Archived: International China Concern (Australia) Ltd: mini charity review

Mini charity review of International China Concern (Australia) Ltd (ICC) as an organisation that seeks donations online, and is a member of Missions Interlink. (Including the answers to the questions that the Australian charity regulator, the ACNC, suggests that you ask.)

For the previous review, see here.

Are they responsive to feedback?

• I sent them a draft of this review on 14 August. They replied promptly, and the ensuing conversation resulted in the ICC comments inserted throughout the review.

Is ICC registered?

• As a charity, yes
• Other registrations:
  • As a public company, a company limited by guarantee.
    • ICC’s constitution does not require all payments to directors to be approved by the Board, so ICC is not permitted to omit ‘Ltd’ when using its legal name.
  • Licensed to fundraise in all the states that have a fundraising regime except Victoria. Exempt there?

What do they do?

• ICC is a fundraiser for International China Concern overseas.
  • This includes the Walk the Wall in Australia event.
• From the AIS 2016:
  • Fundraising to assist in providing medical, therapy and education services for disabled and abandoned children in 3 orphanages in China. We help provide nutrition and living accommodation to over 350 children and assist in training in life skills.
    • How’s this thinking fit with what they are doing?
• ICC has no website, and the page for Australia on the international site doesn’t say what they do.
  • Ministry comment: Stakeholders will find International China Concern Australia Limited referenced in the main website (www. chinaconcern.org), however I will get the website changed to International China Concern Australia Limited to make this clearer to people searching online.

Do they share the Gospel ^[1]?

• No, ICC itself doesn’t. But hopefully those working in the orphanages are faithful to the first of ICC’s ‘Core Values’, ‘Evangelism’:
  • In the birthing of ICC [the international organisation], GOD did not create an orphanage work with a secondary evangelistic purpose. HE created an evangelistic mission whose primary people group are the poor and needy, disabled and orphaned. We seek to take advantage of every Spirit-led opportunity to share with those who do not yet know Christ as their Saviour.
  • ICC has not nominated ‘Advancing Religion’ as an ‘Entity Subtype’ on the ACNC Register.

What impact are they having?

• Nothing found.
  • International China Concern has an Annual Summary 2016, which is ‘a collection of impact reports and stories’, but it wouldn’t download for me.
    • Ministry comment: I have had this investigated we were able to replicate this issue with a particular version of EDGE (not all versions). It works fine with Chrome and Mozilla. 

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

• Based on the financial statements, 92%. Donations made account for only 8% of expenses (down from 17% last year).
  • The AIS 2015 says that they sent 41% overseas (down from 47% last year), but that includes, without explanation, $321K ‘Administration costs’.

Do they pay their directors?

• Although there is no explicit prohibition in the Constitution, paragraphs 8 and 43 strongly imply that it is not permitted.
  • Ministry comment: International China Concern Australia Ltd do not pay directors any salary or remuneration.  The directors may claim for some reimbursable expenses that are directly related to doing their role as directors (e.g fundraising and promotion amongst other things).
• The Statement of Profit or Loss and Other Comprehensive Income doesn’t show any directors’ fees.
  • Ministry comment: No Directors fees are paid.

Can you get a tax deduction?

• No, not to ICC.
  • But at the bottom of the ‘Donate’ page they say that
    • ‘International China Concern is proud to be a partner for Project J282 with Global Development Group (ABN 57 102 400 993). Australian tax deductible (sic) receipts for gifts over $2 with a preference for this project will be issued by GDG. As per ATO guidelines, we advise that if excess funds are received they may be applied to other approved project activities. For more info visit www.gdg.org.au.’
    • However, not only is there no description of this program, but it is not one of the donation options.
    • GDG is not a Christian organisation, and there is an Australian government tax concession involved, so presumably International China Concern must compromise on its ‘Evangelism’ value (see above) in this work.
    • The proportion of International China Concern’s work is with GDP is not disclosed.

Is their online giving secure?

• Security is not mentioned.
  • Ministry comment: Noted; An area that can be improved by ICC.

Where were your (net) donations sent?

• Apparently, from the AIS 2016, they were all sent overseas. But to whom is not disclosed.
  • Ministry comment: All funds (apart from China Team Travel/ Accommodation Funds) sent overseas were sent either directly or indirectly to International China Concern’s 3 orphanage projects in PRC; As per the website there are 2 in Hunan Province and one in Henan Province.  The China Team Travel Funds were sent to the ICC China Teams area to purchase accommodation and travel for participants in short-term China Teams. The reference to indirectly sending funds relates to where special equipment such as tailored wheelchairs may have been purchased in Hong Kong  (for example) and the equipment then taken into ICC’s projects.

Is their reporting up-to-date?

• Yes (four months after their year-end, two weeks earlier 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 thirteen months ago.
    • Ministry comment: The year ending 30/06/2017 financials will be available prior to the 31/10/17, as required by Australian legislation, once the audit process has been completed. These will be lodged on the ACNC website after the board has approved them at the AGM to be held in October 17.

Does their reporting comply with the regulator’s requirements?

• AIS 2016: Not quite:
  • The amount for ‘Grants and donations made…’ is significantly more than the amount for ‘Donations’ in the financial statements. By deduction, the difference is ‘Administration costs’. There is no explanation in the financial statements for classifying these costs as donations.
    • Ministry comment: In International China Concern Australia, there are several Australian residents and taxpayers who are engaged by ICC to be responsible for an sphere of responsibility greater than just Australia. Examples are the Chief Operating Officer, The Chief Financial Officer etc.  The practice is that other sister ICC organisations (such as ICC Hong Kong and ICC Canada) reimburse an allocated portion of their costs (including salaries) to offset  the non- Australian costs incurred, so that ICC Australia Ltd only incurs directly their own (user pays cost).
  • No outcomes are given.
    • Ministry comment: GDG regularly audit the ICC  China projects as an arm’s length organisation, to ensure outcomes are being achieved. Additionally ICC do internal audits against pre-defined ‘end-statements’ and rate progress on a regular basis.  These are reported on within the organisation.  ICC could probably do more with external reporting of achieved outcomes.  Some of the outcomes are reported on in facebook and in ICC stories in the regular newsletter which is readily available.
• Financial Report 2016: Questionable:
  • A major item of revenue (42% of the total) is not a standard revenue item, yet is unexplained.
    • Ministry comment: ICC will aim to add an additional note in the 2017 reporting to make this more understandable.
  • The second largest expense, ‘Administration costs’ seems (from the AIS 2016) to be treated as donations, yet this treatment is not explained.
  • The ACNC is still not mentioned by either the directors or the auditor.
    • Ministry comment: ICC will address this aspect in 2017.
  • The form of the Statement of Changes in Equity does not match the information in the Statement of Profit or Loss and Other Comprehensive Income.

What was the financial situation shown by that Report?

• 42% of the revenue came from the unexplained ‘Administrative reimbursement’.
  • Ministry comment: Refer notes above.
• Last year’s very small deficit was turned into a positive 3% of revenue.
  • Ministry comment: Agreed.  Unless a NFP is surplus building, one would expect a faith based organisation to run at either a very small suprplus or very small deficit so that the best possible outcome is achieved while being sustainable.
• 41% of donations went to paying the one full-time, seven part-time and one casual employee.
  • Of the $393K ‘Payroll and on costs’, it appears that $147K went to the (whatever the leader is called).
    • Ministry comment: ICC believes it pays salaries commensurate with that of the Australian mid-range Charity sector (not big business) .. and a lot of additional volunteer hours are also contributed by role incumbents.
• Even though ICC is only a fundraiser, 5% of its expenses was incurred on travel.
  • Ministry comment: Agreed, Refer to note regarding staff employed by ICC Australia doing additional duties internationally and being reimbursed from other offices.     Travel was also incurred with ICC’s China based director of Projects doing a promotional / Fundraising speaking tour of ICC Australia’s major cities. In 2016, this initiative raised AUD64,000 after expenses, so ICC considers such initiatives to be worthwhile despite incurring some travel costs.
• The working capital position – the excess of current (short-term) assets over current (short-term) liabilities – is now healthier.
  • Ministry comment: Agreed, however refer to dot point 2.
• And the equity (that is, liabilities exceed assets), is no longer negative.
  • Ministry comment: Given that ICC has regular recurring income, a small deficit at one point in time (like year-end) is not considered by ICC to be of significance.

What did the auditor say about the last financial statements?

• The auditor, Neil S Harding, of Harding Martin, gave a ‘clean’ opinion.
  • To take the right amount of comfort for this finding, please read here and here.
  • Also see ‘Financial Report 2016’, above.

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

• Yes
  • The website is for the overseas organisation, not ICC.

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

• The donation page initially suggests that all donations go to ‘the general fund’ or ‘Where most needed’. However, further down you are given an opportunity to select from 16 ‘Donor designations’ (including ‘Where Most Needed’).
  • Ministry comment: ICC Australia Ltd tracks donations made against designation and aims to send the funds donated to the respective designation so that the donor wishes are congruent with International China Concern Australia Ltd actions.  Some donors are happy that their donations go to a ‘Where most needed’ which is the largest need while some have a specific reason for donating to a medical or wheelchair or therapy need as examples.

Who are the people controlling the organisation?

• The names on the Australian page of the website match the ‘responsible persons’ on the ACNC Register:
  • Janet Conroy
  • Rex Hills
  • Justin Anemaat
  • Ian Sigsworth
  • Brian Tidmarsh
  • Claire Watson
  • Graham Young
  • Christy Yu
• The board is three larger than allowed by the constitution.
  • Ministry comment: (R)ecently ICC Australia Ltd has passed a new constitution based on the template provided by the ACNC (about to be registered with the ACNC) which permits 9 persons to be appointed to the board.
• David Gotts, the founder of International China Concern, was eligible to attend five board meetings during the year, but attended none.
  • Ministry comment: True, but David resigned from the board in  2016, due to personal family circumstances.
• There are only eight members of the company, so the accountability of the board is limited.
  • Ministry comment: With the change in constitution, the number of members will increase overtime, providing greater accountability for the directors of ICC Australia Limited.

To whom is ICC accountable?

• Apart from the ACNC, it is a Member of Missions Interlink.
  • For one opinion on the strength of this accountability, see the section Activities in this review.
•  As a registered charity, ICC is accountable to the ACNC.

1. “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. ↑ ↑