Australian Mercy: charity review

This is a review in the series ‘Members of Missions Interlink. Missions Interlink is ‘the Australian network for global mission’ and a means for a Member to get income tax exemption when it might not otherwise be available^[1].

‘Australian Relief and Mercy Services’ is a Member of Missions Interlink, and an organisation that seeks donations from the public.

Charity response

Both Members and Associates have to accept a set of standards, the introduction to which includes this statement:

I sent them a draft of this review. The National Director, David Skeat, responded quickly. He did not want anything published though^[2].

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 for ‘Australian Relief and Mercy Services^[3], with #5 supplemented by the essentials of the ACNC’s What should I consider when deciding which charity to support?^[4]

1.  With a couple of minor changes, there’s a registered^[5] charity: Australian Relief & Mercy Services Limited (Australian Mercy).

• Because Australian Mercy does not have the provisions in its governing document that would allow it to omit ‘Ltd/Limited’ at the end of its name, it should not be using ‘Australian Relief & Mercy Services’ without registration^[6].
• The name of its malaria initiative, Buzzoff, is not registered.

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2.   Australian Mercy used street collectors in 2016, but there is nothing to indicate that it has subsequently.

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3.  The web address begins with a closed padlock symbol, so the website is secure [the ACNC article above^[7]]. There is nothing about security on the page where you enter your personal information.

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4.  Donations to Australian Mercy are tax-deductible, as are donations to its fund, ARMS Overseas Aid Fund.

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5.  The use of your donations

As context, here’s what Australian Mercy, on the ACNC Register, says it does:

Within the Financial Report, it is a good idea to look at two areas first: (1) the ‘Basis of preparation’ in the Notes to the accounts (Notes to the Financial Statements in this case), and (2) the audit report^[8].

1.  Although the type of financial statements – ‘general purpose’ – are appropriate, their implementation is again materially flawed^[9]:

• There is no consolidation of subsidiaries^[10].
• There is no disclosure of related parties.
• Most of the required Notes are missing.
• The Statement of Financial Performance omits the required information on Comprehensive Income (and includes material that should be in another statement).
• A large negative amount is included in the Current Assets without explanation.
• The Statement of Changes in Equity omits the figures for the prior year.
• Two additional statements are included without explanation (and not marked as unaudited).
• The Directors’ Declaration doesn’t comply with the ACNC’s requirements.
• There is no explanation for how a ‘Large’ charity can be run with no employees.

2.  The auditor has not issued a ‘clean’ audit opinion. He has qualified his opinion on two grounds:

• Despite the fact that ‘cash donations are a significant source of revenue for the company’, the directors have decided that ‘it is impractical to establish control over the collection of cash donations prior to entry’ in the’ accounting system[‘Qualification’ paragraph]. Most other charities don’t have this problem.
• Despite the fact that ‘the company derives a substantial portion of its income from donations and sales to related parties’, the directors have decided not to establish ‘effective control over such transactions…until they are received and entered in the accounting records’. Why?

What this means is that the company can give you no assurance that all the (a) cash donations, (b) donations from related parties, and (c) money from sales to related parties have been officially received by the company (and therefore included in the financial statements).

1 and 2, especially in combination, are a significant limitation on Australian Mercy’s discharge of accountability and the provision of information to give donors confidence.

Here are the directors who thought that reporting was acceptable for a Christ-led charity:

David Skeat

Rodney Alan Richards

Nicholas John Matthews

Kris Leonard Thomson

Bruce Colin Skinner

Christopher Lee Harrison

Dianne Margaret Clark

Kevin Ewart Clark

Jennifer Anne Keatch

All these people are involved with YWAM’s Australian operation^[11].

End of review.

1. ↑
2. Their Complaint Handling Procedures invite direct contact with the ACFID: “Complaints that relate directly to Australian Mercy breaching the Code of Conduct of the Australian Council for International Development (ACFID) may be raised directly with the ACFID Code of Conduct Committee following the processes outlined at http://www.acfid.asn.au/code-of-conduct/complaints.” I have done this. ↑
3. See here for the last review. ↑
4. 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?

   ↑

5. The ACNC implies, therefore, that it is a ‘legitimate’ charity. But this is not correct – as the ACNC itself points out, registration is voluntary. ↑
6. Australian Mercy says that it uses three names:But it is confused: ‘Australian Relief & Mercy Services’ is not ‘the registered business name’, ARMS maybe an abbreviation but it is a business name, ‘Australian Mercy’ is not a trading name but a business name, and there are two other names that it uses that are registered business names. And it uses more than three names. ↑
7. The ACNC’s information (in its article above) is out-of-date. ↑
8. I used the Financial Report 2018 on the ACNC Register. No changes are needed if one uses the section in the charity’s Annual Reports 2018 – 2019 on its website called ‘Audit of Accounts’. ↑
9. 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. ↑
10. It controls two other charities, both public ancillary funds: ARMS Gift Fund and ARMS Aid & Relief. ↑
11. Does YWAM Australia control (and therefore should consolidate) Australian Mercy? https://buzzoff.org/about/: ↑