Archived: Service Fellowship International Inc: mini-charity review

Mini-charity review of Service Fellowship International Inc (SFI), an organisation that is connected, by the cross-directorship of John Peberdy, to Christian Ministry Advancement Ltd, the organization that is responsible for the CMA Standards Council’s ‘major new initiative, accrediting Christian organisations against a set of standards of good governance, financial oversight, and fundraising ethics.’

Is it responsive to feedback?

• They were sent a draft of the (pre AIS 2016) review on 6 June 2017. They…did not respond.

Is it registered?

• Yes, as a charity.
  • SFI is a member of an ACNC ‘Reporting group’. The group has one other member, S F I Overseas Aid Fund (SFIOAF).
    • SFIOAF has, with the addition of Wayne Belcher, the same directors as SFI.
  • SFI also has the same directors as Global Interaction Inc. (GI), both SFI’s and GI’s names are on the building at the SFI ACNC address, and GI’s Andrew Streets is the contact for SFI and SFIOAF. But
    • GI is not a member of the SFI Reporting group, nor has it established one of its own. No reason could be found for this.
    • The only reference to SFI on the GI website is in their ‘Introduction to Global Interaction’ document:
      • • Security In order to ensure the safety of cross-cultural workers and local believers in some countries, we limit the publication of people group names and exact locations. Cross-cultural workers in these regions are seconded to Service Fellowship International (SFI) for development and humanitarian work.
    • There is no explanation of the connection between SFI and GI in either of their Financial Reports. Which means no financial consolidation.
  • GI is an ‘affiliated body’ of the Baptist Union of Australia. Although, as an affiliate, GI has its own board, the members are appointed by Union organisations. So it is effectively controlled by the Union. There is no mention of SFI on the Union site though.
• SFI is a Victorian incorporated association (VIC A0002168H).
• SFIOAF is an unincorporated entity (not an ‘Other Incorporated Entity’ as SFIOAF says on its ABN record).
  • SFIOAF has lodged SFI’s constitution as its ‘Governing document’ with the ACNC, not its own, so we can’t be any more precise.
• SFI operates, per the ACNC Register, in all states bar the ACT, SFOAF in all eight. Given that the two charities raised $2.78 m in ‘Donations and gifts’ – how did they do that without a website? –the lack of a fundraising licence, in either name, in any of the seven states, does not seem right.

What does SFI/SFIOAF do?

• Neither charity has a website, and all we know from the GI website is that SFI does ‘humanitarian and development work’ (see above).
• There’s a little more in the SFI ‘Financial Report’:
  • The principal activities of Service Fellowship International during the financial year were to facilitate sending staff to the field, and to receive and distribute funds for aid and development purposes [page 2].
• The ‘Group Reporting (Joint basis) 2016 Annual Information Statement’ said that this is how the ‘group’s activities and outcomes helped achieve the members of [the group’s]…reporting group’s charitable purpose (sic):
  • Aid and Development. Providing English teachers to a University in Central Asia (sic) Supporting an Education Foundation(sic) in South East Asia (sic) Supporting a sheep loan program in Central Asia to provide income generation for families. Providing Health Education (sic) in South East Asia. Supporting Income (sic) generation projects in South Asia
    • This is identical to 2015.

Do they share the Gospel?

• From the little information that is available about each charity, I’d say not. (Which would be consistent with their status as Deductible Gift Recipients.)

What impact are they having?

• Nothing found.

What do they spend outside the costs directly incurred in delivering the above impact, that is, on administration?

• If we define ‘direct’ as ‘Funds to international programs’, administration was 29% of expenses.
  • But where does the $1.24 m of ‘Cross-cultural staff and management services provided by Global Interaction’, shown in the Group Financial Report, fit in?

Can you get a tax deduction?

• Yes, to both charities.

Is their online giving secure?

• NA

What choices do you have in how your donation is used?

• NA

Is their reporting (i.e. the Group reporting) up-to-date?

• Yes (five months after their year-end)
  • The ACNC Register shows them being six months late in lodging the 2016 accounts, but this is because the ‘Financial Year End’ date on the ACNC Register is incorrect).

Does their reporting comply with the regulator’s requirements?

• Group Reporting (Joint basis) 2016 Annual Information Statement (AIS 2016): No
  • Zero for ‘Grants and donations…for use outside Australia’ does not fit with the $1.86 m ‘Funds to international programs’ in the financial statements.
  • They have an employee yet no ‘Employee expenses’.
    • Employees have, without explanation, declined from 18 to one.
  • No outcomes mentioned.
• Group Financial Report 2016: No
  • The Report is not a group report, but a report on SFI only. There is no consolidation of the other member of the Group.
  • The directors give no explanation for their decision that ‘the association’ is not a reporting entity, that is, they have no users dependent on general purpose financial statements to make their decisions about SFI/SFIOAF.
  • The decision allows them to produce the lower standard special purpose financial statements. This is only the correct decision if any of the Group’s users, either present or prospective, can request SFI/SFIOAF to tailor a financial report to their needs. With a professional staff separate to the members, operations in all states, $2.78 m in ‘Donations and gifts’, this is not plausible.
  • There is no explanation of the relationship between the Group and GI.
  • There is no explanation of how a multi-million-dollar charity can operate without ‘Property, plant and equipment’.
  • There is no explanation for how a charity with employees has no provisions for employee benefits.
  • The Notes to the Financial Statements are missing a number of Notes that one would normally expect to find for a true and fair view.
  • The figure in the 2015 Financial Statements for ‘Cross-cultural staff and management services provided by Global Interaction’, $848K, has been changed this year, without explanation, to $1.20 m.

What financial situation was shown in that Report?

• Subject to the unknown effect of the relationship with GI,
  • The surplus as a percentage of revenue dropped dramatically (from 24% to 6%).
  • No government grants have been received for the last two years.
  • Current assets compared to current liabilities (working capital) increased from 12 to 1 to 24 to 1.
  • There are no long-term liabilities, so the long-term financial structure is sound.

What did the auditor say about the last financial statements?

• He gave a ‘clean’ opinion.
• The auditor, Saward/Dawson (Jeffrey Tulk),
  • agreed with the directors’ decision that there are no users (present or prospective) who are dependent on general purpose financial statements, and
  • agreed with the directors’ decision not to consolidate SFIOAF.

If a charity, is their page on the ACNC Register complete?

• SFI: ‘Website’ is blank, but it appears that they don’t have one.
• Group: Not incomplete but incorrect: The year-end is 31 December, not 30 June.
• SFIOAF: There is a ‘Governing document’, but it SFI’s, not SFIOAF’s.

Who are the people controlling the organisation?

• SFI, per the ACNC Register:
  • David Bird
  • Kenneth Clendinning
  • Heather Coleman
  • Murray Crabb
  • Kay Hunter
  • Beth Jackson
  • David Moyes
  • Surette Southwood
  • John Peberdy
    • John Peberdy is a director of Christian Ministry Advancement Ltd, the organization that is introducing a ‘major new initiative, accrediting Christian organisations against a set of standards of good governance, financial oversight, and fundraising ethics.’
    • There are 14 directorships recorded for the name ‘John Peberdy’ and nine for ‘Surette Southwood’. And the register only covers charities, not all not-for-profits, and no for-profit organisations. Therefore, if after eliminating the charities for which SFI/SFIOAF’s John and Surette are not directors, you are left with their number being more than a handful, it would be legitimate for you to question whether their ability to discharge their fiduciary responsibilities is threatened.
• SFIOAF: the same as above, except plus Wayne Belcher.

To whom is SFI/SFIOAF accountable?

• SFI: To the ACNC and the Victorian regulator of incorporated associations.
• SFIOAF: To the ACFID – it is ‘Full’ member.