Auditors question future of SA charity responsible for new eating disorder service
Breakthrough Mental Health Research Foundation has reported a "deficit in equity" of nearly $2 million, according to documents filed in June with the Australian Charities and Not-for-profits Commission (ACNC).
Independent auditors concluded there was "material uncertainty" that may cast "significant doubt" over the charity's ability to continue operating.
But Breakthrough said it was confident it would remain afloat — and expected its financial position to improve once work began on the new eating disorder facility.
SA Health has confirmed it is in ongoing discussions with Breakthrough about its financial situation.
Work on the centre, located at the Repat Health Precinct, was slated to begin in mid-2025 and take 18 months to complete — but it has not yet started.
The new statewide eating disorder service was first announced in 2019 as a $7.1 million facility, with the former federal Liberal government to contribute $5 million and Breakthrough to fundraise the remainder.
The project, led by Breakthrough, would be delivered in collaboration with SA Health and Flinders University and include a five-bed residential unit, day program and outpatient clinics.
But it stalled for five years until the current federal and state governments each contributed another $2.5 million in December 2024, taking the total budget to $12.1 million.
The top-up came six months after auditors first flagged concerns over Breakthrough's financial position, mentioned in the previous year's audit.
In 2019, as part of its $2.1 million contribution to the project, Breakthrough announced it had secured a $500,000 donation from mental health and wellbeing charity the Fay Fuller Foundation.
However, the foundation has confirmed it did not go ahead with the donation — and its formal involvement in the project ended in 2022.
A Fay Fuller Foundation spokesperson did not address questions about why the funding was withdrawn.
A Breakthrough spokesperson said the charity was "comfortable that interest is sufficient to meet its fundraising contribution towards the project".
At the end of last year, Breakthrough reported a deficit in equity of $1.94 million, meaning the charity would be short by that amount when repaying its debts if it collapsed.
It also has a fully drawn $1.59 million loan from the Flinders Foundation.
Breakthrough, which was paid the initial $5 million in government funding in 2022, reported $5.53 million in "total current assets".
The charity's spokesperson said accounting regulations meant the $5 million in government funding is currently classed as a deficiency — but it would "become positive" once work on the eating disorder service began.
He said Breakthrough, as a start-up organisation, had for several years paid out more in grant funding than it received in operating income.
Asked about the loan, he said the Flinders Foundation, which founded Breakthrough in 2020, seeded it with cash to invest in its growth and development.
"Breakthrough has met its commitments under the loan arrangement to date, and makes provisions for all future payments," he said.
Breakthrough also plans to recover costs through a 40-year lease that will require SA Health to pay rent on the centre — despite taxpayers contributing $10 million for its construction.
In a statement, a SA Health spokesperson said the department would not pay market rent for the site.
It is understood, under the arrangement, Breakthrough would receive reimbursement for operating expenses such as maintenance and security.
Following initial inquiries from the ABC, made in July, the SA Health spokesperson said standard measures were in place to manage "scenarios where project requirements are not able to be upheld".
But she said Breakthrough had not flagged any issues.
"We are in regular communication with Breakthrough Mental Health Research Foundation and we're not aware of any issues with respect to Breakthrough's financial position," she said.
In an updated statement, provided on Friday, SA Health said it was now looking into Breakthrough's financial position.
"Since the previous statement provided to the ABC … the Department for Health and Wellbeing and the Southern Adelaide Local Health Network have been in discussions with both the Flinders Foundation and Breakthrough to further understand their financial position and these discussions are ongoing," the spokesperson said.
Health Minister Chris Picton said the government was committed to the delivery of the service.
In a statement, a spokesperson for the federal Department of Health, Disability and Ageing said "any arrangements between South Australia and Breakthrough Mental Health Research Foundation are a matter for the South Australian government".
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