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Speaker: KidsCan comes back

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  • Martin Taylor,

    No mention of the $150,000 VW Touareg leased during the year. Not a good look and certainly makes you wonder about how gold-plated some of the other expenses might be.

    Well done getting this issue aired, both Russell and Rick for a fairly detailed response but, as the comments indicate, still leaves many questions to answer.

    I'm very uneasy about valuing the non-cash aspects of any charity, just as accountants in general are wary of valuing non-cash "revenue" items of any sort. The fact is, every business or charity generates services and benefits that don't have a dollar amount attached but any move by the Charities Commission to allow this kind of reporting would devalue the whole exercise. Better to compare apples with apples and let each charity explain what it does with the money as a separate exercise, not by dubious accounting. I, too, like the idea of the Commission picking out some basic financial ratios from all accounts so we can quickly line them up on key metrics. We all know people have to be paid and events, etc, cost money but let's see how efficiently and prudently the basic enterprise is run.

    I don't have any doubt that the people involved have got into this with good intentions but I personally have an aversion to charities that are run with slick marketing and, in many cases, are designed and packaged from initial concept to appeal to sponsors. I personally always avoid these - kids, cancer, etc - and would only support unpopular causes that don't make for good TV or supermarket labelling. They're probably more likely to squeeze every ounce of value from the few dollars that do come their way.

    Auckland, New Zealand • Since Aug 2009 • 3 posts Report Reply

  • Heather W.,

    I assume it is listed under motor vehicle expenses. The VW Tourareg (for Invitation Only Events) is listed on carjam.co.nz as 2004 model with a Turners valuation of $32805 (slightly less than cost of the total term of lease). The Ford Territory is a 2005 (KidsCan).

    Description under lease and capital commitments

    North Shore • Since Nov 2008 • 189 posts Report Reply

  • Martin Taylor,

    Fair point, that's a bit more reasonable. Looking at the lease cost, it was quite a bit more than that at purchase but still a big discount over new.

    Auckland, New Zealand • Since Aug 2009 • 3 posts Report Reply

  • stephen walker,

    hello Rick,

    thanks for the response to various questions and the overall summary. i hope everyone appreciates all the time and effort you are putting in on a voluntary basis.

    i may have this wrong, but it seems to me that you want people to recognise that you have three kinds of "costs" and three kinds of "revenues".

    costs:
    - admin costs
    - event costs
    - charitable programme delivery costs

    revenues:
    - cash revenue not from the general public that has been received for a specific purpose (usually admin)
    - in-kind revenue, mainly from private companies, that offsets all three kinds of costs
    - cash donated by the general public in the expectation that it will mostly be used for the delivery of charitable programmes

    ok. but. as others have said, the key issue is transparency. where is the revenue coming from and what is it being used for?

    it seems to me that you need to very clearly show a breakdown of costs and revenues divided between:

    - the cost of raising funds (all costs associated with fundraising activities and not charitable programme delivery)

    and

    - the cost of charitable programme delivery. this is key, imo. it can include the goods being distributed and the wages and logistics/infrastructure costs associated with distribution.

    if you can't delineate the fundraising costs from the programme costs in a way that seems reasonable and fair, people are going to be left with lingering doubts about the validity of your model.

    once you have disclosed all your costs and revenues and there is general recognition that the values are reasonable, then the key ratio is ALL money + in-kind goods/services available for (and eventually used for) charitable programme delivery as a percentage of ALL money + in-kind goods/services received.

    IMHO!
    cheers! (sorry, i may have started rambling)

    nagano • Since Nov 2006 • 645 posts Report Reply

  • bronwyn,

    If I'm reading this correctly you have donors who have given $770k to the charity and specifically said "but don't spend it on the kids"

    Not quite - more like "please spend this on making sure you have suitably experienced and professional to run these programmes that are paid at a suitable level so they don't leave after two months because they could get paid more working at a supermarket".

    Thankfully most funders are realising that it's better for them to fund salaries at a reasonable level to attract people who will stay and do a decent job, rather than half fund something and get a shoddy job. Ironically, it's actually much harder to secure funding for staff costs than programme delivery, so irregardless of anything else, it does suggest to me that whoever was dong the fundraising at KidsCan was pretty amazingly good at talking a good game to funders.

    (On a more personal note, it is somewhat daunting to ask whether my contribution will so improve systems that my new organisation could bring in 10 times my salary in donations.)

    Good luck - it's possibly not as daunting as it may seem right now!

    tamaki makaurau • Since Nov 2006 • 86 posts Report Reply

  • martin murphy,

    I dont think this charity is different to many others. They simply dont want to reveal their true efficiencies. NZ law allows this concealment by not requiring this information to be made public under the Charities Act. Ammend the Act and bring NZ into line with other countries. There are 23000+ charities in this country. Even if you assumed each had 5 paid workers, then thats 100,000 people that derive their income from public donations. It is in effect a form of social welfare. How many people realise that the money they receive from the public is TAX FREE. IRD gives them tax free status once registered with the Charities Commission. Keeping this in mind, my view is any charity that is less than 90% efficient is a rip off. FULL DISCLOSURE IS NEEDED NOW.

    Auckland • Since Aug 2009 • 1 posts Report Reply

  • Steve Curtis,

    Bronwyn, youll will find that most funders require you to stick to the letter of your application. So KC will have specifically asked for money for salaries and running costs.
    I checked online for Pelorus Trust who are a pokie trust and they more or less say in general we want to fund programmes not the support staff. They gave $10,000 to KC last year.

    This suggests KC cant hide behind its 'tagged funds' as it would have been the one asking for the limitations

    Auckland • Since Nov 2006 • 314 posts Report Reply

  • bronwyn,

    Steve - I didn't mean to imply that KidsCan were applying for funds for programmes and then were using it for salaries and running costs - I merely meant that as it is so difficult to obtain funding for these, they must have been pretty good at convincing funders to do exactly that.

    tamaki makaurau • Since Nov 2006 • 86 posts Report Reply

  • Glenn Pearce,

    I merely meant that as it is so difficult to obtain funding for these, they must have been pretty good at convincing funders to do exactly that.

    To the tune of $770k in fact, very impressive.

    A quick google and you'll find many many applications and awards from charitable trusts to KC over the last couple of years.
    They seem to all be "for the provision of raincoats and shoes to children".

    I have yet to find one tagged as for the provision of admin costs or salaries.

    Russell - Is Rick likely to respond to any of these questions or has he had his final say on the matter ?

    Auckland • Since Feb 2007 • 504 posts Report Reply

  • Russell Brown,

    UPDATE: The following paragraphs are an update to correct a mis-interpretation by Rick of Oxfam’s figures at http://bit.ly/V1mG4. Rick had assumed that the “where the money goes” table added up to the 78% programme spend referred to at the bottom of the table. Oxfam advises that those figures comprise its entire expenditure and has now updated its website at http://bit.ly/V1mG4 to clarify this.
    ----------------------------

    In looking at Oxfam's figures therefore one needs to go a little deeper than the original blog post. As reported here - http://bit.ly/V1mG4. Those figures indicate:

    Based on its website, Oxfam spends approximately 22% of its revenue on areas not related to its core programme delivery. Of that 22%, 4% is spent on general admin and the rest is spent on investments and getting Oxfam's message out to the public (see http://bit.ly/PjJPN )

    − Of the remaining 78% that the Hard News blog post uses as a comparison, KidsCan takes a different approach to Oxfam. Different charities will take different approaches of course as mentioned above. KidsCan does not include in its programme delivery cost, its costs of raising public awareness, lobbying, research or any costs other than actual delivery of physical products to children throughout New Zealand. In contrast, Oxfam funds a specialist advocacy team and considers its advocacy and awareness raising as part of its core activity. It therefore includes these in its programme delivery percentage..

    − Oxfam received about 55% of its funding from Government or its overseas affiliate sources (the cost of raising those funds would be significantly lower than KidsCan has to spend). For the 2008 year, KidsCan received little Government support other than locally administered community grants ($34,550 in total - part of its tagged funding). Such grants are not easy to obtain, since each is applied for by way of statutory declaration to a local grant board that scrutinises applications and monitors expenses with a great deal of care. The amounts are often very small (a few hundred dollars in many cases). Like other tagged funds however, they are essential to KidsCan’s operations.

    − Both Oxfam and KidsCan have to bear significant costs in the delivery of their programmes because they deliver physical products and services over physical distances, compared to other charities that simply collect funds and pass them on to others.

    Comparison is therefore difficult. But remember KidsCan's other major costs that were not funded by tagged funds were in fundraising and PR – something that a well known, well established and heavily Government supported charity like Oxfam does not need to spend as much on. None of this is a criticism in the slightest of Oxfam or a suggestion that the way in which it presents its figures is better or worse than the way KidsCan does. Oxfam certainly did not ask to be drawn into this comparison and is a well run charity – but, if comparisons are to be made, they need to be carefully drawn.

    Auckland • Since Nov 2006 • 22817 posts Report Reply

  • Elizabeth Sanderson,

    Hi russell - and yet - still NO response re: the Doug Howlett money go round? Also no response re: the fact that the are trying to convince the public to view only certain costs to make their return on investment look better than 18%? No other charity does this.

    Auckalnd • Since Aug 2009 • 14 posts Report Reply

  • Just thinking,

    The Howlett Foundation sounds like community service. Doing good for all the wrong reasons, but still doing some good.

    Is there a Charity Audit Authority, beyond finacial statements? A measure of needs addressed, as opposed to works done(which may not be required).

    Thinking of "Fairtrade" here as well. Moving from a position of slavery into free employment hasn't always had positive outcomes. Sounds wrong, but many ex-slaves are worse off as employees doing piece work, and having to house and feed themselves.

    The all knowning market doesn't often correct itself on moral issues. The immoral price for coco isn't expected to change post-slavery, say Cadbury. Therefore their workers will now be working for the equivilant of slave-wages, otherwise the price must go up.

    They won't be whipped, but they might starve?

    Putaringamotu • Since Apr 2009 • 1158 posts Report Reply

  • Tony Auckram, in reply to Russell Brown,

    Kidscan is in Dunedin tonight collecting 50% of the gold coin donation for Dunedin's Big Night in at our new stadium. My children were recipient's of at least two pairs of shoes Kidscan dish out to low decile schools (as an aside I would dispute the description "quality" shoes in our case as the shoes were very poor quality and fell to pieces within a term. I am surprised I never read any other complaints about the shoes, but I guess its not in the interests of the poor to complain) I was curious to see how Kidscan latest two years of financials compare since their financial controversies of a couple of years ago. Umm! Nice one Kidscan! In the Y/E 31 Dec 2006, 2007 and 2008 one could at least do some simple maths to work out how much they spend on kids compared to the money they gather in. Even if we had to pick through the items scattered in the P&L and add them together. In the Y/E 31 Dec 2009 and the Y/E 31 Dec 2010 Kidscan, coincidently, changed the way they reported their spending. In these last two years their financial reporting has changed somewhat. Gone is the P&L of earlier years with a reasonable detailed breakdown of where money was spent. Now there is almost no information. Check out the Charities Commision website and download the financials for yourself and compare yourself how the information is presented in the last two years compared to 2008 and earlier. If we discount the in-kind spending, which is offset by in-kind donations exactly, all other spending on kids is shown in a single line. If that is to believed now up to now 70% of money raised (2010) is spent on its charitable aims. Big increase from the 25% to 29% calculated my myself and others for the 2006, 2007 and 2008 years. My concern in that case is why Kidscan cannot provide a note to the accounts breaking down their "Costs of programmes for children". It seems to me that the way the accounts were presented from 2009 was a change in accounting policy that should have been noted in the accounts. In fact the auditors should have picked up on it and demanded that the "costs of programmes for children" be unpacked further in the notes to keep the level of financial disclosurer in line with prior year treatments. The audit report loaded in the charities commision website for that 2009 year is unsigned. Was it actually signed off in the end or are we looking at draft accounts here? I would like to see what this "costs of programmes for children" figure is comprised of for the upcoming Y/E 31 Dec 2011 accounts. Its not hard. I would be curious as to what costs they are shoving in this category. Its all very general isn't it? More information please.

    Dunedin • Since Nov 2011 • 1 posts Report Reply

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