Archived: Hillsong Church Ltd, charity review

This is a charity review, a review for those with an interest in the Australian charity Hillsong Church Ltd (Hillsong)

It is structured according to the charity’s entry on the ACNC Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your decision about Hillsong.

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 August 2016. They did not respond. On 16 August I updated the review for the overdue Financial Report that had subsequently appeared on the Register.

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 this section of the review:
  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 name.
• Hillsong website.
• Social media (via About/Contact on the website.)
• LinkedIn.
• State government fundraising licence registers.
• No reviews of Hillsong on Glassdoor.

REGISTRATION DETAILS

Entity Subtype

• A Subtype that is consistent with the sharing of the Gospel both in word and deed.
• Both of which are included in the objects in the constitution.

CHARITY DETAILS

Legal Name

• Hillsong is a public company limited by guarantee.
  • It is entitled to omit ‘Ltd/Limited’ at the end of its name.
• Membership is only open to ‘elders’.
  • And then only if they are nominated by the Senior Pastor, Brian Houston.
• Hillsong Church is known colloquially, both here and overseas, as ‘Hillsong’. There are seven other charities on the register with ‘Hillsong’ in their legal name, and a further two with either ‘Hillsong’ or ‘Hillsong Church’ as ‘Other Name(s) (see below). Confusing.
  • Hillsong Aid and Development’s registration was voluntarily revoked, leaving eight registered charities.
  • Seven of these have the same directors, and the eighth shares three of its six directors with the other seven.
  • All eight are run from the same office as Hillsong and have the same Charity Address for Service.
    • There is at least another one charity that is similarly run: Church 180 Incorporated.
  • Except for four business names with ‘care’ or ‘aid’ in them that are owned by Hillsong Citycare, the other 16 names are held by Hillsong (i.e. the church).

Other Name(s)

• It appears that the ACNC provide insufficient space for the likes of Hillsong – this is an incomplete listing of Hillsong’s business names. For the complete list see the ABN record (see Charity ABN, below).

Charity ABN

• Tax deductibility: No, you cannot claim a tax deduction for a donation to Hillsong.
  • Elsewhere in the Hillsong group – see Legal Name, above – you can though.

Charity Street Address

• ‘Contact’ in the website footer doesn’t give the street address that should be here.

Website

• From the Google search: www.hillsong.com.

ANNUAL REPORTING

• AIS 2015
  • This is Hillsong’s compulsory Annual Information Statement 2015 (AIS 2015).
  • The accounts were signed on 23 June 2016, six months after year end. The AIS was lodged a few days later, on the second last day of the six month period allowed.
  • The AIS gives basic financial information. If you think that this is sufficient for you:
    • The financial statements, in a decision that stretches credulity, are those that are only acceptable when the charity believes that its users (either present or prospective) can command it to produce financial statements tailored to their need.
    • Hillsong received government grants. (The amount, $684K, is too small though to appear in their financial statements.)
    • ‘Employee expenses’ represent 56% of expenses and 34% of revenue.
      • Assuming that part-timers work 50% of full time hours, and casuals 10%, then the average benefits for the 554 employees is $69K p.a.
    • No donations were made to people or organisations within Australia.
    • ‘Grants and donations’ represent only 1% of revenue. (The amount, $1.28 m, is an amount too small to appear in their financial statements.)
    • Hillsong had negative working capital – current liabilities exceeded current assets by $1.06 m.
• Financial Report 2015
  • This was not on the Register on 2 August. Now it says that it was lodged on 30 June.
  • Despite the existence of multiple ‘Hillsong’ entities, all appearing to be part of the one organisation, Hillsong has not taken advantage of the ACNC’s Group reporting provisions.
    • It hasn’t even produced consolidated financial statements.

ABOUT THE CHARITY

• Statement of Faith
  • See ‘Statement of Beliefs’, here.
  • This is identical to the Statement of Belief (sic) in the constitution.
    • ‘The Holy Spirit enables us to use spiritual gifts, including speaking in tongues.’
  • For how Hillsong practices church, Google ‘Hillsong’ and sort through the multitude of hits.

Date Established

• There’s no history on the website.
• See Wikipedia for a short one.
• Google ‘Hillsong’ and sort through the multitude of hits to build your own.

Who the Charity Benefits

• Vision
  • The vision of the Senior Pastor/Chairman of the Board, Brian Houston, is the vision of the church.
• Mission
  • To reach and influence the world by building a large Christ-centered, Bible-based church, changing mindsets and empowering people to lead and impact in every sphere of life.
• Activities (What did Hillsong do?)
  • From the AIS 2015:
    • The operation of a broad range of activities across these local communities which include – Weekly (sic) worship services – Youth and Children’s programs – Pastoral care and community support – Operating a vocational training collee, and – Production of Christian teaching and worship materials. These principal activities connect people to the life giving message of the Gospel of our Lord Jesus Christ. Each of the services and programs and individually managed and assess (sic) to ensure they are effectively contributing to the achievement of the church’s mission. There have been no significant changes in the nature of the Church’s principal activities during the financial year.
      • Nothing particular to 2015.
  • See ‘Ministries’ in the main menu of the website.
• Outcomes/Impact^[1] (How were people’s lives improved?)
  • Unfortunately, in the AIS 2015, in response to the request to describe activities and outcomes, there are only activities (see above).
  • Nothing systematic found.

Size of Charity

• With revenue of $93.40 m, Hillsong is a mega-charity, even when compared with just those in this category.

Financial Year End

• This means that the next Financial Report is due by 30 June 2017. Before that the financial information on the Register will be up to 19 months out-of-date.
  • You may therefore need to ask for more up-to-date information.

WHERE THE CHARITY OPERATES

Operating State(s)^[2]

• Although Hillsong operates in all seven of the states that have a fundraising licensing regime, it doesn’t have a licence in any of them. (It had one in its home state, but that expired in September 2015.)
• Hillsong has a prominent call for donations on its website.
  • This is perhaps, depending on the view of the state authorities, another reason for having a fundraising licence.

Operates in (Countries)

• The blank here doesn’t match the extensive list of overseas locations shown on the website.

CHARITY’S DOCUMENT (sic)

• An Annual Report/Review can be lodged on the ACNC Register, but Hillsong hasn’t done this.
• It normally publishes one on its website, but 2015’s is not there yet.

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions^[3]

Joel A’Bell                                        13

George Gregory Aghajanian       14

Donovan Cooper-Williams          10

Phillip Bradley Denton                  9

Melinda Dwight                             11

Dane Gambrill                               10

Benjamin David Houston           10

Brian Charles Houston                11

Leigh Howard-Smith                   10

Peter Ridley                                   14

Nabi Saleh                                     15

Lalitha Stables                              10

Grant John Stuart Thomson        9

• You may reasonably question how somebody can, especially if directorship is not their full-time occupation, successfully discharge their fiduciary responsibilities to more than a handful (?) of organisations. (And this list only includes charities; the inclusion other not-for-profits and for-profit organisations may of course increase the above numbers.)
  • And then there’s overseas: George Aghajanian is, for instance, a director of Hillsong London.
• Only recently was the second woman appointed.
• Compared to the listing on the website
  • Peter Ridley, the Secretary, is extra. As he is not a member of the Board he should not be included on the ACNC Register.
  • Melinda Dwight is an addition.
  • Dwayne Nielson is missing.
• As all board members are also elders, the list of elders is incomplete.
• All are equal, except for Brian Houston.
  • Cancellation of his membership of the company is subject to a special appeal process.
  • He alone may convene a general meeting at any time.
  • He is automatically the chair of the board.
  • He is a permanent member of the board.
  • He is the only one for whom it is thought that a biography is not necessary in the website listing!
• Under ‘Position’ the officers other than the Secretary should be identified. For instance, Brian Houston is the Chairman.

(End of review of the ACNC Register information)

Latest financial report – detail^[4]

• For an organisation of Hillsong’s size and complexity, not to mention its public profile, it is ludicrous that its directors think that it is not a reporting entity. Do the directors realise that they are saying that anybody with a legitimate interest in Hillsong can command it to produce a set of financial statements tailored to their needs?
• This financial report is for Hillsong as an individual entity. Despite acknowledging that there is a ‘Hillsong Group’ (Note 2(b)), and showing material transactions and balances with the members of that ‘Group’ (and other ‘related parties’), Hillsong does not produce consolidated statements. Why? How can a true and fair view be shown without consolidating?
• The accounts were completed well after the period allowed in the constitution.

The Directors Report (page 1 of the Financial Report)

• This is not required by the ACNC. (Nor is the Auditor’s Independence Decaration…on page 27.)
• Under ‘Objectives’, note that Hillsong operates ‘various Church communities, including churches in Sydney, Newcastle, Brisbane, God Coast, Noosa, Melbourne, and Hobart; (sic) a network of connect groups, contributing ministries and extension services.’
• Compared to good practice:
  • The signer is not named.
  • There’s no section ‘Performance measures’.
  • ‘Directors’ is missing most of the required information.
  • ‘Objectives’ are not really objectives, and not specific to 2015.
  • Strategies have been mixed with ‘principal activities’, and are not particular to 2015.
  • Five of the nine sections are not unnecessary.

Where the directors put their name to the report – the Directors Declaration (page 6 of the Financial Report)

• Here’s where the directors – all of them – clearly declare that, because they think that any user can ask Hillsong to prepare a financial report to suit their interests, their company does not have to produce financial statements that comply with all the Accounting Standards.
• They give their reasoning in Note 2(b):
  • The Church is not a reporting entity because in the opinion of the directors there are unlikely to exist users of the financial report who are unable to command the preparation of reports tailored so as to satisfy specifically all of their information needs. The Board have elected to prepare special purpose financial statements to reduce the preparation and administrative time and costs as the Church operates an open book policy with its congregation in accordance with the Financial Charter of the Hillsong Group.
    • Apart from the ridiculous assertion that all users are able to command Hillsong to prepare statements for them,
      • This ‘open book policy’ merely means that ‘congregation members are welcome to make an appointment to inspect the audited financial results of the church.’ This nothing that is not available to the public on the ACNC Register. So no support for saying that Hillsong is not a reporting entity.
      • The costs of producing financial statements is not a valid reason under the Accounting Standards to not produce the required statements.

What was earned, what was consumed during the year – the Statement of Comprehensive Income (page 7 of the Financial Report)

• There are only five line items for expenses, all $7.64 m or higher. But no explanation for any of them.
  • The largest, 59% of expenses, is labelled ‘Cost of church and other benevolent activities’. There is no breakup.
  • The item ‘Other expenses’ is not the smallest. It is 10% of expenses, and there is no breakup.

What’s left at the end of the year – the Statement of Financial Position (page 8 of the Financial Report)

• Hillsong has negative working capital (i.e. current liabilities exceed current assets).

How the wealth of the members has changed over the year – the Statement of Changes in Equity (page 9 of the Financial Report)

• Note the existence of ‘a commonly controlled entity’.

Where the cash came from, where the cash went to – the Statement of Cash Flows (page 10 of the Financial Report)

• Note the significant loan transactions with related parties.

Essential information to go with the figures – the Notes to the Financial Statements (page 11 of the Financial Report)

• ‘Not a reporting entity’: see above.
• Minor omissions:
  • That the accounts are for an individual entity.
  • The functional and presentation currency.
• Missing from Note 2:
  • New, revised or amending Accounting Standards and Interpretations adopted
• 4 Expenses
  • Are ‘Wages and salaries’ plus ‘Contributions to…’ the same as Employee Benefits Expense?
• 5 Operating leases
  • Are all these leases held by Hillsong, or are some held by other Hillsong charities?
• 8 Trade and other receivables
  • Note the $23.58 m owing by ‘related parties’ that will not be repaid in the next 12 months.
• 18 Other related party transactions
  • Note the acknowledgement that the accounts include balances owing to and owing by ‘Hillsong Group entities’.
• 19 Guarantee Contracts
  • More related parties.
• 22 Trust assets, liabilities and right of indemnity
  • Why is this controlled entity not consolidated with Hillsong’s accounts?
• Missing Notes:
  • Critical accounting judgements, estimates and assumptions.
  • Commitments

An independent opinion on the financial statements – the Independent Auditor’s Report…(page 28 of the Financial Report)

• This report is a ‘clean’ opinion. To take the right amount of comfort for this finding, please read here and here.
• In order to agree to this engagement, the auditor had to first agree to the directors’ choice of special purpose financial statements.

Membership of accountability organisations claimed

• Hillsong is a Member (not just an Associate) of Missions Interlink. Nowhere is their accountability to Missions Interlink mentioned.

(End of review)

1. This is how the ACNC explains ‘impact’: ‘The changes produced in individuals and their communities’. ↑
2. 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.’ ↑
3. 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. ↑
4. I use Pinnacle Financial Statements, respected in the profession as providing a very sound basis for producing compliant financial reports. To this I add an assessment of materiality (both quantitative and qualitative), where the users being considered are donors. ↑