OPINION:AT CHRISTMAS, Irish charities raise more in donations from the public than at any other time of the year. As the needs to be addressed become more acute, and charitable fundraising more sophisticated – and competitive – the public increasingly, and properly, expects transparency around financial matters and clarity about impact. Government and the non-profit sector should work harder to address this.
Non-profit organisations are perhaps the last sector in Irish society to enjoy a high degree of unconditional trust from the public. This has taken generations to build, and for the sector there is no more precious asset.
The non-profit sector in Ireland employs more than 100,000 people and has annual income of nearly €6 billion. It relies heavily on State grants and private donations, and yet it remains unregulated.
Many people assume that a charity (or CHY) number is the equivalent of charity regulation. It is not. It is concerned only with taxation, which means that just short of 8,000 non-profits have received exemption from paying various taxes (like Dirt and corporation tax) from Revenue, and that about a quarter of these are eligible for certain tax benefits on gifts of more than €250 from the public. Before granting such tax reliefs, Revenue must be satisfied that the work of the non-profit body in question aims to relieve poverty, advance education or religion, or promote other purposes of benefit to the community.
Whereas this tax status is undoubtedly of value to those non-profits that enjoy it, it does not amount to charity regulation – and indeed Revenue has never suggested that it does.
First, it is optional rather than obligatory. Second, it is administered as a private transaction between Revenue and the non-profit body in question and the public only has access to the names, CHY numbers and registered addresses of charities that receive it. Missing from these arrangements are public disclosure, mandatory performance standards and visible, enforceable sanctions for non-compliance.
All of these good things – disclosure, standards and sanctions, and many more besides – are provided for in the Charities Act 2009. For the first time, this held out the prospect of comprehensive regulation for a wide variety of non-profit organisations – both religious and secular – some of which currently operate in a less than transparent way. Unfortunately, according to the Minister for Justice, there is no prospect of the Charities Act being enforced anytime soon. Speaking at a conference of sector leaders last month, Alan Shatter said that the Act was conceived in wealthier times, that its full implementation would involve expense unthinkable in the current climate, and that the solution to the need for regulation required effort on both sides – Government and the sector.
This clarification is welcome, given the rather muffled character of ministerial statements about plans to implement the legislation since its enactment almost three years ago. The question is, are non-profit bodies ready to answer the Minister’s call for co-regulation, in the spirit of economy and shared responsibility in which it was made?
There are some encouraging precedents. A thousand non-profit companies – small, medium and large – have already taken up the invitation to provide additional disclosures online to the Irish Nonprofits Database about their values, activities, beneficiaries and achievements. This information is available on the free, searchable, public website, www.irishnonprofits.ie, which was launched last week by my own non-profit company, Irish Nonprofits Knowledge Exchange, and incorporates the database.
The additional information complements the detailed regulatory data available in the database for about 8,000 non-profit companies, and the more rudimentary regulatory data provided by Revenue about non-incorporated, non-profit organisations.
As increasing numbers of people use the website, more non-profit organisations in the database – including all those that enjoy charitable tax relief – may perceive their self-interest to be served by joining in and providing additional information on a voluntary basis.
Another recent trend is the codification of best-practice voluntary standards – in non-profit governance, fundraising, child protection and managing volunteers. Some have matured this year and can be signed up to by any non-profit body. Like the new website, these reflect a high degree of cross-sectoral collaboration, and have been part-funded by the Government.
On the face of it, we seem to have the makings of part at least of a co-produced solution to the needs of a proportionate, economical regulation of charities: public disclosure, and – with some further work on impact reporting – performance standards.
Now, we could use visible, enforceable sanctions for non-compliance. Surely only ingenuity, co-operation and goodwill are required to deliver these before the fourth anniversary of the Charities Act in 2013?
Patricia Quinn is the founder and chief executive of Irish Nonprofits Knowledge Exchange (INKEx), an independent non-profit company funded by Government, philanthropic and corporate grants