Over in South Australia the Deaf community is battling to save the iconic 262 building that has been their home since the 1920s. Regular readers of The Rebuttal will know that the South Australian Deaf community has been fighting hard to save their spiritual and community home. As it was pointed out in the Rebuttal’s last article the Deaf community received an offer to take over the building and the cost of its maintenance. The offer essentially meant that the Deaf community could remain at the building and retain its long association and history with it. However, the powers that be have rejected the offer.

The reasons for the rejection are not entirely clear.  They have e-mailed Deaf Sport recreation South Australia to explain their decision. Typically the powers that be have hidden behind legal jargon to explain the rejection of the offer. They have used terms like “Not viable” – “Not in line with the constitution” – “Needing to follow the Corporations Act to protect the interest of the Deaf Society.” – “Needing to ensure support is available to those deaf in need.” Despite the use of fancy legal terms the Deaf community are really none the wiser as to the reason behind the rejection. One suspects that the offer was rejected simply because it was not going to provide immediate access to liquid capital. In other words CASH! Or perhaps my cynicism knows no bounds.

I received the most extraordinary email out of the blue on Monday. The email was from a person who wished to remain anonymous. With the email were a number of attachments, 12 attachments in fact. The attachments provided a poignant insight into the history of the 262 saga. I have sought in this article to summarise some of the information that has been divulged. It does not make for pretty reading.

The documents received suggest that a combination of ill thought out business ventures, falling Government funding and falling fundraising revenue led to cash flow difficulties. Because the kitty was bare the Royal South Australian Deaf Society was in grave danger of keeling over. To prevent this from happening the Royal South Australian Deaf Society approached Townsend House for assistance. This was in 2007. (The Royal South Australian Deaf Society is now known as Deaf Can Do. For the purpose of continuity we have used the name Royal south Australian Deaf Society throughout this article.)

It is important to realise that organisations like the Royal South Australian Deaf Society do not always have a lot of cash assets. Often assets are tied up in investments like shares or property. When such organisations make substantial losses they often liquidate their assets to pay off the losses.

This might involve the selling of shares or of property. In this way cash is raised and losses are covered. The problem is that when assets are constantly liquidated eventually there are no assets left. The farm gets sold off, so to speak. It is clear from the documents that were emailed to me that this is gradually what happened to the Royal South Australian Deaf Society.

Fundraising is not always about asking for money through telemarketing, bequests, rattling tin cans or through raffles, although these are important strategies. Fundraising also can involve embarking on business initiatives.

This might be the renting out of office space. It may involve setting up a business arm to make profits. Such profits can then be channelled back into the organisation. This is where we get the term “Not for Profit” organisation. Not for Profit Organisations can make a profit but this profit must be used by the organisation for its services and running costs. Many organisations, including The Royal South Australian Deaf Society, have a combination of fundraising that involves the traditional and business approaches. (They also often receive Government funding for services.)

Traditional fundraising is always a bit of a hit and miss. The author of the documents that were emailed believes that fundraising for the Royal South Australian Deaf Society was and is not particularly effective. The documents suggest that fundraising income for the Royal South Australian Deaf Society between 2009 and 2012 increased by 37.5%. One might see that as a success but it seems that the cost to implement this fundraising increased by a whopping 170% in the same period.

What this means is that money raised from this fundraising has been minimal. Certainly any minimal gains that were obtained went straight to paying the bills. Very little of this money would have gone directly to the Deaf community.

In an attempt to address the shortfall in fundraising dollars the Royal South Australian Deaf Society embarked on an aggressive “diversification” strategy. This involved the establishment of what would hopefully become income-generating businesses. There was an attempt to run a second-hand clothing business. This was abandoned after a period of time, presumably because it was not profitable. By far the biggest outlay was on the audiology business that is now known as Can Do Hearing.

The documents received indicate that expenses at the Royal South Australian Deaf Society increased almost 45% between 2004 and 2006. The increase in expenditure was in the vicinity of $1m. The documents received allude that much of this increased expenditure can be attributed to the establishment of the audiology business. Returns from the business were not immediate. This is not unusual because often a new business needs time before it becomes profitable. The lack of immediate return for the investment meant that the Royal South Australian Deaf Society had significant cash flow problems. As the result of these cash flow problems the Royal South Australian Deaf Society turned to Townsend House for assistance.

We are now at 2007. Around mid 2007 the Royal South Australian Deaf Society held a community forum. The community forum had the purpose of informing the Deaf community of the financial situation and also outlined how Townsend House would assist. It seems that the severe shortage of cash, rapidly decreasing traditional fundraising returns and the rapid erosion of investments left the Royal South Australian Deaf Society with little option but to cry for help. Townsend House responded to the cry for help.

The ‘help’ was described at the time as a ‘PARTNERSHIP’.  Many were skeptical and saw it as an outright takeover that gave Townsend House virtually full control of the Royal South Australian Deaf Society.

Over the years the management of the Royal South Australian Deaf Society have tried to justify the decisions that they have made. However some of the arguments that they have used over the years do not stand up to scrutiny.

The Partnership

Consistently the relationship between Townsend House and the Royal South Australian Deaf Society was described as a partnership. This ‘PARTNERSHIP’ was to protect the financial viability of the Royal South Australian Deaf Society and secure the future of 262.

The author of the documents that were received believes that any suggestion that Townsend House and the Royal South Australian Deaf Society had entered into a ‘PARTNERSHIP’ is misleading. A number of reasons for this were outlined by the author. I have paraphrased these arguments below:

•         The ‘Partnership’ between Royal South Australian Deaf Society and Townsend House meant that the Royal South Australian Deaf Society became a “controlled entity” of Townsend House. In other words the power to decide the future of the Royal South Australian Deaf society was solely with the management of Townsend House. Townsend House can and do control the financial and operating policies of The Royal South Australian Deaf Society and get benefits for Townsend House from the things the Royal South Australian Deaf Society does.

•         It also means that Townsend House essentially owns and controls all Royal Soth Australian Deaf Society services and assets, including 262 South Terrace, Adelaide.

•         Though Royal South Australian Deaf Society financial performance did improve just after the 2007 takeover, big operating losses over the past two years have again put them in a perilous and declining financial position.

•        In 2012, 5 years after promising to “save” 262, the ‘PARTNERSHIP’ announced that they could no longer afford to keep the 262 property and needed to put it up for sale.

•        Today, just 6 years after the 2007 takeover, the Royal South Australian Deaf Society is again on the brink of financial collapse – and the 262 heritage property is to be sold!

The Gift

In 2012 the Royal South Australian Deaf Society offered the 262 building to the Deaf community, through Deaf Sport and Recreation South Australia. The condition of the gift was that they had to prove that they had the ability to look after and maintain the building.

The author of the documents that were emailed believes that the GIFT was never a serious offer. There are a number of reasons or this:

•         If the Royal South Australian Deaf Society with all the money it receives from Government funding grants, the money it makes from services and the profits it makes from the audiology business could not afford the up keep of 262. HOW then could Deaf Sport Recreation South Australia, who have virtually no assets, do so? For this reason alone the conditions of the GIFT were never viable. The management of the Royal South Australian Deaf Society would have known this from the onset.

•         One of the conditions of the GIFT was that the Deaf community were not allowed to set up services at 262 that might be seen as competition for the Royal South Australian Deaf Society. This effectively cut off many viable alternatives to raise money for the up-keep of 262. The management of the Royal South Australian Deaf Society would have been well aware of this.

•         The Royal South Australian Deaf Society is effectively broke and has had to borrow a large amount of money from Townsend House. The sale of 262 would inevitably be seen as the easy and obvious way to pay back these loans to Townsend House.

•         It seems is highly unlikely that the management of the Royal South Australian Deaf Society could ever have truly believed the 262 property would be gifted to the Deaf community.  Selling 262 is clearly the easy solution that will allow Townsend House to recoup the money that they have loaned.

SURVIVAL

The management of the Royal South Australian Deaf Society will have us believe that to continue to provide services to the Deaf community it is important that the Royal South Australian Deaf Society survives.

The author of the documents believes that this line of argument is being used to scare the Deaf community and make them toe the line. The reality is:

•         The Management of the Royal South Australian Deaf Society is using “the best interests of The Royal South Australian Deaf Society” argument as an excuse for selling 262.

•         Townsend House has full control of the Royal South Australian Deaf Society. Any decisions that they make are therefore more likely to be made because they are seen as beneficial to Townsend House. The needs of the Deaf community are not the priority.

•         The management of the Royal South Australian Deaf Society argue that if 262 is not sold services will be lost. This is misleading because even if the Royal South Australian Deaf Society closes Townsend House still has full control over the services funding and the audiology business. Services will continue regardless as to whether 262 is old or not.

•        The reality is that the sale of 262 is more about recouping money loaned than it is about the future of the Royal South Australian Deaf Society and its services.

As it stands the Deaf community home at 262 is on the cusp of being sold. The sale will mean that the Deaf community will have lost its last ongoing and enduring asset. Let’s be clear 262 was established for the Deaf community and therefore any profits that are made from it, including its potential sale, should be channeled back to and controlled by the Deaf community.

This is unlikely to happen because the Deaf community has been totally disenfranchised from the running and control of assets that were established for their benefit. The author of the documents is at pains to point this out. The author has highlighted the fact that the Deaf community has no membership whatsoever to the Royal South Australian Deaf Society. In fact the Royal South Australian Deaf Society has a “closed” membership and is controlled by 8 hearing people who are its sole members. These 8 people have total control of the Royal South Australian Deaf Society and the future of 262.

What is worse is that the constitution that has been adopted for the Royal South Australian Deaf Society effectively prevents Deaf people from becoming members. In fact the whole constitution can be changed at the whim of the 8 people who are deemed as members and without consultation. It is a terrible situation. Essentially it means the Deaf community and Deaf people have no control at all over the future of the institutions and assets that were originally established for their benefit.

THIS IS THE REALITY. The Deaf community is about to lose its last and only asset. It is an asset that was established for THEIR BENEFIT. Not only that, any control that they had over this asset has been totally wrested from them.

As it stands there are currently two options. The first option is an offer from a not for profit housing group known as Development Partnership Proposal. This group have, according to the author of the documents received, “ ..provided the requisite financial support for Deaf Sport Recreation South Australia to operate, maintain and sustain the building both in the short-medium term and the longer-term. The Development Partnership Proposal also delivered a viable and sustainable solution that from Day one released the ‘PARTNERSHIP’ from any future property cost responsibilities, provided a $1M windfall profit after five or so years and preserved the 262 heritage building for the Deaf Community into perpetuity.”  Presumably some of this profit could have been channeled towards paying off money that Townsend House has put into the running of the Royal South Australian Deaf Society in the last few years.

It is alleged that Townsend House has received an offer to buy 262. It is believed that this offer is in the vicinity of $3-4 million. I stress that this is the allegation and that no evidence of the allegation has been provided. It is believed that the Townsend House are committed to the sale. This is despite the viable business proposition of the Development Partnership Proposal that is preferred by the Deaf community. Exactly what Townsend House will do with the money raised from any sale to ensure the long term future of the South Australian Deaf community remains unknown at this stage. (Townsend House will argue that it is Deaf Can Do that is making the decisions. The reality is that it is Townsend house in control.)

It seems inevitable that 262 is going to be sold. This will be a sad day for the Deaf community. The decision is particularly hard to stomach in light of the offer from the Development Partnership Proposal that is the Deaf communities preferred option.

All we can do is wait and hope that Townsend House does the right thing. We can but hope that any profits that are made from a sale are channeled back to the long term benefit of the Deaf community and CONTROLLED by the Deaf community.

Given developments that have occurred to date – That does not seem likely – Does it?