Seal holder Sydney Diocesan Services: charity review

Sydney Diocesan Services (SDS) is one of 12 organisations that have been accredited by the CMA Standards Council^[1]:

As well as the ‘standards^[2]’, there are also some ‘policies’ that have to be met:

Let’s have a look – at least as far as we can as a member of the public – at how SDS complies with each of the Standards:

1.1  The organisation must publicly state its Christian ethos and purposes, for example in its constitution, vision/mission statements or website.

From this page^[3]:

1.2   The organisation must have a written statement of faith, approved annually and unanimously by its governing body, which is consistent with, and is not in conflict with (sic.) the Nicene Creed or otherwise satisfactorily demonstrate its commitment.

If it has one, it’s not on the website under either ‘statement of faith’ or ‘What we believe’.^[4]

1.3   The organisation must be registered in good standing on the ACNC register.

It is.

1.4   The organisation must have been operating for at least one year and have at least one annual information statement visible on the ACNC register.

The ACNC Register says that SDS was established in 1973. And all the Annual Information Statements are on the Register.

2.1   The members of the organisation’s governing body must meet the ACNC’s suitability requirements.

From the website:

John Pascoe

Peter Evans

Libby Hackett

Greg Hammond

Robyn Hobbs

Lily Strachan

Normal Lee

Ben Meikle

Michael Stead

Jennifer Yorath

Here are ACNC’s ‘suitability requirements’:

None of the SDS directors are on the ASIC ‘Banned & Disqualified’ register.

The ACNC has yet to disqualify anyone.

2.2  The organisation must keep its information on the ACNC register (for example responsible persons, contact details, constitution, and required reports) up-to-date.

All up to date.

3.1   The constitution or equivalent must clearly state who bears the ultimate responsibility for the organisation.

From the Governing Document on the ACNC Register (Sydney Diocesan Services Ordinance 2017):

3.2  The governing body must have at least five properly appointed members.

There are 10 (see 2.3 above). And it is assumed that they were appointed properly^[5]:

3.3  The majority of the governing body must be independent (see the CMA Standards Council’s Supporting Policy on Governing Body Independence).

None of the ‘senior management team’, headed by Robert Wicks, are on the board.

3.4   The governing body must meet at least 4 times per year, at times reasonably spaced apart.

The table on page 4 of the Annual financial report – 31 December 2018 shows that the requisite four meetings were held. The dates are not shown, but if this year’s pattern was followed, they were ‘reasonably spaced apart’:

3.5   A quorum must be at least half the governing body, with a majority of those attending being independent.

The quorum is five members, that is, half the board [Governing Document]. All are independent (see 3.3, above).

3.6  The governing body must keep written minutes of all meetings, documenting all decisions made.

If SDS keeps minutes, which is highly likely, they are not made public^[6].

3.7   Financial dealings between the organisation and any member of the governing body must be governed by the CMA Standards Council’s Supporting Policy on Governing Body Remuneration.

No such dealings are disclosed in Note 18 (‘Related party transactions’) of the financial statements.

3.8   The chair and vice-chair (if any) must be non-executives.

There are no executives on the board.

3.9   The governing body must have a policy which addresses the length of service of its members and which balances the benefits of knowledge and experience of the organisation against the danger of losing the member’s independence from management, their effectiveness and enthusiasm.

From the Governing Document (paragraph 6):

3.10   If the organisation has subsidiaries or related entities with which it is grouped on the ACNC register or equivalent, this Standard 3 should also apply to such subsidiaries and related entities.

SDS is not part of an ACNC Group.

For two Anglican schools it can cast a majority of the votes when there is a ballot. However, it argues, in the Notes to the accounts (Note 1) that they are not subsidiaries:

Although SDS does not mention Accounting Standard AASB 128 Investments in Associates and Joint Ventures, it gives this explanation for why there is no accounting required for the two associates:

3.11   If the governing body has any standing or ad hoc committees (for example, an audit committee), it must document the establishment of each committee, including its membership, responsibilities and powers.

From the Statutory report of the members of the Sydney Diocesan Services, in the Annual financial statements – 31 December 2018, we know that SDS has two such committees. And both have the required documentation (a charter):

The charters have not been made public.

4.1   Each member of the governing body must at all times meet the ACNC’s published criteria for responsible persons (whether regulated by the ACNC or not) and must meet their legal duties, including the duties set out in ACNC Governance Standard 5.

Other than the ‘suitability requirements’ – see 2.3 above – the information necessary to assess this is not publicly available.

4.2  The governing body must have a selection process for recruiting appropriately skilled and diverse members.

If this exists, it is not publicly available.

4.3  The organisation must have an induction process which informs and educates members of its governing body about their duties and responsibilities.

If this exists, it is not publicly available.

4.4  The organisation must have a governing body development plan, which outlines how that body intends to continuously review and improve its effectiveness.

If this exists, it is not publicly available.

4.5   The governing body must take steps to identify any conflict of interest and deal with it in a manner consistent with the CMA Standards Council’s Policy For Excellence In Handling Conflicts of Interest.

The information necessary to assess this is not publicly available.

SDS has a Policy on managing conflicts of interest.

5.1  The organisation’s constitution or equivalent must clearly identify the charitable purpose of the organisation.

From the Governing Document:

One of the 12 charitable purposes listed in the Charities Act 2013 (Cth) is ‘advancing religion’. Although none of the eight examples of purpose clauses given by the ACNC for ‘advancing religion’ goes close to what SDS does, it would be a brave move for the ACNC to challenge SDS’s eligibility.

5.2   The organisation’s constitution or equivalent must contain the customary non-profit clauses which meet the non-distribution constraints required for not-for-profit entities.

From the Governing Document:

5.3   The charitable purpose for which the organisation exists must be clearly articulated in websites, brochures, reports and other relevant and appropriate publications.

On the website:

In the Annual financial report – 31 December 2019:

5.4   The organisation must ensure that an overall plan exists which describes how current and future activities align with the organisation’s charitable purpose.

From the Report by the Chief Executive Officer in the Annual financial statement – 31 December 2018:

5.5   The governing body must conduct an annual review of the organisation’s overall finances and activities, to satisfy itself that they are being applied in the pursuit of the organisation’s charitable purpose.

From the Report by the Chief Executive Officer in the Annual financial statement – 31 December 2018:

5.6   The governing body must, either itself or by way of an approved process, ensure that each significant program or activity is evaluated at intervals of no greater than every three years, to verify that it is progressing the organisation’s charitable purpose, and represents an effective use of organisational resources.

I could find no mention of evaluations.

6.1   The organisation must maintain detailed accounting records, and prepare complete and accurate financial statements, including a balance sheet, profit & loss statement and statement of cash flows.^[7]

There is no public information about the accounting records, but from the state of the financial statements, it is reasonable to infer that they are ‘detailed’.

The financial statements give the impression of an organisation wanting to be transparent and accountable.

6.2   The governing body must ensure that the reports provided to it contain sufficient detail, in appropriate formats, to allow it to determine the financial health and performance of the organisation.

The minutes of board meetings are not available to the public.

6.3   Organisations with an annual revenue of $1 million or more must be audited^[8] annually by an appropriately qualified, independent auditor.

For 2018 it was Francois Bruder for PricewaterhouseCoopers (pwc).

pwc declare their independence in their audit report:

6.4   Organisations with an annual revenue of less than $1 million must be reviewed (within the meaning of the Australian Charities and Not-for-profits Act) or audited annually by an appropriately qualified, independent auditor.

NA – see 6.3, above.

6.5   Each year the governing body must review and approve the final financial statements of the organisation, and must review any audit report and / or management letter provided by the auditor.

The board’s minutes are not publicly available, but the board’s approval of the statements is included in the Annual financial statements – 31 December 2018:

6.6   Each year the governing body must review the appropriateness of its policies and procedures relating to internal controls, segregation of duties and expenditure approval policies, taking into consideration the size and capacity of the organisation.

The minutes of the governing body – the members – are not publicly available.

6.7   At intervals of no greater than every five years, the governing body must review the quality of the audit or review.

The minutes of the governing body – the members – are not publicly available.

6.8   The organisation must not make a loan to staff, volunteers or members of its governing body unless the loan is documented and approved by the governing body, and is either on arm’s length terms providing a commercial return, is clearly part of an approved remuneration package, or is otherwise within the charitable purposes of the organisation.

There is insufficient disclosure to assess this.

6.9   If the governing body delegates some of its responsibilities to an audit committee, all members of that committee must be independent and non-executive (see the CMA Standard Council’s Supporting Policy on Governing Body Independence), the audit committee must include members of the governing body, and the governing body members must not be able to be outvoted.

The Audit Committee consists entirely of board members [page 4, Annual financial statement – 31 December 2018].

7.1   The organisation must develop, implement and monitor a risk management plan that identifies the significant risks to which the organisation is exposed, classifies them according to severity and likelihood, and documents appropriate management strategies and insurance programs. The plan must be reviewed at least annually.

From this information in the Statutory report of the members of the Sydney Diocesan Services (in the Annual financial statements – 31 December 2018), it is reasonable to infer that such a plan exists, and is most likely reviewed annually:

7.2  The organisation must take reasonable steps to ensure that it meets its legal obligations and in particular must not act in a way which could be dealt with as an indictable offence or could be punishable by a civil or criminal penalty of over $10,000.

Although there is nothing specifically about this in the public domain, what is available gives at least some confidence that SDS complies with this requirement.

8.1   The organisation must hold an annual meeting to inform members of its activities, performance and achievements. There must be a reasonable opportunity at the meeting for members to ask questions or seek clarity about matters of legitimate interest.

Because it does not have members in the same way as a company has members, but is responsible to the Standing Committee of the Synod of the Anglican Church Diocese of Sydney, it does not hold an AGM.

8.2   The organisation must produce an annual report which is available to members, donors, staff, volunteers and members of the public. The report must contain sufficient detail to enable readers to gain a reasonable overview of the activities, performance and achievements of the organisation.

SDS produces an annual report, and it is available on their website. (The ACNC provides a place on a charity’s Register record to make an annual report available but SDS has chosen not to do this.)

8.3   The organisation must supply at any time a copy of its most recent audited/reviewed financial statements to any legitimate stakeholder who submits a written request. The organisation may charge a reasonable fee reflecting the costs and effort of supplying the statements.

These financial statements are available on the website. Presumably they would also mail a copy on ‘written request’.

8.4   The organisation must supply a summary report on the financial and operational results of any significant specific purpose appeal, in response to a written request from a donor to or volunteer of that project. The organisation may charge a reasonable fee reflecting the costs and effort of supplying the report.

I found no evidence of any appeals having been made.

8.5   The organisation must ensure that postal, email and telephone contact details are kept up-to-date on websites, reports and publications.

I have seen nothing to indicate that these are not up to date.

8.6   The organisation must ensure that a suitable mechanism exists for members, donors, volunteers and other interested parties to receive communications about the organisation’s activities and progress in between annual meetings.

I could find no such mechanism.

8.7   The organisation must maintain and publicise a mechanism for members, donors, staff, volunteers and other interested parties to submit feedback or register a complaint with the organisation, and respond in a timely and appropriate manner.

Other than an invitation to submit feedback about the website, I found no invitation to submit complaints or feedback.

I sent a draft of this review to SDS. They did not respond.

8.8   The governing body must set the remuneration package of its top leader and address related-party transactions in a manner that demonstrates integrity and propriety (see for example the CMA Standards Council’s Policy for Excellence in Remuneration-Setting).

The minutes of the governing body – the members – are not publicly available.

8.9  All information supplied for publication in the Standards Council Online Directory must be correct and up-to-date at all times.

I don’t know what was supplied, but here’s what’s there:

Revenue is $7.3 million, not $7.1 million^[9].

The other information matches the website.

9.1   In securing gifts, all representations of fact, descriptions of the financial condition of the organisation, or narratives about events must be current, complete, and accurate. References to past activities or events must be appropriately dated. There must be no material omissions or exaggerations of fact, use of misleading or disrespectful photographs, or any other communication which would tend to create a false impression or misunderstanding or unrealistic expectations of what a gift will actually accomplish.

There is no request for gifts on the SDS website. And unless they are included in ‘Other income’ in accounts, no gifts were received in 2018.

9.2   The organisation must honour statements made about how it will use gifts that it seeks. If a donor gives any special instructions with the gift, and the organisation accepts the gift, it must honour the instructions.

NA

9.3   The organisation must give donors appropriate and timely receipts for all tax deductible gifts and otherwise on request.

NA

9.4   Organisations must ensure that their representatives do not take improper advantage of any fiduciary relationship of trust the representative may have with the potential donor. An organisation must not knowingly accept a gift if it appears to the organisation that it is a major financial commitment by the donor and the donor has not considered his or her financial capacity to make the gift.

NA

9.5   Every item of communication used for solicitation of gifts must clearly identify the organisation’s name, address, phone number, ABN (if applicable), and the purpose for which support is being solicited.

NA

9.6   The organisation must have a plan for how funds will be applied in the case of an appeal for a particular purpose being oversubscribed and (if appropriate) undersubscribed, and will communicate its intent at the commencement of the appeal or as soon as practicable after the risk of oversubscription became apparent.

NA

1. See here for a comment on their decision. ↑
2. ↑
3. Neither the purpose given in the constitution – ‘The purpose of SDS is to advance the purposes of the Anglican Church’ – or the mission statement on the website – ‘(SDS) exists to support the mission of the Anglican church…’ require a Christ-centred organisation. ↑
4. Members though, before they are elected or appointed, have to sign a Statement of Personal Faith [Governing Document]: . ↑
5. From the Governing Document on the ACNC Register (Sydney Diocesan Services Ordinance 2017). ↑
6. The Minutes of the superior body, the Synod of the Diocese of Sydney, are available on the website. ↑
7. Why omit the fourth of the financial statements making up the set, the statement of changes in equity? ↑
8. It is unfortunate that the CMA Standards Council perpetuates the myth that an audit is of the organisation, rather than of the financial statements. The standard audit report states clearly (this from the SDS Annual financial report – 31 December 2018): ↑
9. As a Basic Religious Charity SDS does not need to submit any financial information to the ACNC. It was free, in the interests of transparency, to do so, but chose not to. However, the accounts are on the website (‘Our annual reports’, here). ↑