Archived: SparkLit: charity review

Mini charity review of The Society For Promoting Christian Knowledge Australia Incorporated (SparkLit) as an organisation that seeks donations online. (Including the answers to the questions that the Australian charity regulator, the ACNC, suggests that you ask.)

The previous review (in black) is used as a base, with comment only if the situation has changed or extra information would be helpful.

• 2018 review: SparkLit was, and still is, a Member of Missions Interlink.
  • This is the basis of its exemption from income tax.
• Such members have to accept a set of standards, the introduction to which includes this statement:

Are they responsive to feedback?

• When sent a draft of this review, they sent comments, then another comment in response to my reply. Where still relevant, these comments have been included below.
• 2018 review: They did not respond to a draft of this review.

Is SparkLit registered?

• As a charity, yes.
• 2018 review: ‘The’ has been incorrectly included at the beginning of the name.
• Other registrations:
  • As a South Australian incorporated association (A38977).
  • As a registrable body, in this case an association that operates interstate (ARBN 119 800 645)
  • RCF doesn’t have a licence to fundraise in the states that, according to the ACNC Register, it operates. Nor in any of the others that have a licensing regime^[1].
• 2018 review:
  • Sparklit holds the business name ‘Sparklit’.
  • But this is also the name of a ‘Non Registered Entity’:

What do they do?

• Generally: see the website.
• 2018 review: From the ‘Donate’ page, these are the three uses of your donation: ‘Supply books’, ‘Nurture emerging publishers’, and ‘Equip publishing professionals’. Read more here.
• In 2015, from the AIS 2015:
  • Text books and reference works were supplied to students, church leaders and libraries in Cambodia, China, Kenya, Myanmar, Philippines and Tanzania. Grants made possible the publication of books in Burmese, Chinese, Khmer, and Spanish. Training and encouragement has been provided for publishing professionals in Africa, Asia and Latin America.
• 2018 review: ‘Activities and Outcomes’ in AIS 2017:
  • ‘Text books and reference works were supplied to libraries, students and church leaders in Africa, Asia and the Middle East. Grants made possible the publication of books written in local languages by local authors in Asia. Training and encouragement has been provided for writers and publishing professionals in Africa, Asia and Latin America.’

Do they share the Gospel?

• No.

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 ‘Grants and donations…’ (in the AIS 2015) then it cost $167K to deliver $167K.
  • ‘Administration’ is therefore 50% of expenses.
  • ‘Employee benefits expense’, for one full-time and three part-time employees, is 38% of expenses.
  • SparkLit comment: ‘The primary benefit provided to our project partners is the training and mentoring delivered by the National Director. However, his salary and travel expenses are counted in our AIS as Employee Expenses and Other Expenses.’
    • Reviewer response: As not all the Director’s time and trouble would be on this work, an allocation would be required to revise the figure for direct costs.
• 2018 review: For 2017, it cost $171K to deliver $139K, and ‘Employee benefits expense’ was 34%.

Can you get a tax deduction?

• No

Is their online giving secure?

• PayPal is used, so yes.

Is their reporting up-to-date?

• Yes (right on the deadline, six months after their year-end).
  • But if you are considering a large donation, I would ask for more up-to-date financial information – the accounts are for a year end that is now 10 months ago.
• 2018 review: 10 days earlier than last year.

Does their reporting comply with the regulator’s requirements?

• AIS 2015: No
  • No outcomes given.
  • Only ‘Government Grants’ and the total match the income figures in the Financial Report.
  • One business name missing.
• 2018 review: AIS 2017:
  • No outcomes
  • Three of the figures in the ‘Comprehensive Income Statement summary’, and all the figures in the ‘Balance Sheet extract’ are different from those in the Financial Report.
  • One business name missing.
• Financial Report 2015: Only if
  • you believe that it is reasonable for the directors to say that, for a charity operating in 17 countries, and two states, and with ‘Donations and bequests’ of $286K, there are no users, either current or prospective, who are dependent on its financial statements.
  • 2018 review: The audited account of how the donations are used is the Financial Report 2017 on the ACNC Register. Within that there are two statements that give information on how the donations were used. Most donors think in terms of cash, so if that’s you, you might turn first to the Statement of Cash Flows. What you might now know though, is that you first should turn to the Notes to the accounts (Notes to the Financial Statements in this case) to check out the ‘Basis of preparation’.

Do you provide or give things to, receive things from, or have oversight of, or review, of the SparkLit? Perhaps you intend to donate or are one of those who contributed to the $351K of revenue [Financial Report 2017]? Perhaps you are one of the 23 staff [AIS 2017]. If so, can you ring SparkLit’s office and request that they prepare financial statements that answer the question or questions you have about the charity? I very much doubt it. You are therefore ‘potentially interested in the information provided in general purpose reports’^[2].

You are therefore in the wrong place – I only have access to the published accounts of SparkLit, and the directors^[3], with the agreement of the auditor, have again produced the lower standard special purpose financial statements. This is because they think that you don’t exist.

Even if this type of financial statement was reasonable, The Financial Report does not say either how the donations and grants were used, or to where they were sent.

What financial situation was shown by that Report?

• The deficit was decreased from 4% of turnover to a surplus of 3%.
• 2018 review: From a deficit of 6% to a surplus of 12%.
• ‘Cash and cash equivalents’ and ‘Financial assets’ total $952K. This is approximately three years’ worth of revenue. No explanation is given for holding this much.
  • SparkLit response: ‘Financial assets are held for two purposes. (1) A fund is maintained to provide interest-free loans to emerging publishers. (2) Cash prizes for the Australian Christian Literature Awards are funded by investment income. This enables the awards to be independent and free from any conflict of interest. Donations are not retained as financial assets. Money in our investment portfolio and loans fund has come from (1) bequests and (2) revenue generated by our defunct book publishing enterprise.
• 2018 review: Financial assets are now $1.09 million. There is still no explanation for holding this much.
• No obvious concerns with the financial structure.

What did the auditor say about the last financial statements?

• He was unable to give a ‘clean’ opinion. He qualified the accounts on two grounds:
  • The directors of SparkLit had decided that it was ‘not practicable’ for them to establish any controls over donations until after they were entered in the books.
    • They do not say why SparkLit is one of a small minority of charities who are unable to do this. (What it means is that they, and the auditor, cannot be sure that all the money given to SparkLit made it into the bank account.)
    • SparkLit response: ‘Where possible, SparkLit directs donors to donate electronically. However, while representing SparkLit, the National Director occasionally receives cash donations. In 2015 he received $1840 in cash donations. Neither the directors nor the auditor are in a position to guarantee that cash received by the National Director is deposited into a SparkLit bank account. This is the reason for the first qualification.’
      • Reviewer response: An auditor never gives any guarantees; this qualification can be avoided.
  • Saward Dawson say that, because they weren’t the auditor last year, ‘we are not in a position to express an opinion on the comparatives for 31 December 2014’.
    • A different auditor is not sufficient reason under the Auditing Standards to issue a qualified opinion.
• 2018 review: It is now a ‘clean’ opinion^[4].

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

• Almost. One business name is missing under ‘Other Name(s)’.

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

• None – at least on the website.

Who are the people controlling the organisation?

• The names (and some faces) here on the website.
• Which is two less than is shown under ‘Responsible Persons’ on the ACNC Register.
• 2018 review: The names on the website are the same as those on the Register, except that on the Register there is no Michael Collie, and Paul Douglas replaces David Painter.

To whom are SparkLit accountable?

• Membership of Missions Interlink claimed in the (website) footer. Confirmed. Missions Interlink has standards with which members must comply^[5].
• SparkLit is also accountable to the ACNC.
• 2018 review: And also to the South Australian regulator of incorporated associations.

1. The law in this area is not straightforward and advice varies, so check with the charity before drawing any conclusions. ↑
2. From Objective of General Purpose Financial Reporting (SAC2), www.aasb.gov.au:  ↑ ↑
3. The people shown here. After removing the Public Officer and adding Grant Robinson, this list matches the ‘Responsible Persons’ on the ACNC Register. ↑
4. It is a questionable practice for the audit firm’s logo to appear on the front of a report authored by the charity. It’s prominence in this case would, in most other situations in commerce, indicate that the report was written by Saward/Dawson, with the content being Society for Promoting Christian Knowledge Australia Inc. ↑
5. For one opinion on the strength of this accountability, see the section Activities in this review. ↑