Archived: Global Recordings Network Australia: mini charity review for donors

Mini charity review of Global Recordings Network Australia (GRN) as an organisation seeking donations. (Including the answers to the questions that the Australian charity regulator, the ACNC, suggests that you ask.)

Is GRN registered?

• As a charity, yes.
• Other registrations:
  • As a public company (a company limited by guarantee)^[1].
  • Operating in NSW but not licensed to fundraise there.
    • The law in this area is not straightforward – is an internet invitation ‘fundraising’ for instance? – and advice varies, so check with the charity before drawing any conclusions.

What do they do?

• The information on the website seems to be about Global Recordings Network worldwide, so here’s GRN’s description of their activities from their AIS 2015:
  • GRN makes Christian teaching materials in audio and audio-visual form. The focus is on small and minority language groups around the world, with a special emphasis on oral cultures. During the past year GRN Australia has made a number of recordings in Australia PNG and elsewhere, plus run a studio for the production and mastering of recordings made by affiliated organizations overseas. GRN also developed software such as websites and mobile apps to make these materials available to the public.
    • With no intention of changing in 2016 [AIS 2015].
• See also the next question.

Do they share the Gospel?

• Via their recordings, yes.
• Which is what their objects require:
  • …the Company’s Principal Object is to communicate the Good News of Jesus Christ and the teachings of the Scriptures in audio and audio-visual formats in every spoken language so that all people, especially those who are oral communicators and those who speak minority languages might hear the message in their heart language and in a culturally appropriate way and be able to respond to the message.

What impact are they having?

• They did not respond to the regulator’s request for outcomes in the AIS 2015.
• Nothing systematic found.
• Some anecdotal information can be found if you search on ‘impact’ on the website. It may not be exclusively about the impact of the Australian effort though.

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

• I am unable to match the information under ‘What do they do’ (above) with the expenses in order to isolate administration.
  • For instance, how much of the 28% of expenses ($459K) that went as gifts to ‘related parties’ outside Australia (presumably Global Recordings Network organisations in other countries) went to make recordings?

Can you get a tax deduction?

• No.

Is their online giving secure?

• ‘Get involved/Donate’ leads to a page for online giving via a credit card, but results in a message being sent to GRN.

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

• Three: ‘Where Most Needed’, ‘Staff Members’, and ‘Special Purpose’.
  • The ‘special purpose’ can be specified, but not the staff member.

Is their reporting up-to-date?

• Yes. (Three months after year end.)

Does their reporting comply with the regulator’s requirements?

• AIS 2015: Not quite.
  • No outcomes are reported.
  • ‘Language Recordings’ is not a business or trading name.
  • Did they, as they say here, report to ASIC as well as the ACNC?
  • The figure for ‘Employee expenses’ includes volunteer expenses.
• Financial Report 2015: No
  • Only if there’s nobody who relies or will rely on Entrust’s financial statements to help them make decisions, is the directors’ decision to produce the type of financial statements that don’t comply with all the Accounting Standards correct.
  • The policy of classifying the $417K of interest-free loans from members as non-current based on the lender’s intent is contrary to the Accounting Standards.
  • They have a policy of not recognising their employee benefits liability.
  • Revenue is understated and liabilities overstated by the policy of not recognising designated donations.
  • The figures in the Statement of Comprehensive Income do not match those in the Statement of Changes in Equity.
  • There’s no disclosure of related parties.
  • Investment properties, the bulk of the company’s equity, are not separately shown on the Statement of Financial Position.
  • $90K of inventories are, without explanation, classified as non-current.
  • There is an unexplained $12K foreign exchange loss.

What financial situation was shown in that Report?

• They incurred a deficit again this year, and up from 6% of revenue to 14%.
• When borrowings are correctly classified (see above), current liabilities greatly exceed current assets. This calls into question the use of the going concern assumption.
  • Ministry comment:
    • ‘In accordance with accounting standards we have classified interest free loans as either current or non-current based on the repayment profile as advised by each lender.
      The total of interest free loans lent to Global Recordings Network has not materially changed between 30 June 2015 and 30 June 2016.’
      • Reviewer response: GRN chose not to respond to the further explanation that I sent:
        • ‘Para 69 [AASB 101] says

69 An entity shall classify a liability as current when: 

…(d) it does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting period (see paragraph 73). …

An entity shall classify all other liabilities as non-current. 

It is therefore not a question of donor intent (see, for instance, here); the classification depends only on whether the terms and conditions of the borrowing allow you to defer repayment….

• Borrowings increased from 541K to $754K.
  • But given the $10.17 m property portfolio, this was not a threat to the long term financial structure.
• The equity is entirely represented by investment properties.
  • What is the relationship to GRN’s mission?
  • Is the return satisfactory?

What did the auditor say about the last financial statements?

• He gave a ‘clean’ opinion. To take the right amount of comfort for this finding, please read here and here.
• But note too that he
  • approved of the directors’ decision to produce the type of financial statements that require less disclosure.
  • approved of the incorrect accounting decisions (see above).

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

• Yes^[2].

Who are the people controlling the organisation?

• Not mentioned on the website, but here they are from the ACNC Register:
  • Glenn Baker
  • Kristen Bayliss
  • Gregory Cooper
  • Karl Hochstetter
  • Robert Love
  • Francis Mackaway
  • Mark Neasey
  • Bernard Wong.

To whom is GRN accountable?

• They are, apart from the ACNC, accountable because of their membership of Missions Interlink.
  • For one opinion on the strength of that accountability, see the section Activities in this review.

Is it responsive to feedback?

• When sent a draft of this review, they sent the comment recorded under What financial situation… above.

1. Click on the ABN in the ACNC Register entry. ↑
2. ‘Language Recordings’, under Other Name(s), is not a name registered to GRN. ↑