NSA of Canada Funds Report for 2010

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.

Revenues
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)
Revenue:
T3010 Line #Total ($)
Total eligible amount of all gifts for which the charity issued tax receipts4500$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 charity4530$1,312,236
Total interest and investment income received or earned4580$2,196,128
Gross proceeds from disposition of assets4590
Net proceeds from disposition of assets (show a negative amount with brackets)4600
Gross income received from rental of land and/or buildings4610$129,254
Other revenue not already included in the amounts above4650$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.

NSA Canada assets chart

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.

  • David

    You’re making the same mistake you did when you tried to make a similar argument last year. When the form says, for example, to add lines “4510 to 4580″, it does not mean ‘add 4510 *and* 4580′, it means ‘add 4510 *through* 4580.’ When you follow the direction correctly the total comes out exactly as reported. You’ll notice your purported discrepancy of $1,441,490 is the total of 4530 and 4610 (1,312,236 + 129,254 = 1,441,490).

  • Anonymous

    David, thanks for pointing that out (again). Boy… [sigh] I can’t believe I made that mistake twice. I’ll go flagellate myself with ramen noodles now. Any other mistakes? I guess I’m a glutton for punishment.

  • http://www.bahairants.com Baquia

    David, thanks for pointing that out (again). Boy… [sigh] I can’t believe I made that mistake twice. I’ll go flagellate myself with ramen noodles now. Any other mistakes? I guess I’m a glutton for punishment.

  • Bird

    To error is human Baquia. I adore your efforts and appreciate them dearly. Don’t loose sight of the content of your blog, investment return, that is huge, and the growing capital, huge, what are the Bahai’s saving for? 40M in assets? Sounds like either an Ex-Enron employee is cooking the books or they have an FA as smart as Warren Buffett ~ maybe? Something else may be the currency, the loonie, has gained strength substantially in Canada and they are wiser consumers in the sense they want to lower thier debit rather then raise it. They may have just cashed in some of thier coins here in the old USA to have made that gain.

  • randy burns

    Is it possible that the above report is on a “calendar year basis” while reports to the community are on a “Bahai year basis?” I know that in the US reporting is from Ridzvan to Ridzvan.

    Cheers, Randy

  • Baquia

    Bird, even without that discrepancy which was an error on my part (I have no qualms to admit) there are so many strange things in the report that raise questions.

    Also curious is that this information is NOT shared with the community at large. In the intermittent letters and news Baha’is get through official channels like Baha’i Canada magazine, the only thing that is provided is the donations received. Not how much assets there are, not the total donations received, not what these funds are used for or how they are managed, etc.

  • Anonymous

    Randy, the fiscal year for the NSA does correspond to the Baha’i calendar while their reporting to the CRA has to conform to the tax year. That however would not create any discrepancy nor would it make things appear/disappear out of the air.

    The asset side of the financial report is never reported to the community. The expenses and the fwd’ing of the donations (for example to Haifa or other countries) are likewise never reported. The only thing that is released to the community by the NSA is a partial reporting of donations received.

    And as you’d imagine, when there is zero communication regarding the asset figures, there is also nothing about who or how the assets are managed or what steps are being taken to provide for proper stewardship.

    This is a very important issue since assets per capita (of Baha’is) has been growing very rapidly. Don’t get me wrong, I think this is wonderful. I’m glad to see the community being this wealthy.

    However, with this comes great responsibility, as you’d imagine. Not only responsibility towards its management but also ultimately its use. How are we going to use these resources? where can we spend them to get the most benefit? these and other similar questions need to be part of the national consultation.

    Rather difficult to have such consultation when the NSA insists on opacity and non-disclosure. The first ingredient of any productive consultation is information. I’m saddened that the NSA has consistently refused to communicate with the community at large – the very same that provided these assets to begin with! – and treat them like adults.

    As Shoghi Effendi wrote:

    The duties of those whom the friends [Bahá'ís] have freely and conscientiously elected as their representatives are no less vital and binding than the obligations of those who have chosen them. Their function is not to dictate, but to consult, and consult not only among themselves, but as much as possible with the friends whom they represent. They must regard themselves in no other light but that of chosen instruments for a more efficient and dignified presentation of the Cause of God. They should never be led to suppose that they are the central ornaments of the body of the Cause, intrinsically superior to others in capacity or merit, and sole promoters of its teachings and principles. They should approach their task with extreme humility, and endeavour by their open-mindedness, their high sense of justice and duty, their candour, their modesty, their entire devotion to the welfare and interests of the friends, the Cause, and humanity, to win not only the confidence and the genuine support and respect of those whom they should serve, but also their esteem and real affection. They must at all times avoid the spirit of exclusiveness, the atmosphere of secrecy, free themselves from a domineering attitude, and banish all forms of prejudice and passion from their deliberations. They should, within the limits of wise discretion, take the friends into their confidence, acquaint them with their plans, share with them their problems and anxieties, and seek their advice and counsel. And when they are called upon to arrive at a certain decision, they should, after dispassionate, anxious, and cordial consultation, turn to God in prayer, and with earnestness and conviction and courage record their vote and abide by the voice of the majority, which we are told by our Master to be the voice of truth, never to be challenged, and always to be whole-heartedly enforced. To this voice the friends must heartily respond, and regard it as the only means that can ensure the protection and advancement of the Cause.
    (23 February 1924 to the Bahá’ís of America, published in “Bahá’í Administration”, p. 64)

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