Archived: Church Missionary Society NSW & ACT Ltd: mini-charity review

Mini-charity review of Church Missionary Society NSW & ACT Ltd (CMSN&A), an organisation that seeks donations^[1] and is a member of Missions Interlink. (Including the answers to the questions that the Australian charity regulator, the ACNC, suggests that you ask.)

For the previous review, see here.

Are they responsive to feedback^[2]?

• I sent them a draft of this review. Like last year, they did not respond.

Is CMSN&A registered?

• As a charity, yes.
• CMSN& A is a charity, according to Note 2 in its Financial Report 2015 (see below), that controls another charity, Church Missionary Society Trust Limited (the Trust).
  • It still hasn’t taken advantage of the ACNC’s group reporting concessions.
  • The Financial Report 2016 of the Trust says that
    • The principal activity of the company during the financial year was to act as Trustee (sic) for [CMSN&A]…and Church Missionary Society – Australia Limited.
    • It is still not explained how this is possible when neither of these entities are a trust.
    • If CMSN&A deems that it controls the Trust, then why not also Church Missionary Society – Australia Limited?
    • The Trust holds the real property of the companies yet there are no properties in its Balance Sheet.
  • CMSN&A is a public company, a company limited by guarantee.
    • It appears to have only one of the two provisions in its constitution necessary for it to omit ‘Ltd/Limited’ at the end of its name.
  • CMSN&A operates, per the ACNC Register, in Australian Capital Territory (ACT) and New South Wales (NSW). It seeks donations online. A licence is not required in the ACT, and CMSN&A is exempt in New South Wales. It has no fundraising licences in the other five states that have a licensing regime applicable to charities^[3].
  • It operates overseas, per the ACNC Register, in Aland Islands. There is nothing in their public material to support this entry.
  • It holds no business names, so trading in anything other than its full name is not legal.
• The Trust:
  • A public company, a company limited by guarantee.
  • Although not shown on its ABN record, it holds five business names, all to do with a bookshop.

What do they do?

• There is no description on the website, but you can get a very good idea from the Directors’ Report in the Financial Report 2016:
  • Strategy (page 4 of the accounts):
    • To raise awareness of world mission and educate Christian churches in NSW and ACT about the importance of God’s mission in the world.
    • To raise support of those being sent out. This is both financial support through charitable fund raising, and prayer support.
    • To communicate with supporters through letters, videos and publications in order to provide information about the needs of the church worldwide, the opportunities for involvement in world mission and to help people take their place in God’s world mission.
    • Providing resources for individuals and churches interested in finding out more about world mission.
    • To run and promote activities that reach a cross section of church members of all ages and differing circumstances.
  • ‘Principal activities’ (page 4 of the accounts)
    • CMS Summer School. CMS Summer School is an annual week long conference held in Katoomba and attended by up to 3,000 members and supporters of the company.
    • General Committee. This is an elected body of members and meets 5 times per year. As a representative group of our key stake holders, the General Committee gives feedback about the effectiveness of the work that is done in service of our missionaries and supporter base.
    • Youth and children’s camps. These are held each year in Katoomba for primary and secondary school students. The aim is to provide a fun environment where children also learn about God’s work in the worldwide church.
    • Conferences for retirees. These are aimed at older members and supporters.
    • Publications. A number of publications are produced to appeal to a variety of people and provide information on current activities as well as encouraging people to become more engaged with global mission through CMS. These include emails, videos and printed media such as letters, newsletters and magazines.
    • Visiting churches. Missionaries on “home assignment” and staff of the company regularly visit churches, speak at church services and liaise with church leaders.
    • Meetings. Throughout the year, regional meetings are held throughout NSW and ACT to encourage and raise support in more rural regions. Members of staff of the company also meet on an individual basis with any person interested in being sent to serve overseas.
    • Fund raising. Charitable fund raising is carried out throughout the year. This is done mainly through our individual members and supporters as well as churches with whom we have an existing relationship and not by appeal to the general public.
  • Everything above is unchanged from last year.
  • Not mentioned above, but one of the objects is ‘to receive assets which have been held or are held on trust for the Association by [the Trust]’ (clause 4.2, the constitution)^[4].
    • The company started in 2011. The Financial Report 2016 shows that many properties are still held by the Trust.
• The Trust
  • Nothing on the website, but the Trust’s Directors’ Report says that
    • The principal activity of the company during the financial year was to act as Trustee (sic) for Church Missionary Society NSW & ACT Limited…and Church Missionary Society – Australia Limited. The company did not trade on its own account during the year.
    • This is supplemented by a listing of the company’s activities Note 2 in CMSN&A’s Notes to the Financial Statements.
    • Why are there no properties or cash/financial assets balances in the Balance Sheet?
    • The Trust’s Directors’ Report shows four distributions under ‘Support Provided by Trusts’. $12K total.
      • Why then are revenue and expenses zero?
      • And ‘Receipts from trusts’ and ‘Payments to creditors’ $316K in the Cash Flow Statement?
    • Note 3 says that the Trust paid $3K to its auditor. Why is this not in the accounts?

Does CMSN&A share the Gospel?^[5]

• No, not according to the above information.

What impact are they having?

• No information found. (The performance indicators in the Directors’ Report do not include any impact measures.)

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

• If ‘Missionary Support’ is defined as the money that goes to achieve the impact, then 35% of expenses go on administration.
• The Trust had no expenses.

Do they pay their directors?

• The CMSN&A governing document does not permit this.
• Directors’ fees are not mentioned in the Statement of Profit or Loss and Comprehensive Income.
• The Trust had no expenses.

Can you get a tax deduction?

• No
  • Nevertheless, the giving page that they use, the one belonging to Christian Missionary Society – Australia Ltd, does offer tax-deductible giving.
• The Trust: No

Is their online giving secure?

• Security is not mentioned.
• The Trust: NA

Is their reporting up-to-date?

• Yes (lodged three days late, seven months after their year-end, and a week later than last year).
  • 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 16 months ago.
• The Trust: Yes (lodged three days late, seven months after their year-end, and a week later than last year).

Does their reporting comply with the regulator’s requirements?

• Annual Information Statement (AIS) 2016: No
  • The ‘Financial Information’ is for the group, not CMSN&A.
  • No outcomes are reported.
  • The trading names are omitted.
  • The Trust: No
    • No outcomes are reported.
    • The trading names are omitted. (How can two of these be the same as those belonging to CMSN&A?)
• Financial Report 2016: No
  • ‘Profit on disposal of property’ is not an item of ‘Other Comprehensive Income’. The surplus is therefore understated by $395K.
  • Legacies (bequests) meet the definition of revenue. CMSN&A, however, doesn’t record them as revenue, preferring to practice ‘income smoothing’. Revenue is therefore understated by $314K.
  • 19% of the $7.06 m donations revenue was ‘Contributions to Tax Deductible Funds’. As CMSN&A doesn’t have any such funds, this money must have been received for a third party. Such receipts are not revenue.
    • ‘Missionary Support’ is overstated by the same amount.
  • The directors continue to say that CMSN&A has ‘no users who are dependent on its financial statements’. This allows them to prepare the type of statements that do not need to comply with all the Accounting Standards. Elsewhere in the Financial Report they say that CMSN&A has 125 missionaries, 5,717 individual donors, 329 donor churches, and 764 company members. Their decision implies that these thousands of users, plus all prospective users, have the capacity to ask CMSN&A to tailor a financial report to their needs. Implausible.
  • ‘Freehold land and buildings’ total $16.67 m.
    • A large portion of this would be for buildings. Without explanation, the directors have decided to not depreciate buildings, a contravention of the Accounting Standards. The asset is therefore overstated, along with the surplus.
      • Despite this, the directors declare in the Directors’ Report that ‘adequate provision has been made by the Branch for depreciation, maintenance and replacement of fixed assets’.
    • All bar one of the properties were subject to an independent professional valuation in 2016. However, although stated to be ‘at fair value’ in the accounts, the valuations of these properties have been arbitrarily, and without explanation, reduced by 10%.
    • Without explanation, the directors have decided to include two properties that are owned by the Trust.
  • The ‘Related Party Transactions’ Note (Note 16) does not mention the transactions and balances with Church Missionary Society – Australia Limited.
  • ‘Prepayments’ have been incorrectly included as ‘Cash flows from financing activities’ in the Statement of Cash Flows.
  • The Directors’ Declaration does not cite the ACNC Act.
  • The Trust: Because of its size, no Financial Report was required. Its submission was voluntary, and therefore did not need to comply with the ACNC’s requirements.
    • Where are the properties that are shown in the group accounts?

What financial situation was shown by that Report?

• Ignoring any adjustment required (see above),
  • Surplus as a percentage of revenue was increased from negative 1% to positive 1%.
  • Consolidated ‘Cash and cash equivalents’ plus ‘Financial assets’ represents nearly nine months’ revenue.
  • ‘Employment expenses’ are 19% of total expenses. For 103 employees.
  • Both short-term and long-term structure are sound.
  • The Trust:
    • No transactions.
    • ‘Receivables’, $14K, matched exactly by ‘Payables’.
    • No employees (AIS 2016).
    • Where are the properties that are shown in the group accounts?

What did the auditor say about the last financial statements?

• The auditor, Peter Vilimaa, of Manser Tierney & Johnston, Chartered Accountants, issued a ‘clean’ opinion.
  • Before you decide how much comfort to take from this
    • read about audit opinions here and here.
    • re-read the section above.
  • The Trust:
    • He gave a ‘clean’ opinion.

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

• No
  • The Register says that CMSN&A still hasn’t selected an Entity Subtype.
  • There is nothing to suggest that they are operating, as they say on the Register, in Aland Islands.
  • Trading names are missing.
  • The Trust: No
    • The Register says that CMSN&A still hasn’t selected an Entity Subtype.
    • Why is The Trust not operating in the same two states as CMSN& A?
    • Trading names are missing.
    • ‘Phone’ and ‘Website’ are blank, but these are not compulsory.

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

• Having been redirected from the CMSSA page to the ‘Give to CMS’ page, that is, to Christian Missionary Society – Australia Ltd’s giving page, your choices are:
  • ‘General Missionary Support’
  • ‘General Tax Deductible (sic) Gift’
  • ‘A particular worker’ (with a dropdown listing all the workers)
  • ‘Other’
  • The Trust: NA

Where were your (net) donations sent?

• To Christian Missionary Society – Australia Ltd:
  • $1.33m donated to four tax-deductible funds.
  • ‘Contributions from Mission Support Fund’, $4.80 m.
  • The Trust: NA

Who are the people controlling the organisation?

• The people shown here.
• The same as those listed on the ACNC Register (under ‘Responsible Persons’):
  • Faith Blake
  • Alastair Christie
  • David Clarke
  • Christine McComb
  • Ian McFarlane
  • Robert McPaul
  • Stephanie Menear
  • Gregory Olliffe
  • Malcolm Richards
  • Kathryn Thompson
  • Apart from the two CMSN&A charities, the name ‘David Clarke’ appears on the register for five others.  And the register only covers charities, not all not-for-profits, and of course doesn’t include for-profit organisations.  If after eliminating the charities for which CMSN&A’s Robert Clarke, a full-time Senior Minister, is not a director, you are left with the total being more than a handful, it would be legitimate for you to question whether his ability to discharge his fiduciary responsibilities is threatened.
• The Board is responsible to the membership. There were 764 members at 30 June 2016.
• The Trust: Five of the above people, plus Ian Miller (from the Register):
  • Alastair Christie
  • Christine McComb
  • Robert McPaul
  • Ian Miller
  • Malcolm Richards
  • Kathryn Thompson
  • The name ‘Ian Miller’ appears on the register for 10 other charities.  The register only covers charities, not all not-for-profits, and of course doesn’t include for-profit organisations.  If after eliminating the charities for which The Trust’s Ian Miller is not a director, you are left with the total being more than a handful, it would be legitimate for you to question whether his ability to discharge his fiduciary responsibilities is threatened. Especially as appears to have a full-time job as a partner in hunt & hunt lawyers.

To whom are CMSN&A accountable?

• To the ACNC.
• As a company, to ASIC.
• Although not mentioned on their webpage, they are accountable as a Member of Missions Interlink.
  • For one opinion on the strength of this accountability, see the section Activities in this review.
• The Trust:
  • To the ACNC.
  • As a company, to ASIC.

1. Although CMSN&A has no invitation to give on its own webpages on the Christian Missionary Society – Australia Ltd site, the invitation to give by the ‘parent’ remains accessible on those webpages. ↑
2. I agree with Randy Alcorn [Money, Possessions, & Eternity, Tyndale, 2003] when he says that ‘Any Christian leaders who resist financial accountability make themselves suspect.’ [page 425]. ↑
3. The law in this area is not straightforward and advice varies, so check with the charity before drawing any conclusions. ↑
4. Even though the Directors’ Report is for the group, the Trust’s activities are not mentioned. ↑
5. “Good living and social concern are important [to the cause of evangelism], but they are not uniquely Christian graces…I’ve met a lot of fine Hindus, Muslims and atheists. Just living the life is not going to bring someone to Christ. There is much more to it than that. We must help people, certainly, but we must also share with them why we are motivated to do so. We must stand against injustice, poverty and need, but we must at the same time point to the One who brings justice and who can meet the deepest need. Until they know our reasons, how can they come to know our Lord?” [Dan Armstrong, the Fifth Gospel: The Gospel According to You, Anzea Books, pp. 13-14. ↑