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EXCLUSIVE INVESTIGATION

ANTHONY KLAN

The $30 million “charity” Guide Dogs Victoria spends more than twice as much on fundraising than it does delivering guide dogs.

Over the past five years the charity supplied an average of $1.5m of dogs a year, but spent $3.2m a year just on fundraising costs.

Its average expenses were $17.4m a year.

Earlier this month The Klaxon revealed Guide Dogs Victoria had delivered just 35 guide dogs last financial year – the same number as a decade ago – despite its burden on taxpayers surging four-fold.

 

Guide Dogs allocated each year (note FY16 and FY17 figures are extrapolated due to missing data). Source: Guide Dogs Victoria. Graphic: The Klaxon

 

It can now be revealed the charity is delivering thousands of hours a year fewer services, with the total hours of services it is delivering clients having crashed over 25 per cent in the past decade.

The revelations come as Guide Dogs Victoria – facing a major public backlash after we revealed it had supplied just 35 dogs last year – urged the public to look at its “non-dog related” operations.

“Our guide dogs are so important to us and our clients, however, the vast majority of the services that we provide to our clients are specialist allied health and assistive technology services,” its board said in a statement.

The Klaxon has examined the total hours of services it is providing the public – and, compared to guide dogs supplied, the performance is even worse.

The client service hours being provided has not only crashed – with 7,500 fewer hours of services delivered last financial year compared to 2011-12 – but the change is systemic.

In the three years to 2013-14, Guide Dogs Victoria delivered a total of 83,428 client hours, an average of 27,809 hours a year.

Yet in the three years to 2020-21 it delivered a total of 60,527 client hours, an average of 20,176 hours a year – over 25 per cent less.

 

Total hours of services provided to the public each year (no data for FY15-FY17) Source: Guide Dogs Victoria. Graphic: The Klaxon

 

The charity did not publish the data for the 2015 to 2017 financial years and did not explain why.

As previously reported, Guide Dogs Victoria’s reporting becomes more opaque from around 2015, which was also when the board became more “corporatised”.

The Klaxon previously revealed that Guide Dogs Victoria supplying the same number of guide dogs as a decade ago was despite its burden on taxpayers soaring four-fold, its top executive pay more than doubling and its annual donations from the public soaring 110 per cent to $14.84m.

The revelations sparked a major public backlash, including on social media and talkback radio.

In response, the charity’s board on Monday last week released a statement saying it was “bitterly disappointed” about “inaccurate and disrespectful online commentary” regarding the “amazing work” being done by “our dedicated staff, board members and donors”.

“Incorrect assumptions were made about our services, 70% of which are not dog related,” the statement says.

In part one of this investigation The Klaxon revealed the number of clients the charity was servicing was down 25 per cent on a decade earlier.

 

Part one of The Klaxon’s investigation into Guide Dogs Victoria. Source: The Klaxon

 

The total number of hours of services the charity is providing to all its clients is an even better barometer than its number of clients.

It shows the situation is even worse.

Last financial year the charity recorded record revenue of $22.8m.

Of that, $11.06m was “donations and bequests”.

It received $3.9m in government funding for services, up from $1m a decade ago.

 

Australian taxpayers are paying four times the amount for Guide Dogs Victoria’s ongoing operations than they were a decade ago, despite services plummeting. Source: Guide Dogs Victoria. Graphic: The Klaxon

 

Two months

Monday marked two months since it emerged that Hayes had appeared in political advertising material spruiking then Federal Treasurer Josh Frydenberg for re-election.

It is illegal for charities to advocate political candidates or political parties.

That same day the Frydenberg scandal emerged, April 20, Guide Dogs Victoria board announced an “internal investigation”.

A week later, on April 26, it announced Hayes had been “stood down” as CEO.

(Both statements have since been deleted from its website.)

 

The Klaxon’s May 31 report. Source: The Klaxon

 

At the Federal Election, held on May 21, Frydneberg lost his seat and the Federal Coalition was removed from power after nine years.

Just over a week later, on the evening of May 30, The Klaxon sent the board a series of questions about progress of the “investigation” – and whether Hayes remained on full pay.

The following day, both Hayes and the board released statements announcing her “resignation”.

The statements made no mention of the scandal that saw her ousted.

At the time, Guide Dogs Victoria spokesman Tim Lele, from external communications company Keep Left, told The Klaxon the “internal investigation” (launched six weeks earlier) was being conducted by an external party and that it remained ongoing.

The board has repeatedly refused to say when the investigation is expected to be complete, who is conducting it, how much it is expected to cost, and whether its findings will be released publicly.

The Klaxon has repeatedly put written questions to the Guide Dogs Victoria board, such as on May 30 and June 1 (below). It has repeatedly refused to respond.

 

The Klaxon’s questions to the Guide Dogs Victoria Board on May 30 and June 1. The board has not responded.

 

Spendlove

It has also emerged Guide Dogs Victoria acting CEO Charlie Spendlove has had her time in the role cut short by up to six months.

Spendlove, who is head of Marketing and Communications for Guide Dogs Victoria, as well for Guide Dogs NSW/ACT, was appointed acting CEO after Hayes was stood down in April.

Spendlove’s tenure as acting CEO ended abruptly.

 

On May 31, when Hayes announced her “resignation”, a statement from the board said Spendlove, would remain in the acting CEO role “while a recruitment process is undertaken to appoint a new CEO”.

Then, two days later, and without providing any explanation, the board released another statement announcing chair Iain Edwards would instead become acting CEO “while a recruitment process is undertaken to appoint a new CEO”.

The process would take “up to six months”.

That took effect this week and on Monday Edwards became acting CEO and David Cochrane, who had been deputy chair, became acting chair.

Gloss

A forensic analysis of Guide Dogs Victoria’s financial reports by The Klaxon has uncovered some highly concerning findings.

For example, almost one-third of every dollar the charity raises in donations and bequests is immediately soaked up in fundraising expenses.

Its accounts show that in 2020-21 the charity received $11.07m in “fundraising and gift in wills”, of which $3.036m was immediately wiped out by fundraising costs.

(The $3.036m is shown in the accounts as “Expenditure: Fundraising and gift in wills”.)

 

Guide Dogs Victoria raised $11m last year in donations – but $3m of that was immediately soaked up in fundraising costs. Source: Guide Dogs Victoria

 

The Klaxon has been able to ascertain the value of dogs, including guide dogs, that Guide Dogs Victoria supplies each year. (More below)

Last financial year it spent $1.99m providing dogs, against revenue of $22.8m.

Over the past five years, the amount of money the charity spent supplying dogs ($7.5m) was less than one-seventh of the value of donations it received ($55m).

 

Guide Dogs Victoria receives more than seven times more in donations than the amount it spends providing dogs. Source: Guide Dogs Victoria. Graphic: The Klaxon

 

Over the five years the $7.5m it spent supplying dogs represented 8.6% of its expenses ($87m) and 7.2% of its revenue ($22.8m).

In fact, over the past five years, Guide Dogs Victoria spent, on average, over twice as much just on fundraising costs each year than it did supplying dogs – guide dogs or otherwise.

 

Guide Dogs Victoria spends more than twice as much on “fundraising costs” alone than the amount it spends providing dogs. Source: Guide Dogs Victoria. Graphic: The Klaxon

 

The glossy material that accompanies Guide Dogs Victoria’s financial reports suggests it spends far more providing dogs.

It reports a figure called “Cost of dogs and mobility services”.

“Mobility services” includes both services to guide dog users – such as instructing guide dog recipients on how to care for their dogs – and services to non-guide dog users, such as lessons on how to use a white cane or navigate public transport.

For example, in the 2019 financial year, Guide Dogs Victoria reports “Cost of dogs and mobility services” as $10.67m.

Yet our analysis shows that figure lumps in the vast majority of the charity’s burgeoning wages bill.

Last year it had 115 “full-time equivalent” employees.

Over the past decade – despite services slumping over 25 per cent – its wages bill surged 40% to $9.44m.

 

Misleading: Guide Dogs Victoria reports “Cost of dogs and mobility services”. Source: Guide Dogs Victoria

 

Let’s break this down a little further.

In the FY19 (the table above) Guide Dogs Victoria delivered a total of 21,000 “client hours”, which includes all services it provided, both to guide dog users and to all other clients.

The cost of dogs supplied that year was $1.1m.

That leaves $9.67m.

That means delivering those 21,000 “client hours” cost $9.76m – or $465 for every hour.

Much of the four-fold increase in government funding for services the charity has received over the past decade has been delivered under the National Disability Insurance Scheme (NDIS), which started in mid-2013.

 

Backlash

The Klaxon’s revelations just over a week ago sparked a community backlash, including on social media and talkback radio.

On Monday last week the ABC and 7 News each followed the story.

Guide Dogs Victoria’s board has refused to respond to questions from The Klaxon since the scandal broke on April 20.

According to the Guide Dogs Victoria charter, the CEO and chair are responsible for making media comment.

 

 

On Monday last week, the board provided the ABC and 7 News (but not The Klaxon) the statement referred to above.

Attributed to (then) chair Edwards, it includes the following:

“The claims are based on fundamental inaccuracies and misrepresentations of the information we share publicly about our remuneration – such as the figure being quoted as the CEO’s salary, when that figure is not the remuneration of a single Corporate Officer.

“Furthermore, incorrect assumptions were made about our services, 70% of which are not dog related.”

The board did not explain what it meant by “incorrect assumptions made about our services”.

Guide Dogs Victoria has been stating that 70% of its services are “non-dog related” for many years.

(We’re aware of this because, as stated in our earlier expose: “The Klaxon has analysed every document the charity has published over the past ten years”.)

Its 2017-18 annual report states: “70% of our services are non-dog related”.

 

Guide Dogs Victoria’s 2017-18 annual report. Source: Guide Dogs Victoria

 

Covid 

The statement also makes reference to Covid-19.

“The impact of Covid-19 has been very difficult on our operations -it takes two years to breed and train a guide dog – and this year we expect to deliver 39 dogs,” it says.

Why and how Covid-19 impacted on its activities is not stated.

In the 2017-18 and 2018-19 financial years – before Covid-19 – the charity provided fewer hours of client services than it did in 2020-21, the first full year of the Covid-19 pandemic.

In 2017-18 it provided 18,580 total client hours compared to 21,272 hours in 2020-21.

And, as previously revealed, the charity supplied its lowest number of dogs in the 2016 and 2017 financial years.

 

The ABC reports on the Guide Dogs Victoria scandal. Source: ABC

 

Hayes’ Secret Salary

In 2014 Guide Dogs Victoria reported the “total compensation” it paid to “the person” in charge of the company was $298,678 in the financial year.

That person was Hayes.

As previously reported, in later years Guide Dogs Victoria changed the wording to “person(s)”.

That introduced the possibility that the reported payments to “key management personnel” after 2014 also included payments to a person, or people, other than Hayes. (The directors are unpaid).

The compensation to “key management personnel” has grown strongly – but incrementally – since, and last financial year it was $535,000.

The board of Guide Dogs Victoria has steadfastly, over many weeks, refused to respond when asked if that $535,000 includes anyone other than Hayes, and if so who.

 

Guide Dogs Victoria’s board. Source: Guide Dogs Victoria

 

In its statement of Monday last week, the Guide Dogs Victoria board writes:

“The claims are based on fundamental inaccuracies and misrepresentations of the information we share public about our remuneration – such as the figure being quoted as the CEO’s salary, when that figure is not the remuneration of a single Corporate Officer”.

The board provided no more information, failed to define “Corporate Officer” and did not say how many “Corporate Officers” the “key management personnel” figure included, or who they were.

 

 

The Guide Dogs Victoria Board at June 30, 2021. Source: Guide Dogs Victoria

 

Dog’s Breakfast

Last financial year Guide Dogs Victoria bred 140 pups (in FY20 it was 94 and 155 in FY19).

After they’re weaned, the pups are given to volunteers for around a year.

The volunteers must follow strict requirements, such as not leaving the dogs alone for more than three hours at a time.

Guide Dogs Victoria then decides which dogs are suitable to enter its “intensive 20-week guide dog training program”.

Dogs are removed from the program early if it becomes evident they’re not suitable to be guide dogs.

Some of those instead become “therapy” or “companion” dogs.

Guide Dogs Victoria reports that last financial year 67 dogs were “matched with their new handlers”.

They were 35 guide dogs, 19 therapy dogs, 11 dogs to be used as “breeding stock” and 2 “ambassador dogs” (dogs used for marketing).

All guide dogs the charity supplied in Victoria were provided free-of-charge.

It also sells some dogs to its affiliates interstate, and to entities overseas, although in recent years the charity has not clearly reported this information.

 

Guide Dogs Victoria’s FY14 annual report. Source: Guide Dogs Victoria

 

Regardless, it is possible to work out the value of dogs it supplies overall each year.

That’s thanks to esoteric accounting requirements overseen by the Australian Accounting Standards Board (AASB).

One of the three documents Guide Dogs Victoria published last year connected to its annual reporting is its 39-page “Financial Statements”.

Piecing together information spread across three different pages — note “o” on page 16, note “c” on page 11 and “6” on page 21 — reveals that in 2020-21 the charity delivered, in total, dogs worth $1.985m.

On page 16 it states:

 

On page 11 it states:

 

And on page 21 it states:

 

The total value of dogs supplied is the figure called the “value of inventory recognised as an expense” – which in 2020-21 was $1.985m.

Doing the same for every financial year gives us the “total value of dogs supplied” figures shown above.

The actual cost to Guide Dogs Victoria of the dogs it produces could be even less than reported because of the charity’s heavy use of volunteers.

In 20201-21 it reported having 536 volunteers who provided “1.3 million-plus” volunteer hours.

Despite Guide Dogs Victoria spending around just $2m a year of its $22m-odd in annual revenue providing dogs, its fundraising focuses almost exclusively on guide dogs.

In an interview last year, when discussing why donors give money to the charity, Spendlove acknowledged this disconnect.

“We’re reliant on dogs to fundraise for us,” Spendlove told marketing industry publication CMO.

“Their interest is in the dog”.

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