Street Swags To Fight for Lost Donor Funds
22 November 2016 at 11:38 am
Homeless support charity Street Swags – which has signed a voluntary undertaking with the charity regulator over the handling of its finances – said it would fight to recover almost $200,000 in lost donated funds after a company it owned went into liquidation.
Walkabout Beds, which went into liquidation in May 2016 owing more than $261,000, was under the sole directorship of controversial Street Swags founder Jean Madden.
The company collapse occurred around the time Madden was stood down as CEO of the Street Swags over alleged funds mismanagement and before the voluntarily undertaking with the Australian Charities and Not-for-profits Commission (ACNC) was agreed to.
The ACNC found a lack of financial controls and conflict-of-interest policies with the charity.
Insolvency documents show that Street Swags is owed $197,842 by Walkabout Beds. Publicly available financial statements on the ACNC website show the charity had loaned the money to Walkabout Beds in 2015.
The appointed liquidator from Brisbane accounting firm Pilot Partners, Ann Fordyce, confirmed to Pro Bono Australia News that Walkabout Beds had been placed into liquidation and wound up.
“There were insufficient funds… no creditors received any dividends as there were insufficient assets and the company’s affairs have been wound up,” she said.
Street Swags, which has won a number of awards, continues to provide lightweight and waterproof sleeping bags for the homeless across Australia.
Madden, a former Queensland Young Australian of the Year, was charged by Queensland Police over an alleged attack on the organisation’s website and emails in May 2016.
The newly formed Street Swags board director and spokesperson Paul Daly said the charity would seek redress based on a forensic report into the organisation’s finances.
Daly confirmed the charity was named as guarantor for the loan to Walkabout Beds.
“Ultimately we have a responsibility to pursue, to the full extent of our capabilities, to recover the funds. We will be pursuing that but what we have to do first of all is that we have to prove that there has not been any wrongdoing,” Daly told Pro Bono Australia News.
“We have a responsibility to those donors and we are acutely aware of that. On the basis that we can prove that there has been wrongdoing we will pursue it to the fullest capabilities of the law to seek recovery of whatever we can.”
He said the ACNC was fully aware of all the circumstances of the insolvency.
“We have provided them with everything and they are very comfortable with what we have provided,” he said.
Daly agreed the loss of the funds was not good for Street Swags.
“[The loss] hurts any organisation – funds to that level – however our donors have continued to support us. We have held meetings with our major donors and when this happened we did have to go and meet with all our stakeholders,” he said.
“It’s not good for any charitable organisations that this situation arises. But we have to stay true to our charter to provide swags to the homeless… that’s what we do and whilst we have those distractions we can’t be distracted from our charter.
“It has hurt us. We initially lost some support but now we have regained that support because they have been able to see that we have addressed the issue. We are showing good governance… and still getting street swags out to those who need them. We are very fortunate that donors have continued to support us.
“Fortunately we have insurance to cover our legal expenses at the moment and we do get a lot of pro bono support which has been beneficial for us.”
He said charges were yet to be laid.
“Charges are yet to be laid and we have to prove [this] in a court of law… we believe in facts and we believe those facts are strong enough for us to report that to the Queensland police. They have seen fit to pursue that further… as to when and if any charges will be laid rests with the Queensland police,” he said.
“We have a responsibility to all our donors to pursue it to the full extent of our capacity. We are in the hands of the Queensland police and depending on the outcome of that we will determine the course of action going forward.”
According to the ACNC voluntary undertaking, Street Swags has until 24 February 2017 to implement both financial controls and procedures for managing conflicts of interest, as well as produce a 12-month strategy.
ACNC assistant commissioner David Locke said a voluntary undertaking was appropriate when a charity had fully cooperated with an ACNC investigation and had made obvious attempts to comply with their regulations.
“Where appropriate the ACNC works with charities to address concerns and to ensure charities understand and comply with their obligations,” Locke said.
“Our investigation found a lack of financial controls and conflict of interest policies.
“Street Swags has fully cooperated with our investigation. By entering this voluntary undertaking, Street Swags has made a commitment to increased accountability and transparency within the charity.”
Locke said the ACNC would continue to monitor Street Swags’ activities closely.
“If the conditions of this voluntary undertaking are breached, the ACNC will take further action,” he said.
“The ACNC has a range of formal powers it can use, including warnings, directions, removing responsible persons, enforceable undertakings and revocation.”
Street Swags is required to provide the ACNC with any related court decisions or findings relating to the matter.
Street Swags said that the charity had ramped up its production of the swags in recent months and was currently producing 20 swags a day.