Irish Red Cross may have to rely on branch funds to avert financial crisis

The national office of the Irish Red Cross may be forced to rely on funds held in local branch bank accounts to avert a financial crisis, leaked documents show.

The charity should have three months worth of operating cash in reserve, but in July only had reserve funding for four to six weeks, according to minutes from its last general assembly meeting, seen by The Irish Times.

The charity’s head office is dealing with a significant funding shortfall, and income to the end of April was €360,000 less than budgeted for.

Tom Horwell, vice chair of the board, resigned in recent weeks "due to his dissatisfaction with a number of operational decisions," a spokeswoman for the charity has confirmed.

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In late May Darren Ryan also resigned from the board, over concerns about the financial management of the charity.

From 2015 to 2017, Irish Red Cross fundraising income dropped from €4.3 million to €2.5 million. It has €700,000 in restricted donations for international and national appeals, which cannot be spent on general costs.

The charity has been embroiled in previous controversies over accounting procedures and governance standards in the last decade.

Members present at the July general assembly meeting raised concerns with plans to cover shortfalls running the national office with local funds.

The charity’s national director of emergency units Tony Lawlor said branch funds would only cover national staff salaries for a year. Mr Lawlor asked “what would the society do the following year when they had not only used HQ funds but also used up branch funding,” according to minutes.

“The board refused to approve anything other than a breakeven budget for 2018. This meant that planned budgets had to be substantially cut,” minutes stated. The general assembly is made up of board members and regional branch representatives.

“The national society has the operational (HQ) funds to cover the national and international restricted balances with a small surplus for unrestricted operational cash,” the national secretary told the July 21st meeting. This does not include €3.7 million held by separate local branches across the country, minutes outlined.

The charity’s auditors BDO had “sought assurances” these funds held in local branch accounts “were available to the head office as operating cash if required,” minutes stated.

“The audit and risk committee had advised the board not to give such a commitment until they were sure funds would be available,” the meeting heard.

A spokeswoman for the Irish Red Cross said to date “there has been no developments in this area and this funding has not been accessed by the head office”.

At the meeting national treasurer Sheila Callan proposed a rule limiting board members to a maximum of two terms should be suspended for a board term. A decision will be taken on the motion at the next meeting.

John Roche, former head of the charity’s international department, who was recently made redundant, told The Irish Times the proposed changes were “absolutely nuts.” Mr Roche said the change would be “going backwards ... to the problems back in the day around poor governance.”

Another motion looks to give the general assembly powers to convene a meeting with the charity’s auditors “if it has concerns regarding the financial statements as signed by the board.”