.

  • Written by Michelle Cull, Senior Lecturer in Accounting and Financial Planning, Western Sydney University

Few Australian charities have been as high-profile as the White Ribbon organisation. In its stated mission to prevent men’s violence against women, it garnered the support of politicians, sporting champions, celebrities and the general public.

But now White Ribbon Australia has collapsed under the weight of its debts, after losing A$840,000 last financial year. Clearly something went very wrong.


Read more: Celebrity charities just compete with all other charities – so why start one?


Understanding how this could happen is important. We have a collective interest in ensuring charities are run well. Australians donate more than A$12 billion a year to charities and not-for-profit organisations. Donors want their contributions to make a positive difference. It’s important for society that they do.

But too few of us know anything about the inner workings of the organisations to which we donate. We trust regulation to ensure they are well run and spend donations efficiently and effectively.

Accounting experience

Charities are regulated by the Australian Charities and Not-for-profit Commission. It has governance standards that state organisations should be run by “responsible persons” in an “accountable and responsible way”.


Read more: Australian charities are well regulated, but changes are needed to cut red tape


A clear problem with White Ribbon Australia is with how it ensured this at board level. Its directors had relevant skills and qualifications, particularly in social work. But was only a few months ago that it added someone with a strong accounting background – KPMG partner and qualified auditor Julian McPherson.

By comparison, more than a third of directors on the boards of the Australian Securities Exchange’s top 200 companies have accounting and finance backgrounds.

Directors of large listed companies are, of course, usually well paid compared to not-for-profit board members (who may not be paid at all), but White Ribbon Australia still should have recognised the need for certain skills on the board. It might have ticked the box on some diversity criteria but it appeared to have failed on others.

Shuffling deckchairs

It’s important in any organisation to get the balance right between stability and renewal. Changes at the top of White Ribbon Australia could well have contributed to its troubles.

Libby Davies retired in July 2018 after eight years as chief executive. Her replacement, Tracy McLeod Howe, lasted just three months. McLeod Howe’s replacement, Delia Donovan, took over in an acting capacity in November 2018, before being formally appointed in March.

Chairman Nicholas Cowdery meanwhile resigned in October 2018 due to criticism of comments he made about convicted baby killer Keli Lane.

Another director, Dan Gregory, left the board in April 2018, with three new board members – Trish Egan, Sean O'Brien and Vanessa Swan – appointed since December 2017.

While some board refreshment can help provide a new perspective to an organisation, high turnover of board members can signal underlying issues and instability, with a higher risk of poor financial performance and poor management oversight.

Flash over substance

White Ribbon Australia’s annual report was full of pretty pictures and charts but otherwise superficial. There was limited financial disclosure and minimal information within the notes to the financial reports, which were not included in the annual report.

Given this was a relatively large registered charity, with an annual revenue more than A$1 million, the lack of detail was a clear warning sign.

This is confirmed by the audited financial statements the charity was required to lodge with the Australian Charities and Not-for-profits Commission, which can be accessed via the commission’s website. A quick analysis of the income statements reveals:

  • revenue from sales of merchandise (such as white ribbons and wristbands) declined from A$1,197,445 in 2017 to A$723,729 in 2018

  • employee costs jumped from about A$2 million in 2016 to nearly A$4 million in 2018

  • “other expenses” were A$750,000 in 2015, almost A$850,000 in 2017 and more than A$1 million in 2018

  • “other admin expenses” of nearly A$2 million in 2017 and 2018 for which no additional information was available within the notes to the financial statements.

The annual report’s commentary focuses on income and expenditure while neglecting cash flow. But it is cash flow on which an entity usually depends to continue trading. White Ribbon Australia had negative cash flow; it spent more money than what was coming in. Last financial year it borrowed almost A$300,000 to keep operating. This was unsustainable.

Regulatory responsibilities

So all the warning signs were there, for those with the management and accounting knowledge. Leadership was in flux. Some traditional sources of revenue were declining. Expenses were increasing. Reports were light on detail and heavy on pretty graphs and “highlights”. Income and expenditure information was summarised in the form of pie charts, making year-to-year comparisons difficult.

Perhaps the regulator should do more than simply require large charities to lodge financial statements. It could be more prescriptive with the financial disclosures it requires organisations to publish. One suggestion is that organisations produce a one-page “snapshot” document facilitating comparison with other organisations.

Without enough accountability and transparency, we will end up with similar situations.

Michelle Cull has received funding for various research and consultancy projects from the Financial Planning Association of Australia Ltd, UniBank and Wesley Community Services Ltd. She is currently a member of CPA Australia Ltd and the Financial Planning Association of Australia Ltd and sits on the Macarthur Advisory Committee for the Salvation Army Australia.

Ushi Ghoorah has received research grants from the Accounting and Finance Association of Australia and New Zealand (AFAANZ). She is currently an associate member of CPA Australia and is closely involved with CPA Australia's not-for-profit discussion group. Ushi sits on the board of the Australia New Zealand Third Sector Research and is an advisory panel member for the Australian Accounting Standards Board (AASB).

Nicole Ibbett does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Authors: Michelle Cull, Senior Lecturer in Accounting and Financial Planning, Western Sydney University

Read more http://theconversation.com/all-the-signs-were-there-lessons-from-the-collapse-of-white-ribbon-australia-124771

Is your horse normal? Now there’s an app for that

Vet: are you happy? Horse: neigh. evilgurl/Flickr, CC BY-NC-SASince ancient times, horse behaviour, and the bond between horses and humans, has been a source of intrigue and fascination. The horse-l...

Paul McGreevy, Professor of Animal Behaviour and Animal Welfare Science, University of Sydney - avatar Paul McGreevy, Professor of Animal Behaviour and Animal Welfare Science, University of Sydney

Small histories: a road trip reveals local museums stuck in a rut

Berry, and other tourist towns, are out of step with modern museum curation which is trying to include Aboriginal communities and their stories. ShutterstockAboriginal and Torres Strait Islander read...

Jen Saunders, Phd candidate, University of Wollongong - avatar Jen Saunders, Phd candidate, University of Wollongong

Curious Kids: how are stars made?

Stars come into existence because of a powerful force of nature called gravity. ESA/Hubble & NASA, Acknowledgement: Judy SchmidtIf you have a question you’d like an expert to answer, send it...

Orsola De Marco, Astrophysicist , Macquarie University - avatar Orsola De Marco, Astrophysicist , Macquarie University

What is perimenopause and how does it affect women's health in midlife?

Perimenopause lasts months for some women, and years for others. from www.shutterstock.comAll women know to expect the time in life when their periods finish and they reach menopause. Many might even...

Gita Mishra, Professor of Life Course Epidemiology, Faculty of Medicine, The University of Queensland - avatar Gita Mishra, Professor of Life Course Epidemiology, Faculty of Medicine, The University of Queensland

Vital signs. Our compulsory super system is broken. We ought to axe it, or completely reform it

We're taking money from people, letting it fall through the cracks, and spending no less than we were on pensions. ShutterstockThe just-announced inquiry into Australia’s retirement income syste...

Richard Holden, Professor of Economics, UNSW - avatar Richard Holden, Professor of Economics, UNSW

Might consciousness and free will be the aces up our sleeves when it comes to competing with robots?

Our advantage lies in incommensurables, and it'll grow in importance. Franck V. on UnsplashThe rise of artificial intelligence has led to widespread concern about the role of humans in the workplaces ...

Allan McCay, Law Lecturer, University of Sydney - avatar Allan McCay, Law Lecturer, University of Sydney

Should I stay or should I go: how 'city girls' can learn to feel at home in the country

Shutterstock/The ConversationA move to the country is often presented in popular culture as an idyllic life, a place where you can escape the pressures of the city. It’s in television shows su...

Rachael Wallis, Lecturer and Honorary Research Fellow, University of Southern Queensland - avatar Rachael Wallis, Lecturer and Honorary Research Fellow, University of Southern Queensland

Grattan on Friday: Storm clouds avoid the bush, darken over the economy

National Farmers' Federation president Fiona Simson says she doesn't think the government has a drought policy. ShutterstockGovernment sources insist shock jock Alan Jones didn’t drive Thursday&...

Michelle Grattan, Professorial Fellow, University of Canberra - avatar Michelle Grattan, Professorial Fellow, University of Canberra

Julianne Schultz appointed chair of The Conversation

Professor Julianne Schultz AM FAMA has been appointed chair of The Conversation Media Group, following the retirement of Harrison Young. Since becoming chairman in April 2017, Harrison has improved ...

Misha Ketchell, Editor & Executive Director, The Conversation - avatar Misha Ketchell, Editor & Executive Director, The Conversation

Cats are not scared off by dingoes. We must find another way to protect native animals

New research suggests feral cats can probably outsmart dingoes. Wikimedia/AAPFeral cats are wreaking havoc on our native wildlife, eating more than a billion animals across Australia every year. But ...

Bronwyn Fancourt, Adjunct Research Fellow, University of New England - avatar Bronwyn Fancourt, Adjunct Research Fellow, University of New England

Curious Kids: does chewing gum stay inside you for years?

Swallowing a lot of gum can cause it to stick together or stick to food in your gut. www.shuttershock.com, CC BYIf you have a question you’d like an expert to answer, send it to curiouskids@th...

Jerry Zhou, Lecturer, School of Medicine, Western Sydney University - avatar Jerry Zhou, Lecturer, School of Medicine, Western Sydney University

Don't believe your ears: 'enhancing' forensic audio can mislead juries in criminal trials

Audio used as evidence in criminal trials can often be unreliable.  Many criminal trials feature forensic evidence in the form of audio recordings, typically from bugging houses or cars, or intercep...

Helen Fraser, Adjunct Associate Professor, University of New England - avatar Helen Fraser, Adjunct Associate Professor, University of New England

The case for 'inclusion riders' in creative industries: what Australian discrimination law says about quotas

In March last year, Frances McDormand won the Academy Award for Best Actress. In her acceptance speech, she drew attention to the female nominees in the room and left them with two final words: &ldq...

Liam Elphick, Adjunct Research Fellow, Law School, University of Western Australia - avatar Liam Elphick, Adjunct Research Fellow, Law School, University of Western Australia

The Portal review: can meditation change the world?

The Portal uses individual stories of meditative transformation to suggest a bigger change is possible. SuppliedThe Portal follows six individuals who undergo a personal transformation from trauma an...

Peggy Kern, Associate professor, University of Melbourne - avatar Peggy Kern, Associate professor, University of Melbourne

Why white married women are more likely to vote for conservative parties

Women’s perceptions of 'gender linked fate' were contingent on two dimensions: their race and their marital status. ShutterstockThe polls were wrong in the last US and Australian federal electi...

Leah Ruppanner, Associate Professor in Sociology and Co-Director of The Policy Lab, University of Melbourne - avatar Leah Ruppanner, Associate Professor in Sociology and Co-Director of The Policy Lab, University of Melbourne

Thoughts and prayers: miracles, Christianity and praying for rain

In a speech in Albury last month, Prime Minister Scott Morrison told his audience that he was praying for rain in drought-affected areas. “I pray for that rain everywhere else around the count...

Philip C. Almond, Emeritus Professor in the History of Religious Thought, The University of Queensland - avatar Philip C. Almond, Emeritus Professor in the History of Religious Thought, The University of Queensland

Prime Minister's science prizes awarded for algebra expertise, anti-cancer research and excellence in science teaching

Cheryl Praeger was awarded the 2019 Prime Minister’s Prizes for Science. She has spent more than four decades inspiring a love for maths in others, and has created a vast body of academic work i...

Michael Hopkin, Science + Technology Editor, The Conversation - avatar Michael Hopkin, Science + Technology Editor, The Conversation

Curious Kids: is it OK to listen to music while studying?

Does music usually put you in a better mood? That might help you try a little bit harder and stick with challenging tasks. Shutterstock I am in year 11 and I like to listen to music when I am studyin...

Timothy Byron, Lecturer in Psychology, University of Wollongong - avatar Timothy Byron, Lecturer in Psychology, University of Wollongong

A requiem for Reformasi as Joko Widodo unravels Indonesia's democratic legacy

It’s deeply ironic that Indonesia’s third president, BJ Habibie, died on September 11 – less than a week before the national legislature passed a law that gutted the highly-regarded ...

Tim Lindsey, Malcolm Smith Professor of Asian Law and Director of the Centre for Indonesian Law, Islam and Society, University of Melbourne - avatar Tim Lindsey, Malcolm Smith Professor of Asian Law and Director of the Centre for Indonesian Law, Islam and Society, University of Melbourne

Sick and Tired of Your Dead End Job? Try Teaching!

Tired of the same old grind at the office? Want an opportunity to impact lives both in your community and around the world? Do you love to travel and have new experiences? Teaching English is the perfect job for you! All you need is a willingness to ...

News Company - avatar News Company

The Impact of an Aging Population in Australia

There’s an issue on the horizon that Australia needs to prepare for. The portion of elderly citizens that make up the country’s overall population is increasing, and we might not have the infrastructure in place to support this. Australians h...

News Company - avatar News Company

LifeStyle

Questions to ask yourself before buying your watch

There are more and more watches on the market. And more and more brands are trying to seduce consu...

How to Thoroughly Prepare Children for a Professional Photoshoot at a Studio

Children are only young for a moment, which is why, for a lot of parents, it's essential to take a...

What to Expect at the University of Florida Tour

The University of Florida is a dream college for most aspiring students. Not only because of its p...

7 Professions that Will Be Huge in the Next Decade

In order to embark on a career path that requires a lot of training and experience, you might ne...