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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Care:  At least some of the information about this charity is no longer current.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.

A charity review of CityLife Church Inc (CC) as an organisation that seeks donations online, whose ‘World Impact Dept’ is a member of Missions Interlink, and which shares a director (Karen Naylor) with the body that accredits organisations if they meet ‘Nine Principles of Ministry Accountability‘. (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.)

Are they responsive to feedback?

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

Is CC registered?

  • As a charity, yes[1].
    • Not to be confused with the organisation with the identical name, a New South Wales association (INC9878332).
    • Or a name that’s close:
      • Citilife Church Inc (a deregistered Queensland association)
      • Citilife Church (a business name of Christian Outreach Centre)
  • CC controls four, probably five, and possibly six, other charities:
  • CC is a Victorian incorporated association (A0026171A).
  • It holds no business names. Does this mean that it should be using its full name on its website and on Facebook?
  • CC operates, per the ACNC Register, not only in Victoria but also in Western Australia. There is no mention of this state on the website. If they are indeed operating there, they do not have the necessary registration (an ARBN).
  • CC operates in eight overseas countries.
  • CC doesn’t have any fundraising licences. It is exempt in the state in which it operates. Whether it requires a licence in the five six states that have a licensing regime for charities depends whether they think that seeking donations on the internet is ‘fundraising’.

What do they do?

  • See under ‘Connect’ and under ‘Grow’ in the main menu on the website.

Does CC share the Gospel?[2]

  • Yes

What impact are they having?

  • Nothing systematic found.

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

  • The expenses are not classified to allow this calculation.

Do they pay their board members?

  • There nothing prohibiting this in the constitution.
  • Unless such expenses are included in ‘General Expenses’ (and barring misclassifications), no such payments have been made.

Can you get a tax deduction?

  • No
    • But under ‘Give’ in the main menu, both ‘Outreach’ and ‘Building’ options are tax-deductible giving. This is because CC is collecting for another charity.

Is their online giving secure?

  • Security is not mentioned.

Is their reporting up-to-date?

  • Yes (five and a half months after their year-end, the same time as 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 14 months ago.

Does their reporting comply with the regulator’s requirements?

  • AIS 2016: No
    • I cannot get a combination of CC’s multiple donation figures in the profit and loss statement to add to the figure given.
    • The ‘Gift from Open House Christian Fellowship’ $3.43 m, is not ‘Other Income (for example, gains)’.
    • No outcomes are given.
    • The trading name is missing.
  • Financial Report 2016: No. The accounts do not show a true and fair view.
    • CC is a very large church (Melbourne’s largest?). It has multiple sites, 114 employees, and 2584 volunteers (AIS 2016). And that’s ignoring its subsidiaries. Therefore, the directors’ claim that CC is not a reporting entity is…well, ridiculous.
      • The directors again do not give any reason for this decision, but it means that they can produce financial statements that do not have to comply with all the Accounting Standards. It also means that they are effectively saying is that CC has no users, past and prospective, who rely on normal financial statements to make decisions.
    • The Financial Report does not give the full picture of the CC operation. CC has four, probably five, maybe six active ministries that are run via separate charities yet does not produce consolidated financial statements.
      • CC says that ‘Kingdom Investment Fund…and Student Impact Fund are included as part of these financial reports’, but this appears to mean only that their transactions and balances are reported along with those of CC in the one set of statements.
        • For instance, to show ‘Distribution from KIF’ as a negative amount in CC’s accounts is confusing.
      • This extract from Note I (o) is an example of the integration in reality, but not in the accounts:

    • For more, see this footnote[3].

What financial situation was shown by that Report?

  • Because of what’s above, no comment.

What did the auditor say about the last financial statements?

  • The auditor, Peter Shields for Saward Dawson, gave a ‘clean’ opinion.
  • But before you decide how much comfort to take from this
    • note that in continuing with the engagement, he again implicitly agreed with the directors’ decision to produce special purpose rather than general purpose financial statements (see above).
    • see ‘Financial Report 2015’ above.
    • read here and here about audit opinions.

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

  • Are they really operating in Western Australia?
  • ‘Phone’ and ‘Website’ are still blank, but neither are compulsory.

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

  • ‘General’
    • ‘Tithes’
    • ‘General Offering’
    • ‘Church Building Fund’
    • ‘World Impact (Missions)
      • ‘Partnership in Missions’
      • ‘Other’
    • ‘Other’
  • ‘Nations’
    • ‘Partnership in Missions – Missions Worker’
      • ‘Please specify’ (no drop-down menu)
    • ‘Partnership in Missions – Other’
      • ‘Please specify’ (no drop-down menu)
  • ‘Outreach’
    • (‘Kingdom Investment Fund’) ‘My gift for where most needed’ (Tax-deductible)
  • ‘Building’ – ‘The Story Building Project’

Where were your (net) donations sent?

  • Other than ‘in Australia’, $2.13 m, and ‘for use outside Australia’, $569K (AIS 2016), there is no disclosure.

Who are the people controlling the organisation?

  • They are not shown on the website, but per the ACNC Register (under ‘Responsible Persons’):
    • Mark Eddison
    • Daljit Gill
    • Andrew Hill
    • Peter Leigh
    • Michael Loke
    • Karen Naylor
    • Peter Sheahan
    • Andrea Stickland
    • Elizabeth Thong
    • All these board members are also members of at least one of CC’s charities. Hill and Eddison are members of two, Sheahan three, and Leigh all four.
    • The name ‘Andrew Hill’ appears on the register for 12 charities. And the register only covers charities, not all not-for-profits, and of course doesn’t include for-profit organisations.  CC’s Andrew Hill is the Senior Pastor of CC, so, if after eliminating the charities for which he 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.

To whom are CC accountable?

  • As a charity, to the ACNC.
  • And to the Victorian regulator of incorporated associations.
  • It’s not mentioned on the website, but a part of CC, its ‘World Impact Dept (sic)’ is a member of Missions Interlink. (It is strange that membership continues to be in this name, the name of an entity that doesn’t even have an ABN.)
    • Missions Interlink is an organisation that has standards with which members must comply.
      • For one opinion on the strength of this accountability, see the section Activities in this review.

 

 

  1. The name has been recorded as ‘Citylife…’ instead of ‘CityLife…’. ↑
  2. “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. ↑
  3. Other comments:
  • Other than the ‘Board of Elders’ (the committee), only ‘CityLife Community Care’ is mentioned under ‘Related Party Disclosure’.
  • CC again discloses a $4.48 m ‘contingent asset’:

  • A contingent asset is ‘a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity [AASB137.10, www.aasb,gov.au].
  • Even though CC says that this distribution in the same class as ‘Tithes, offerings and other gifts’, and therefore should only be recognized on receipt, it is the Accounting Standard on revenue that governs when revenue is recognized. And in this case, because it is more than ‘probable’ that ‘future economic benefits will flow’ to CC, and the distribution can ‘be measured reliably’ [AASB 118, www.aasb.gov.au], this $4.48 m should, on the information presented by CC, have been booked as revenue. With an asset as the contra. Both assets and revenue are therefore materially understated.
  • The group has lent $6.00 m to Waverley Christian College, all of it at 90 day at-call or less. There is no explanation why this has been classified as a non-current asset.
  • As a public ancillary fund, Kingdom Investments can only help deductible gift recipients. CC is therefore not eligible. To whom was the money donated?
  • The presentation of income in the Statement of Income and Expenditure and Other Comprehensive Income is confusing and neither complies with the Accounting Standards nor matches what is shown in the Statement of Cash Flows.
  • CC continue to disclose ‘Revenue for General Reserves & KIF’ ($2.82 m) without explanation. It is the source of the revenue, not its destination that needs to be disclosed here.
  • CC continues to use the acronym ‘KIF’ without explanation.
  • ‘Other expenses’ $879K is broken down, but ‘Ministry expenses’, 983K, is again unexplained.
  • The unusual ‘Expense from General Reserve ($336K) is still unexplained.
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BY: Ted Sherwood IN : , , , ,
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