Introduction – The Role of Charities
I am pleased to address the House on this motion.
Charitable work is extremely important across many sectors of our society.
When you think of the many diverse areas in which charities are active,
encompassing health and social care, education, youth and community work,
environmental and animal welfare protection, arts and culture, to name but
a few, it is clear that “charitable work” can mean many different things
and its value can be realised in many different ways. We have great
diversity in our charitable organisations too. Ranging from highly
professionalised charity companies with multi-million euro annual
turnovers, to small local groups made up of volunteers, and everything in
between. Some charities rely heavily on public funding and may deliver
services on behalf of the state. Others depend on private donations or
commercial activities, and many more on combinations of these.
With such diversity of work, size, structure and income sources, one might
wonder how meaningful it is to think in terms of a single “charity sector”
at all. But this would be to ignore the critical common factor that all
charities share - the primacy of the charitable purpose. Charities exist in
order to advance the charitable purpose for which they were established,
and to deliver the public benefit that their charitable purpose entails.
This sets them apart from all other forms of enterprise and gives them a
unique responsibility and a unique place in the fabric of our economy and
society.
Public Trust and Confidence in Charities
For the most part, charities discharge this unique responsibility ably and
effectively. For the most part, charities meet the high expectations we
have of them - and that they have of themselves – with energy and
creativity and integrity. I am well aware that charities in Ireland today
are facing and overcoming many challenges day by day as they adapt to
reduced income and increased demand for services. And I commend the
dedication of the workers and volunteers involved.
Levels of public trust and confidence in charities in Ireland are
consistently found to be high, and rightly so. Trust is essential to
charities – the trust both of their donors and volunteers, and of their
beneficiaries. The public need to feel sure that the hard-earned money they
so generously donate to charities is spent wisely and with care and goes to
help those that need it the most. Charities work hard to foster and protect
this trust. The public also need to know that when they donate food or
clothing or other items to charities it is distributed or disposed of in a
manner that benefits those intended. Of course, no sector of this size is
characterised by uninterrupted good practice. As illustrated by the
recently broadcast revelations about the charity clothes recycling
business, there is always a risk of the public being misled or
insufficiently informed. There is also a risk of malpractice or abuse of
charitable status through deception or of others, through criminal
activity, benefiting from charitable donations. Unfortunately, when this
occurs in one area it can damage trust more widely, leading to adverse
impacts on charities that are fully transparent, are run effectively and
efficiently and which have, in fact, invested much time and effort on
ensuring high standards in their own work.
Charities Act 2009 – Objectives
Recognition that public trust and confidence in charities was a precious
commodity that needed to be pro-actively supported and enhanced was perhaps
the primary motivation for the introduction of the Charities Act, and its
passage with cross-party support in 2009. This Government remains committed
to these objectives. The measures contained in the Act to put in place a
dedicated system for the regulation of charities are designed to enhance
trust and confidence in the sector in a number of ways.
Increased transparency is one important part of the overall approach. In
addition to establishing a public register of all charities, the system of
regulation will, in time, result in the public availability of an annual
activity report for each registered charity. Of course, many charities
already publish annual reports and there is much good practice throughout
the sector with respect to information disclosure. I would encourage all
charities to adopt a transparent approach and make available such
information as would help potential donors to make informed choices and to
have confidence that their donations were being used as intended. Such
measures, when placed on a statutory footing through the bringing into
force of the relevant sections of the Charities Act, will also help to
align arrangements for the oversight of the charity sector here with the
recommendations of the International Financial Action Task Force. This
inter-governmental body has a remit to promote effective measures against
money laundering and terrorist financing and has identified the global
non-profit sector as particularly vulnerable to abuse for the financing of
terrorism. Putting in place a dedicated charities regulator in line with
the requirements of the Charities Act will strengthen the oversight of the
sector here in Ireland.
Increased transparency is just one, albeit very important, element of the
regulatory framework provided for under the Charities Act. The Charities
Regulatory Authority to be established will have a range of functions and
powers that will facilitate the development over time of a comprehensive
and balanced system of regulation. In addition to the initial task of
developing and maintaining a register of charities, these will include
advisory, monitoring, investigative and enforcement functions, as well as
the granting of charitable status to eligible organisations.
This system of regulation will be new to all of us. It is important that
charities are supported in meeting their new obligations under the
Charities Act when they come into force, and that the regulatory
requirements are applied across the sector in a manner that is
proportionate and sensitive to the different situations of different
charities. By maintaining the consultative approach that we have adopted
throughout this process, I am confident that this will be achieved.
Existing Regulatory Provisions
Notwithstanding this clear rationale for proceeding with the implementation
of the Act, I feel it is also important to remind the House that there is
already in existence a broad range of regulatory oversight measures that
can apply to charities. Many charities are already subject to scrutiny by
various State Bodies. Many charities receive significant levels of
Government funding through grants, contracts for service delivery, and so
on. In relation to how they use and account for these public funds, these
charities are subject to the oversight of the relevant grant-making or
contracting Departments and Agencies, and, where appropriate, of the Office
of the Comptroller and Auditor General. The Revenue Commissioners have
granted charitable tax exemptions to almost 8,000 charities and have
significant powers to ensure that such charities comply with tax law. A
full list of these charities is available to the public at
www.revenue.ie.
Many charities are companies limited by guarantee and, as such, are also
subject to the provisions of company law and are generally required to
provide certain information to the Companies Registration Office under the
Companies Acts. This information can then be accessed by the public. Such
charities would also potentially be subject to scrutiny by the Office of
the Director of Corporate Enforcement. Charities that take the form of a
trust are subject to the provisions of trust law. And, of course, any
business entity is subject to general criminal and fraud legislation.
So while the Government remains committed to progressing the implementation
of the Charities Act and the dedicated regulatory framework that it will
usher in for charities, it is also important to recognise that the
charities sector is at present far from unregulated. To suggest this would
be misleading and fail to acknowledge the value of the effort invested by
many charities in meeting existing regulatory obligations.
Implementation of Charities Act
Turning again to the
new requirements that will come into force under the
Charities Act, clearly the development of a system of regulation such as
this will have resource implications and this has created an additional and
significant challenge to the further implementation of the Charities Act at
this time. As this House will be aware, following the transfer of
responsibility for this legislation to my Department in mid-2011, I decided
to defer further implementation of the Act and explore possible
alternatives and low cost variations on the course of action that had been
designed before the economic downturn. Without prejudice to the issue of
resources, Government policy with regard to the regulation of the
charitable sector remains aligned with the provisions of the Charities Act.
With this in mind, my Department is now working to develop proposals for
bringing key provisions of the Act into force on a phased and low cost
basis.
Public Consultation on Implementation of Charities Act
I would like to take this opportunity to say a little about what we have
done so far and how we envisage the next steps. In January of this year, I
published for consultation outline proposals for implementing key
provisions of the Charities Act. Stakeholder consultation has been a strong
characteristic of this policy area for many years and we are fortunate in
having an informed and engaged stakeholder community. Delays in the
implementation of the Act had understandably led to some frustration on the
part of active stakeholders, and also perhaps some confusion in the
charities sector and among the general public as to what the position was
on charities regulation. I felt it was important to consult with
stakeholders on the approach now being considered, both in order to
communicate clearly our intentions with respect to the Charities Act, and
to ensure that the implementation process is informed by the views and
concerns of engaged stakeholders.
The consultation document invited the views of stakeholders and members of
the public on proposals for the establishment of a Charities Regulatory
Authority on a phased and low cost basis. Views were also sought on issues
connected with the creation of a statutory Register of Charities, including
a proposal that some of the costs to the Exchequer of establishing and
maintaining this register would be offset through the application of a
modest annual registration fee to be set at a level proportionate to the
income level of each registered charity. The consultation also invited
views on the form and content of annual reports to be made by registered
charities to the new Authority. As these reports are to be made public by
the Authority for all publicly funded charities, this is perhaps the key
mechanism through which the transparency of the sector will be enhanced.
I was very pleased at the response to the consultation. Some 160 written
submissions were received. These are currently being reviewed in my
Department. Following the consultation, we are also developing more
detailed proposals for the establishment of a Charities Regulatory
Authority, including with respect to resourcing and timeframe for
implementation. This work is informed by the submissions to the
consultation. Once this work is complete, I hope to bring the proposals to
Government, following which the consultation submissions will be published
by my Department (where consent has been given by the author, which is in a
majority of cases). At that time, I also hope to be able to give a firm
indication of the process and timeframe for the establishment of a
Charities Regulatory Authority.
Voluntary Measures
While tonight’s debate is primarily focussed on statutory provisions, I
would also like to take this opportunity to remind the House of the
important part that complementary voluntary approaches can play in
enhancing public trust and confidence in the charitable sector. We should
recall that the responsibility for enhancing the transparency and
accountability of the charitable sector rests primarily with charities
themselves. Voluntary, sector-driven approaches to better practice are an
essential part of a strong and accountable charity sector. Statutory
regulation is a complement to this, not an alternative. As progress is made
on the implementation of the Charities Act, so the Government also hopes to
see a continued drive from within the charities sector itself for
improvements in transparency and accountability where necessary.
Charity Clothes Recycling
A particular issue in this regard was highlighted by the recently broadcast
investigation on charity clothes recycling. I am sure that many of you
share my concern at the finding that, in certain cases, a very small
proportion of the potential income derived from clothing banks appeared to
reach the charitable cause with which the bank was identified. As Minister
for Justice, I would like to see greater transparency in agreements
between charities and companies that own clothes re-cycling bins so that
the donor public know exactly what is happening with their donations, and
how much of what they donate is actually being used for the benefit of
those whom the charity has been established to help. Of course the bringing
into force of the reporting provisions of the Charities Act will support
increased transparency. But donors should not have to wait for statutory
regulation before charities tell them what is happening to their donations.
Surely it is in the interests of the charities to be up front about this. I
hope that we will see genuine leadership from the charities sector on this
issue following the recent revelations.
I would like to congratulate Primetime and RTE for their careful
investigative work in revealing and bringing to public attention the
activities of an organised gang targeting clothing banks. Burglary, theft
and all types of criminal activity are, of course, to be condemned.
However, there is something particularly nasty and callous in the actions
of those who steal, for their own benefit, charitable donations intended to
help those in need. I would like to inform this House that I have asked
the Garda Commissioner for a report on the activities of gangs involved in
this particularly cynical and despicable type of criminality and the action
that can be taken to bring them to justice.
Fundraising
Fundraising is another area in which sector-driven efforts to spread best
practice can play an important part. The Government continues to support
certain initiatives in this area. This includes the development and
promotion of a Statement of Guiding Principles for Charitable Fundraising
that has been developed by the charities sector itself, under the
leadership of voluntary charity umbrella body Irish Charities Tax Research.
These Guiding Principles, at the core of which are respect, honesty and
openness, aim to provide a set of agreed and accessible standards to
charitable fundraising strategies and projects. My Department is providing
grant support for this initiative.
I have encouraged all charities to sign up and adhere to these Principles,
which represent a simple yet demonstrable commitment on the part of
charities to better accountability and transparency. To date, though I
have been pleased to see that sign-up by charities to the Principles has
been growing in recent months, only a relatively small number of charities
have formally committed themselves to the Principles. My Department
continues to support this initiative with the aim of increasing the share
of fundraising that conforms to these principles. However, such an
initiative requires the support and participation of charities themselves
in order to be meaningful and I urge all charities that carry out
fundraising to commit publicly to these best practice Principles.
National Giving Campaign
The motion before us notes the link between effective regulation of the
charities sector and the objectives of the forthcoming National Giving
Campaign, which is one of several initiatives of the Forum for Philanthropy
and Fundraising. Through this Forum, Government is working together with
major Philanthropic organisations and other stakeholders to unlock the
potential of philanthropic giving in Ireland by creating a favourable
environment for individual
and corporate giving and developing fundraising
capacity. The Forum was re-convened in 2011 by my colleague Phil Hogan TD,
Minister for the Environment, Community and Local Government, and reported
in May 2012. One of the recommendations of the Forum was to create a
National Giving Campaign aimed at increasing private giving, and in
particular planned giving, by ten percent year on year to 2016. It also
aims to raise awareness and understanding of the value of philanthropy and
planned giving among all sections of Irish society, including high net
worth individuals, the corporate sector, and the general public, by
demonstrating how charitable and philanthropic giving benefits communities
across Ireland.
A thriving philanthropic and fundraising sector benefits greatly from the
availability of readily accessible, good quality information on the
non-profit organisations that it supports. Information on the income and
activities of charities enables progress and developments within the field
to be tracked and understood over time, and useful international
comparisons to be made. The gradual implementation of the Charities Act and
in particular the measures relating to the compilation and publication of
certain information on charities will contribute to this. In this way,
progress on the implementation of the Charities Act represents an important
part of our efforts to create a favourable environment for philanthropy.
The Giving Campaign will be launched later this year and it is envisaged
that charities will be encouraged to launch their own campaigns under the
umbrella of the National Campaign.
Report by Independent Senator Mary Ann O’Brien
Before completing my remarks here this evening, I would like to mention the
work of Senator Mary Ann O’Brien in this area. Senator O’Brien’s paper on
the implementation of the Charities Act that was published in February
during the period of consultation conducted by my Department is a timely
and constructive contribution to our discussions on this matter. The
current situation demands that we approach the task before us with
creativity, flexibility, and pragmatism. But also that our actions are
informed and underpinned by continuous engagement with the charity sector
and those who have a stake in it. The active engagement of informed
stakeholders such as Senator O’Brien will be critical to our efforts as we
seek to put in place, on a phased basis, a dedicated system for the
regulation of charities.
Conclusion
Before closing, I would like to return briefly to the core issue before us
this evening. That is the role played by charities in our society and how
we can best support them in it. Charities, by definition, benefit
communities through their work, and for this they are indeed worthy of our
commendation and thanks, as expressed in tonight’s motion. The provisions
of the Charities Act are intended to help them to deliver this benefit with
transparency, integrity and efficiency. This in turn can help the trust we
have in our charities to grow and thrive so that we can contribute to them
with confidence. It is in all our interests to have a strong and vibrant
charity sector and I look forward to advancing the regulation of the sector
in line with this overall objective.
Thank you.