The Australian Christian Lobby (ACL) just invited me (Ted), if I was interested in ‘wise leadership’, to apply for “the Lachlan Macquarie Institute’s Autumn 2021 Leadership and Public Service 14 week residential program”.  Well, although Ted’s not interested in the program, we, as an independent reviewer of Christian organisations, naturally cast our eye over the Institute (LMI)^[1].

LMI is a registered charity, The Lachlan Macquarie Institute Limited.

LMI’s constitution (available under ‘Documents’ on the ACNC Register) says that it is ‘a Christian organisation’ [clause 5.1]. The same clause gives the implications of this for its leaders:

Although LMI are happy to accept bequests^[2], the website has no invitation to donate. However, they said in their AIS 2020 that they intended to fundraise this year, and last year 32% of their revenue came from ‘Donations’^[3].

Donors

The charities’ regulator, the ACNC, in their article, Donating to Legitimate Charities, gives “some things to consider to help you make sure your donation is going where it is intended”:

1. Check the organisation’s name.
2. Ask for identification from anyone seeking a donation.
3. Be careful of online requests for donations.
4. No tax deduction doesn’t mean the charity is not a legitimate one.
5. Find out more about how the charity says it uses donations.

Here’s the results for LMI, with #5 supplemented by the essentials of the ACNC’s What should I consider when deciding which charity to support?^[4]

Question 1

See above.

Question 2

There is nothing to indicate that LMI use door-to-door or street fundraisers.

Question 3

NA

Question 4

‘Will my donation be tax deductible?’ [LMI’s Register entry] says it operates a fund that allows it to offer a tax deduction:

As we said above, there is no website invitation to give. In fact, this Fund is not even mentioned on the website.

Question 5

The context

No vision, mission or values on the website.

But their tagline makes it clear what they are about:

This is how they think they bring this about:

• Only two of these four programs are disclosed on the ACNC Register. Why?
• This is what they say they did in 2019-20 [Financial Report 2020]:

Sharing the Gospel^[5]?

No (Given that their students identify as Christians, it would be hoped that they had heard the Gospel.)

Locations

Both the programs they list on the ACNC Register are delivered at Murrumbateman, NSW. This is also their ‘registered office and principal place of business’ [Financial Report 2020].

But the Directors’ Report [Financial Report 2020] shows that they operated outside NSW as well:

How activities translated into dollars spent

The audited account of how donations are used is the Financial Report 2020 on the ACNC Register.

Before we look at where the money went, there are three things of concern revealed in the Financial Report 2020 as a whole.

A qualified audit report

LMI did not get a ‘clean’ audit report.

Here’s the auditor’s explanation for his qualification:

What this means is that the auditor could give no assurance that all the cash donated to LMI made it into its bank account, and then was recorded the books of account.

He does not say, as he is supposed to, how much of the $350,483 we are talking about.

The Board does not explain their reasoning behind concluding that putting the necessary internal controls was ‘impracticable’. How much wisdom did they put into this decision? There are numerous guides available to show charities the simple controls that are available, and therefore how to avoid the embarrassment (well, they should be if they aren’t) of a qualified audit opinion.

Here is one Auditing and Assurance Standards Board (www.aausb.gov.au).

The type of financial statements

In producing this Report, the directors had to choose between two types of financial statements, special purpose and general purpose. The distinction is important because special purpose financial statements are only appropriate when there are no users dependent on the other type.

Users are people who have an interest, or might legitimately have an interest, in LMI (for instance students, employees, volunteers, donors, suppliers, and government).

As a user, you are not dependent on general purpose statements if you can ring the IJM office and ‘command the preparation of (financial) reports tailored so as to satisfy specifically all of …[your] information needs’. If you can’t do this, then you are dependent on a regulator to specify the contents of IJM’s financial report, that is, you are dependent on general purpose reports.

LMI said that you don’t exist:

Wise leadership?

The auditor, Anthony J Bandle FCA, owner of Bandle McAneney & Co. (no website) had to agree with the directors’ decision or else he had to refuse the job. He kept going.

His professional body gives him this guidance:^[6]:

LMI has

• professional management (see ‘Employees’ below).
• 16 volunteers (see ‘Employees’ below)
• via its graduates, and alumni network (Directors’ Report), a wide impact (see ‘Impact’ below)
• 40% of its revenue coming from donations and government grants (see the introduction, above).

Choosing to be the exception (special purpose) was wise decision-making?

The Australian Christian Lobby (ACL)

Consider the following:

• All three of the current ‘responsible people’ of ACL are three of the five ‘responsible people’ of LMI^[7].
• Two of the five are current senior executives of ACL, and one is the former Managing Director.
• Membership of LMI is restricted (by the constitution) to 13. There were only five members at 30 June 2020, most likely the above ‘responsible people’.
• One of the LMI courses is an ACL course.
• The Wikipedia entry for ACL claims that ACL established LMI. As does the Sydney Morning Herald. (LMI does not disclose its history^[8].)

All this makes it look like ACL controls LMI, yet there is not a single mention of the relationship in either Financial Report 2020, or on the LMI website. Why?

Persons responsible

Redaction (probably part of this approval) means that we don’t know the names of all the directors who were responsible for the above decisions:

The above four – if Allan is meant to be Anthony – are still directors:

Allan McLellan (is this meant to be Anthony McLellan?)

David Burr (a director of ACL)

James Wallace (a director of ACL; ACL ex-Managing Director)

Martyn Iles (a director of ACL; current ACL Managing Director)

Pickrell Howard (should be reversed?) (current ACL Chief Operating Officer)

The use of donations^[9]

If you are still willing to rely on the accounts, the Statement of Profit or Loss and Other Comprehensive Income shows the expenses for 2020:

There is no obvious order to these expenses, and the classification is a mixed classification (function and nature). Unhelpful.

Employees

From the Annual Information Statement (AIS) 2020:

The cost was $107K per FTE employee.

Impact

Three of the four programs have a statement about what those completing the program say. This report by LMI It is the same for each of the three:

There is nothing about the source of this information, or how and when it was obtained.

• it is a self-report
• when was it collected?
• did all participate?
• were there no negative comments?
• Was there anything else that might explain some or all these changes?

There is nothing else about impact on the website.

In 2019, the CEO was reported as saying that the impact will occur when the graduates are leaders later in life:

LMI give no support for this claim (either then or now).

LMI’s response

We sent them a draft of this review. They…did not respond.

1. We see that LMI approve of this discernment: ↑
2. ↑
3. ↑
4. Focus on the nature of the charity’s work, its beneficiaries and the impact the charity is having in the community. Is it clear what the charity is trying to achieve and how its activities work towards its objectives? Would you like to spend your money, or time if volunteering, to support these objectives? Is the charity being transparent about its activities? [A section in the article, Donating and Volunteering]. ↑
5. ‘When Helping Hurts by Brian Fikkert and Steve Corbett says this about sharing the Gospel: ‘A host of contextual issues determine the best manner and the appropriate time to present the gospel verbally, particularly in militant Muslim or Hindu settings. But without such a presentation, it is not possible for people to be personally transformed in all their relationships, which is what poverty alleviation is all about [Kindle Locations 1262-1264, Moody Publishers]. ↑
6. Enhancing Not-for-Profit Annual and Financial Reporting, March 2013, accessed from their website March 2020. ↑
7. There is no redaction visible, nor explanation if names have been withheld. If they have, then the ACNC is misleading the public. ↑
8. The Notes in the Financial Report 2015 [ACNC Register] disclose that ACL lent ‘LMI’ $25K that year: ↑
9. Some other, more minor, issues:
   • There is no disclosure of related parties. For instance, what is LMI’s connection with Australian Christian Lobby?
   • What has been the effect of this provision in the constitution?

   

   • There is no obvious logic to the order of the expenses.
   • The expenses are a mixed classification (function and nature).
   • The lender of the $391K is not disclosed.
   • Both statements by the directors are undated.
   • The audit fee is not disclosed.

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