Charities Regulation Seanad Statement by Alan Shatter T.D., Minister for Justice, Equality and Defence

Since I last addressed this House on the regulation of charities, I have taken steps to advance the implementation of the 2009 Charities Act. I wish to inform the House of this progress today, but first I want to address the important issue of charity fundraising. I highlighted some concerns I have in this regard recently in the Dáil and I am now pleased to address this House on the matter.

We are fortunate in Ireland to have a vibrant and diverse charity sector. Throughout the country, communities are supported in countless ways by the efforts of those who work and volunteer for charities. Many charities support their work through raising funds from the public. When they do this, they in turn benefit from a longstanding tradition here of generosity towards charity fundraising. Much of the valuable work carried out by charities across the country is made possible by the enduring willingness of people to give to charity.

Fundraising from the public for a charitable cause brings with it certain responsibilities. Those who donate to charity have an expectation that a reasonable portion of what they donate goes to the primary cause of the charity and in particular, to benefit or assist the specific group or category of individuals for whose benefit the charity was created and to provide the specific service or services to which the charity is dedicated. Charities have an ethical obligation to meet this expectation as best they can. Where the method of fundraising involves the sale of a product – such as a lottery ticket or scratch card – the obligation is no different. Charities using such methods need to bear this in mind when determining the proportion of funds raised that are used in the giving of prizes and to meet other costs, including salaries, allowance, benefits and administration.

In circumstances where such fundraising schemes are supplemented by State funding, the profitability of the schemes and the usage of donor’s money as well as State provided funds is a matter of legitimate concern for the Government. My decision in 2012 to wind down the Charitable Lotteries Scheme over three years was informed by precisely such concern. It is not in the public interest for State funds to be used to prop up charity fundraising schemes that have a low level of profitability or that the State continues indefinitely a State funding scheme that incentivises bad practise.

Where public concern emerges with respect to charity fundraising, there is potential for public confidence in the charity sector as a whole to be damaged. Charities who apply the highest standards to their fundraising can suffer when other charities take a different approach. I am aware that many charities are reporting drops in their donations following the disclosures about the use of charity funds at the Central Remedial Clinic and issues that have arisen with regard to Rehab.

Trust and confidence need to be rebuilt. Critical to this is greater transparency about how charities conduct their business and what they do with the funds so generously given to them. While some charities demonstrate high standards of governance and transparency, the picture is far from uniform across the sector. Increased transparency can help to strengthen the charities sector.

The establishment of the new system of charities regulation provided for under the Charities Act will assist in this process. Under the Act, I will establish an independent Charities Regulatory Authority. I intend to make appointments to the Board of this new Body by Easter so that it can come into operation later this year. In this connection I recently issued a call for expressions of interest for suitably qualified persons who wish to be considered for appointment to the Board. I also intend to appoint an interim Chief Executive and fill a number of administrative positions at the Authority by the end of this month.

Under the Charities Act, the new Authority will compile and publish a comprehensive register of charities. Each registered charity will make a report to the Authority every year, and, in the case of any charity that is funded by donations from the public, these reports will be made available to the public. This will provide donors with an important source of information about how their donations are used. It should also tell us more about how our charities are run, how they manage their resources and what their main areas of expenditure are.

The need for transparency also extends to the issue of remuneration and allowances. It is important that charities address concerns that have arisen in this regard. It is not in the public interest that these matters be concealed, or that they be opaque. Rather, information made available should meet a reasonable standard of transparency and give an adequate picture of the sources and uses of funding at any given charity. Charity trustees and directors have been placed in a position of trust and it is important to the overall health of the charity sector that their behaviour is in keeping with this.

It is my firm belief that the changes that the Charities Act will introduce – including greater transparency – will benefit our charities. I am encouraged that this view is shared by many within the charities sector itself, where there is strong support for the implementation of the new system of regulation.

I am aware that the current environment is difficult for charities as they are experiencing increased demand for their services at a time when resources are under pressure. The steps I am now taking to improve the regulation of the sector will, I believe, help to ensure the strength and vibrancy of the sector into the future. By encouraging high standards and fostering good practice, we can help to protect and, where necessary, restore public trust and confidence in our charities.