Archived: Far East Broadcasting Co (Australia): mini charity review for donors

Mini charity review of Far East Broadcasting Co (Australia) (FEBC) as an organisation that seeks donations online. (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.)

Is FEBC registered?

• As a charity, yes.
  • Although FEBC has produced financial statements that include one of its wholly-owned subsidiaries, FEBC Overseas Fund, it has not taken advantage of the ACNC’s group reporting concessions^[1].
• Other registrations:
  • As a public company, a company limited by guarantee.
    • It is permitted to omit ‘Ltd/Limited’ from its name.
    • FEBC is a fundraising vehicle that operates (according to the ACNC Register) in all eight states. It also has an internet invitation to donate. Seven states have a fundraising licensing regime. It is exempt in NSW, but has a fundraising licence in only three of the other six^[2].

What do they do?

• ‘What we do’ on the website is not about FEBC, but the international FEBC organisation generally. For what they did in Australia in 2015, see the AIS 2015:
  • In the last financial year, FEBC Australia office (sic) has worked hard to effectively communicate needs, relay stories, share prayer points and write up project submissions to raise financial support for overseas projects… (The remainder of their description is about the worldwide FEBC ministry rather than Australian activities.)
• FEBC is an organisation that promotes prayer and raises money ‘to support the [FEBC] work overseas’.^[3]

Do they share the Gospel?

• No.

What impact are they having?

• Contrary to the description of their largest expense, ‘International Programs’, FEBC is not directly involved in any projects – it merely collects money for others.

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

• The cost of raising and sending the money is 23% of expenses.
  • It would be reasonable to ask them why it would not be more efficient for you to send your money direct to wherever FEBC sends it.

Can you get a tax deduction?

• No, not to FEBC.
• But you can if you give to the charity that it controls, FEBC Overseas Fund.
  • It currently has one project (see What choices do you have…), below.
  • The trustee is a company controlled by FEBC, FEBC Custodian Limited. How FEBC is receiving donations for a fund for which it is not the trustee, and where the trustee is not included in the consolidated accounts, is not explained anywhere.

Is their online giving secure?

• They have the ‘Norton secured’ seal, so yes.

Is their reporting up-to-date?

• Yes (lodged five months after their year-end).
  • 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 12 months ago.

Does their reporting comply with the regulator’s requirements?

• AIS 2015: No
  • Much of what is under ‘activities’ is about the FEBC organisation overseas.
  • No outcomes.
  • ‘Grants and donations…’ shown as $127K instead of $1.31 m.
  • There is no evidence in the Financial Report that FEBC operated overseas, or sent money to the 23 countries are listed under ‘Operates in (Countries)’.
• Financial Report 2015: Doubtful
  • There are more than 4000 recipients of the monthly newsletter, all over Australia, and this and other efforts generates more than $1.63 m in donations. The directors, via their decision, once again, to produce the type of financial statements that do not have to comply fully with the Accounting Standards (special purpose statements), are effectively saying that any of FEBC’s stakeholders, including the newsletter recipients, are able to command the preparation of a financial report tailored to their needs.
  • No explanation is given for including both a Statement of Financial Performance and an Income Statement.
    • Only one can be part of the financial statements that are subject to the Accounting Standards, yet both have been audited, and neither comply.
  • Directors’ Declaration
    • FEBC is exempt from the NSW Charitable Fundraising Act 1991. Why then do the directors declare that ‘The provisions of the NSW Charitable Fundraising Act have been complied with’?
  • Statement of Financial Performance
    • The sub-heading ‘Accumulated Funds’ does not make sense.
    • ‘Other expenses…’ comprise 84% of the expenses but there is no explanatory Note.
    • The part of your donations that was sent overseas for beneficiaries is not shown.
    • There is no Other Comprehensive Income section.
  • Balance Sheet
    • Only one of the changes in the designated funds is included in the equity section of the Balance Sheet.
    • The equity balance in the Balance Sheet doesn’t match the balance that in the Statement of Changes in Equity.
    • How was the liability ‘Interest Free Loan’ repaid without the movement of cash?
    • Why are ‘field staff’ not included as employees?
    • The treatment of ‘Financial Assets’ is not compliant with the Accounting Standards.
    • ‘Land and Buildings’ consist of two properties in Caringbah.
      • How was the combined cost only $93K?
      • Should one be classified as investment property?
  • Statement of Cash Flows
    • The ‘Change in the Fair Value of Financial Assets’ in the Statement of Cash Flows doesn’t match what’s shown in the Balance Sheet.
  • Notes to the Financial Statements
    • There is no explanation of the choice of a ‘special purpose financial report’ as opposed to the type that the stakeholders need in order to make their decisions.
    • Compliance with the ACNC Act is not the only reason to produce financial statements; they are also required by the FEBC constitution.
    • It is not the ACNC Act that requires the financial statements to be distributed to the members.
    • As a not-for-profit entity, is FEBC really compliant with International Reporting Standards?
  • Income Statement
    • 77% of the expenses was for ‘International Programs’.
      • Where the money was sent is not disclosed. (Note 18 says that FBC ‘remits those funds to colleges’, but this doesn’t seem right.)
    • The expenses ‘Community Education’ and ‘Fundraising Costs’ are not defined. The definition of the former in the Annual Report refers to some costs that could easily be called fundraising costs.
    • A note says that ‘Direct and indirect costs have been allocated using an activity based absorption costing approach.’, but no explanation of this approach is given.
    • The Annual Report (page 13) says that their ‘activity based absorption costing approach’ includes ‘Showing details of FEBC Australia’s international programs either by program or by country’. These details are not in the Financial Report.

What financial situation was shown by that Report?

• Last year’s deficit of 7% of revenue was reduced to 1%.
• FEBC hold over a year’s worth of revenue in ‘Cash’ and ‘Financial Assets’.
• Financial structure, both short and long-term, appears sound.

What did the auditor say about the last financial statements?

• He gave a ‘clean’ opinion^[4]. However,
  • in accepting the engagement, he implicitly agreed with the directors’ decision to produce special purpose rather than general purpose financial statements (see above),
  • he has not identified the financial reporting framework used, including the type of financial statements (see above),
  • he includes compliance with the Charitable Fundraising Act in his opinion when FEBC is exempt from that Act, and
  • he has not included one of the obligatory paragraphs

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

• Almost. ‘Phone’ and ‘Website’ are blank. And did FEBC operate in all 23 countries listed under ‘Operates in (Countries)?

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

• Quite a few, presented a little confusingly on the website.
• Under the ‘Donate’ button in the main menu, there, is other than being able to write in the name of a tax deductible project, only one.
  • A search of the site results in only one tax deductible project.
    • This is a project run by Global Development Group (GDP).
      • GDP is not a Christian organisation, and would not be allowed to share the Gospel via such projects anyway. How then can this project meet the objects of FEBC: ‘To be a distinctively Christian organisation, communicating the love and knowledge of God for all people…’?
• But to ‘donate’ is not the only way to give. Under ‘Get involved’/ ‘Ways to Give’ in the main menu, there are, in addition to the Donate button again, these three options:
  • ‘Give a radio’
  • ‘Give to a project’
    • Seven projects (on of which is a radio, which is also a gift (see below), and a separate option (see above)
  • ‘Give a gift’
    • Nine options
    • These are also available under ‘Get involved’/’Gift catalogue’.
• The Annual Report mentions two other categories that are not offered on the website:
  • ‘Where most needed’ (page 7), and
  • ‘Field Staff Support’ (page 11) that doesn’t appear on the website.

Who are the people controlling the organisation?

• Not shown on the website, but you can see the current list on the ACNC Register under ‘Responsible Persons’.

To whom are FEBC accountable?

• They’ve got the FIA ‘Organisational member’ seal, the logo of ‘FEBC International’, and the logo of Global Development Group towards the bottom here, but not Missions Interlink.
  • But they do claim such a membership, confirmed here^[5], in the Financial Report:
    • FEBC is a member of Missions Interlink and complies with the Financial Standards set out in the MI Standards Statement.’
  • The ‘FIA’ is Fundraising Institute Australia. Members must comply with its fundraising standards. FIA membership confirmed.
  • FEBC International is ‘an interdenominational radio network ministry, which brings the love of God to the world by broadcasting the gospel of Jesus Christ.’^[6] Organisationally it is also a company in Singapore that provides services to the national organisations, including FEBC. There doesn’t appear to be any accountability involved.
  • Global Development Group is a charity, an “Australian-founded non-government overseas humanitarian development organisation”. FEBC is not accountable to it.
• FEBC is also accountable to the ACNC.

Are they responsive to feedback?

• When sent a draft of this review, they…they did not respond.

1. There is also FEBC Custodian Limited, the trustee of the Overseas Fund. No reason is given for excluding this subsidiary from the accounts. ↑
2. The law in this area is not straightforward – for instance, is an internet invitation ‘fundraising’ – and advice varies, so check with the charity before drawing any conclusions. ↑
3. FEBC Annual Report 2014-15, page 3. ↑
4. To take the right amount of comfort from a ‘clean opinion’, please read here and here. ↑
5. For one opinion on the strength of this accountability, see the section Activities in this review. ↑
6. FEBC Annual Report 2014-15, page 3. ↑