Exclusive: A leaked review into the Sydney Gay and Lesbian Mardi Gras has revealed significant shortcomings in financial oversight and raised serious concerns about the independence of the board.
Dated October 11 this year and marked “final”, the review [pdf] was conducted as a condition of Mardi Gras securing $1.1 million in emergency funding from New South Wales government events and marketing agency Destination NSW – half of which was later covered by the City of Sydney.
It made 28 recommendations and identified 18 governance risks: two classified as “extreme” risks, seven as “high”, six as “significant”, and three as “moderate”. Gay Sydney News does not suggest any of the findings are proven, only that they have been reported in the review.
Sydney Gay and Lesbian Mardi Gras, a not-for-profit registered charity, said in a statement that it had already implemented, or was in the process of implementing, 24 of its 28 recommendations.
“The review was an essential requirement for securing emergency funding for the 2024 Festival, and we welcomed the opportunity to engage in this process,” it said.
Mostly covering the 2024 financial year, the review’s identified risks included significant financial reporting issues, concerns about the independence of key governance roles, an absence of effective risk management, and inconsistent application of foundational governance structures.
Board reporting, minutes and action tracking mechanisms also did not sufficiently show evidence and provide a clear representation of board activities, discussion and decisions, the review found.
“In the absence of this detail, it is unclear how the Board reached certain decisions,” it said.
In one case classified an “extreme” risk, the review identified discrepancies of about $800,000 in February’s internal budget update.
It said these errors may have not only misinformed the board about Mardi Gras’ financial position but also significantly obscured the organisation’s actual year-to-date loss, which had at that point increased to $888,533 (it later reported a $1.2 million deficit for financial year 2024, which took into account Destination NSW’s emergency funding).
Despite the projected loss increasing, the review said Mardi Gras chief executive Gil Beckwith’s update to the board accompanying the February report stated that performance was $25,000 better than budget.
Beckwith told the review the report was prepared by a then-recently hired chief financial officer who soon left the organisation, and that it was not subjected to independent checks or quality assurance before being presented to the board.
Gay Sydney News sought comment from Beckwith through Mardi Gras, but no response was provided. But at the recent Mardi Gras annual general meeting, Beckwith attributed the organisation’s recent $1.2 million operating loss to “a confluence of extraordinary circumstances and not mismanagement”.
Reporting errors also included instances of negative budget variances incorrectly marked with a green status instead of red, potentially obscuring the severity of financial challenges.
While the review said Mardi Gras stakeholders indicated that financials were discussed during board meetings, it found that “meeting minutes did not highlight whether these errors were identified, or the extent to which the financial position was discussed by the board”.
Also classified as an “extreme” risk was the independence of the unpaid board. It said many members had longstanding ties to Mardi Gras through volunteer roles or governance history, which the review said could “potentially impair their ability to act completely independently.”
It recommended the organisation reflect on the minimum term that board members are able to serve as a director to ensure the independence of the board is maintained.
Still on independence, it highlighted that in 2023 a board co-chair at the time the review was conducted also served as the company secretary and chair of the audit and risk committee, positions it said “should ideally be independent to the Board Chair position”.
As a result, the board has since appointed a new secretary and an independent interim chair for the audit and risk committee, it said.
The fact the audit and risk committee did not meet for several months in 2023, despite its charter requiring that members meet six times per year, was also highlighted and classified “high” risk.
Mardi Gras’ 2024 financial report shows the committee met three times, with almost half its members missing at least one meeting.
Addressing a Mardi Gras member’s concerns about the committee at this year’s annual general meeting, then board co-chair and recently re-elected director Brandon Bear, who chaired the audit and risk committee and was also the company secretary, acknowledged the board “did not utilise that committee correctly”.
The absence of a proper risk management framework compounded issues, the review found, noting that Mardi Gras had no operational risk registers, risk appetite statements, or strategic oversight mechanisms.
Additionally, it expressed concern that there was no minimum skill requirement to be nominated for the Mardi Gras board, with one review stakeholder characterising the board election process a “popularity contest”.
The review also revealed that Mardi Gras initially requested $4.5 million in emergency funding – $3.4 million more than the $1.1 million it ultimately ended up receiving.
The emergency funding was requested to manage financial shortfalls worsened by the cancellation of the Mardi Gras Fair Day event at Victoria Park, called off due to asbestos contamination in the venue’s mulch.
The Fair Day cancellation ultimately resulted in the event losing $652,893, according to Mardi Gras’ 2024 financial report, and exacerbated its existing financial pressures caused by rising production costs, sluggish ticket sales, and reduced funding following Sydney WorldPride.
The review also found that Mardi Gras failed to adjust its budget in response to worsening conditions, neglecting scheduled budget reforecasting in October 2023, which left the board without an accurate financial picture until early 2024.
Although reforecasting was requested by the board in December 2023, it was not fulfilled by management “due to competing priorities … and capacity constraints”, the review said.
Review recommendations included overhauling financial reporting processes, improving board member skills and training, and developing a formal risk management framework. Others included introducing mandatory training for directors and updating conflicts of interest registers.
Destination NSW said it commissioned the review in order “to identify learnings and improvement opportunities relating to Sydney Gay and Lesbian Mardi Gras Ltd’s governance arrangements in considering challenges the organisation experienced in the 2024 financial year”.
Brandon Bear – the recently re-elected board director, former board co-chair, former audit and risk committee chair, and former company secretary – did not respond to an individual request for comment.
While the review highlighted notable governance challenges, it also noted recent improvements. The adoption of better budgeting practices for the 2025 festival and the shift to three-year partnership agreements, instead of annual contracts, were viewed as steps towards stabilising finances.
The findings come after a recent controversial debate over whether NSW Police should be excluded from marching in the Mardi Gras parade, narrowly voted down by its membership 493 votes to 459.
Editor’s note: Journalist Ben Grubb pays $50 annually for Mardi Gras memberships to access discounts, including at retail stores and bars, but doesn’t use the membership’s voting rights.
Gay Sydney News editor