Archived: Deaf Ministries International Ltd: charity review

A charity review of Deaf Ministries International Ltd (DMI), an organisation that seeks donations online and is a member of Missions Interlink. (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?

• There is no invitation on the DMI website to submit feedback or complaints.
• I sent them a draft of this review. Like last year, they did not respond.

Is DMI registered?

• As a charity, yes.
  • DMI controls another two Australian charities, Deaf Action Limited (Action)^[1] and, via that one, The Trustee for Deaf Action Fund^[2] (the Fund).
    • DMI doesn’t consolidate Action with its figures. And Action doesn’t consolidate the Fund with its figures. In fact, none of the three charities mentions the relationship with the others.
    • Which might explain why neither DMI or Action have still not taken advantage of the ACNC’s group reporting provisions.
• DMI is a public company, a company limited by guarantee.
  • As it has the necessary provisions in its constitution, DMI is entitled to omit ‘Limited/Ltd’ when it uses its company name.
• DMI doesn’t hold any business names.
• DMI operates – per the ACNC Register – in all Australian states. And has an internet invitation to give.
  • It doesn’t have a licence to fundraise in any of those that might require one of a charity. There may be a good reason – ask them.

What does DMI do?

• See ‘What choices…’ below.
• The DMI that is described on the website www.deafmin.org is an international organization, with Australia being one of the countries that has ‘support groups’:

• Australia has a separate board – ‘Rod Chapman sits on the Australian Board as Chairman and on the International Board as Director of International Pastoral Care’ – but there’s not even an ABN for a ‘Deaf Ministries’ entity other than DMI, and Australia is not listed as a country that sends donations to DMI [Note 12 of the financial statements]. Mystery.

Does DMI share the Gospel?^[3]

• 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?

• If we define ‘direct’ as ‘Project expense’, it cost $309K to deliver $482K. That’s 39% for ‘administration’, a significant increase on last year’s 31%.

Do they pay their board members?

• This is prohibited by DMI’s constitution.
• There is insufficient disclosure of expenses to check.

Can you get a tax deduction?

• No
• But you can if you donate to its subsidiary:

Is their online giving secure?

• PayPal is used, so yes.

Is their reporting up-to-date?

• Yes (lodged four and a half months after their year-end, a month earlier 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 13 months ago.

Does their reporting comply with the regulator’s requirements?

• AIS 2016: No
  • The figure for ‘Employee expenses’ is quite different to the one in the accounts.
  • No outcomes are reported.
• Financial Report 2016: No
  • The threat to the going concern assumption posed by the poor financial situation is not mentioned.
  • The question of consolidation of the subsidiary is not addressed.
  • The relationship between DMI and the (unidentified) Australian arm is unclear.
  • DFI has a staff of 14 (four of whom are paid), operates throughout Australia, collects $800 K p.a. from seven countries, controls a public ancillary fund, and seeks donations from the public via the internet. To say that such an organization’s stakeholders, both present or prospective, have the capacity to get the organization to produce financial statements tailored to their needs, is implausible.
  • The directors seem unconcerned that DMI has ‘no appropriate controls over income’ [What did the auditor…’, below].

What financial situation was shown by that Report?

• Remembering that, with the exclusion of their subsidiary, Deaf Action, the Report shows only half the picture:
  • They returned the surplus as a percentage of income to positive (5% to 1%.
  • Short-term liabilities again exceed short-term assets (although by a lower percentage). That’s negative working capital again.
  • Equity is still negative (although reduced from $19K to $10K).
    • So DFI has both a shaky short-term financial structure, and a shaky long-term structure.
  • Unlike last year, the directors do not mention to threat posed to the going concern assumption by these two negative figures.
    • Presumably their reasoning for saying that the assumption still applies is the same: the ability to defer spending on projects to pay the bills.
      • How does this relate to the implicit promise to donors when soliciting donations?

What did the auditor say about the last financial statements?

• Because DMI is a ‘Medium’ rather than a ‘Large’ charity, it is permitted to have a review rather than an audit.
• The auditor, Jeffrey Tulk for Saward Dawson, gave a ‘qualified conclusion’, not a ‘clean’ one^[4].
  • He concluded from his review that ‘except for the effects on the financial report of the matters referred to in the Basis for Qualified Conclusion paragraph, nothing has come to our attention that causes us to believe that the annual financial report…does not satisfy the requirements of the [ACNC] Act 2012 and the Associations Incorporation Reform Act 2012…
• The same firm (but different auditor) reached the same conclusion last year. It is therefore concerning that the directors allowed the deficiency to continue this year.
• This is the reason for the qualification:
  • Deaf Ministries International Ltd receives income from cash donations. It was found that there are no appropriate controls over income received prior to entry into the accounting records.
    • Hopefully the auditor means just cash donations, not all donations, let alone all income.
    • Why is it not practicable for the company to control this cash? Most other companies can. (Or at least enough to avoid a qualified review report.) Directors please read this.
• Before you decide how much comfort to take from Jeffrey’s conclusion,
  • note that
    • He has again omitted to mention the going concern issue. Why not at least an Emphasis of Matter paragraph?
    • He has, in continuing with the engagement, again implicitly agreed with the directors’ decision to produce special purpose rather than general purpose financial statements (see above),
  • read again the section above, ‘Financial Report 2016’.

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

• Yes

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

• The choices are confused by the fact that they occur in four different places on the website, and cover not only DMI but also the Fund:
  • Under the ‘Donate’ menu item:
    • ‘General Donation’
    • ‘Sponsorships’
    • ‘Helping a deaf worker attend the 2017 DMI-Conference’
  • Under the ‘Sponsorships menu item:
    • ‘Sponsor a Child Now’
    • ‘Sponsor a School Now’, and
    • ‘Please see Australian Tax Deductible Projects’
      • This is the Fund acting as an agent for World Relief Overseas Aid Fund,
      • 1323 Wakiso Secondary School (& others) – Uganda
      • 1324 Ligao Schools – Philippines
      • 1326 Davao – Philippines
      • 1327 Immanuel School for the Deaf – Kenya
      • 1333 Visayas – Philippines
      • 1334 Muir (Immanuel) School for the Deaf – Myanmar
        • These projects are not described on the website.
  • Under the ‘Projects’ tab, three ‘projects’ that appear to be something different to the tax-deductible projects above:
    • • ‘Sponsor a Pig’
      • ‘Sponsor a Sewing Machine’ (Kenya)
      • ‘Sponsor a Sewing Machine’ (Burundi)
  • On the home page, a ‘Bible School and Church Fund’

Where were your (net) donations sent?

• There is no information on this in the Financial Report 2016.

Who are the people controlling the organisation?

• Not shown on the website.
• Per the ACNC Register (under ‘Responsible Persons’):
  • Rodney Chapman
  • Neville Muir
  • Susan Shannon
• These there are also the directors of the two subsidiaries.
• By most sensible standards, three people is too few to entrust with the governance of an. Especially for an organization of this size and complexity.

To whom are DMI accountable?

• As a charity, to the ACNC.
• And as a company, to ASIC.
• They don’t say anywhere, but they are members of Missions Interlink, an organisation that has a set of standards with which DMI must comply.
  • For one opinion on the strength of this accountability, see the section ‘Activities’ in this review.

1. At the time of its registration DMI was the sole member. Action has a separate website, on which they, like DMI, refer to the relationship as a partnership. ↑
2. A public ancillary fund (endorsed as a DGR), of which Action is the trustee. The last Financial Report shows a turnover of $279K. ↑
3. “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. ↑
4. Even if this were a ‘clean’ conclusion rather than a qualified conclusion, it would, as a review rather than an audit, provide a lower level of comfort. ↑