Archived: Sydney Missionary & Bible College: mini-charity review

Mini-charity review of Sydney Missionary & Bible College (SMBC) as an organisation that seeks donations on the internet, and is a member of Missions Interlink. (Including the answers to the questions that the Australian charity regulator, the ACNC, suggests that you ask.)

For last year’s review, see here.

Are they responsive to feedback?

• When sent a draft of this review, they, like last year, didn’t respond.

Is SMBC registered?

• Yes, as a charity.
• As a public company, company limited by guarantee.
  • SMBC is entitled to omit ‘Ltd/Limited’ at the end of its name.
  • It also has a business name under which it may operate, SMBC’s The Bridge.
• SMBC operates, per the ACNC Register, in all six states that have a fundraising licence regime, but is still licensed in only NSW^[1].
• SMBC controls another charity, SMBC Foundation Limited.
  • There is no description of the Foundation on the website.
  • There is no explanation in the Financial Report 2016 for why SMBC doesn’t produce consolidated financial statements.
    • The Foundation is not even mentioned in the Financial Report.
  • The Foundation had revenue of $540K, a surplus of $351K and equity of $594K.

What do they do?

• Start with what is said in its name, then
  • ‘SMBC is thoroughly evangelical and Bible-centred, interdenominational in character, strongly cross culturally mission minded and underpinned by a committment (sic – still) to learning and being transformed in the context of caring community….’

Do they pay their directors?

• There is insufficient disclosure in the accounts to answer this.

Do they share the Gospel ^[2]?

• No

What impact are they having?

• There is no indication that they are assessing their impact. (I searched for ‘outcomes’ too.)

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

• ‘Administration expenditure’ (sic) is 7% of expenses. But all the other expenses may contain ‘administration’ expenses, so there is no clear way to even estimate the figure as defined above.

Can you get a tax deduction?

• Their ABN record says that SMBC has deductible gift recipient status.
  • Why, then, are only three of the seven funds for which it seeks donations marked as being ‘tax deductible’?

Is their online giving secure?

• Although there is no logo or link, the page says that ‘Westpac’s Secure Portal’ is used, so I’d suggest that the giving is secure.

Where were your (net) donations sent?

• They show zero for ‘Grants and donations made…’ in the AIS 2016.

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

• Seven different funds.
  • However, it appears that not a dollar was received again this year in other than the ‘Building & Maintenance Fund’. Is that because they are collecting for another charity, SMBC Foundation Limited?

Is their reporting up-to-date?

• Yes (five months after their year-end, and at the same time as last year).
  • 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 over 9 months ago.

Does their reporting comply with the regulator’s requirements?

• AIS 2016: Not quite – it says that general purpose financial statements were prepared whereas it was the lower standard special purpose statements.
• Financial Report 2016: No
  • There is no explanation of why their subsidiary, SMBC Foundation Limited, is not included in the accounts. (In fact, not only is the relationship not disclosed, but this company is not mentioned.)
  • There is insufficient disclosure of the non-current borrowings. Consequently, there is a question over (a) their classification as non-current (with implications for the going concern assumption), and (b) the relationship between borrower and lender.
  • With revenue of $6.00 m, hundreds of students, operations all over Australia, and 68 staff, it is not credible for the directors to state, as they do, that “there are no users who are dependent on its general purpose financial statements”.
    • This allows them to prepare the lower standard special purpose financial statements.
    • Do they realise that they are effectively saying that all current and prospective donors, students, staff and suppliers are able to command the preparation of a report tailored to their needs?

What financial situation was shown in that Report?

• The surplus as a percentage of revenue was increased from negative 8% to positive 2%.
  • Due in large part to an 81% increase in donations.
• However, this and other changes was nowhere near enough to rectify the poor short-term financial structure. The working capital position was sufficiently dire (again) – current liabilities were 1.5 times current assets – that the directors thought it necessary to address whether the company was a going concern, that is, whether it could pay its debts as and when they were due and continue to operate for the next 12 months.
  • Their positive answer was based on
    • Assets exceeding liabilities
      • $30.24 m of buildings – presumably the SMBC campus – was the only reason that assets exceeded liabilities.
    • $750K of the $1.36 m non-current borrowings having ‘no set repayment date’.
      • Without further information, these are incorrectly classified as non-current. And a reclassification to current would mean a much higher deficit of working capital (see above).
    • The balance of those borrowings being due progressively, starting April 2018.
    • An overdraft $338K below its limit.
      • The limit was increased this year.
• Why the interest rate on one part of the $1.36 m borrowings– the Notes do not disclose which part – is zero is not disclosed.
• ‘Unpaid fees’ have increased 127% – to $178K – yet there is no mention of bad and doubtful debts.
• The number of employees at the time of completing the AIS 2016, May 2017, was 68. There were only 52 at 31 December 2016.

What did the auditor say about the last financial statements?

• He gave a ‘clean’ opinion.
  • But he agrees with the directors’ decision to
    • Produce the lower standard special purpose financial statements
    • Not disclose the existence of the subsidiary, and
    • Classify the $750K of borrowings as non-current.
• The auditor’s independence was threatened by his involvement in the preparation of the report he was auditing. You might ask how this was countered.

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

• No. It is (still) missing information under ‘Other Name(s)’ and ‘Date Established’.

Who are the people controlling the organisation?

• The directors are not mentioned on the website. From the ACNC Register they are:
  • Kirrily Brown
  • Andrew Chen
  • Geoffrey Deane
  • Jennifer Fallon
  • Mark Freeman
  • Stuart Gow
  • James Lane
  • Raymond Notley
  • Dean Rerekura
  • Scott Sanders
  • The board is accountable to the members. But there are only 11 of them – and ten of those may be the board members.

To whom is SMBC accountable?

• To the ACNC.
  • Its ‘Charity Tick’ is used on the website in support of you giving to them. And rightly so, because it would be unwise to give to a charity that is unregistered. The ‘tick’ also means SMBC’s AIS is not overdue, and the ACNC has not taken any compliance against it.
    • But no more than this.
• SMBC is, as they claim, also in support of you giving, a Member of Missions Interlink.
  • Confirmed.
  • See the section Activities in this review for one opinion on the strength of this accountability.
• As a company, SMBC is also accountable to ASIC.
• It also has some other memberships, listed here. One or more of these may have some ongoing requirements of membership.

1. The law in this area is not straightforward – is an internet invitation ‘fundraising’ for instance? – and advice varies, so check with the charity before drawing any conclusions. ↑
2. “Good living and social concern are important [to the cause of evangelism], but they are not uniquely Christian graces…I’ve met a lot of fine Hindus, Muslims and atheists. Just living the life is not going to bring someone to Christ. There is much more to it than that. We must help people, certainly, but we must also share with them why we are motivated to do so. We must stand against injustice, poverty and need, but we must at the same time point to the One who brings justice and who can meet the deepest need. Until they know our reasons, how can they come to know our Lord?” [Dan Armstrong, the Fifth Gospel: The Gospel According to You, Anzea Books, pp. 13-14. ↑ ↑