Finances of two-thirds of non-profit groups shielded from scrutiny

The finances of almost two-thirds of Irish non-profit organisations are shrouded from scrutiny even though they receive billions in State support, according to a report.

The examination by Benefacts covers almost 30,000 non-profit organisations in the Republic, including charities, philanthropies, sports bodies, political, human rights organisations, as well as business and trade associations.

To be published on Wednesday, Benefacts puts the total turnover for such organisations at €13.8 billion, of which €5.9 billion comes from the State. This amounts to one-twelfth of the State’s entire current annual budget.

In a third annual analysis of the sector, Benefacts drew from all available data from the public filings of nearly 30,000 non-profits, as at the end of the first quarter of 2019.

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About one-third of these are regulated as charities by the Charities Regulator. However, State funding is not evenly distributed. More than 70 per cent – or €4.2 billion – goes to just 60 major organisations. Most of the remaining €1.7 billion goes to 1,500 non-profits, about half of which are registered charities.

Despite the public funding, Benefacts can only scrutinise financial data from incorporated non-profits, which add up to just over 10,000 of the 29,300 organisations.

The financial statements of 1,650 unincorporated charities – 37 per cent of all registered charities – are not publicly available. These have been filed with the charities regulator since 2016 but are not yet published.

The report said the trend for non-profits, including charities, to publish financial statements in abridged form has “grown steadily” from 36 per cent in 2016 to 44 per cent in 2017 and from 32 per cent to 37 per cent among incorporated charities.

Abridged accounts include some financial data such as balance sheets, employee numbers and remuneration, but not the key details in relation to income and expenditure.

Benefacts said 15 per cent of non-profits did not comply with the statutory requirement to report on payroll costs in financial statements filed in 2018, while 3 per cent did not comply with the requirement to report on numbers of full-time equivalent employees.

Furthermore, 57 per cent did not report on the remuneration of higher paid employees in bands of €10,000.

"This is accountability without transparency and it amounts to a lack of joined-up thinking on the part of State funders and regulators," according to Benefacts managing director Patricia Quinn.

“These trends have deprived us of the capacity to analyse at least €1.7 billion of sector turnover for 2017 alone.

“The remedies are not complicated, and the prize is a more transparent and accessible sector in the service of greater public confidence, better decision-making, and elimination of wasted duplication of administrative effort.”

Outside of the 60 higher education, health and social care charities where staff are remunerated as though they are public servants, less than 1 per cent of jobs attract pay of more than €70,000 per annum, compared to 13 per cent in the economy at large.

The Benefacts report also analysed the boardrooms of non-profit organisations and found they are mostly made up of older men, many of whom have served on them for almost a decade.

The average size of a non-profit board is six directors/charity trustees. Nearly a quarter have served on the same board for nine years or more.

These trends are most pronounced in the boards of sports bodies where the male female balance is 80:20, and one-third of directors/trustees have served for more than nine years.

Overall, the average age of a non-profit director/charity trustee is 57, and the gender balance in the sector as a whole is 58:42 in favour of men. Within charities alone the balance is 54:46 in favour of men.