
5. Find out more about how the charity says it uses donations.

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

1.  A search on the ACNC Register of charities for ‘Arrow Leadership’ brings up three charities with that phrase in their name:

The entry in the Standards Council Directory (above) shows that it is the first of these, Arrow Leadership Australia Limited (Arrow) that is the member^[6].

But the second one, up until 25 January 2019 was part of the first one.

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2.   Nothing on the Register or the website indicates that Arrow uses door-to-door or street collectors.

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3.  Arrow’s website has “a closed padlock symbol next to the website’s URL in the address bar” [The ACNC article above^[7]]. But there is no information about the security of your information on the ‘Donate’ page.

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4. The ABN record says that no tax deduction is available for a donation to Arrow. The ‘Donate’ page does not mention tax.

However, Arrow says that you can get a tax deduction if you donate to the Brian Coombs Sponsorship:

Arrow doesn’t say how you can donate to this Sponsorship, but it matters not: The Annabel Charitable Foundation Ltd is closing.

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5.  The use of your donations

Objects / Mission

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Strategies/Activities

See the Annual Review 2019 for what they did in 2019 (‘Annual Report’ under ‘Documents’ here^[8]).

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Sharing the Gospel?^[9]

No (they train Christians).

(Their statement of faith is the Lausanne Covenant.)

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Locations

Arrow operates in Australia, per the ACNC Register, in every State. No overseas countries are shown.

Each of the 22 people described here, except for two, is a ‘State Leader’ but, compared to the Register, the ACT is not mentioned and there is a ‘State Leader’ for New Zealand.

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Giving options online

The Financial Report 2019 doesn’t disclose the result for each. ______________________________________________________

How Arrow uses its revenue

The audited account of how donations are used is the Financial Report 2019. In this Report the directors declare that ‘there are no users who are dependent on its general purpose financial statements’^[10]. They are therefore saying that all Arrow’s stakeholders, both present and prospective, can ring Arrow’s office and request that Arrow prepare financial statements that answer the question or questions they have about Arrow. This meant that the directors could product the lower standard special purpose financial statements.

This was done with the agreement of the auditor, Peter Shields, for Saward Dawson.

And he did this despite this advice from the firm’s professional body, Chartered Accountants Australia & New Zealand:

Arrow had

• 200 volunteers [AIS 2019] and 115 students, an alumnus of 700 [Annual Review 2019], spread throughout Australia [ACNC Register].
• Professional management (5 employees) [AIS 2019].
• A reported significant impact in the community [the NCLS research reported in the Annual Review 2019].
• 37% of revenue (46% last year) coming from ‘Donations and grant income’ [Financial Report 2019].

Knowing this, how did the directors conclude that special purpose statements were appropriate? And then how did the auditor press on with the audit after he found out about this decision?

These are the people who agreed to the Financial Report 2019 (from the Directors’ Report):

Anna Burke

John Beckett

Christopher Edwards

Diann Feldman

Liam Glover (an Arrow executive)

Keith Hanslow

Adam Lowe

Timothy Hawkes

If the website is correct, then since that time Edwards and Lowe have departed, and Desmond Ong and Michael Stevens have joined.

The Board is responsible to the membership. The Notes to the Financial Statements [Financial Report 2019] say that there were 21 members at 31 December 2019 [Note 15]. They also disclose 24 for the previous year. However, the previous accounts say that there were eight, not 24. If it is anywhere near eight this year, then with the governing document requiring directors to be members, there is limited accountability possible from the membership.

Should you still choose to rely on the financial statements, here is where the $784K revenue went:

Cash spent

This is the only information about where the cash went on operating activities (with last year in the second column):

^[11]

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Resources consumed (i.e. accrual)

The accrual section of the Report is more helpful (with last year in the second column):

• The amount incurred for services by the auditor is not disclosed.
  • The audit firm has managed to get some free promotion by the inclusion of their logo on the cover of Arrow’s Financial Report (and larger than the name of their client!) Given the ownership of the Report (Arrow), and the importance of the auditor being independent of the client, this inclusion is inappropriate.
• Understanding of the above list is not helped by
  • There being no obvious order to the expenses, and
  • A mixed mixed classification (function versus nature).
• A breakup of the second largest expense, ‘Event and facilitation expenses’ would also help understanding.

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Impact

• Since their accreditation by the CMA Standards Council in 2017, Standard 5.6 of Council’s standards requires that regular program evaluations must be performed. Up until 2019 there hadn’t been any – or at least not that they’d reported.
• In 2019 an evaluation of the Emerging Leaders Program’ was performed by NCLS Research.
• On the assumption that the transformation produced in the participants would lead to an increase in their church’s ‘vitality’, the change in ‘church vitality’ was measured over two points in time.
• This is what the researcher, Ruth Powell, concluded:

Charity response

Number 8 of the CMA Standards Council’s ‘Nine Principles of Ministry Accountability‘ is ‘The organisation must be transparent and accountable to its stakeholders’. One of the nine Standards that ‘fall under’ that principle is about openness and responsiveness to feedback:

Arrow has this invitation.

We sent them a draft of this review on 3 September 2020. On 14 September 2020 the Executive Director, Liam Glover, sent this response:

Thanks for sending us a copy of your draft review. We will consider all the issues you raise and if appropriate will make any relevant changes.

The review was not published in September as planned.  Nevertheless, with a couple of updates, it remains relevant, so is published now.

1. See here for the previous review. ↑
2. Link added by me. ↑
3. Emphasis in original. ↑
4. It achieved this by meeting the Council’s ‘Principles and Standards of Responsible Stewardship’, and therefore is able to be promoted as a ‘high quality organisation’ ↑
5. 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? ↑
6. Arrow is permitted to trade without ‘Limited/Ltd’ at the end of its name, and it has now registered the business name ‘Arrow Leadership’. ↑
7. ‘https’ is not shown on all browsers. ↑
8. It doesn’t come up in a search, but it’s on the website here. ↑
9. ‘When Helping Hurts by Brian Fikkert and Steve Corbett says this about sharing the Gospel: ‘A host of contextual issues determine the best manner and the appropriate time to present the gospel verbally, particularly in militant Muslim or Hindu settings. But without such a presentation, it is not possible for people to be personally transformed in all their relationships, which is what poverty alleviation is all about [Kindle Locations 1262-1264, Moody Publishers]. ↑
10. From Objective of General Purpose Financial Reporting (SAC2), www.aasb.gov.au ↑
11. Although this level of disclosure may be compliant with the letter of the applicable Accounting Standard ( AASB 107), it is not consistent with either the intent of the Standard and paragraphs 14 and 19, or what is reasonable to expect from a major Christ-led charity that is reporting a true and fair view. ↑