Barnabas Fund Australia: charity review

This is a review^[1] in the series ‘Members of Missions Interlink’, Missions Interlink being ‘the Australian network for global mission’^[2] (and a means for a Member to get income tax exemption when it might not otherwise be available^[3]). ‘Barnabas Fund (Australia) Limited’ is one such member.

Covid-19

The website linked from the Missions Interlink membership goes to a website in the name ‘barnabasfund’. Here they seek online donations.

Donors

Given what Missions Interlink does, ‘Barnabas Fund (Australia) Limited’ is probably a charity. 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 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.
5. Find out more about how the charity says it uses donations.

Here are the results for ‘Barnabas Fund (Australia) Limited’, with #5 supplemented by the essentials of the ACNC’s What should I consider when deciding which charity to support?^[4]

1.  There’s no result from searching for ‘Barnabas Fund (Australia) Limited’ on the ACNC Register of charities. Checking on the Australian Business Register shows that the name changed to ‘Barnabas Fund (Australia)’ on 16 January this year, and then again on 25 January to ‘Barnabas Fund Australia’. There is a registered charity in that last name (Barnabas).

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2.  There is nothing to suggest that Barnabas uses 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]. The donate page says ‘Donate securely’ but offers no evidence of the security^[5].

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4.  The Australian Business Register (linked from Barnabas’ ACNC Register record), says that the charity is not entitled to receive tax deductible gifts. Nevertheless, it is a ‘legitimate’ charity’.

Although not entitled itself, Barnabas controls another charity that can offer a tax deduction, a public ancillary fund^[6] (the Fund).

There’s no mention of this tax deductibility on the Barnabas site, but presumably this is because there is a separate site, ‘Barnabas Relief Education and Development’^[7]. But why no mention of the Fund on the Barnabas site?

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5.   The use of your donations

As context, here are their Activities:

• As described on the website.
• Information on what happens to the result of the prime activity, fundraising, is given as their ‘Summary of activities’ on the ACNC Register:

^[8]

The audited account of how a charity uses donations is the Financial Report on the ACNC Register.

Apart from anything below, there are some issues with this report:

• $907K of revenue has been misclassified as ‘Other Income’ [Note 2].
• A loan from a related entity (85% of the liabilities) is classified as non-current on the basis that ‘The lender…has no intention of calling in the loan’. This strongly implies that the lender can ask for repayment before 12 months; it therefore should be classified as a current liability [Note 10].
  • Reclassification would make working capital strongly negative.
• Based on the information in the Financial Report, the $796K of reimbursements should be shown as a deduction from the applicable expenses, not as income.
• The directors quote the criteria for when an entity should be consolidated, then give completely different reasons for why they decided not to consolidate the Fund [Note 12].
  • Note 1 does not say whether the report is for a single entity or a consolidated entity.
• Despite these issues, the auditor, Cameron Bradley, a partner in PKF, issued an unqualified report.

So how were the donations used?

Cash spent

From the Statement of Cashflows (with last year in the second column):

It’s one line more than most charities have, but because no further information is given on these figures, we don’t have enough information to understand where the cash went.

Resources consumed (i.e. accrual)

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

The audited statements give no information about the destination of the $4.70 million sent overseas.

But this from the Directors’ Report:

No explanation is given by Barnabas for directing the money to CRI rather than to the US Barnabas organisation.

There is no disclosure of where the money goes after it leaves CRI. Does Barnabas have any say in the destination of your donations?

Unlike Barnabas in the US, the don’t have the protection afforded by the Evangelical Council for Financial Accountability (ECFA) for CRI.

‘Christian Relief International’ has a one-page website on which this is the major item:

CRI says that it is ‘unrelated with regard to governance’ to Barnabas organisations. This may be technically so, but

• The Directors’ Report says that three of the five Barnabas directors are three of the four (?) trustees of CRI.
• CRI operates from the same office as the US organisation.
• Does ‘bf’ in cri@bfmail.org, the only information on the CRI website other than three uncaptioned photos, stand for ‘Barnabas Fund’?
• CRI provided over 12% of Barnabas’ income in 2018-19.

CRI is not mentioned on either the Barnabas website, or on the US website.

Unlike Barnabas in the US, CRI is not a member of the Evangelical Council for Financial Accountability (ECFA).

Directors

These are the directors who were responsible for the Financial Report:

Ian Clarkson

Caroline Kerslake

Rosemary Sookhdeo^[9]

Kakha Tsagarelli

Anne Willett^[10]

Kerslake and Sookhdeo are directors of both the US Barnabas organisation and the UK Barnabas organisation – two of seven directors in both cases.

Impact

The question of the impact of your donations is not addressed anywhere. (There is no Annual Report^[11].)

Charity response

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

We sent Barnabas a draft of this review on 16 April 2020. By the time of publication, two and a half weeks later, they had not responded.

1. See here for the previous review. ↑
2. https://missionsinterlink.org.au/about/ ↑
3. ↑
4. 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? [A section in the article, Donating and Volunteering]. ↑
5. Many charities consider it wise to assure their donors, before they are asked to enter their personal information, including their credit card details, that their information is secure. They do this by stating the name of the service that provides that security, with a link to the site of that service. ↑
6. Barnabas control the fund via another public company, Barnabas Relief Education and Development Ltd. Note 11 to the financial statements incorrectly imply that it is this company that can offer a tax deduction. ↑
7. This is not a name that is registered. It should be either this name with ‘Ltd’ on the end, or The Barnabas Relief Education and Development Fund. ↑
8. As it sends money to the US, Barnabas should include the US under ‘Where the charity operates’ on the Register. ↑
9. The responsible persons for the other charity, the Fund, are these five plus the founder of the Barnabas organisation, Patrick Sookhdeo. ↑
10. The directors are accountable to the members. There were only seven members at year-end, and directors must be members. So very limited accountability here. ↑
11. Although ‘Documents’ on the ACNC Register lists an ‘Annual Report’, this document not what the ACNC, and most others, mean by an ‘annual report’. It is merely another copy of the Financial Report 2018. ↑