Australian Lutheran World Service

This is 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. ‘Australian Lutheran World Service’ is one such Member.

The name in the ACFID membership list links to a website for ‘Australian Lutheran World Service’. Here they seek donations from the public.

Donors

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 ‘Australian Lutheran World Service’, with consideration also given to the essentials of the ACNC’s What should I consider when deciding which charity to support?^[2]

1.  A search on the ACNC Register for ‘Australian Lutheran World Service’ gives a charity in the that name (ALWS).

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2.  There is nothing to indicate that ALWS uses either door-to-door or street collectors.

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3.  The web address begins with a closed padlock symbol, so the website is secure [the ACNC article above]. On the page where you enter your credit card information there is an eWay logo, linked to information showing that your information is secure.

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4.  ALWS’s ABN record (via the ACNC Register):

There is information on the website though that contradicts this:

The 17 gift options on the ‘Donate’ page are not marked as either tax deductible or not. What’s not tax deductible, and why?

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5.  The use of your donations

Context

Activities

Last year: See their Annual Report 2019, available under ‘Documents’ on the ACNC Register.

Now: see the giving options (above).

COVID-19 response: No general message, just an appeal for donations.

Sharing the Gospel^[3]

From the constitution:

But not their spiritual need – there’s a separate organ of the Lutheran Church for that: LCA International Mission.

How ALWS uses its revenue

The audited account of how donations are used is the Financial Report 2019. In this Report the directors present special purpose financial statements rather than general purpose. They are meant to say why they’ve done this, but don’t. But what it effectively means is that they are saying that all ALWS’s stakeholders, both present and prospective, can ring ALWS’s office and request that ALWS prepare financial statements that answer the question or questions they have about the charity.

This was done with the agreement of their auditor, Mark LeCornu (MRL Group Pty Ltd).

And he did this despite this advice from his professional body, Chartered Accountants Australia & New Zealand:

ALWS had

• 33 volunteers [AIS 2019], and hundreds of donors from all over Australia [Annual Report 2019].
• Professional management (20 employees) [AIS 2019].
• A reported significant impact in the community [Annual Report 2019].
• 59% of revenue coming from donors, and a further 37% from government [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?

Other issues

There are other issues with the Financial Report:

• The financial statements have ‘been prepared in accordance with the requirements set out in the ACFID Code of Conduct’ rather than the Australian Accounting Standards [footnote to the Directors’ Declaration].
• There is insufficient information about the expenses (see below).
• The nature of the relationship between ALWS and its related parties is not described.
• The type of organisation is not identified.
• The directors don’t say why they chose special purpose financial statements.
• Many of the required Notes are missing (from the Notes to and forming part of the financial statements).
• There is no mention of the pandemic.

Directors

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

P Hage

I Rentsch

Jodie Hoff

Peter Renner

Morgan Brookes

If the website and ACNC Register are correct, then since that time Hage and Rentsch have departed, and the following people have joined:

Andrew Kotzur

Michael Stolz

Tom Brennen

Simon Cooper

Should you still choose to rely on the financial statements, here is where the $7.24 million revenue went^[12]:

How did they use their revenue?

From the Statement of Comprehensive Income (i.e. Profit and Loss) (with last year in the second column):

• Other than the Note on ‘Funds to International Programs’ (see below), there is, contrary to the requirement of the Accounting Standards, no other information on the expenses.
• None of the items are explained.
• How do ALWS ensure that the money sent overseas (a) reaches the intended recipient, and (b) is used for the purpose(s) for which it was given?

Funds to International Programs

Impact

Five of the 17 project reports in the Annual Report 2019 have a paragraph like this:

Sounds good, but we would need to know ALWS’s ‘theory of change’ for each project to truly judge success.

Charity response

ALWS says in the website footer that it values feedback.

We sent them a draft of this review. After asking for an extension to respond, they sent their response.  However, because they don’t want anything published, the people who need to see it, you, the stakeholders, don’t get to see it.

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?

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2. ‘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]. ↑