Archived: Destiny Rescue Inc, charity review

This is a review, a charity review, for supporters, and potential supporters, of the Australian charity Destiny Rescue Inc (DR).

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 giving decision.

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 November 2015, and invited them to comment. At the end of the 10 days I gave for a response, Tenille Nugent, the General Manager, replied to ask for another two weeks. I agreed. I then heard nothing further from DR.

Reviewer’s Comments: (1) DR’s response is not consistent with their stated commitment to “maintaining the highest level of financial integrity and transparency with the resources it has been entrusted”; and (2) DR’s constitution (see Charity Document (sic), below) requires the Management Committee to “ensure that a mechanism is established that will properly and effectively deal with complaints made by members of the public and grievances from employees.” Has this been established? And if it has, is it being used?

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 that section:

• 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.)

• There is then a more detailed comment on the Financial Report.
• Lastly, there is a section Membership of accountability organisations claimed.

Sources

• ACNC Register (including links)
• Google search on the charity’s names (see Charity Details, below).
• DR website. (Care: there is also one for the US, and one for New Zealand, both of which look the same as the Australian site.)
• DR on social media, on the right on this page, and LinkedIn.
• State government fundraising licence registers.
• www.glassdoor.com.au

REGISTRATION DETAILS

Entity Subtype

• Not a type that requires the Gospel to be shared.
• The company’s primary object is similarly silent on the Gospel:

To provide a Christ-centred ministry for the relief of poverty, suffering, distress, misfortune and helplessness of people wheresoever found in Australia and overseas regardless of age, sex, race, ethnic background, religion, political beliefs or marital status;

CHARITY DETAILS

Legal Name

• Not to be confused with the trust Destiny Rescue Overseas Aid Fund (DROAF), a separate charity run from the same address by the same four directors.
  • DR – see the website and Activities (below) – treats them as one operating entity, yet there is no explanation why DROAF’s figures are not consolidated with those of DR.

Other Name(s)

• The second one is not another name for DR but the name of another charity (see Legal Name, above).
• The first name is a trading name. In order to continue to operate, at least legally, under this name, DR needs to register it as a business name.

Charity ABN

• Tax deductibility: Despite what DR claims, you cannot claim a tax deduction for a donation to DR.
  • You can to DROAF though.

Charity Street Address

• Postal address, from the website: PO BOX 1197 Buddina Queensland 4575

Email

• Or try the one given on the website: kids@destinyrescue.org

ANNUAL REPORTING

• AIS 2014

• This is DR’s compulsory Annual Information Statement 2014 (AIS 2014).
• It gives basic financial information.
  • If you think that this is sufficient for you then you should note that
    • The full picture is not obtained without looking at the Financial Report of DROAF at the same time.
      • For instance, 92% of the ‘Donations and bequests’ came from DROAF.
    • Although DR is an organisation that raises funds to help people overseas, ‘Grants and donations made by the registered entity for use outside Australia’ were zero. (None were made for use in Australia either.)
    • They paid $54K to an Overseas Aid Fund (not DROAF) as ‘commission’.
      • This is despite appearing to operate in their own name overseas. (And see Operates in (Countries), below.)
    • Because the expenses in the profit and loss statement are more disaggregated than in the AIS 2014, it is not possible to verify ‘Employee expenses’.
    • Other income is slightly misstated. (It should be $8175.)

• Financial Report 2014

• The report was signed nearly eight (8) months after the year end.
• It was lodged two days after being signed. This was, according to the ACNC, only 20 days late.
• The coverage of finances in this review is left until the financial report proper (Latest financial report – in detail, below).

ABOUT THE CHARITY

Who the Charity Benefits

• Statement of Faith
  • None found. (There is no search function to confirm.)
  • Despite DR saying that it is ‘Christian based’, and a ‘Christ-centred ministry’ (see Entity Subtype, above), I can find no explanation in any of its materials to explain how this makes it different to a secular Public Benevolent Institution that rescues children.
  • Despite a ‘restoration’ program for the rescued girls, there is no mention of the Gospel.
• Vision
  • None found for Australia.
  • What they call a vision, here, is actually a goal (or series of goals). And not specifically for Australia, but for Destiny Rescue worldwide.
• Mission
  • None found for Australia.
  • For Destiny Rescue worldwide:   “Destiny Rescue exists to Rescue, Restore, Protect, Empower and be a Voice for the Voiceless.”
    • The fullest description is here
• Activities (What did DR do?)
  • From General activities in the AIS 2014:
    • …Destiny Rescue is an International Aid & Development Organisation that rescues, restores and reintegrates children who have been trafficked, lured or sold into sexual slavery around the world. Destiny Rescue Inc helps raise funds and awareness for our overseas projects by selling jewellery & merchandise hand made by rescued girls, raising awareness and funds through our Advocacy Program, Team Trips & generating tax deductible donations for our Public Ancilliary Fund – Destiny Rescue Overseas Aid Fund (ABN: 15 454 771 860), which then distributes funds to our beneficiaries.
  • From the Description of charity’s activities and outcomes in the AIS 2014
    • Through the sale of handmade jewellery/merchandise, team trips and other donations, Destiny Rescue Inc helped generate much needed funds for both Destiny Rescue Inc and Destiny Rescue Overseas Aid Fund so that we could continue our vision of rescuing 100,000 children from sexual slavery by 2020. In 2014 Destiny Rescue celebrated our 1000^th rescue since it started this vision in 2011! As we continue to raise much needed funds and awareness within Australia, we can continue to strive towards our 2020 Vision!
• Outcomes (What did DR deliver?)
  • None found for Australia.
  • For Destiny Rescue worldwide, see Activities, above.
    • And informally in their blog.
• Impact (How were people’s lives improved?)
  • None found for Australia.
  • For Destiny Rescue worldwide, nothing formal or systematic found.
    • But there are examples in their blog.

Size of Charity

• With a revenue of $1.63 m, DR qualifies in the largest of the ACNC three size categories (‘Large’).
  • This is dwarfed by the $3.4 m generated by DROAF.

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.

WHERE THE CHARITY OPERATES

Operating State(s)[ii]

• DR holds a licence to fundraise in all the seven states that have a licensing regime.
• As an association DR is a registrable Australian body. It is carrying on business outside Queensland; it therefore needs to register under Part 5B.2 of the Corporations Act 2001 – the lack of an ARBN shows that it has not so registered

Operates in (Countries)

• Myanmar is not included in the list on the website (in the footer of every page).

CHARITY’S DOCUMENT (SIC)

• There is no Annual Report/Review available on the ACNC Register.
• Nor on the website.

RESPONSIBLE PERSONS

No. of Australian charity directorships[iii]

Jennifer Kirwan                                   2

Michelle Winser                                   2

Tony Kirwan                                         2

Lachlan Anderson                               2

• This is an identical board to DROAF.
• With a board of only four, there is a strong argument that a husband and wife should not be members together.
• Only if Lachlan is independent does this board have any independence.
• This list is quite different from the one on the website; there it says that only Tony Kirwan, and Thor and Jo-Ellen Bouttell are board members.
  • The Bouttells were appointed in March 2014 but had left within 18 months.

(End of review of the ACNC Register information)

Latest financial report – detail

Warning

• The DR website reads as if DR and DROAF operate as one. They have the same board members. The description of ‘General activities’ in the AIS 2014 for each begins ‘Destiny Rescue is an International (sic) Aid & Development Organisation…”. DR gives no money to beneficiaries but has significant expenses; DROAF gives millions to beneficiaries – including DR – but has minimal expenses.
  • Despite this, here is no explanation in the Financial Report for why the directors have chosen to present only the DR financial picture, that is, not to consolidate DROAF with DR.
  • To get the full picture on the DR operation in Australia, therefore, it would be advisable to look at the Financial Report for DROAF while you are looking at DR’s Report. The information below is on DR alone.

On DR as a separate entity

• Although DR is an organisation that raises funds to help people overseas, ‘Grants and donations made by the registered entity for use outside Australia’ were zero. (None were made for use in Australia either.)
  • Nor do the expenses show that they did the overseas work themselves.
• DROF is a public ancillary fund, and therefore must only give to charities with Deductible Gift Recipient (DGR) status. When then did they give DR, an organisation without DGR, $993K (and $615K the previous six months)?
• The company collects millions of dollars from thousands of donors all over Australia, yet the directors have decided that all these donors, and any prospective donors, have the capacity to ask DR to prepare a financial report tailored to their needs.
• The Financial Report is missing one of the four compulsory statements, a Statement of Cash Flows, (and therefore also two reconciliations with other statements).
• The auditor only audited two of the other three statements.

Committee’s Report (page 1 of the Financial Report)

• The ACNC does not require this report.
• The description of the ‘principal activity’ shows DR’s treatment of DR and DROAF as a single operating entity.
• Three sections normally included are missing:
  • Objectives, short-term and long-term
  • Strategy to achieve those objectives
  • Performance measures

What was earned, what was consumed during the year – the Statement of Profit and Loss and Other Comprehensive Income (page 3 of the Financial Report)

What was earned:

• The website says that all donations over $2 are tax deductible. The only way that this can be correct, is if DR is collecting for DROAF.
• Therefore it is not possible to see how much was earned for each of the donation options on the website, because the money was accounted for by DROAF, not DR.
• For instance, these are the six options under ‘One Time’:
  • Greatest Need
  • Child Trafficking Prevention
  • Aftercare Program For Rescued Children
  • Administration
  • Overseas Project (Enter details below_
  • Celebration Fund
  • (Other)
• DR solicits both child and corporate sponsorship yet shows revenue from neither.
• No bequests or events?
• Awareness/Donations $90K
  • This is the only money that DR shows as being received from donors.
  • What is ‘awareness’ revenue?
• Sales $241K
  • Presumably this is a major contributor.
• Team Fees $296K
  • There is no explanation of this revenue.
  • Presumably it is from this activity.
• Donation from DROAF $993K
  • This is 61% of revenue, yet nowhere in the Financial Report is ‘DROAF’ explained.
  • DROF is a public ancillary fund, and therefore must only give to charities with Deductible Gift Recipient (DGR) status. When then is it giving to DR?

What was consumed in the course of earning the revenue (see above):

• Do these expenses include the cost of operating overseas?
• Neither fundraising expense nor administration expenses are separately disclosed.
• Cost of Sales $39
  • Cost of sales are all those costs necessary to get the goods into a condition ready for sale. Do ‘Other Direct Costs’ and ‘Delivery’ qualify?
• Advertising & Promotion $22K
  • Is this equivalent to ‘Fundraising expenses’?
• Community Awareness $35K
  • How does this differ from ‘Promotion’ (above)?
• Commission – Global Development Group $54
  • This is an Overseas Aid Fund. Why, when DR has such a fund itself, did it need to employ one?
  • What service did they perform?
  • What is the rate of commission?
• Lease Payments $5K
  • There is no mention of leases in Note 1.
• New Zealand Establishment costs $80K (32K last half year
  • There is no mention in the statements of establishing a new office.
  • Did donors fund this? If not, how was it funded?
  • What is the relationship between this office and the Australian charity?
• Team Expenses $215K (last half year $111K
  • Are only direct expenses included in this?
  • Does this mean that ‘teams’ contributed $296K less 215K = $81K to overhead?
• Wages $659K
  • Based on the number of staff shown in the AIS 2014, this represents an average salary of less than $30K p.a.

What’s left at the end of the year – the Statement of Financial Position (page 5 of the Financial Report

• Financial Liabilities $64K (including Note 7)
  • There is nothing in Note 1 about hire purchase (or a chattel mortgage).

Essential information to go with the figures – the Notes to the Financial Statements… – page 7 of the financial report

• Note 1: Summary of Significant Accounting Policies
  • The directors say the company is a ‘not a reporting entity’, but they don’t say why.
    • They are in effect saying that anybody who is interested in this company has the power to contact the company and request a report tailored to their particular needs.
      • This is despite the fact that DR operates all over Australia and has, on the internet, a standing invitation to donate.
    • The result of the decision is that the accounts don’t comply with the Australian Accounting Standards, and can disclose considerably less than that required for a general purpose report, a report designed for those people who are dependent on the charity’s report for the information they need.
    • You can compare the directors’ decision to this advice from the ACNC:
      • If people use and rely on your charity’s financial statements to help them make decisions (for example, about how to spend money) then your charity is most likely a reporting entity.
        • Although not clear from this, the directors should also consider prospective users.
  • The Accounting Standards that were followed are not disclosed.
  • a. Revenue
    • There are no grant $ under revenue.
    • Nor are there any bequests or dividends.
  • b. Inventories on hand
    • There is no description of the inventories.
  • c. Property, Plant and Equipment
    • There are no buildings, leased assets or leasehold improvements in the statements.
• Note 8: Change in Reporting Period
  • Who are these ‘funding providers’? (There were no grants received.)
• Missing Notes
  • New, revised or amending Accounting Standards and Interpretations adopted
  • Current and non-current classification
  • Impairment of non-financial assets
  • Fair value measurement
  • New Accounting Standards and Interpretations not yet mandatory or early adopted.
  • Contingent liabilities
  • Commitments
  • Events after the reporting period
• Incomplete Notes:
  • ‘Employee provisions’: long-term benefits
  • ‘Critical Accounting Estimates and Judgements’: none disclosed.
  • ‘Plant and Equipment’: the movement reconciliations.

Where the board members put their name behind the report – the Statement by the Members of the Committee – page 14 of the Financial Report

• This is missing three of the four usual assertions.

An independent opinion on the financial statements – the Independent Auditor’s Report (page 15 of the Financial Report)

• For some reason the auditors didn’t audit one of the statements that’s included in the report, the Statement of Changes in Equity, and didn’t comment on the fact that one of the required statements, the cash flow statement, has not been included in the report.
• This is a ‘clean’ opinion.  Read here and here to draw the right conclusions from this.

Membership of accountability organisations claimed

• None claimed.
• Neither DR or DROAF are members of Missions Interlink (at 3 August 2015).
• Neither DR or DROAF are members of ACFID.
• Neither DR or DROAF are an accredited NGO.
• Destiny Rescue USA is a member of the ECFA.

(End of review)

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

[ii] 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.’

[iii] 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.