24 Feb 2021

Christchurch Foundation under fire over a lack of transparency

7:58 am on 24 February 2021

The charitable trust most notable for helping to raise $11.4 million following the mosque attacks, is in hot water over its finances.

Close-up of New Zealand fifty dollar banknotes

Photo: 123RF

A review ordered by the Christchurch City Council criticised the Christchurch Foundation over a lack of transparency in its financial reporting, and for incurring high costs.

Established in 2017, the foundation paid for its day-to-day operations through a $600,000 a year council grant, something the council had promised to continue doing until 2023, when it expected it to be self-funding.

Wanting to know how it was tracking towards meeting this goal, the council asked accountants Deloitte to review it, including comparing it to similar trusts.

The results did not make encouraging reading.

Stripping out the millions raised following the mosque attacks, in order to provide a valid comparison, for every dollar the foundation raised, it incurred 56 cents in costs.

Compare that to the Auckland Foundation's costs of 22 cents for every dollar raised or Momentum Waikato at 40 cents.

City councillor Yani Johanson said that was a real concern.

"You would expect at the start an organisation would incur some higher costs. But I think what's disappointing is we haven't seen the partnership and collaboration with other organisations in the city to pay for the operational costs."

Johanson questioned why the foundation had spent $430,000 in the last financial year on salaries for three staff and a chief executive.

"I can't comment on individual employment relationships. But as a general principle, what's concerned me for a number of years is the way in which every organisation seems to need a chief executive now, and there seems to be an ever increasing quantum of money going to those at the top, while those at the bottom struggle to get a living wage."

Deloitte noted throughout its review a failure by the foundation to provide it with information on all manner of things, such as what deductions have been made from donations to meet administrative costs, its register for when conflicts of interest happen, and even its general ledger for the past two years to help it compare costs.

Councillor Sam MacDonald said transparency was vital when you were dealing with donated funds and public money.

"With any of this stuff when there is ratepayer money involved, perception is reality, there has to be a real credibility with it. Because, you know, this has still got a couple of years of funding cycles. And as a council when we're trying to make cuts in every other area, we need to be sure that this is delivering value for money."

The Deloitte review said based on the information it had been able to gather, it was not confident the foundation would be able to stand on its own two feet when council support was withdrawn in two years' time.

MacDonald said it was important now that the trust was forthcoming on how it planned to fulfil its promise of bringing large donations in to the city.

"When you're getting funding from the ratepayer, you should be as compliant as possible. Quite simply that there are people out there at the moment really struggling, who are contributing to the rates every week. And this money goes out the door. So there has to be an element of accountability that sits with the foundation on all of this."

Christchurch Foundation chief executive Amy Carter did not respond to RNZ's request for an interview.

But in a statement she came out swinging, saying Deloitte "had little experience reviewing not-for-profits", something she believed required a "specialist skill set".

She said Deloitte "struggled to quantify" the value the trust brought to the city and noted there were no issues raised by its auditors, PWC or the Charities Office.

Carter said they were making great progress in reducing their reliance on the council for funding and for this financial year were asking for $60,000 less from ratepayers.

The future of the council's contribution, and perhaps that of the foundation, would be discussed at a council committee meeting this Thursday.

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