We have been asked to do a review of Lifeline Canberra for a donor. It should help others too.

Given what Lifeline Canberra does –

• it is most likely a charity

Donors

The charity 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 charity’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, and
5. Find out more about how the charity says it uses donations.

Here’s the results for Lifeline Canberra, with #5 supplemented by the essentials of the ACNC’s What should I consider when deciding which charity to support?^[1][5]

Question 1

A search on ‘Lifeline Canberra’ on the ACNC’s site results in a registered charity in that name, but with the addition of ‘Inc’: Lifeline Canberra Inc^[2]. The ‘Inc’ on the end tells us that this is an incorporated association, in this case, in the ACT, rather than one that is unincorporated.

Question 2

There is nothing on Lifeline Canberra’s website to suggest that Lifeline Canberra uses professional fundraisers door-to-door or in the street. They do, however, invite the public to seek their permission to fundraise for them, and those fundraisers may appear on your doorstep or on the street corner.

Question 3

The web address begins with a closed padlock symbol, so the website is secure [the ACNC article above]. There is nothing in the giving process about the security (as distinct from privacy) of the information that you are entering.

Question 4

Although Lifeline Canberra’s giving process does not mention tax deductibility, their ABN record (via their ACNC Register record) says that the charity is entitled to receive tax-deductible gifts^[3].

Question 5

Context

Lifeline Canberra doesn’t disclose it directly, either on the website or in the annual report, but it is impossible to fully understand this charity without understanding the relationship it has with another charity, Lifeline Australia.

From the Lifeline Australia constitution (ACNC Register), we see that Lifeline Canberra is an accredited Lifeline Centre:

Lifeline Australia has requirements for how these services are to be delivered [constitution, clause 7.5(d)].

There is no mention of accreditation (including the term or reassessment), nor that the services it can offer are constrained, on the Lifeline Canberra website, or in the Annual Report 2019-2020.

The Lifeline Australia constitution also tells us that Lifeline Canberra is almost certainly a member of the company that is Lifeline Australia^[4].

The other relationship is that Lifeline Australia’s status as a Registered Training Organisation (RTO) allows Lifeline Canberra to offer the essential volunteer training^[5].

Financial Reporting

The account of how a charity uses donations is the Financial Report on the ACNC Register. A charity such as Lifeline Canberra (a ‘Large’ charity), must submit a financial report that is audited:

The objective of an audit of a financial report is to enable the auditor to express an opinion as to whether the financial report is prepared, in all material respects, in accordance with an applicable financial reporting framework such as the Act and Australian Accounting Standards^[6].

If he can say yes to this, then he issues an unmodified or ‘clean’ opinion.

But Lifeline Canberra did not receive a ‘clean’ opinion (and hasn’t for the last twelve years).

Lifeline Canberra’s audit

Lifeline’s auditor, GED Stenhouse of RSM, gave instead what is called a ‘qualified opinion’:

(The inferior quality of the image is due to the poor quality of the Lifeline Canberra original.)

Here’s his Basis for Qualified Opinion section:

What this is saying is that people responsible for implementing internal controls in Lifeline Canberra, its directors (see below), are either unable or unwilling to implement controls over some of the charity’s revenue. They don’t say why.

Similar charities can avoid this audit qualification, so why not Lifeline Canberra?

The role of the Lifeline Canberra directors

They should not have been in the dark about this deficiency: so long as the auditor was doing his job they would have learnt of his findings and the fact that they would not be getting a ‘clean’ opinion^[7]. And even if he didn’t, the directors should have known that, without any changes to the controls, a modified opinion similar to that given previously was likely^[8].

The consequences

The consequence of this gap in controls is given in the last sentence: the audit is therefore unable to give the donor any assurance that all the money collected at the Bookfair, and all the cash donations to Lifeline Canberra, made their way into Lifeline Canberra’s bank account.

The auditor says that these items of revenue ‘are a significant source of revenue for the Association.’ How much? Unfortunately, Lifeline Canberra’s disclosure of revenue [Financial Report 2020] doesn’t give us this information:

Our ability to assess the risk is thereby greatly diminished^[9].

The Lifeline Canberra directors’ explanation

This is especially the case given that the directors have given no explanation in the Notes to and Forming Part of the Financial Statements (the Notes) for why they are not concerned about this deficiency. And not concerned about getting a qualified audit report.

Who was responsible?

The Directors’ Report (Financial Report 2020) tells us that these were the people who were responsible for the acceptance of the qualified audit:

Todd Wills

Jessica Mellor

Arran Curll

Warren Apps

Archie Tsirimokos

Bruce Armstrong

Richard Rolfe

Meegan Fitzharris

Both the ACNC Register and Lifeline Canberra’s website show that there have been no changes since.

Lifeline Canberra has not lodged its constitution on the ACNC Register as required, and it’s not on its website, but we presume that the board is accountable to the members. The number of members is not disclosed.

So, back to how the donations were used

If you are not put off by the above situation, here’s where the money (excluding any lost prior to banking) went:

Cash spent

From the Statement of Cash Flows (with last year in the second column):

No further information is given on the $3.3 million figure.

Resources consumed (i.e., accrual)

This, from the Statement of Comprehensive Income, is how the activities translated into expenses (with last year’s figures in the second column):

Employee benefits (‘Employment costs’ and ‘Superannuation’) comprise 67% of the total. Why this has increased from 61% is not explained.^[10]

Although they don’t define ‘efficiency’, expenses are normally central to it. Lifeline Canberra report^[11] that, at least compared to other Lifeline centres, they are efficient:

Impact ^[12]

The ACNC has previously – the Fact Sheet is no longer on the site – explained impact this way:

Every charity has a mission that is associated with producing a public benefit. As this mission is pursued, the changes produced in individuals and their communities can be referred to as the charity’s ‘impact.’ If you are donating to a charity, you may wish to make sure that your donation is creating the greatest impact possible.’

There is no reason why this wouldn’t still be their view.

With no explanation, or heading other than the one here, Lifeline Canberra reports this in its Annual Report 209-2020 [page 5] (markings ours).

In only the those circled in red are the gains to the clients explicit. In the others we presume that a portion of the clients were positively affected by the service.

Is this ‘the greatest impact possible’? We are given no information to allow us to assess this.

There is no report of impact on the website. Nor anything about an evaluation.

The Annual Report 2019- 2020 similarly has no mention of either impact or evaluation.

Charity response

Lifeline Canberra invites neither feedback nor complaints.

We sent a draft of this review to Lifeline Canberra. They…did not respond.

1. A section in the article, Donating and Volunteering:
   • 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?

   ↑

2. The only business name registered by Lifeline Canberra Inc is Institute of Professional Skill Enrichment, so they should be including ‘Inc.’/’Incorporation’ on the end of the website name (and elsewhere) [Associations Incorporation Act 1991]. ↑
3. The ‘Donate $’ button at the top of the home page takes you to a page within gofundraise.com.au. Nowhere is tax deductibility mentioned. ‘Donate’ in the main menu takes you to this page. Again, tax deductibility is not mentioned. At the bottom of this second page, there is another ‘Donate’ button. This leads to the gofundraise.com.au page (above). ↑
4. This is a stronger and more formal connection than that described by Lifeline Canberra: a ‘strong partnership’ (Annual Report 2019-2020, page 14), and ‘our national partner’ (the website, about online resources). ↑
5. It is not explained, and it is not immediately apparent, but it appears that when Lifeline Canberra says ‘Lifeline’ on its website, as opposed to ‘Lifeline Canberra, it means the national organisation Lifeline Australia. This FAQ is an example. ↑
6. Guidance Statement GS 019, www.auasb.gov.au, paragraph 25(e). ↑
7. Auditing Standard ASA 700, www.auasb.gov.au, paragraph 18. ↑
8. Here’s the ACNC’s advice to directors: ↑
9. Presumably, ‘cash donations’ are included in the $336K ‘Donations income’, and ‘Bookfair income’ is part of ‘Trading and operating activities’ $2.72 million. But we shouldn’t have to guess. ↑
10. None of the expenses are defined. The standard item for employees is ‘Employee benefits expense,’ so why is super separated? What is the distinction between ‘Administrative expenses’ and ‘Management costs’? All the expenses are the expenses of operating, so what’s in ‘Operating costs’? Is there any significance to the expenses being in alphabetical order except for ‘Lease interest’?None of the amounts are explained. Why the very large increase in ‘Depreciation and amortisation’? Why the significant decline in ‘Occupancy costs? ↑
11. Annual Report 2019-2020, page 14, www.acnc.gov.au. ↑
12. The ACNC has previously – the Fact Sheet is no longer on the site – explained impact this way: “Every charity has a mission that is associated with producing a public benefit. As this mission is pursued, the changes produced in individuals and their communities can be referred to as the charity’s ‘impact.’ If you are donating to a charity, you may wish to make sure that your donation is creating the greatest impact possible.’ There is no reason why this wouldn’t still be their view. ↑