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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.

ENDS