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Archived: Citylife Church Inc, charity review

Care: At least some of the information about this charity is no longer current. Use the ‘Search charity names’ box to see if there is a later review. If the latest review has a message like this, you are welcome to make your case for an updated review via email to ted@businessbythebook.com.au.

This is a charity review, a review for those with an interest in the Australian charity Citylife Church Inc (CC).

It is structured according to the charity’s entry on the ACNC[i]Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your decision about CC.

It is up to you to decide whether any or all of the information presented here is what you need in order to make that decision, and whether you should seek any other information, either from the charity itself or from other sources.

Ministry response

Prior to publishing this review, I sent my observations to the charity, on 2 March 2016, and invited them to comment[ii]. They did not respond.

Organisation of this review

The first part of this review is organised according to the headings in the Register entry. This is how to use this section of the review:
1. For each heading in the register entry, first read the information under that heading.
2. Then check if that heading is included below. (Headings for which there is no comment are not included. This also applies to the information in the Financial Report.)
There is then a more detailed comment on the Financial Report. (Go straight there.)
Lastly, there is a section Membership of accountability organisations claimed.

Sources

ACNC Register (including links)
Google search on the charity’s name.
CC website.
CC on Twitter, FaceBook, YouTube, Instagram, and a mobile app, all via buttons in the footer of webpages.
State government fundraising licence registers.
No reviews yet at www.glassdoor.com.au

REGISTRATION DETAILS

Entity Subtype

A subtype consistent with sharing the Gospel.

CHARITY DETAILS

Legal Name

CC is a Vic incorporated association.
Not to be confused with
- the Citylife Church in NSW that says it owns the business name Citylife Church. Nobody owns this name.
- The church headquartered in Qld that owns the business name Citilife Church.

Other Name(s)

The trading name CityLife Church is missing here. However, to continue to trade legally under the name CityLife Church they need to register it as a business name.

Charity ABN

Tax deductibility: There is no entitlement to a tax deduction for a donation to CC.
A deduction is, however, offered by the church. They don’t explain how this is possible.

Charity Street Address

Postal address, from the website: PO Box 140 Vermont, VIC 3133

Phone

From the website: 03 9871 8300

Website

From a Google search: https://www.citylife.church/

ANNUAL REPORTING

AIS 2014
- This is CC’s compulsory Annual Information Statement 2014 (AIS 2014).
- It gives basic financial information. If you think that this might be sufficient for you
  - Although Total Gross Income matches the income statement, the first two components can’t be confirmed there.
  - The $5.94 m Other income, as it is a gift, should be added to Donations and bequests.
  - Neither of the grants expenses can be confirmed from the income statement.
Financial Report 2014
- The ‘report’ contains nothing signed by the directors, so we don’t know when it was approved (or even if it was approved).
- The ‘report’ was lodged just two weeks before the six month deadline.
- The coverage of finances in this review is left until the financial report proper (go straight there.)

ABOUT THE CHARITY

Statement of Faith
- A search for a statement of faith on the website leads to the constitution (see below).
  - Which includes this distinguishing belief:
    - Baptism of the Holy Spirit may occur at the time of salvation or at some time afterwards. We believe that the normal Biblical evidence of being baptised with the Spirit is the ability to speak in other languages or ‘tongues’ (Acts 2:1-4; 10:44-46) [clause 9].

Date Established

Here’s a history.

Who the Charity Benefits

Vision
Mission
Activities (What did CC do?)
- Maybe it’s not what happened in 2014 – the ‘2013’ suggests a cut and paste – but perhaps they genuinely do the same from year to year: From the Description of charity’s activities and outcomes in the AIS 2014:
  - CityLife Church Inc exists to advance the Christian faith. Its mission is to raise up fervent followers of Jesus Christ who impact communities, cities and nations for the Kingdom of God. This was achieved in 2013 through regular church services and other church activities including acts of kindness and mercy in the community as part of those activities.
Outcomes (What did CC deliver?)
- CC did not respond to the request in the AIS 2014 for a description of its outcomes.
Impact (How were people’s lives improved?)
- Nothing systematic found.

Size of Charity

With a revenue somewhere between $9.80 m and $18.99 m (see Income), CC is well above the threshold for this category.

Financial Year End

This means that the next financial report is due by 30 June 2016. Before that the financial information on the Register will be up to 18 months out-of-date.
- You may therefore need to ask for more up-to-date information.

WHERE THE CHARITY OPERATES

Operating State(s)[iii]

No fundraising licence is held in this state. Being able to marry people exempts them.
CC calls for donations on its website.
- It does not hold a fundraising licence in any of the other six states that have a licensing regime.
  - Apart from exemptions, whether it needs such a licence depends on whether these states think that CC, by calling for donations publicly, is ‘fundraising’ in their territory.

CHARITY’S DOCUMENT (SIC)

The constitution is also available on the website.
There is no Annual Report/Review available on the ACNC Register.
Although there appears to have been one in 2013 and earlier, there’s not one on the website now.

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions[iv]

Mark Conner This function was not available at the time of publication

Compared to what is required by the constitution, ‘Position’ here is missing a Chairperson.
What is the difference, under ‘Position’, between ‘Other’ and ‘Board Member’?
The listing on the website does not include Peter Leigh.

(End of review of the ACNC Register information)

Latest financial report – detail

What is lodged with the ACNC as a financial report is questionable as a true and fair view:
- It is difficult to see how the directors of CC, reputedly Australia’s second largest church, have made a decision that CC is not a ‘reporting entity’, and therefore doesn’t have to produce the type of financial statements that are designed for those users who are dependent on general purpose financial statements for their decisions about CC.
- They give no reason for this decision.
- This decision allows them to make less than a full disclosure about CC’s finances and operations, and implies that CC, reputedly Melbourne’s largest church, is willing to tailor a financial report for anybody who requests one. Any one of its 3741 followers on FaceBook, any one of its 129 employees, any worshipper at any of its five locations. Does the Board realise what it is saying?
- The ‘report’ is a collection of Excel sheets without any linking or explanatory document.
  - It contains, without explanation, two statements extra to what the Accounting Standards define as a complete set of financial statements.
  - There is no directors’ declaration. The directors have therefore not put their name to this collection of sheets.
  - There is no audit report. Were the sheets even audited?
  - There is a strong argument that, through incorrectly calling a trust distribution a contingent asset, CC’s assets and revenue are understated $4.59 m.
  - The CC Board controls at least four (5) other separate charities, yet there is no explanation in Note 1 of how these interests have been treated in the accounts:
    - a public ancilliary fund, The Trustee For Kingdom Investment Fund,
    - a church, Open House Christian Fellowship Inc,
    - Waverley Christian College, a Christian College with a $23 m turnover,
    - CityLife Community Care Inc, a public benevolent institution, and
    - CityLife Projects Ltd, a company with the subtype ‘Advancing religion, but which didn’t disclose its activities in its AIS 2014.
  - This is only charities. Does CC own any other not-for-profits? For profit entities?
  - There is evidence that the first of these charities has been consolidated with CC. Why not the other four?
- Open House Christian Fellowship Inc, taken over by CC in 2013, is very behind in its legal obligations as a charity.

What was earned, what was consumed during the year – the Statement of Income and Expenditure and Other Comprehensive Income (the 1^st Excel sheet)

Income (reordered by size)

Revenue from Operating Activities $9.80 m (including Note 3)
- The distinction here between operating and non-operating activities is not consistent with the Accounting Standards.
- The correct division of income is between revenue, inflows from ordinary operations, and gains, items that are incidental to those operations.
- The Note contradicts the statement in introducing a further distinction between ‘Operating Activities’ and ‘Designated Revenue’ (see below for breakup)
Gift from Open House Christian Fellowship $5.94m
- There is no reason given for treating this revenue differently from all the other income
Revenue for General Reserves & KIF $3.25 m
- What is ‘Revenue for General Reserves’? It is the source of the revenue, not its destination, that needs to be disclosed here.
- There is no reason given for treating this revenue differently from all the other revenue.
- Nowhere is ‘KIF’ explained. (Presumably it is the Kingdom Investment Fund – see above).
- Where are the KIF expenses?
Note 3 (breakup of Revenue from Operating Activities $9.80 m)
- Operating Activities – Tithes & Offerings $8.25m
  - A member of CC is required to tithe (a requirement that many would argue is not Biblical):
    - “(b) a willingness to adhere to the requirements of CityLife membership as evidenced by:-…vii. giving tithes (i.e. contributing 10% of their income into the ministry of CityLife and free-will offerings…[clause 3.1, the constitution].
Designated Revenue – Missions $767K
- What is the source of this revenue?
Operating Activities – Interest received $249K
- If interest is recognised ‘on a proportional basis’ (Note 1), why has there been no difference, either this year or last year, between the accrual and cash figures for interest?
Designated Income – Ministry Income $196K
- The whole church is a ministry so what is ‘Ministry income’?
Operating Activities – Other receipts $172K
- ‘Other expenses’ are broken up in a Note, why not ‘Other receipts’?
Operating Activities – Rental income $149K
- This category of revenue is not mentioned in the policy Note.
- What is being rented?

Expenses (reordered by size)

The expenses classification is a mixture of the two permitted methods.
Superannuation expense is not dislosed.
Disclosure of (a) fundraising, and (b) administration expenses is good practice for a charity. Does CC think that this is not applicable to a church?
Employee benefits expense $5.70 m (including Note 3)
- This is 69% of ‘tithes and offerings’.
Ministry expenses $1.10 m
- There is no explanation of this item.
Distribution from KIF $948K
- Who received this money?
Missions expenses $767K
- Why is this identical to the revenue item of the same name
Expense from General Reserves $581K
- There is no explanation of this unusual item.

What’s left at the end of the year – the Statement of Financial Position (the 2^nd Excel sheet)

Assets

Cash and cash equivalents $8.24 m (including Note 4)
- These in no explanation for the reason for holding this much money in the bank.
- Are all the givers, particularly past givers, to the church aware that the church has $8.24 m in the bank?
Other current assets $719K (including Note 6)
- Waverley Christian College is a 100% controlled subsidiary of CC. This loan is not disclosed under Related Party Disclosures. This also applies to the $5m long-term loan below.
Property, plant and equipment $15.66 m (including Note 7)
- An explanation is needed for ‘Plant & Equipment’ that is included under a heading ‘Property, plant and equipment’.
- There are no reconciliations of written down value.
Long-term loan $6.00 m (including Note 6)
- Is Kingdom Investment Fund’s loan to an entity that is not a deductible gift recipient consistent with the trust’s purposes?
- This loan is not disclosed as a related party balance.

Liabilities

Short-term provisions $663K (including Note 9)
- The number of employees here is quite different to the number disclosed in the AIS 2014.

Members’ Funds

Reserves $12.22 m (including Note 12)
- General – Building Fund $2.31 m
  - This reserve is only $1.81 m in Kingdom Investment Fund’s accounts. What’s the difference?

Essential information to go with the figures – the Notes to and forming part of the Accounts (the 5^th Excel sheet)

Note 1 : Statement of Accounting Policies
- Missing information:
  - Which accounting standards have been complied with?
  - Is the ‘report’ for CC as an individual entity?
  - Functional and presentation currency.
  - The date the accounts were authorised for issue.
- From the lack of a comment it appears that the directors do not have the power to amend and reissue the financial statements
- Missing policy Notes
  - New, revised or amending Accounting Standards and Interpretations adopted
  - Current and non-current classification
  - Trade and other receivables
  - Impairment of non-financial assets
  - Trade and other payables
  - Fair value measurement
  - Critical accounting estimates and judgements
- (a) Property, Plant and Equipment
  - Two policies are missing: the review of depreciation factors and derecognition of assets.
- (b) Valuation of Land and Buildings
  - We are told that a valuation was commissioned on two properties, but we are not told what was done with the result.
- (e) Employee Entitlements
  - The required distinction between long-term and short-term is missing.
- (g) Goods and Services Tax (GST)
  - The policy on GST and cash flows is missing.
- (h) Contingent Asset
  - This is not a policy. It is the report on a decision by the directors about $4.59 m, and should bea Note of its own.
  - A contingent asset is one whose existence is in doubt. Since CC is ‘presently entitled’ to the distribution from the trust, the asset exists. As neither its collectability nor the timing of its receipt are grounds for not recording the asset, it should have been recorded. Revenue and assets are therefore understated by $4.59 m.
- (i) Treatment of Multisites
  - What are ‘multisites’? CC is a ‘multisite’ church, but that is only one ‘multisite’.
  - Why does the possibility of separately reporting the ‘multisites’ even have to be addressed?
- (j) Related Party Disclosures
  - Why is there no mention of the five other charities that CC controls?
    - For instance, CC has lent Waverley Christian College $5 m for no fixed term.
- (l) Church activities
  - Why would KIF activities be tax deductible?
  - Nowhere is ‘SIF’ explained, including here.
Note 2 : Committed Missions Funds
- Their location in the statements should be disclosed.
Missing Notes
- Contingent liabilities
- Commitments

Membership of accountability organisations claimed

None claimed. However, a part of CC, CityLife Church World Impact Dept, is a member of Missions Interlink.
- Although it has its own bank account, it has no ABN, and shows as one of the ‘activities’ of CC in CC’s extra financial statements.
- How a department of an organisation complied with membership requirements clearly written for entities that at least have an ABN is a mystery.
- You can see the performance and position of this department of CC in the extra financial statements provided in the Excel spreadsheet (see Latest financial report – detail, above). (This makes it clear that World Impact Dept is not financially independent of CC.)

(End of review)

[i] Australian Charities and Not-for-profits Commission, Australia’s national regulator of charities.

[ii] Their twelfth’ ‘Core Value’ [the constitution] is ‘Excellence – we are a quality church. Our goal is to pursue excellence in all aspects of church life in order to bring glory to God.”

[iii] This is how the ACNC explains ‘operating locations’ in their application guide: ‘You need to give details about where in Australia your organisation conducts (or plans to conduct) its activities.’

[iv] Because of the possibility of two (or more) directors having the same name on the register of responsible persons, it is not possible to be definitive about the number of directorships held.

PUBLISHED: 09/03/2016 BY: Ted Sherwood IN : Charities, Charity reviews, Missions Interlink members
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