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Mercy Works Limited: charity review

This is a review in the series ‘Australian Council for International Development (ACFID) Members’. ACFID ‘is the peak body for Australian non government organisations (NGOs) involved in international development and humanitarian action.’ It requires Members to adhere to a Code of Conduct. ‘Mercy Works’ is one such Member.

Donors

The name in the ACFID membership list links to the website for ‘Mercy Works’. Here they seek donations from the public.

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 ‘Mercy Works’, with #5 supplemented by the essentials of the ACNC’s What should I consider when deciding which charity to support?[1]

 1.  A search on the ACNC Register for ‘Mercy Works’ gives this result:

The footer on the website from the ACFID listing (above) shows that it is the first that is the member, Mercy Works Limited [Mercy Works].

Mercy Works has neither the name Mercy Works registered as a business name nor does it have the necessary provisions in its constitution (ACNC Register), so it should not be trading in any name other than its full name, that is, with either ‘Ltd’ or ‘Limited’ on the end.

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2.  Although the possibility is provided for in their Fundraising and Marketing Policy, there is nothing to suggest that Mercy Works raises funds door-to-door or in public places.

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3.  The web address begins with a closed padlock symbol, so the website is secure [the ACNC article above].

There is nothing about security on the ‘Donate’ page.

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4.  Mercy Work’s ABN record (via the ACNC Register record) says that it is entitled, as a Public Benevolent Institution, to receive tax-deductible gifts.

The ‘Donate’ page says that donations are tax-deductible.

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5.  The use of your donations

As context, read here what Mercy Works does.

The audited account of how a charity uses its donations is the Financial Report 2019.  

For this report, directors have a choice between special purpose or general purpose reports. The requirements of the former are less onerous than the latter. Preparing special purpose reports means, among other things, that charities do not need to consolidate (produce a combined picture if they control over entities), and do not need to disclose related parties and transactions with related parties.

Mercy Work’s auditor, Carl Millington, is a partner of the firm Pitcher Partners. He is a Chartered Accountant. This is what that body has to say about the choice between the two types of reports[2]:

With a diverse range of donors providing $2.29million [Financial Report 2019], professional management (11 FTE employees), 350 volunteers, projects overseas [AIS 2019], and almost total reliance on donors and grant givers [Annual Report 2019], it is hard to see how a special purpose report is the right choice. But that is the choice that the directors of Mercy Works made.

And the auditor, a Chartered Accountant, agreed with them.

One of the implications of their choice is that you can ring Mercy Work’s office and request that they prepare financial statements that answer the question or questions you have about the charity. I strongly doubt that they will agree[3].

The bottom line is that the accounts presented by the directors are not for you. They say that you don’t exist:

If you are still happy to consider a donation to Mercy Works, here’s how it used the donations it received:

Cash spent

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

No further information is given on this figure. So, we don’t have enough information to understand where the cash went.

Resources consumed (i.e. accrual)

This, from the Statement of Profit or Loss and Other Comprehensive Income, is how the activities translated into expenses:

None of these items are defined.

The destination of the money for programs, 86% of the total, is not given.

So, again we don’t have enough information to understand what happened to the donations received[4].

There is nothing in the Financial Report 2019 on how Mercy Works ensures that (a) the money reaches the overseas organisation, and (b) it is used for the purposes given.

These were the directors who were responsible for the Financial Report 2019:

Sheena Barber

Travis Bowman

Sr. Mary Densley, RSM

Kathleen Donnellon

Megan Giles

Sr. Berice Livermore, RSM

Jacqueline Magurren

Since this time, the ACNC Register shows that Jacqueline Magurren has been replaced by Francis Elvery.

The board is responsible to the members. There were only eight members at year-end, one more than the number of directors[5]. No accountability there.

Impact

Nothing systematic found on Mercy Work’s impact.

Charity response

Although Mercy Works’ Complaints Policy, does not explicitly include feedback as opposed to a complaint, the introduction to that policy implies that they are interested in it.

I sent a draft of this review to them on 29 March 2020. By the time of publication, over three weeks later, they had not responded.

 

  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. Enhancing Not-for-Profit Annual and Financial Reporting, March 2013, accessed from their website March 2020.

  3. The accounting profession says that you are therefore ‘potentially interested in the information provided in general purpose financial reports’. [From Objective of General Purpose Financial Reporting (SAC2), www.aasb.gov.au].

  4. The need is supported by paragraphs 85 and 112 of the Accounting Standard Presentation of Financial Statements [www.aasb.gov.au].

  5. The constitution does not require a director to be a member.

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