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The Australian Navigators Limited: mini charity review

Care:  At least some of the information about this charity is no longer current.  Use the ‘Search charity names’ box to see if there is a later review.  If the latest review has a message like this, you are welcome to make your case for an updated review via email to ted@businessbythebook.com.au.

Mini charity review of The Australian Navigators Limited (AN) as an organisation that seeks donations online, and is subject to the accountability of Missions Interlink. (Including the answers to the questions that the Australian charity regulator, the ACNC, suggests that you ask.)

For the previous review, see here.

Is it responsive to feedback?

  • Yes, very.

Is AN registered?

  • As a charity, yes.
    • As a public company (a company limited by guarantee).
      • Although such a company has members, in the case of AN membership is only open to a ‘staff member’ (someone holding a paid or unpaid staff position).
      • It does not have the necessary provisions in its constitution to permit it to omit ‘Limited/Ltd’ at the end of its name.
  • It has registered the business name Solid Rock Ministries.
  • AN operates, per the ACNC Register, in the Australian Capital Territory, New South Wales, Queensland, Victoria, and Western Australia. It still doesn’t have a fundraising licence in Western Australia, a state that has a licensing regime[1].
    • Apart from exemptions, whether they need a licence in Tasmania and South Australia depends on whether they deem an internet invitation to be ‘fundraising’.

What do they do?

  • See ‘Calling’ on the website:
  • It’s not about 2016 specifically (as the ACNC requires), but the Annual Information Statement (AIS) 2016 says
    • We raise up generations of disciples of Jesus Christ to advance the gospel. We are active in all areas of community including the student, business and military ministry.
      • This is identical to the last two years, so not a good response to the ACNC’s request for 2016’s activities.
      • A description of each of these areas is given on the website under the menu item ‘Communities’.
        • Compare these activities to what your local evangelical church and its members are doing (or at least should be doing).
    • Here’s how ADFA describe what AN does there.
  • AN is part of The Navigators Worldwide Partnership.
  • AN operates, per the ACNC Register, overseas in Indonesia and the United States.
    • You can see which staff work in these two countries in the list of staff (also called ‘members’).

Do they share the Gospel [2]?

  • Yes

What impact are they having?

  • They put stories on their website to illustrate the impact of their work.  I believe the systematic measurement of impact (including scientifically) provides a better guide to impact.

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

  • The expenses are not classified to allow this estimate.

Do they pay their directors?

  • Ministry comment: No we don’t.
  • It’s not prohibited in the constitution.
  • There is no ‘Directors’ fees’ in the expenses.

Can you get a tax deduction?

  • No

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

  • Where Most Needed’
  • ‘Specific Person’
    • 32 named individuals/couples
  • ‘Specific Project’
    • ‘Growing Capacity’
    • ‘ISM Melbourne Ministry’
    • ‘ISM Sydney Ministry’
    • ‘Jephcott’s Car’
    • ‘Keep the Labourers Labouring’
    • ‘Military Ministry’
    • ‘Student Ministry’
      • Apart from the last two, which are two of the ‘communities’ (see above), only ‘Keep the Labourers Labouring’ is explained on the website. (It was a six-week campaign that finished last year.)

Is their online giving secure?

Where were your (net) donations sent?

  • NA – no grants or donations were made.

Is their reporting up-to-date?

  • Yes (six and a half months after year end, two weeks later than last year.)
    • The next financial report is due by 31 December 2017. Before that the financial information on the Register will be up to 18 months out-of-date. You may therefore need to ask for more up-to-date information.

Does their reporting comply with the regulator’s requirements?

  • AIS 2016: No
    • A business name (Solid Rock Ministries) is missing.
    • The ‘Description of charity’s activities and outcomes’
      • is not particularly about what was done in 2016.
      • does not mention outcomes.
    • Some of the ‘Financial Information’ again doesn’t match what is in the Financial Report 2016.
  • Financial Report 2016: No doubt the ACNC would say yes. But
    • Again this year, in the Statement of Profit or Loss and Other Comprehensive Income:
      • An unrealised gain on what appear to be ‘Available for sale’ financial assets has been, contrary to Note 1(e), included in revenue rather than Other Comprehensive Income.
      • There is an expense that is a large proportion of the total yet is unexplained. This year it is 26% for ‘Ministry Expenses & Costs’. AN is a ministry, and everything it does is an expense of ministry, so this title is unhelpful.
      • The income statement has been significantly recast from the one published last year. There is no explanation for this.
      • There is no breakup of ‘Donations Received’ (92% of revenue), so a match, even at the fundamental level of programs versus staff, is not possible.
        • 32 individuals or couples seek money on the website (either via ‘Give’ or via ‘Meet the Staff’.
          • There is no explanation of how this money will be used, nor its relationship to other income they may be receiving.
          • Ministry comment: There is no relationship to other income they may be receiving, except that we allow staff to reduce their salary to take other income, and any other factors, into account. Quite a number do and have a salary less than the maximum.  The maximum salary staff can receive is dependent on their length of service with the Navs – 1-2 years’ service 0.86 of the Australian average weekly wage (AAWW), 3-9 years the AAWW and 10 years + 1.07 of AAWW.   See next point also.
          • We are not told whether the money donated to a person (or couple) goes to AN to offset the benefits AN gives the person, or is just handed on to them.
          • Ministry comment:  It goes to offset their superannuation guarantee costs, their ministry expenses like attending our national conference, a 15% admin fee and their salary.
        • 45 individuals or couples are shown under ‘Meet the Staff’.
          • Why, when they appear to be doing the same work, do 13 staff not qualify for the ‘Give’ button?
        • The AIS 2016 gives the number of employees as 30. How does this relate to the above figures?
        • Ministry comment: Staff for the Navigators can be either paid or unpaid, full time or part time, and some may receive funds to cover ministry expenses only but not receive salary.  You can’t give to staff unless they receive a salary or funds to cover ministry expenses.  The numbers are accurate, so we have 30 employees who receive some salary.
    • The amount of interest received is shown in both the income statement and the Cash Flow Statement even though accrual accounting is used.
    • ‘Other Income’ is a revenue item in the Statement of Profit or Loss…, but is not included in the Note supporting revenue.
    • The foreign currency gain has been classified as ‘Other Comprehensive Income’ in the Statement of Profit or Loss…, but as revenue in the Note giving the breakup of revenue.
    • Again this year, in the Statement of Financial Position:
      • 87% of the $187K liabilities are in one item, the unexplained ‘Ministry Expense Account’.
      • There is no explanation for why $25K is kept in a US bank account.
      • Inventories are stated at cost rather than the required lower of cost or net realisable value.
      • There is no explanation for why a ministry with a $1.72 m turnover would hold 100% of its $807K non-cash funds buffer – if that is what it is – in a moderate to high risk asset class.
        • $807K is an 11% increase on last year.
      • The type of financial assets is not disclosed. (This is even though the types are described in Note 1.)
      • Restricted funds are not disclosed.
    • Again this year, in the Statement of Changes in Equity:
      • ‘Other comprehensive income’ is missing.
    • Again this year, in the Notes to the Financial Statements:
      • Five of the usual policy Notes are missing.
      • Neither commitments nor contingent liabilities are disclosed[3].

What financial situation was shown in that Report?

  • On the assumption that any adjustments required because of what is revealed above will not be large –
  • Last year’s surplus of 13% of revenue was reduced to 5%.
  • While ‘Employee Benefits Expense decreased from 69% of expenses, the unexplained ‘Ministry Expenses & Costs’ increased from 22% to 26%.
  • Short-term structure: current assets are over two times current liabilities.
  • Long-term structure: there are no non-current liabilities but $807K of ‘Financial assets’ (see above).

What did the auditor say about the last financial statements?

  • The auditor, Glenn McEwen, of ThomasGLC, issued a ‘clean’ opinion.
  • When assessing how much comfort to take from this
    • read the ‘Financial Report 2016’ section above, and
    • read here and here.

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

  • Not quite:
  • The business name is missing.

Who are the people controlling the organisation?

  • The people listed under ‘Board of Directors’ on the website.
  • Whether the director is a ‘Member Director’ or a ‘Non-Member Director’ is not disclosed.
  • Which is the same as the list on the ACNC Register (under ‘Responsible Persons’):
  • Members can hold directors accountable. AN include a Directors’ Report in the Financial Report 2016, but the number of members, usually available from that report, is not included.

To whom is AN accountable?

  • Not shown on the internet, but it is a member of Missions Interlink[4].
    • For one view on the strength of this accountability, see the section Activities in this review.
  • As a registered charity, AN is accountable to the ACNC.
  • And to ASIC as a company.

 

 

  1. Last year, they said ‘We are working on these.’ Perhaps they have concluded that they are exempt?
  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. 
  3. 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.
  4. Under a slightly incorrect name.
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