Archived: International Nepal Fellowship (Australia) Limited: mini charity review

Mini review of International Nepal Fellowship (Australia) Limited (INF) as an organisation that (a) seeks donations online, and (b) is a member of Missions Interlink, an organisation that, among other things, gives members income tax exemption even though they do not meet the “in Australia” test and do not have deductible gift recipient status. (Including the answers to the questions that the Australian charity regulator, the ACNC, suggests that you ask.)

See here for last year’s review.

Is it responsive to feedback?

• INF have the following statement on their webpage:
  • INF/A is committed to honesty and transparency and is a member of the Australian Council For International Development and a signatory to their Code of Conduct, adhering to high standards of management, public communication and disbursement of funds. INF/A publishes an Annual Report and has a Complaints policy which describes how anyone can confidentially raise concerns about any aspect of INF Australia’s work.
• When sent a draft of this review, on 20 June 2017, they offered this response on 12 July:
  • INF Australia is grateful for Ted’s comments and feedback and we will use this to improve our reporting and communication as we prepare our accounts for the year just gone. One immediate change is that on the advice of our Auditor, INF will be using a General Purpose reporting format for our accounts this year.

Is INF registered?

• As a charity, yes.
• Other registrations:
  • As a public company, a company limited by guarantee.
  • A business name: ‘INF Australia’.
  • INF operates – according to the ACNC Register – in all states except Tasmania.
    • The omission of Tasmania does not match the inclusion of a Tasmanian in the list of state representatives on the website.
  • It also has a public invitation to donate. Since last year’s review it has added a fundraising registration in South Australia to its registrations in New South Wales and Queensland. Four other states have a licensing regime^[1].

What do they do?

• From the top banner on the webpage:
  • INF has existed in Australia for over fifty years to enable Australians to help bring about ‘fullness of life’ for the most marginalised people in Nepal, learning from them and taking encouragement from our partnership.
• More specifically, from their Annual Information Statement (AIS) 2016:
  • INF Australia works with partners in Nepal to bring about fullness of life for Nepal’s poor and marginalized people, particularly women in remote areas and people with disability. In 2016 we sent $170,000 to improve mother and child health and empower women in Nepal’s remote Jumla district; $86,000 was used to empower people with disability in western Nepal, providing rehabilitation and helping them access their human rights; and $122,000 was used to treat people with leprosy and disability at INF’s Green Pastures Hospital in Pokhara. In addition, we supported 14 Australians using their professional skills and serving as long term volunteers in Nepal. More information can be found on our website: www.inf.org/inf-australia.
• So INF is principally a fundraising vehicle.
• There are not 14 people in the online giving options (see below).

Do they share the Gospel?

• Despite being a member of the ‘INF family’, a family headed by an organisation that has as its tagline ‘a Christian mission serving the physical and spiritual needs of the Nepali people’, INF cannot, since it gained Deductible Gift Recipient Status, share the gospel.

What impact are they having?

• Nothing found.

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

• INF claim that 90% of expenses ‘are directly incurred in aiding Nepal projects and programmes’ [page 6, Financial Report].
  • However, these expenses include
    • ‘International Programs – program support costs’ $105K ‘Community Education’ $45K, and
    • ‘Domestic Programs Expenditure’ (i.e. in Australia) $50K
    • So it all depends how you define ‘directly incurred’, and they (still) give no definitions of the line items in the statement.
  • Defining ‘directly incurred’ is defined as ‘money sent to Nepal’, that is, ignoring the fact that some of that money would be used on ‘administration’ after it arrived, is 74% (82% if ‘International Programs – program support costs’ was money spent in Nepal).
• Using the figure given in the Directors’ Report for ‘Expenditure directly related to our work in Nepal’ the figure is 75%. That’s 25% for ‘administration’.

Can you get a tax deduction?

• The ABN record (via the ACNC Register), says yes. (Both as an organisation and for a fund that it operates, International Nepal Fellowship (Australia) Relief Fund.)
• The page for Australia on the giving page on the international website says yes.
• Note 8 in the financial statements says yes.
• But not according to the Table of Cash Movements For Designated Purposes in the Financial Report (page 13). There is shows that, apart from donations for ‘INF Volunteers’, some donations to ‘Nepal Projects’ were also non-tax deductible. 28% of the total. Why the contradiction?

Is their online giving secure?

• There’s no giving available from the Australian page, but you can give from the website that hosts the page.
• On that website, security is not mentioned but the word ‘PayPal’ appears under the bar showing your progress through the donation process, so maybe it is secure.

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

• Here’s the possibilities that come up on the international website donation page for Australia:
  • ‘Where most needed…’
  • ‘Community Development and Rehabilitation projects’
  • ‘Green Pastures Hospital and other clinical work’
  • ‘Support of I & N Baumann May’
  • ‘Support of the Steven family’
  • ‘Support of the Colville family’
  • ‘Support of the Mcgunnigle Hilder family’
  • ‘Support of C & D Price’
  • ‘Support of Sam Budhathoki’
  • ‘Other project or person…’
  • ‘Smokeless stoves’ (additional to last year)
• As INF is collecting for overseas organizations, it would not be unreasonable for you to question why it would not be both more efficient and safer for donors to send their money direct to those organisations.

Is their reporting up-to-date?

• Yes (just over six 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 nearly a year ago.

Does their reporting comply with the regulator’s requirements?

• AIS 2016: No. Like last year
  • several of the figures in the Income Statement do not match those in the Financial Report, and
  • there are no outcomes given.
• Financial Report 2016: Questionable
  • The directors, without explaining why, have (again) decided that INF, an organisation that has ‘thousands of Australians’ helping them, earned $1.35 m revenue, including $1.05 m in gifts, operates in seven (eight?) states, and appeals publicly for donations, has no users, either present or prospective, who rely on the financial statements to make decisions. This means that they can produce special purpose financial statements, statements that do not have to comply with all the Accounting Standards.
  • Despite indirectly acknowledging (in Note 9) that the accrual accounting statement of flows should be called a Statement of Comprehensive Income, they have labelled it an Income Statement and omitted any mention of comprehensive income.
  • The accounting treatment of funds sent overseas is both confusing and questionable.
    • In explaining why $390K was transferred to the international organization (INF Limited) and yet classified as still being held by INF, they say that an expense is only incurred ‘when funds have been fully acquitted for by (sic) the project implementation partner’. Has a donation been made to INF Limited, or are they just holding the money for INF? If the first, then the $390K is an expense, and surplus is overstated; if the second, the $390 is ‘cash and cash equivalents’, and ‘Other Financial Assets’ are overstated.
      • Why isn’t the rest of the money sent overseas accounted for in the same way?
      • Another $390K expense would have turned a small surplus into a $348K deficit.
    • Apart from the $390K, the destination of the other monies sent overseas is not given.
      • INF Limited shows only approximately $7K received from INF in 2015-16.
  • Neither the Table of Cash Movements… (placed before the audit report), nor the Supplementary Financial Information (included after the audit report), are marked as being unaudited.

What financial situation was shown in that Report?

• Surplus as a percentage of revenue declined markedly, from 36% to 3%.
• Revenue declined 35%, with 93% of this decline due to a drop in ‘Donations and Gifts – Monetary’. There is no explanation in the Financial Report for this, including in the Directors’ Report (which, although included is not required by the ACNC).
• Liabilities, both short-term and long-term, are minimal.
• We are told how much money was sent overseas (Financial Report), and for a portion of it, the destination program (AIS 2016). But nowhere are we told which organisations received the money.

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 he agrees with the directors’ decision to produce that the lower standard special purpose financial statements are appropriate (see ‘Does their reporting..’, above).

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

• Yes
  • ‘Phone’ and ‘Website’ are blank, but neither are compulsory.

Who are the people controlling the organisation?

• The webpage (middle right) gives the names of eight people.
• Except for a swop of Catherine Clark for Kate Shepherd (or did she get married?), this is the same list as on the ACNC Register (‘Responsible persons’),
  • Catherine Clark
  • Richard Groves
  • William Hood
  • Worboys Kerrie (names reversed)
  • Johnson Matthew (names reversed)
  • Rudra Paudel
  • Upendra Singh
  • Judd Stephanie (names reversed)

To whom is INF accountable?

• See second panel from the bottom here on the Australian page of the website for INF’s four memberships. Only the ACFID information mentions accountability, but both Missions Interlink and the government’s Australia AID have some requirements too^[2].
• INF is also accountable to the ACNC.
• And as a company, to ASIC.

1. 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. ↑
2. For one opinion on the strength of the Missions Interlink accountability, see the section Activities in this review. ↑