Archived: TEAR Australia, charity review

This is a charity review, a review for those with an interest in the Australian charity TEAR Australia (TEAR).

It is structured according to the charity’s entry on the ACNC Register, and its purpose is to supply some information extra to what is there, information that may be helpful in your decision about TEAR.

It is up to you to decide whether any or all of the information presented here is what you need in order to make that decision, and whether you should seek any other information, either from the charity itself or from other sources^[1].

Ministry response

Prior to publishing this review, I sent my observations to the charity, on 1 August 2016. Their comments have been incorporated below.

Organisation of this review

• The first part of this review is organised according to the headings in the register entry. This is how to use this section of the review:
  1. For each heading in the register entry, first read the information under that heading.
  2. Then check if that heading is included below. (Headings for which there is no comment are not included.)
• There is then a more detailed comment on the Financial Report.
• Lastly, there is a section Membership of accountability organisations claimed.

Sources

• ACNC Register (including links).
• Google search on the charity’s name.
• TEAR websites, here, here, and here.
  • There appears to be something wrong with the search facility on the main TEAR website. For instance, a search on ‘our vision’, gives 782 hits, but despite the term being used under Mission Statement (see Vision, below), it doesn’t occur in the first page of results.
    • Ministry comment: ‘We took a look at this and found it a bit complicated to easily change on our website but our Mission Statement is easily found under “About TEAR”.’
• Facebook: TEAR, The Justice Conference
• Vimeo Twitter, Instagram, Pinterest, YouTube.
• LinkedIn.
• State government fundraising licence registers.
• No reviews of the Australian organisation on Glassdoor.
• TEAR’s Submission to the Independent Review of Aid Effectiveness, February 2011
• The 2009 paper by the Centre for Policy and Development Systems, ‘Aiding the World’s Poorest: Some Suggestions to Tear Australia’.

REGISTRATION DETAILS

Entity Subtype

• Not a Subtype that is consistent with the sharing of the Gospel.
• Which is consistent with its absence in TEAR’s objects, the first of which is
  • to provide direct relief of persons in necessitous circumstances in Australia and throughout the world by reason of poverty, sickness, destitution or helplessness whether in consequence of natural disaster or otherwise but in all circumstances in response to the love of our Lord Jesus Christ and to demonstrate His compassion; [punctuation is copied accurately]
• Not only does TEAR not fund proselytization, but it equates the sharing of the Gospel while practising community development as efforts to ‘manipulate people into the church’:
  • …TEAR’s policy is to finance the relief, development and advocacy activities of organisations who are motivated by their faith in Christ, and by their desire to demonstrate the depth of God’s commitment to justice, to mercy, to the poor. We do not fund proselytizing activities, but we rejoice and celebrate when we know of people whose lives have been wonderfully and beautifully enriched by the embrace of God in Christ. But we will not support any attempt to misuse relief and development activities to manipulate people into the church. We believe such attempts lack integrity, result in poor development, and dishonour the One who is our motivation.
• How, then, is TEAR any different to a secular public benevolent institution that’s also trying to bring about ‘a just and compassionate world in which all people have the opportunity to achieve their God-given potential’ (TEAR vision, see below)?
  • Ministry comment: ‘TEAR’s theological underpinnings shape the way we approach the work we do both in Australia and overseas. In practical terms this means we only work with local Christian partner agencies (local church, Christian NGOs and CBOs) who share our approach and ethos to holistic development projects. For more on our theology of development see our publication Target magazine and forTomorrow website.’

CHARITY DETAILS

Legal Name

• TEAR is a public company limited by guarantee.
• It is entitled to omit ‘Ltd/Limited’ at the end of its name.

Other Name(s)

• TEAR also presents The Justice Conference. No ABN, so its transactions must be in TEAR’s name.

Charity ABN

• Tax deductibility: You can claim a tax deduction for a donation to either TEAR itself, or the fund that it operates, Tear Fund (Australia) Developing Countires Aid Fund.

Charity Street Address

• It appears that they may have another office: the Victorian government’s ‘fundraiser details’ page for TEAR gives its address as 6 Holly Court, Mitcham 3132.
  • Ministry comment: ‘We will amend this when lodging next return – this was linked to one of our directors.’
• The postal address, from the website: PO Box 164, Blackburn, VIC, 3130, Australia.

Phone

• From the website: 03 9264 7000 or 1800 244 986 (Free call).
• From the Google search: 03 9877 7444. The website shows this as the number for the Victorian contact – but at the same address as the National office.

Website

• From the Google search: www.tear.org.au.
• And their other sites: www.usefulgifts.org and www.fortomorrow.org.au.
• They also present The Justice Conference.

ANNUAL REPORTING

• AIS 2015
  • This is TEAR’s compulsory Annual Information Statement 2015 (AIS 2015).
  • It gives basic financial information. If you think that this might be sufficient for you, you only need note that the ‘Employee expenses’ cannot be confirmed in the financial statements because they are not disclosed there.
• Financial Report 2015
  • The accounts were signed two and a half months after year end.
  • The Report was then lodged one and a half months after that.
  • The coverage of finances in this review is left until the financial report proper (see Latest financial report – detail, below). (Go straight there.)

ABOUT THE CHARITY

• Statement of Faith
  • See ‘Statement of Belief’, here.
  • The constitution, adopted in 2014, requires applicants for membership to sign an ‘agreement to the Basis of Belief and Charter’. However, the Charter is in neither the constitution or on the website.

Date Established

• There’s a brief history on the website.

Who the Charity Benefits

• Vision
  • Under Mission Statement (see below):
    • Our vision is for a just and compassionate world in which all people have the opportunity to achieve their God-given potential.
• Mission
  • You might question how excluding the Gospel (see Entity Subtype, above) is consistent with TEAR’s mission to encourage ‘biblically-shaped responses to poverty and injustice’, and to work ‘holistically’.
    • TEAR acknowledges that ‘Poverty in much of the contemporary Christian literature is understood as a complex web of broken relationships and sinful systems.’ How then can it justify – other than by the decision to go for government grants – to omit from ‘holistic’ development the most important broken relationship of them all?
• Activities (What did TEAR do?)
  • From the AIS 2015:
    • Community development in disadvantaged communities with international and Australian partners. Fundraising from Australian public (primarily Christian public). Speaking engagements at churches, schools and community groups. All of this work is done to help build a more just and compassionate world.
      • Except for the addition of the last sentence, this is identical to last year, so not a helpful response to the ACNC’s request for 2015’s activities.
  • See the website for the ‘Areas of Focus’.
• Outcomes (What was delivered?)
  • Unfortunately, in the AIS 2015, in response to the request to describe activities and outcomes, there are only activities (see above).
    • Ministry comment: ‘We will review the 2016 AIS return and update accordingly to include both.’
  • Nothing systematic found.
• Impact: (How were people’s lives improved?)^[2]
  • No systematic evidence found.
  • The ‘Impact Report, Sector Analysis For Basic Health, 2014-15’, apart from a short description of the impact of a project on seven individuals, merely describes who received services.
  • Projects are evaluated – see Frequently Asked Questions under www.tear.org.au/about – but we are not told whether impact is one of the measures.
    • Ministry comment: ‘All TEAR funded projects include rigorous design (at the start), monitoring (throughout) and evaluation (at the end). Given the diversity of these projects, each has its own unique outcome measurements which are reported.’
      

Size of Charity

• With revenue of $17.80 m, TEAR is a mega-charity, even when compared with just those in this category.

Financial Year End

• This means that the next financial report is due by 31 January (following the ACNC’s repeat of its (generous) extension (to all charities)). Before that the financial information on the Register will be up to 19 months out-of-date.
  • You may therefore need to ask for more up-to-date information.

WHERE THE CHARITY OPERATES

Operating State(s)^[3]

• Although TEAR operates in all six of the states that require it to have a licence, it doesn’t have a licence in SA.
  • Ministry comment: ‘…SA information was delayed due to SA Govt. processing delays, now updated.’
  • And three of its licences are in its former name (changed in 2012).
    • Ministry comment: ‘WA and Qld – we will update when lodging next return. Tasmania now corrected.’
  • The Victorian government’s ‘Fundraiser details’ for TEAR show that all beneficiaries are overseas, which is not the case.
    • Ministry comment: ‘Will check when the next annual renewal is submitted.’
• TEAR has a prominent call for donations on its website. And seeks donations on Donations.com.au, GiveNow.com.au, and via crowdfunding.
  • This is perhaps, depending on the view of the state authorities, another reason for having a fundraising licence in each state.

Operates in (Countries)

• This matches the number mentioned in the Annual Report.

CHARITY’S DOCUMENT (sic)

• An Annual Report/Review can be lodged on the ACNC Register, but TEAR hasn’t done this.
• There is, however, one on the website.

RESPONSIBLE PERSONS

No. of Australian ‘responsible person’ positions^[4]

David Bartlett                                8

Helen Beazley                                1

Joanna Betteridge                         1

Jane Furniss                                   1

Brett Gresham                               1

Elizabeth Hill                                 3

Gregory Manning                         2

Matthew Maury                            1

Peter Noble                                    4

Brooke Prentis                              1

• If it is the same David Bartlett for all eight charities, you may reasonably question how somebody who is a partner in accounting firm and a director of at least one other organization can successfully discharge their fiduciary responsibilities.
  • Ministry comment: ‘ACNC list updated (this is usually done annually when the finance statements are finalised). David Bartlett is no longer a member of the board however he provided insightful and valuable service during his tenure.
    • Reviewer response: It is a legislative requirement to tell the ACNC of any change in responsible persons ‘as soon as you reasonably can’, or within 28 days at the latest.
• There is no listing of the directors on the website.
  • Ministry comment: ‘A full list of directors is contained in the Annual Report, which is loaded on the website. We are investigating listing board members under a separate page.’
• Two people shown in the Annual Report as being part of the board, Mikaela Belling and Elaine Stops, are, in fact, not directors, but observers.
  • Ministry comment: ‘The report notes that they are Associate Board members. However, we have noted to clarify this for 2016 annual report.’
• Under ‘Position’:
  • What is the distinction between ‘Board member’ and ‘Director’?
    • Ministry comment: ‘Will be updated.’

(End of review of the ACNC Register information)

Latest financial report – detail^[5]

Directors’ Report (page 1 of the Financial Report)^[6]  and Auditor’s Independence Declaration…(the fifth page of the Financial Report)

• Neither are required by the ACNC.

What was earned, what was consumed during the year – the Statement of Profit or Loss and The Statement of Comprehensive Income (page 5 of the Financial Report)

• Revenue from Operating Activities $17.80 m (including Note 2)
  • This does not match Note 2; that Note shows that some of this revenue was ‘non-operating’.
    • Ministry comment: ‘Page 8 of 2016 Financial Report now splits Revenue between Operating Activities and Non-Operating Activities.’
  • Donations $11.28 m
    • There is no breakup of this amount, so a match, even at the fundamental level of (a) general giving, monthly giving, and gifts on the website, and (b) the two tax deductible options, is not possible.
  • Legacies and Bequests $505K
    • This means that total donations comprise 66% of revenue.
  • DFAT Grants
    • ‘DFAT’ stands for the Department of Foreign Affairs and Trade, an Australian Government department.
    • This is 31% of revenue.

Expenses

• Employee benefits expense is not disclosed
  • From the AIS 2015 we know that it is $3.16 m
    • Deducting the $642K benefits paid to ‘key management personnel’ (see Note 4, below), and assuming that the other 26 part-timers shown in the AIS 2015 work 50% of full-time, and the 10 casuals work 10%, this represents an average of $55K per employee.
  • Superannuation expense.
• Funds to Overseas Projects $12.51 m
  • There is no disclosure of the destination of this money, so a match to either the countries or the projects shown on the website is not possible.
  • How much of this money is sent directly to ‘partners’, and how much is sent via an intermediary?
  • How do we know that this money got to the destination intended by the donor? This is one of the ‘Frequently Asked Questions’ under www.tear.org.au/about:
    • All projects are audited by independent local auditors and are regularly reviewed by TEAR project workers and finance staff. TEAR is also audited by Saward Dawson registered company auditors and is fully accredited by The Department of Foreign Affairs and Trade (DFAT) which manages the Australian Government’s overseas aid program. TEAR is a signatory to the ACFID (Australian Council for International Development) Code of Conduct, representing our commitment to ethical standards in governance, financial management and public accountability.
      • Let’s look at these one-by-one:
        • ‘audited by independent local auditors’: which auditors? When? For whom do they work? Can a donor see the results?
        • ‘regularly reviewed by TEAR project workers and finance staff’: what is the nature of this review? Can a donor see the results? What is done to counter the effect of self-interest?
        • ‘registered company auditors’: given the limitations of an audit and the extra risk in the audit of payments made to overseas parties, it would be interesting to know how much comfort TEAR can legitimately take from this type of audit.
        • DFAT: a link to their procedures on which TEAR is relying would be helpful. (Do they in fact do any compliance work, especially overseas?)
        • AICD: they do minimal compliance work in Australia, none overseas?
  • When combined with the local projects (see Australian Indigenous Projects, below), this represents 72% of revenue.
    • In order to get anywhere near the 83% claimed on the website, one has to add the $1.13 m of ‘Other Projects Expenses’ (see below). The ‘Projects’ items total 79% of revenue.
• Australian Indigenous Projects $345K
  • Presumably this is the same as the giving option ‘Dhumba’?
• Other Projects Expenses $1.13 m
  • This represents 6.3% of revenue.
  • There is no explanation of what is included in this item.
    • Does it include an allocation of overhead? What are the major components? How much was spent overseas?
    • If this is the same as ‘Program Support Costs’, the Annual Report (page 25) says that these are monitoring and evaluation costs. The other questions above remain.
      • Ministry comment: ‘Other Project Expenses is described in the annual report (which is on the website), rather than in the body of the Financial Report.’
        • Reviewer response: If they are going to make you go elsewhere to find out something reasonably needed for your understanding of the statement, then they should at least provide a link. And if it’s something needed in order to present a true and fair view, then it needs to be within the Financial Report.
• Community Education $1.60 m
  • This represents 9.0% of revenue.
  • There is no explanation of what is included in this item.
    • Education about what?
    • How does this differ from fundraising?
    • Direct costs only, is overhead included?
  • The Annual Report (page 25) says that it includes ‘education staff salaries, advocacy campaigns, and the production and distribution of TEAR’s education resources.’
    • Ministry comment: ‘Community Education is described in the annual report (which is on the website), rather than in the body of the Financial Report.’
      • • Reviewer response: If they are going to make you go elsewhere to find out something reasonably needed for your understanding of the statement, then they should at least provide a link. And if it’s something needed in order to present a true and fair view, then it needs to be within the Financia Report.
• Fundraising – Public $669K
• Fundraising – Government $27K
  • The total of the two types of fundraising represents 3.9% of revenue.
  • Is the second item the cost of getting the government grants? Direct costs only, or is overhead included?
• Administration $1.29 m
  • This represents 7.3% of revenue.
  • Employee benefits expense alone is 2.44 times this figure. What is the relationship between employee benefits expense and all the other significant expenses?
  • So this is not ‘administration’ expense as defined by many other charities. Or as explained by the ACNC:
    • Generally, the ‘administration costs’ of charities are understood to be costs that are not directly incurred by charities in delivering charitable services’.
  • Presumably ‘Administration’ is the same as ‘Accountability and Administration’ in the Annual Report (page 25)?

Essential information to go with the figures – the Notes to Financial Statements…(page 9 of the Financial Report)

• Note 1 Summary of Significant Accounting Policies
  • Basis of Preparation: the type of company and the functional and presentation currency is missing.
    • Ministry comment: ‘Note 1 for 2016 Financial Report includes a reference to presentation currency.’
  • Accounting Policies: Revenue (Note k): This Note is of little help unless one knows whether the DFAT grant is a reciprocal or a non-reciprocal grant.
  • Missing policy Notes:
    • New, revised or amending Accounting Standards
    • Current and non-current classification
    • Trade and other receivables
    • Fair value measurement
      • Ministry comment: ‘2016 financial report Note 1 now has reference to new or amended standards. Auditors have advised TEAR that the rest of Note 1 is compliant with reporting under the general purpose – reduced disclosure requirements and no further adjustment is needed.’
• Note 3 There is no Note 3 in the financial statements.
• Note 15 Reserves: The policy for revaluations is contrary to the Accounting Standards.
  • Ministry comment: ‘Raised with auditors, they can’t see any problem with the Revaluation Reserve policy.
    • Reviewer response: TEAR says that if they deem revaluations to represent profits of a permanent nature, they may be ‘shifted to the statement of profit or loss’. The applicable Accounting Standard though doesn’t permit the wholesale shifting of revaluations based on an assessment of permanency, and certainly not to ‘the statement of profit or loss’. The limited transfers that are allowed go to retained earnings, not profits.
• Note 17 Related Party Transactions: What about loans and receivables between related parties?
• Missing Note: Contingent liabilities (even if there aren’t any).
  • Ministry comment: ‘A note describing Contingent Liabilities is listed in the 2016 Financial Report.’
    

An independent opinion on the financial statement – the Independent Audit Report… (the third last page of the Financial Report)

• This is a ‘clean’ opinion. Read here and here to draw the right conclusions from this.

Membership of accountability organisations claimed

• Under ‘Accreditation and Strategic Alliances’ (under www.tear.org.au/about), five accountability relationships are mentioned:
  • Department of Foreign Affairs and Trade (DFAT)
  • Australian Council for International Development (ACFID).
  • Micah Global, and
  • Integral Alliance
  • Missions Interlink.  Confirmed.
• There’s a fifth shown on page 01 of the Annual Report.
  • Ministry comment: ‘Website is up to date, 2015 annual report is now obviously over a year old (TEAR is no longer a partner with People in Aid Code of Practice, but were a partner when the 2015 annual report was issued).’

(End of review)

1. I am encouraged by TEAR’s ^{own advice}: ‘As donors, Australian Christians have enormous “purchasing power”. We need to be careful that our assumptions don’t drive the way we give; we need to be informed about the issues of development practice and the organisations we give to…’ ↑
2. This is how the ACNC explains ‘impact’: ‘The changes produced in individuals and their communities’. ↑
3. This is how the ACNC explains ‘operating locations’ in their application guide: ‘You need to give details about where in Australia your organisation conducts (or plans to conduct) its activities.’ ↑
4. Because of the possibility of two (or more) directors having the same name on the register of responsible persons, it is not possible to be definitive about the number of directorships held. ↑
5. I use the Pinnacle Financial Statements, respected in the profession as providing a very sound basis for producing compliant financial reports. To this I add an assessment of materiality (both quantitative and qualitative), where the users being considered are donors. ↑
6. Two minor things compared to good practice: the ‘Principal activities’ are not specific to 2015, and the Company Secretary is not identified. ↑