Archived: Barnabas Fund (Australia) Limited: mini charity review for donors

Mini charity review of Barnabas Fund (Australia) Limited (BFA) as an organisation that seeks donations online. (Including the answers to the questions that the Australian charity regulator, the ACNC, suggests that you ask.)

(To see the situation last year, read this review.)

Is BFA registered?

• As a charity, yes.
• Other registrations:
  • As a public company, a company limited by guarantee.
    • It does not have the necessary provisions in its constitution to allow it to omit ‘Ltd/Limited’ from its name.
    • BFA is a fundraising vehicle that has offices in three states (see the next question) and also operates (according to the ACNC Register) in the other five. It also has an internet invitation to donate. However, it does not have a fundraising licence in any of the seven states that have a fundraising licensing regime^[1].

What do they do?

• ‘What we do’ on the website is not about Australia, but the international organisation generally. For what they did in Australia in 2015, see the AIS 2015:
  • Barnabas Fund Australia continues to raise funds from its Australian supporters (Churches, individuals, businesses) to assist fellow brothers and sisters in Christ who have been persecuted for their faith. Funds raised in Australia anr (sic) sent to the Barnabas Aid International Uk (sic) office where it is held and finally distributed to projects around the world, primarily to countries that are mainly Islamic. Barnabas Fund Australia has an office in QLD that employs 4 staff and occasiobaly (sic) casual staff to process donations, send out thank you letters. We also have a NSW office that employs 1 person and a couple of casuals. We also have a WA employee who runs a home office.Our bi monthly(sic) magazine is printed in Brisbane and sent to our supporters around Australia (over 32,000). Petitions are sometimes produced to promote a country that is in desperate need and these are signed by supporters and other individuals.
    • You might legitimately ask them why it would not be more efficient for you to send your money direct to the UK company.
• For what they are doing this year, if their plans came to fruition, see the AIS 2015 again:
  • We intend to get involved with Australia’s intention to bring in around 12,000 refugees from the Middle East. This will be by the provision of finances and practical help once they arrive in Australia.

Do they share the Gospel?

• No.

What impact are they having?

• Contrary to the description of their largest expense, ‘Charitable projects worldwide’, BFA is not directly involved in any projects – it merely collects money for ‘Barnabas Aid International Uk’ (sic).
  • Although BFA, via the governance of the UK organisation, has a say in the selection of countries and projects, any impact from the use of your money is outside their control.
  • The recipient’s financial year is not the same as BFA’s. They show the receipt of GBP2,523,290 from Australia in the year ended 30 April 2015. This is $4.59 m at 31 October 2014 ($4.92 m at 30 April 2015). $5.03 m was sent by BFA transfer for the year ended 30 June 2015.
  • Some of your donation – 8% in the current year – is returned to Australia as ‘reimbursements’.

What do they spend outside the costs directly incurred in delivering the above impact, that is, on administration?

• The cost of raising and sending the money to is 24% of that money.

Can you get a tax deduction?

• No, not to BFA.
  • It also has a public ancillary fund, another charity, The Trustee For The Barnabas Relief Education and Development Fund. This can accept tax deductible deductions. However, there is no mention of this fund either on the website or in the Financial Report.

Is their online giving secure?

• Security is not mentioned on the first page under ‘Donate’.

Is their reporting up-to-date?

• Yes (but lodged six months and a half months after their year-end).
  • But if you are considering a large donation, I would ask for more up-to-date financial information – the accounts are for a year end that is now over 15 months ago.

Does their reporting comply with the regulator’s requirements?

• AIS 2015: Apart from the absence of outcomes, and one incorrect figure in the Income Statement, yes.
• Financial Report 2015: Doubtful
  • BFA continue to produce the type of financial statements that do not have to comply fully with the Accounting Standards (special purpose statements). This is based on their belief that there are no users, either current or prospective, who are dependent on its financial statements to make decisions. The corollary of this belief is that BFA is saying that any of its ‘stakeholders’, including the 32,000+ people from all over Australia who together contribute over $5 m, are able to command the preparation of a financial report tailored to their needs.
  • The charity they control, The Trustee For The Barnabas Relief Education and Development Fund, is not mentioned, let alone consolidated.
  • They continue to be in contravention of the Accounting Standards in not depreciating their buildings. (Despite saying in Note 1 that they do.)^[2]
  • The description of their borrowings, borrowings that are 72% of assets, does not justify their classification as non-current liabilities rather than current liabilities^[3].
  • Related parties, both the relationships and the transactions, are not disclosed. For instance, the borrowings (see above) are from a related party.
  • ‘Resources’ are sold but there are no inventories in the Statement of Financial Position.
  • Despite Note 1 saying that ‘freehold land and buildings are shown at their fair value’, they are described in the Statement of Financial Position as ‘At cost’.
  • Note 1 says that buildings are depreciated; Note 6 says that this is too hard.
  • The policy for designated donations and bequests is that they are recognised as ‘prepaid income’ (Note 1), but there is no such item in the Statement of Financial Position.

What financial situation was shown by that Report?

• Last year’s surplus of 4% of revenue was turned into a 1% deficit.
• ‘Cash and cash equivalents’ have fallen well below the desired three months’ ‘cash operating expenses’.
• Retained earnings are only 3% of revenue, and a little over three times the deficit.
• The directors thought it necessary to question whether the going concern assumption was still valid.
• If the borrowings should be reclassified as current liabilities (see above), then this question because even more pertinent – those liabilities would then be 2.7 times current assets.
• The directors decided that the going concern assumption was still correct. This was because ‘Barnabas Fund (BF)…will continue to provide financial support’. No information is given to support this belief.

What did the auditor say about the last financial statements?

• He gave a ‘clean’ opinion.
  • However, he didn’t mention the threat to the going concern assumption. He should have at least included an Emphasis of Matter paragraph.
  • And in accepting the engagement, he implicitly agreed with the directors’ decision to produce special purpose rather than general purpose financial statements (see above).
  • To take the right amount of comfort from a ‘clean opinion’, please read here and here.

If a charity, is their information on the ACNC Register complete?

• Almost. BFA is, at least according to the ACNC, long overdue in selecting an ‘Entity Subtype’. And ‘Phone’ and ‘Website’ are blank.

What choices do you have in how your donation is used?

• The drop-down menu has 145 projects. You can see a description of each, by category, here.

Who are the people controlling the organisation?

• Not shown on the website, but you can see the current list on the ACNC Register.

To whom are BFA accountable?

• Although not claimed on their website, they are accountable as a Member of Missions Interlink^[4].
• They are also accountable to the ACNC.

Are they responsive to feedback?

• When sent a draft of this review, they…did not respond.

1. The law in this area is not straightforward – for instance, is an internet invitation ‘fundraising’ – and advice varies, so check with the charity before drawing any conclusions. ↑
2. Note 6 says that this is because it is too hard, but last year’s review gave them a simple solution. ↑
3. Last year’s review pointed out to them that the current-non-current distinction is not about what the lender says; a liability has to be classified as non-current if BFA ‘does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period’ [AASB 101.69, www.aasb.gov.au.] ↑
4. For one opinion on the strength of this accountability, see the section Activities in this review. ↑