merrion street

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

.

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.