Extract from communication to Club Presidents 17 August 2010
There is considerable confusion within clubs at the moment regarding the situation on ShelterBox and Disaster Aid Australia, particularly in light of the current flood crisis in Pakistan. To help clarify the District's position please see the following points below:
- Like all District Governors in Australia, I am watching the situation closely and this may change. Rotary will normally leave first response to the emergency authorities, our role is in the recovery process.
- The Disaster Aid Australia is, at this time, purely a project of the Rotary Club of Youngtown and may be responded to by clubs as they wish.
- Contributions may be made to Shelterbox in Australia if clubs so desire.
- District Governors will be meeting in Perth in early December on the issues regarding Disaster Aid Australia and Shelterbox in Australia and hopefully a united response will result in one or other or both projects being supported by Rotary in Australia.
- Until after this meeting there will be no District position on supporting either project, it is entirely up to the individual clubs who they support.
Best wishes, Ted
District Governor 2010-2011
Communication to Clubs from DG Ian Shuey 23 June 2010
Dear Rotarians of D9830,
I have had a few requests for a little more background to the reasons behind the recent termination of the Affiliation Agreement between ShelterBox Trust UK (SBTUK) and ShelterBox Australia Ltd (SBA), a project of RC Endeavour Hills in D9820. The issues are quite complex and I again stress that there has been no allegation or indeed any evidence of any financial impropriety by either party to the dispute. This topic has been extensively debated by all District Governors throughout Zone 8 [the 23 Australian Districts] over the past 3 months.
Before summarising the background, would you please note that as of 11 Apr, SBA have advised that they will disengage from SBTUK without contesting any issues and remit all funds withheld since 1 February 2010 to SBTUK, less the agreed 10% for administrative management expenses. This is expected to be finalised by the end of this month.
Although the issues do differ in interpretation by both parties in several instances, I offer the following key points:
- For several months, SBA have been asking SBTUK to clarify the costing behind each Shelter Box and how the funds remitted from Australia are applied. The article in the March issue of RDU authored by SBA outlined their concerns and was written and submitted before the SBTUK advice on financial transparency was received.
- A key aspect behind this need for financial transparency has been SBA’s recent recognition as a Deductible Gift Recipient (DGR) organisation for tax deductibility from individual and corporate donors. As part of their DGR status, SBA were obligated to be able to be quite specific in advising how and where donations were being applied. They felt that they could not adequately define this without increased financial transparency on cost and disbursement of funds etc from SBTUK. SBA took legal advice that to continue to remit funds without having better financial transparency would be in breach of their responsibilities. That was behind their decision to withhold remittance of funds received from Australian donors from 1 February 2010.
- The SBA request for additional information from SBTUK to help them discharge their responsibilities was seen by many as a quite reasonable request. Although there was a fair amount of “to and fro” on this over the last several months, the recent advice provided by SBTUK seemed to adequately address this question. But SBA decided that this was not the case to the degree they wished and continued in their refusal to remit the funds without the direction of the original donors.
- At the same time much of this ongoing exchange was in play, SBA researched an alternate product line and distribution system. Their intention was to use their recently acquired DGR status and its attendant capability to be able to engage with AusAid to improve disaster relief operations funded by Rotary out of Australia.
- As this dispute was reaching an impasse around three months ago, SBTUK issued SBA with a deadline to continue to remit funds in accordance with the Affiliation Agreement (more a broadly based Memorandum of Understanding) or they would cease to use them as the Australian Affiliate of SBTUK for ShelterBox operations in Australia. SBA felt that any deadlines were unreasonable and asked that those deadlines be removed to allow continued time for negotiations. SBTUK declined to do so and SBA remained steadfast in their refusal to remit the withheld funds. As a result, SBTUK decided to terminate the Affiliation Agreement with SBA as of midnight 30 March 2010.
- SBTUK are now looking at alternate arrangements to have an Australian Affiliate in play sooner rather than later. However, they have yet to formally acknowledge the need that any such arrangements must be made in close consultation with the Australian DGs of the day. We are hoping this consultation will occur before any arrangements are proposed and subsequently put in place.
- It should also be noted that although SBTUK refer to ShelterBox as a “Global Rotary Club Project”, this branding has yet to be agreed with Rotary International (RI) in any formal sense. Accordingly, ShelterBox remains just another humanitarian aid program for consideration by Clubs, Rotarians and their supporters.
- RC Endeavour Hills have elected to remain in the Disaster relief business as a Club project and will develop a project designed to acquire and promote a range of disaster relief products that can be sourced and dispatched from Australia. Their new corporate structure is called Disaster Aid Australia and remains a Club project within D9820. [Please note there are a number of businesses associated with Rotary Clubs throughout Australia which rely on Rotary to finance and promote, so Shelterbox is not unique in this sense.
- In the meantime, it would be folly to actively promote ShelterBox and/or Disaster Aid Australia until the above issues are resolved. My deep concern remains that any new ShelterBox Australia Affiliate and the newly-established Disaster Aid Australia will be competing organisations operating outside the Rotary framework as an authorised RI program. A similar calamity could occur with either of the new entities in the future.
- Should a major natural disaster occur before then Ted Richey as DG for 2010-11 will suggest to Clubs what response options they might take to solicit and donate funds to assist in any way possible. I would repeat my advice from an earlier email and recommend that Club funds can always be provided to the Rotary Foundation and they will be able to apply them to post disaster projects.
- I have often noted that we are not in the business of “first response” for disasters although I acknowledge we can and do provide significant and timely levels of support. Rotary’s primary role is in the medium to long term and that is where I encourage resource usage. This has certainly been the situation with our well-supported Victorian Bushfire Appeal, the Samoan Appeal and the recent Haiti Appeal.
I hope that these points provide additional background for you to better understand the core issues.
Yours in Rotary,
Ian Shuey [Elizabeth]
District Governor 2009-10
Rotary International District 9830 Inc.
Rotary Club of Hobart.
23 June 2010