TEAR Australia: charity review

This is an update of the June 2019 review of the charity Tear Australia. The previous review (in black) is used as a base, with comment only if the situation has changed or extra information would be helpful.

COVID-19

[UPDATE] Tear Australia’s comments added 2 October 2019 after they realised that they had missed the offer in June.  Reviewer’s response added the next day.

This is a review in the series ‘Organisations accredited by the CMA Standards Council’. The CMA Standards Council is ‘a ministry of Christian Ministry Advancement’^[1], with a mission “to help build faith and trust in Christian organisations, be they churches, charities, schools or otherwise, to enable them to achieve more effective outcomes^[2]. ‘TEAR Australia’ (TEAR) is one of these accredited organisations.

TEAR is also a Member of the Australian Council for International Development (ACFID). ACFID ‘is the peak body for Australian non government organisations (NGOs) involved in international development and humanitarian action.’ It requires Members to adhere to a Code of Conduct.

TEAR is also a Member of Missions Interlink, Missions Interlink being ‘the Australian network for global mission’^[3]. The review is therefore also a review in the series ‘Members of Missions Interlink.’

Feedback

TEAR says that feedback is essential to their commitment ‘to being shaped by those that are a part of the wider TEAR community’. It also ‘values complaints’.

I sent TEAR a draft of this review on 14 June 2019. They did not respond^[4].

Charity response

We sent TEAR a draft of this review. They responded with some comments and suggested corrections. Apart from one small addition, no other changes were required. After seeing the reviewer’s defence of what he had written in the review, TEAR decided that they did not want to offer any comments for publication.

Donors

TEAR is an organisation that seeks donations online. The charities’ regulator, the ACNC, in their article, Donating to Legitimate Charities, gives “some things to consider to help you make sure your donation is going where it is intended”:

1. Check the charity’s name.
2. Ask for identification from anyone seeking a donation.
3. Be careful of online requests for donations.
4. No tax deduction doesn’t mean the charity is not a legitimate one.
5. Find out more about how the charity says it uses donations.

Here’s the results for ‘TEAR Australia’^[5], with #5 supplemented by the essentials of the ACNC’s What should I consider when deciding which charity to support?^[6].

1.  A search on the ACNC Register of charities for ‘TEAR Australia’ brings up a charity in that name^[7].

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2.  Nothing on the website or in the Annual Report 2017/18 (on the ACNC Register) indicates that TEAR uses professional third-party collectors.

Ministry comment:  “TEAR confirm that third party collectors are not used for fundraising.“

There is nothing on the website to indicate that TEAR collects donations door-to-door or in the street.

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3.  The “web address [link corrected] begins with ‘https’”, and there is “a closed padlock symbol next to the web address in the address bar”, so the website is secure [the ACNC article above].

But on neither the first giving page, nor on the one that follows, is there mention of the security of your information.

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4.  The Australian Business Register (linked from Tear’s ACNC Register record), says that the charity is entitled to receive tax deductible gifts. The donation pages support this.

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5.  The use of your donations

Mission

There is no explicit ‘mission’ on the website, but there is one given in the Annual Report 2017/18 2018/19:

Compare this with the website’s description (here and here) of what they are about:

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Strategies/Activities

From the Directors’ Report in the Financial Report 2018:

Activities: see ‘What we do’ on the website:

TEAR is a supporter of ‘climate justice’:

Page 2 of the Annual Report 2018/19:

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Sharing the Gospel^[8]?

No:

To equate, as TEAR do here, proselytizing with attempts ‘to misuse relief and development activities to manipulate people into the church’ is incorrect^[9].

And even though one of their values is to ‘follow the call of Christ to love our neighbour’, a call that they say allows the people they help ‘to experience the fullness of life that Jesus promises’, their own Christ-centred beliefs say that this ‘fullness of life’ is impossible without being born again’.

This last statement is no longer on the website.

But they say the same thing on the Integral Alliance website:

Their stance on sharing the Gospel is consistent with their belief that the Kingdom can be built, or brought closer, by making the world a fairer and more sustainable place. For a counter to this view, one that is arguably more consistent with what the New Testament says, see, for instance, Frank Viola’s book Insurgence –Reclaiming the Gospel of the Kingdom.

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Locations

TEAR operates in Australia, per the ACNC Register, in every State. And in 19 overseas countries – the Annual Report 2017/18 2018/19 shows that these are the countries in which TEAR has partners (and therefore the countries to which your donations are sent).

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Giving options

• ‘Useful gifts’
  • You send money to buy one or more specified gifts
• ‘Donation’
  • No options given, but a preferred use can be specified.

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Donations received

From the Financial Report 2018 (page 5):

2019:

TEAR says in the Financial Report 2018 (Note 1) that

And a FAQ says that your donations go to either this Fund or TEAR. But this the only information given about this Fund in TEAR’s publications.

‘Overseas development’ is no longer mentioned in the Financial Report.

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Cash spent

The audited account of how donations are used is the Financial Report 2018 on the ACNC Register.

The logo of the auditor, Saward Dawson shares equal prominence – perhaps because it is in colour, greater prominence – to the details of the owner of the Report, TEAR. As the Report belongs to TEAR, and independence of the auditor from the client must be both actual and perceived, this is inappropriate.

This is the only information about where the cash went on operating activities:

^[10]

2019:

TEAR has $7.80 m $7.50 million in cash, cash equivalents and financial assets left over from past revenue (including donations). This includes $1.37 million $1.42 million in shares, a relatively risky investment. No explanation is given for this.

Ministry comment:  “TEAR holds significant funds in local and overseas equities (shares) as part of a diversified portfolio strategy.”

Reviewer’s response:  This does not explain the reason for (a) holding this amount of unspent revenue, or (b) investing much of it in longer-term assets.

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Resources consumed (i.e. accrual)

The accrual section of the Report is more helpful (although not very helpful):

2019:

There is no further information on any of these expenses other than Note 13.

Ministry comment:  “TEAR is a member of the Australian Council for International Development (ACFID), and has displayed financials in the particular format required by ACFID.“

Reviewer’s response:  This format does not prevent TEAR explaining the meaning of the terms (just as they have done in their Annual Report), or from giving information about this spending.

Quite apart from the transparency and accountability beyond the legal minimum that we might reasonably expect of a Christ-led charity, the law trumps ACFID requirements.

None of these terms are defined in the Report. That this is a deficiency of the Report is shown by TEAR’s belief that the definition of the expenses would be required by readers of the same information in the Annual Report 2017/18:

2019: Slightly different format, same information.

From the AIS 2018, ‘Employee expenses’ are 23% of expenses. The average expense per ‘Full-time equivalent staff’ [AIS 2018] is $88K. The average for the ‘key management personnel [Financial Report, page 16] is approximately $105K.

This year, the figures have increased to $98K and $110K.

The website gives this analysis of the expenses:

These percentages do not agree with the published accounts (above): administrative and fundraising have been reversed, and fundraising is 8%, not 7%.

Ministry comment:  “The percentages quoted in “Where your money goes” on the website, refer to TEAR’s 2019 financial year figures. The updated 2019 financial statements will be available on the ACNC shortly.“

The ‘2019 financial year figures’, see below, are not the same as the above figures.

Reviewer’s response: The 2018-19 financial year had not finished when I copied the information from the website.

The fundraising figure here is a percentage of all revenue; when calculated as a percentage of just the revenue from fundraising, the figure rises to 11.3% 12% [Financial Report, page 23 24].

The figures in the above website graphic are now 6% for ‘administrative costs’ (down 1%), 8% for ‘fundraising’ (up 3%), and 86% on the rest. Note that ‘the rest’ includes 14% for ‘Community education’ (see below).

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Community education

12% of the expenses – $1.83 million – is for ‘community education’.

2019: This percentage has increased significantly, from 12% to 14%. Which means less for ‘the field’.

However, this is not something that fits with their description of what they are about (see ‘Mission’, above). Given the strong relationship between awareness raising and the receipt of donations, it would not be unreasonable for you to consider this, or at least a substantial portion on it, as ‘fundraising’. It certainly is more closely aligned with ‘fundraising’ than the pairing that TEAR makes, ‘programs’.

Ministry comment:  “Community Education work comprises Advocacy, The Justice Conference, Church Engagement and Communications (TEAR newsletters around our overseas work). None of these expenses are of a Fundraising nature.”

Reviewer’s response:  I think that the average donor would think that both ‘Church Engagement’ and ‘Communications’ have much to do with ‘maintaining and growing TEAR’s financial support’ (TEAR’s own definition of fundraising, above).

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Destination of the ‘operating cash outflow or ‘Program expenses’

There is no disclosure of the geographical destination of your funds in the Financial Report. The inclusion of this information in the Annual Report 2017/19 is evidence for the need for it in the Financial Report in order to show a true and fair view:

2019:

40% of this money went to local and national partners:

Down slightly in 2019, to 39%:

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How they ensured that the money was used for the purpose for which you gave it

From the FAQs on the website:

• It would be unusual for all projects overseas to be audited: how and when does this happen, and who does it?

Ministry comment:  “All overseas projects are audited by local registered company auditors, as part of TEAR’s commitment to accountability of funds.”

• A review ‘by TEAR project workers’ is after the money is received – what controls are in place to ensure that the money that is sent is received by the person who is to spend it, and that it is spent on what it is meant to be spent on?

Ministry comment:  “TEAR has numerous controls in place to ensure the funds get to where they are meant to and are spent on approved project activities. These include regular financial reports, internal audits, external audits and field visits.”

• It is not TEAR that is audited (‘by registered company auditors’), but its financial statements. There is a big difference. Also, you need to understand the limitations of the usual financial statement audit.

Ministry comment:  “Saward Dawson audit TEAR annually. This audit primarily revolves around the financial statements, however there is also a high level of checking of TEAR systems and processes. TEAR additionally engage Saward Dawson to conduct a rolling three year extended audit of payroll systems, accounts payable systems and partner payments systems.”

• DFAT accreditation confirmed. There is also a re-accreditation process.
• ACFID membership confirmed. The Code is a self-regulatory code. The ACFID does not monitor compliance.

Ministry comment: “ACFID does monitor compliance – please check with ACFID to update your information.” 

Reviewers’ response:  Agreed – ACFID does ‘monitor compliance’.  But not in the way that most people would understand ‘monitoring’.  This is what they say under ‘Compliance with the Code’:

The ‘external verification’ is limited to ‘spot checks’, and it appears that these do not apply to all members each year.

Recent reviews of ACFID members, plus extra compliance checks, by Business by The Book, has shown that non-compliance with the Code, in several areas, is not uncommon.

Here’s the organisations, under the heading ‘Accreditations and Alliances’, on the ‘Accreditations’ page^[11], that are not included above:

• The ACNC – and its charity tick.
  • The tick means (link updated) no more than TEAR is registered (see above), its AIS is not overdue, and the ACNC has not taken any compliance action against it.
  • Because of limited compliance activity by the ACNC, registration does not ensure that the information on the ACNC Register is correct or compliant.
• Integral Alliance
  • Membership confirmed.
  • Members have to comply with quality standards for their relief and development work. Compliance is monitored.
• The CMA Standards Council (CMASC)
  • Accreditation confirmed.
  • This body issues a seal of approval. This does not, however, as TEAR claims in the Annual Report 2017/19 [page 33], ensure that ‘TEAR Australia achieves excellence in the areas of governance, leadership, financial oversight, risk management, transparency and accountability.’ It merely means that they have, at some time in the past, met the bar set by the Council in each of those areas.
• Charter4Change
  • An alliance – no accountability regime.
• Renew Our World
  • An alliance – no accountability regime.
• Micah Global
  • An alliance – no accountability regime.
• Micah Australia:
  • “Micah is a coalition of churches and Christian organisations raising a powerful voice for justice and a world free from poverty.”
  • An alliance – no accountability regime.
• Campaign for Australian Aid
  • An alliance – no accountability regime.
• Missions Interlink
  • Membership confirmed.
  • For one opinion on the strength of this accountability, see the section Activities in this review. (This was the situation in 2015.)

TEAR give insufficient information to give confidence that they are following the ACNC’s advice about payments to overseas:

Ministry comment:  “TEAR complies with all of these ACNC requirements – all of which is verified externally by DFAT’s accreditation process.”

Reviewer’s response:  After the accreditation process, DFAT will only check compliance at re-accreditation.

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Impact

To measure impact one needs a theory of change. TEAR had one. But no longer.

Ministry comment:  “TEAR has a theory of change for both its work in Australia and internationally. They are available on request.”

This diagram, labelled ‘TEAR Australia’s Theory of Change’ is in its Effectiveness Report 2019:

From the FAQs on the website:

In their Effectiveness Report 2017-18, TEAR acknowledge that they had made no systematic study of impact:

This is the opening paragraph on the ‘Scale of Impact’ page in the Effectiveness Report 2019:

This is an example of the reporting that follows:

Please contact me if you need a more in-depth review.

1. Link added by me. ↑
2. Emphasis in original. ↑
3. https://missionsinterlink.org.au/about/ ↑
4. Number 8 of the CMA Standards Council’s ‘Nine Principles of Ministry Accountability‘ is ‘The organisation must be transparent and accountable to its stakeholders’. One of the nine ‘Standards’ that ‘fall under’ that principle is about openness and responsiveness to feedback: With Missions Interlink, both Members and Associates have to accept a set of standards, the introduction to which includes this statement: ↑
5. See here for my last review. ↑
6. Focus on the nature of the charity’s work, its beneficiaries and the impact the charity is having in the community. Is it clear what the charity is trying to achieve and how its activities work towards its objectives? Would you like to spend your money, or time if volunteering, to support these objectives? Is the charity being transparent about its activities? [A section in the article, Donating and Volunteering]. ↑
7. It is a public company, a company limited by guarantee, not as they continue to show on the Australian Business Register, an ‘Other Incorporated Entity’; TEAR has six names registered as business names: Just Women, for Tomorrow, TEAR Fund Australia, The Justice Conference, and TEAR Fund. ↑
8. ‘When Helping Hurts by Brian Fikkert and Steve Corbett says this about sharing the Gospel: ‘A host of contextual issues determine the best manner and the appropriate time to present the gospel verbally, particularly in militant Muslim or Hindu settings. But without such a presentation, it is not possible for people to be personally transformed in all their relationships, which is what poverty alleviation is all about [Kindle Locations 1262-1264, Moody Publishers]. ↑
9. This answer by TEAR could easily be read as a defence against critics who say that they should be sharing the Gospel. But to suggest, in that defence, that a development worker sharing why they are motivated to help (see the footnote to the heading) is being manipulative, is, at best, poor writing, and at worst, mischievous. ↑
10. Although this level of disclosure may be compliant with the letter of the applicable Accounting Standard ( AASB 107), it is not consistent with either the intent of the Standard and paragraphs 14 and 19, or what is reasonable to expect from a major Christ-led charity. ↑
11. There’s also a section with a similar theme on the ‘How Your Money is Used’ page. ↑