Charities’ real regulator is the general public

When historians write their accounts of the demise of the Celtic Tiger and the crises that followed it, one of the recurrent themes may well be the failure of regulation and public scrutiny in early 21st-century Ireland. The spectacular failings of bank regulatory bodies, but also the lack of accountability in other areas such as the health services and our political system, are quite likely to stand out in accounts of what went wrong. Our nation’s reliance on “light-touch regulation” has proven extremely problematic.

Last week’s announcement by the Government of the creation of a new regulatory body for Ireland’s charities could well be seen to be an attempt to learn from the past. After all, the charity sector is a significant part of our economy – employing 100,000 – but it lacks the legal and regulatory frameworks to be truly accountable.

Not that the sector is unregulated. The majority of well-known charities are supervised in precisely the same way as Ireland’s for-profit companies: they file annual accounts to the Companies Registration Office and have their finances checked by independent auditors.

But there are two problems with this: it forces NGOs to pretend to be something they are not (ie profit-driven entities); and it doesn’t account for the needs of most charities, the smaller, volunteer-driven organisations and local associations.

Last week’s announcement by the Government that it will finally proceed with the establishment of an independent “Charities Regulatory Authority” provided for by the 2009 Charities Act does not address the first problem; only the creation of a new public benefit legal entity can do that.

Clarity of purpose
But it is very welcome in that the regulator will create much-needed clarity on which organisations really serve a "charitable purpose", where their funding comes from and who is behind the organisations. All charities will be obliged to register with the regulator and provide information in a format determined by the new authority.

The announcement sets the stage for a new service that will bring increased transparency and accountability to Ireland’s diverse and lively civil society: NGOs will benefit from greater clarity in relation to governance and reporting standards that apply to their work and a central database of recognised charities will save donors and Government departments money in background checks on prospective grantees.

And, most importantly, members of the public will know that the organisations they are backing are fully deserving of that support.

For the greatest asset that Ireland’s not-for-profit organisations have is the trust placed in them by the public. Research shows that, while many of the traditional “pillars of society” such as banks, political parties and the church have been severely damaged, Irish charities and civil society organisations are still the most trusted entities in Ireland. And this confidence and support is needed now more than ever.

The economic crisis has hit vulnerable communities the world over, and the reality for Irish NGOs is they are facing an increased demand for their services when their funding has been cut and opportunities for sponsorship are diminished. NGOs find themselves ever-more reliant on the generosity of the public – at a time when people in Ireland have less money to give.

Non-profit vs non-professional
And it is precisely to safeguard this public support that Irish NGOs have invested time and money in mechanisms to ensure their work is of the highest quality. Member organisations of Dóchas have chosen to go well beyond the minimum legal requirements proposed in the Charities Act. They have developed codes of conduct recognised internationally as first-class tools to ensure quality in the sector.

And they have strengthened their long-term impact, through greater focus on research, needs assessments, evaluation and professional quality control. Ireland’s NGOs are showing daily that “non-profit” by no means indicates “non-professional”.

For Irish NGOs know the best “regulation” and scrutiny will come from the “beneficiaries” and from the general public that supports them. As part of their drive to improve their work, development NGOs are inviting the public to comment on performance.

The charity regulator will play a vital role by enabling the public to access a minimum level of information about all the charities in Ireland. But it is the public that must demand professionalism, accountability and evidence of impact from all charities.

The regulator will enable donors and supporters to distinguish between high-quality charities and underperforming ones. It will encourage people to support those that recognise long-term impact requires more than good intentions.

Hans Zomer is director of Dóchas, the umbrella group of Ireland’s development NGOs