Happy Naw-Ruz everyone! I hope the new year brings with it joy and success to you all.
At Baha’i Rants, with Naw-Ruz comes the ritual reading of the Canadian funds report as submitted to the Canadian Revenue Agency by the NSA of Canada. Thanks to this government mandated disclosure, Baha’is get a glimpse into the financial workings of their community. Sadly, this is something that would not be possible otherwise since the NSA believes that opacity takes precedence over transparency and have not to this date shared such information with the community at large voluntarily or supplemented the government mandated disclosure with any further information or explanations.
As with last year’s exercise, this one leaves much to be desired. It isn’t difficult to find errors and strange things in the T3010 forms. I encourage you to go to the source and see for yourself at the CRA website.
Just as last year, the total revenue reported by the NSA (or whoever filled out the T3010 on behalf of the NSA) is incorrect. The total revenue line is quite simple to calculate, if you know how to add and read at a rudimentary level.
As the form helpfully says: “Total revenue (add line 4500, 4510 to 4580, and 4600 to 4650)”. If we do so, following that guidance diligently, the amount is $13,539,028. However, the amount reported by the NSA is $14,980,518.
A significant discrepancy of $1,441,490.
|(Statement of Operations)|
|T3010 Line #||Total ($)
|Total eligible amount of all gifts for which the charity issued tax receipts||4500||$7,246,278
|Total amount received from other registered charities (excluding specified gifts and enduring property)||4510||$4,053,205
|Total specified gifts from other registered charities ||4520||
|Total other gifts received for which a tax receipt was not issued by the charity||4530||$1,312,236
|Total interest and investment income received or earned||4580||$2,196,128
|Gross proceeds from disposition of assets||4590||
|Net proceeds from disposition of assets (show a negative amount with brackets)||4600||
|Gross income received from rental of land and/or buildings||4610||$129,254
|Other revenue not already included in the amounts above||4650||$43,417
|Total revenue (add line 4500, 4510 to 4580, and 4600 to 4650)||4700||$14,980,518
Simple arithmetic 2, Treasury Department of the NSA 0. The brutal battle royale continues. Perhaps we should buy the NSA a calculator? or an abacus at least. That should even the odds a bit.
What could possibly explain the $1.4 million discrepancy? I don’t really know but it may have something to do with the $2 million interest and investment income.
I suspect that this amount is also incorrect and that it has lead to the incorrect total revenue amount being reported. By itself it seems beyond belief for three simple and logical reasons. First, we are in a low interest rate environment. Second, I don’t believe that the NSA would jeopardize the funds of the Faith by exposing them to high risk, and therefore, seeking a high return. Third, the total portfolio amount reported is not large enough to provide for such a yield.
Finally, if we are to argue that the $2 million in interest and income derived from investments is a reasonable amount, then we must explain how the NSA’s portfolio did not earn an amount even approaching that sum the previous year.
Last year the NSA reported just $83,700 for the line 4580 “Total interest and investment income received or earned”. So obviously something is amiss.
It would make sense if the $2 million were to be instead disposition of assets. Or a combination of interest and income earned as well as disposition of assets.
Apart from such odd discrepancies, the pattern of donations seems to be holding steady from last year and increasing from prior years.
Assets and Liabilities
The assets of the Baha’i community of Canada have been steadily increasing over the years. In 1996 the liquid assets (excluding capital assets like buildings) were a little over $5 million. In 2010 they were more than $32.5 million.
There was an uncharacteristic decrease in 2004 but once again, I suspect that this is due to an error. Prior to 2004 the NSA had been reporting $12-13 million in “Other Investments” but in 2004 they suddenly reported zero and continued to do so until 2009 when they suddenly reported $4.35 million.
The other interesting thing is that the NSA is reporting $5.2 million in liabilities in 2010. This is the most debt the NSA has reported for more than 15 years. It is probably a mortgage debt related to one or more properties.
I hope that with this warchest, the NSA doesn’t resort to the past manufactured financial crisis situations to motivate Baha’is to donate. Cash or cash equivalents are at $27 million, receivables at more than $1 million and investments at $4.35 million. This year there was a surplus of $2.8 million.
The key question is what is the NSA planning to do with this much money? As the amount grows, so does my concern. This large amount of money coupled with limited or non-existent controls, oversight and disclosure provides for a fertile environment for nasty things to happen. We’ve already seen a financial scandal in Italy. I don’t want to see one in Canada.
As the total amount grows, so does the potential for theft and fraud. As does the challenge of managing the money and providing proper stewardship. Unfortunately, we have no information about who is managing this portfolio for the NSA nor how they are doing so.
Commensurate with the large amounts in question is the imperative for the NSA to give proper account of what exactly its intentions are for the funds and how they are managing them.