The Charities Act

The Charities Act, enacted on Saturday 28 February, 2009, represents a very significant milestone for community and voluntary activity in Ireland.

The purpose of the Act is to reform the law relating to charities in order to ensure greater accountability and to protect against abuse of charitable status and fraud and to enhance public trust and confidence in charities and increase transparency in the sector.

Charities will be permitted to promote a political cause if it relates directly to their charitable purpose.

The Act does not come into effect immediately – it will be commenced in stages by the Minister who noted in the Government Press release that “the Act is really only another step on the road to regulation. There is a considerable body of work yet to be done before the new regulatory regime can come into force on the ground, and my officials and myself look forward to working with the sector as we move towards that day.” (Minister John Curran TD)

Key aspects of the Act will provide for:

a definition of charitable purposes for the first time in primary legislation
the creation of a new Charities Regulatory Authority to secure compliance by charities with their legal obligations and also to encourage better administration of charities
a Register of Charities in which all charities operating in the State must register
the submission of annual activity reports by charities to the new Authority
updating the law relating to fund-raising, particularly in relation to collections by way of direct debits and similar non-cash methods
the creation of a Charity Appeals Tribunal
the provision of consultative panels to assist the Authority in its work and to ensure effective consultation with stakeholders.

The Act, together with the Charities Acts 1961 and 1973, and the Street and House to House Collections Act 1962, provides for a composite regulatory framework for charities through a combination of new legislative provisions and retention of existing charities legislation, with updating, where appropriate.

The Act can be downloaded here:

http://www.oireachtas.ie/documents/bills28/acts/2009/a0609.pdf

Please note that the provisions of The Charities Act have not yet taken effect. The Act will be commenced in stages over time by Ministerial order.

The Act gives the Minister for Community, Rural and Gaeltacht Affairs powers to make regulations in relation to charitable fundraising, but it is intended in the first instance that agreed codes of practice will be used to regulate fundraising.

The Department of Community, Rural and Gaeltacht Affairs has worked in partnership with the sector to develop a model to regulate fundraising through the application of non-statutory Codes of Practice. You will find further details on the development of the codes and on the fundraising requirements below.

Outlined here are the principal features of the Charities Act 2009:

New Definition of Charities

Organisations that have exclusively charitable purposes (see below) and provide public benefit will be eligible for inclusion in the register of charities. The charitable purposes defined in the Act are:

The prevention or relief of poverty or economic hardship
The advancement of education
The advancement of religion; or
Any other purpose that is of benefit to the community, which is specifically broken down in the Act to include:
The advancement of community welfare including the relief of those in need by reason of youth, age, ill-health or disability
The advancement of community development, including urban or rural regeneration
The promotion of civic responsibility or voluntary work
The promotion of health including the prevention or relief of sickness, disease or human suffering
The advancement of conflict resolution or reconciliation
The promotion of religious or racial harmony and harmonious community relations
The protection of the natural environment
The advancement of environmental sustainability
The advancement of the efficient and effective use of the property of charitable organisations
The prevention or relief of suffering of animals
The advancement of the arts, culture, heritage or sciences; and
The integration of those who are disadvantaged, and the promotion of their full participation in society.

Regulator Institutions

A new Charities Regulatory Authority (commonly referred to here as the Charity Regulator) will be established to secure compliance by charities with their legal obligations and also to encourage the better administration of charities.
The Regulator will maintain a Register of Charities which will be accessible by the public.
Any organisation in receipt of charitable tax exemption from the Revenue Commissioners on the day that the register is established will be automatically deemed registered with the Charity Regulator.
All other charitable organisations operating or carrying out any activities in the state will be required to register within six months of the establishment of the register.
All charitable organisations will be obliged to ensure that the particulars relating to them are correctly entered in the register.
All charities will be obliged to state in their public literature that they are a registered charity.
All registered charities will have a unique registration number.
It will be an offence for a body not on the register to claim that it is a registered charity or to operate or fundraise as a registered charity.
A Charity Appeals Tribunal will be established to which organisations can appeal certain decisions that the Regulator may make in relation to them
Consultative panels may be established by the Regulator to assist it in its work and to ensure effective consultation with stakeholders.

Reporting Requirements

All charities will be required to keep proper books of account, and the following provisions are made in relation to the filing of annual statements of accounts and the auditing or examination of those accounts of those charities that are not companies:
- The Companies Registration Office will automatically forward Annual Returns by charities that are companies to the Charity Regulator (to minimise the demands made by dual reporting).
- Charities that are not companies will face the following financial-reporting requirements:
- Organisations with income above an as yet-to-be-prescribed threshold (maximum of €500k per annum) will be required to submit audited accounts to the Charity Regulator.
- Charities with income less than this threshold may submit examined accounts (less demanding and expensive to produce).
- Charities with income less than €10,000 will be exempted from filing annual accounts (they will still however have to submit their Annual Activity Report) unless, of course, they are companies, where the fining requirements of company law will still apply.
All charities will be required to submit to the Charity Regulator annual reports on their charitable activities during the year. The Minister will consult with the sector on what the content of these Annual Activity Reports should be, but we can expect them to require both an activities report element and a finance reporting element.

Fundraising

Both cash and non-cash (i.e. direct debits, standing orders etc) charitable fundraising from the public will require permits from the gardaí, and only registered charities will be able to conduct those types of fundraising.
Sealed collection boxes will be the default requirement for collections in public places and the boxes will have to display the name and charity number of the charity. The Regulator has the discretion to make an exception to the sealed collection box rule to facilitate the making of change for token sellers.
Charities that fundraise will be expected to comply with the non-statutory Statement of Fundraising Principles (available at www.ictr.ie), and will also be expected to comply with specific Codes of Good Practice for Fundraising that will be available following the consultation exercise referenced above.

Political and Lobbying Activities

Charities will be permitted to promote a political cause if it relates directly to their charitable purpose.

Trustees

‘Charity Trustees’ are defined in the Act and are essentially those persons having day to day control of a charitable organisation. This means that the Directors (under company law) of a charity that is a company limited by guarantee will be considered to be the trustees of the charity (there may of course be other trustees, in addition to the directors). Equally for charities with ‘management committees’ or ‘core groups’, the members of these groups will be considered to be ‘trustees’ as a result of this Act.
A charity will be permitted to pay a Charity Trustee (or persons connected to a trustee) for work which is not related to their role as a trustee. A charity is not, and will not be, permitted to pay trustees for their work in their capacity as a trustee (other than for receipted expenses). This type of arrangement may require an amendment to the constitutional documentation of most charities
Charities will be permitted to purchase ‘director’s and officers’ insurance to indemnify its trustees for liabilities relating to acts done or omitted by the trustee in good faith and in performance their functions as a charity trustee.