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Archived: Empart 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Care:  At least some of the information about this charity is no longer current.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 of Empart Inc (Empart), an organisation that seeks donations online, is member of Missions Interlink, and that you might know through the ‘motivational speaking’ of its founder, Jossy Chacko:

 

(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 website, to submit feedback or complaints.
  • The ‘Accountability’ page begins with this though:
    • Empart is a non-profit charitable organisation that is committed to maintaining a high level of accountability and transparency.
  • And the Empart USA website says that
    •  In each country we seek not only to comply with governmental requirements but we also submit to independent evangelical accountability groups.
  • I sent them a draft of this review. Like last year, they…did not respond.

Is Empart registered?

  • As a charity, yes.
    • Empart controls another charity, Empower Australia Overseas Aid Fund Inc[1].
      • Empart does not produce consolidated financial statements. It does not explain why. (Empower is not even mentioned in the accounts.)
      • On its website, Empart merely refers to the Fund as a ‘partner’ that provides the ability to get a tax deduction.
      • Empart has not taken advantage of the ACNC’s group reporting concessions.
  • Empart is a Victorian incorporated association (A0034935L).
  • It is still using the names Empart and Empart Australia without them being registered.
  • Empart operates, per the ACNC Register, in all states.
    • It has the registration necessary to carry on business interstate (ARBN 621 279 329).
    • For its fundraising licences, see the last question below.

What do they do?

  • Contrary to the information on the website (‘What we do’ in the main menu), and what they report under ‘Description of charity’s activities and outcomes’ in their Annual Information Statement (AIS) 2016, Empart is not itself involved in good works in South Asia (or anywhere else). As it says for ‘International activities’ in the AIS, it is about ‘Transferring funds or goods overseas’.
  • Empart operates overseas, per the ACNC Register, in India and Nepal.

Does Empart share the Gospel?[2]

  • No

What impact are they having?

  • Nothing systematic found. (Nor on the work in South Asia.)
  • At the bottom of the ‘Accountability’ page, Empart makes this offer:
    • On request, Empart will gladly send you the latest Partnership Impact Report, free of charge.
    • If it is the report that Empart USA produces, then the latest one that is available on their website is for 2014.

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

  • The functional (except for ‘Employee benefits expense’) classification of expenses in the Financial Report does not allow this calculation.
  • However, from the disclosure of ‘Grants and donations made…’ in the AIS 2016, and defining ‘direct’ as 100% of that money[3], we can see that it cost $946K to raise and send $1.22 m overseas. That’s ‘administration’ of 44%.

Do they pay their board members?

  • There’s nothing prohibiting this in the constitution.
  • There is insufficient disclosure of expenses to check for such a payment.

Can you get a tax deduction?

  • The ABN register says no.
    • Which is contradicted under ‘What we do/Sustainable solutions’ on the website:
      • We have specific field projects that qualify for tax deductible giving. These projects all provide ongoing sustainable solutions to long term problems…. For more information please phone the office on 03 9723 9989 or use the Contact menu.
        • The explanation is in the ‘NB’ after that:
      • This means that you will be giving your money to Empower, not Empart. After completing a (draft) review of Empower, I’d suggest caution.

Is their online giving secure?

Where were your (net) donations sent?

  • This is not disclosed. Even the country.
  • From my internet research two years ago, I found the following organisations associated with Empart, and therefore organisations who could be recipients of the money:
  • From the returns lodged with the Indian Government, we can see that Australian donors’ money was received by the last two of these: CFI Ministries in Chandigarh and CFI Charitable Trust in Orissa.
    • The returns submitted by these two organisations, when combined, show that approximately $964K was received in the year ended 31 March 2017. This compares to $1.22 m recorded by Empart for ‘Grants and donations made…for use outside Australia’ in the AIS 2016 in the year ended 31 December 2016. This $256K difference may be due, apart from minor translation differences, to the three-month difference between the two years in question. Just ask them.
  • Whatever the amounts, if it is still the case that ‘no formal reconciliations were received from the India office regarding how the monies received were disbursed’, as the auditor reported last year[4], this means that you have no assurance that your donation will be used for the purpose you have designated.
  • The $1.27 m in ‘Cash Assets’ held in Australia is not explained, but it seems reasonable compared to the amount of cash that is held by the two recipients of the Australian donations in India: $701K. That’s a lot of Indian purchasing power.
    • With an organisation that is required to model Jesus as Lord and Saviour to the poor and oppressed of India, it would be legitimate for you to ask Empart why they hold this much.

Is their reporting up-to-date?

  • Yes (five and a half months after their year-end, one and a half months 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 14 months ago.

Does their reporting comply with the regulator’s requirements?

  • AIS 2016: No
    • Why ‘No’ for ‘Financial report submitted to a state/territory regulator?’?
    • For the third year in a row, the financial statements are described incorrectly.
    • There are again mismatches between the financial information and the accounts.
    • The description of activities is not about Empart, but what is done by other organisations overseas.
    • No outcomes are given.
  • Financial Report 2016: No. Not a true and fair view.
    • Even though Empart collects donations on behalf of Empower, they share an office, and the directors are six of the eight directors of Empart, there is no mention of the relationship.
    • The directors have again, without giving their reasoning, elected to prepare special purpose rather than general purpose financial statements. This choice, a choice that means that not all the Accounting Standards have to be followed, is only correct if no user, present or prospective, is dependent on standard financial statements to make decisions. For an organisation that operates all over Australia, had a turnover of $2.21 m, has 26 staff, and calls for donations on its website, this is stretching plausibility.
    • ‘Amounts written back equity’ is again included without explanation, and again, counter-intuitively, as a cash flow.
    • ‘Designated’ donations are still, without explanation, recorded as a liability.
    • Empart is still not depreciating its property, plant and equipment.
      • Their explanation for this (in Note 1) shows a misunderstanding of the applicable Accounting Standard.
    • All loans, $667K, including ‘Private Loans’[5] of $253K, are shown as non-current. The repayment terms for the loans are not disclosed. A repayment was made last year. Should some (or all?) be shown as current (with implications for the working capital position)?
    • The other comments in last year’s review are still applicable.

What financial situation was shown by that Report?

  • The condition of the Report (see above) means that it is difficult being anywhere near definitive, so I’ll pass.

What did the auditor say about the last financial statements?

  • The auditor, P.J. Igoe CPA, of P.J.Igoe & Associates, gave a ‘clean’ opinion.
    • But because of what I have identified above, my opinion is that he shouldn’t have done. (See here and here to learn about audit opinions.)
    • Phillip is only qualified to do this audit because of the ACNC’s transitional provisions for reporting by incorporated associations:  the Victorian regulator doesn’t require the audit of Empart to be performed by a registered company auditor.

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

  • Yes

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

  • ‘General support’
  • ‘Transforming Communities’
  • Transformation Centres’
  • ‘Bike for a Worker’
  • ‘Sewing Machine’
  • ‘Children’s Homes’
  • ‘Wells’
  • ‘Mercy homes ministry’
  • ‘Field Worker Support’
  • ‘Field Worker’s Kit’
  • ‘Women’s ministry’
  • ‘Children’s ministry’
  • ‘Schooling for a child’
  • ‘Toilet blocks’

Who are the people controlling the organisation?

  • They say, on the website, that they have a board, but don’t give the membership.
  • The ACNC Register, under ‘Responsible Persons’, says that its these people:
    • Jan de Bruyn (just ‘Bruyn’ as the last name)
    • Jennifer Chacko
    • Jossy Chacko (the subject, not the painter):

To whom are Empart accountable?

  • The ‘Accountability’ page on the website declares three accountabilities: ‘non-profit organisation’, ‘state fundraising registrations’, and ‘external accountability’.
  • The first one is about it being a registered charity:

    • The ACNC’s standards are part of the ongoing obligations as a registered charity.
    • The logo is the ACNC’s ‘charity tick’.  Apart from saying that Empart is registered with them, the ‘tick’ also means that GI’s AIS is not overdue, and the ACNC has not taken any compliance action against it.
  • Under the second, Empart records how it has responded to the existence of state-based fundraising legislation:
    • Of the six states that have a fundraising regime that is applicable to charities, Empart says that it is registered in four, is exempt in one (South Australia), and doesn’t mention the sixth (Western Australia).
    • It is registered in Queensland, New South Wales, Victoria and Tasmania. You’ll find links to each regulator’s website on the left hand side here.
  • First under ‘external accountability is Missions Interlink:
    • Here’s the ‘MI Standards Statement’.
    • For one opinion on the strength of this accountability, see the section Activities in this review.
  • Second under ‘external accountability is this logo, following by a glowing testimonial:

  • They got the seal after ‘a comprehensive assessment of Empart’s governance, strategy, finances, impact and communication and technology. This included on-site visits to our ministry in the field.’
    • Certification confirmed.
    • Unlike the first three logos though, this one comes from a US organisation, and, despite the contact person being Jossy Chacko in Australia, from the testimonial it is clear that it is not specifically Empart that was assessed, but the wider organisation.
      • It would be interesting to see how Empart would fare against the transparency standards:
        • Transparency seal recipients voluntarily disclose debt levels, Board engagement, 3-year program and financial trends, impact stats, strategic plans, and even an internal S.W.O.T. analysis (Strengths, Weaknesses, Opportunities, and Threats). 
  • Empart is also accountable to the Victorian regulator of incorporated associations.

 

 

  1. Empower is not a member of Australian Council For International Development (ACFID). ↑
  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. That is, ignoring the fact that there would be some costs of administration after it arrived in the overseas country. ↑
  4. In a letter to his client that should not have been included in the Financial Report. ↑
  5. Last year the auditor reported, in a letter that was not meant to be lodged, that the documentation for these loans was deficient. ↑
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BY: Ted Sherwood IN : , , ,
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