Penny Appeal Australia Ltd: charity review

This is a review of pennyappeal aus, an organisation that is doing something specific in response to the COVID-19 pandemic.

Pennyappeal aus strongly implies, in the footer of its website, that it is a member of the ‘Australian Council for International Development (ACFID)^[1]:

But Pennyappeal aus is not a Member, just trying to be one:

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 ‘pennyappeal aus’ with #5 supplemented by the essentials of the ACNC’s What should I consider when deciding which charity to support?^[2]

1.  Separate ‘penny’ from ‘appeal’ and theirs is a registered charity, Penny Appeal Australia Ltd (Penny Appeal).

Penny Appeal has the provisions in its constitution to allow it to trade without ‘Ltd’ or ‘Limited’ in its name, but as it does not have any business names registered, it can only trade in shortened name, Penny Appeal Australia.

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2.  There is nothing to indicate that Penny Appeal collects donations either door-to-door or in the street^[3].

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3.  The web address begins with a closed padlock symbol, so the website is secure [the ACNC article above]. But there is no mention of security on the giving pages.

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4.  Penny Appeal’s ABN record says that it is a public benevolent institution and therefore entitled to offer a tax deduction for donations.

Tax deductibility is not mentioned on the ‘Donate Now’ page.

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5.  The use of your donations

As context, see ‘What we do’.

Sharing the Gospel?^[4]

No. Penny Appeal is a Muslim charity:

But its aid is not restricted to Muslims.

Penny Appeal has DGR status (see 4. above), it should not be proselytising.

The use of your donations

The audited account of how a charity uses donations is the Financial Report on the ACNC Register^[5].

The report that Penny Appeal has lodged is

• A confusing collection of required and not-required statements organised in an unhelpful order.
• Non-compliant with the ACNC Act:
  • Although both the director and the audit refer to the Notes, none exist.
  • The Director’s (sic) Declaration
    • does not mention the ACNC Act, and
    • Is unsigned and undated.
  • The audit report, by Patricia Strik of Strik & Co. Accountants, does not comply with the Auditing Standards, both in presentation and work performed.
  • The Statement of Cash Flows omits last year’s figures^[6].
  • There is no Statement of Changes in Equity.
  • The Trading, Profit and Loss Statement, the one marked Consolidated^[7], is materially deviant from what is required by the Accounting Standards.

In addition

• The Director’s (sic) Report is incomplete and incorrect^[8].
• The Compilation Report, by Rania Kabbara of Tax Store Australia Pty Ltd,
  • Is unsigned, and
  • Does not comply with the Accounting Standards.

If after all that, you still want to donate to Penny Appeal…

Cash spent

This is the only information about where the cash went on operating activities (without a second column because 2018’s figures have not been provided)^[9]:

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Resources consumed (i.e. accrual)

The disclosure of the expenses is two pages long, mixes a ‘by nature’ with a ‘by function’ classification, and is in no order.

The total is $3.30 million. Here are the five largest items:

Zakat-Ul-Mal 708K

Salaries & Wages – Fundraising 389K

Love Thy Neighbour 376K

Promotion Activities 332K

Qurban Expenses 295K

Emergency Programs 219K

No other items are larger than $128K.

None of the items are defined or explained.

Given the lack of understandable classification of the expenses, there is no reliable way of estimating how much of the total expenses went to beneficiaries as opposed to facilitating that work.

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

From the Director’s Report [Financial Report 2019], it was Muhammad Khan, on his own, who was responsible for the accounts.

• There are two on the ACNC Register, Khan and Saifuddin Ahmad.
• The constitution (‘governing document’ on the ACNC Register) requires a minimum of three^[10]:

Impact

‘Impact’ means the changes for the better in the beneficiaries as a result of Penny Appeal’s activities. Nothing systematic was found.

Charity response

Penny Appeal say that they want to do the right thing:

We sent them a draft of this review on 30 April 2020. They received the email but chose not to respond.

1. 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. ↑
2. A section in the article, Donating and Volunteering:
   1. Focus on the nature of the charity’s work, its beneficiaries and the impact the charity is having in the community.
   2. Is it clear what the charity is trying to achieve and how its activities work towards its objectives?
   3. Would you like to spend your money, or time if volunteering, to support these objectives?
   4. Is the charity being transparent about its activities?

   ↑

3. We think we have compensated for it, but there is a chance that this conclusion, and others in the review, may be affected by the fact that some of the results from a Google search lead instead to the home page. ↑
4. ‘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]. ↑
5. Penny Appeal has also included an ‘Annual Report’ on the ACNC Register. However, like many links, the link provided goes to this page. ↑
6. And ‘Financial Activities’ are described as ‘Other cash items from financial activities’. ↑
7. This is the third of three such statements. ↑
8. Is unsigned and undated.
   • • Says that there was only one director, Muhammad Khan, during the period.
       • There are two on the ACNC Register, Khan and Saifuddin Ahmad.
       • The constitution (‘governing document’ on the ACNC Register) requires a minimum of three:

   

   • • Is sorely lacking in useful information. For instance, the ‘Principal Activities’ are said to be ‘Charitable organisation.
     • Says that ‘likely developments’ have not been included because ‘such information is likely to result in unreasonable prejudice to the Company’.
     • Reports on dividends as if they were possible.

   ↑

9. Although many argue that this level of disclosure is compliant with the letter of the applicable Accounting Standard (AASB 107), it is not consistent with either the intent of the Standard or paragraphs 14 and 19. ↑
10. The directors are accountable to the members. The common disclosure of the number of members is absent. ↑