The Charities (Amendment) Bill 2022
The General Scheme of the Charities (Amendment) Bill 2022 provides for a number of amendments to the Charities Act 2009. The proposed amendments aim to improve the ability of the Charities Regulator to conduct its statutory functions, ensuring more proportionate regulation leading to greater public trust and confidence in the charity sector. Below, Alice Murphy (Partner) and Claire Colfer (Associate) from Mason Hayes & Curran LLP, a leading provider of legal services to the Charity and Not-for-Profit sector in Ireland, share some key highlights from the General Scheme and insights into what’s next.
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1. Introduction
The current framework for charity regulation in Ireland is set out in the Charities Act 2009 (the “2009 Act”). Brought into operation in 2014, the 2009 Act established the office of the Charities Regulatory Authority (the “Regulator”) and ushered in a new era of regulation in the charity sphere. The 2009 Act was broadly welcomed by the charities sector, who viewed it as supporting charities in their efforts to deliver their mission and preserve public trust and confidence in the sector. With the benefit of 8 years' experience of this regime in operation, the recently published General Scheme of the Charities (Amendment) Bill 2022 (the “General Scheme”) seeks to strengthen the regulatory framework and provide clarity on certain issues which may not have been fully addressed in the 2009 Act.
The pre-legislative scrutiny of the General Scheme has recently concluded and MHC were delighted to participate in this process and bring our many years of experience advising charities to bear, through a joint written submission with Charities Institute Ireland and The Wheel, and a subsequent appearance before the Joint Committee on Social Protection, Community and Rural Development and the Islands (the “Committee”).
2. Key highlights
2.1 Welcome provisions
There are a number of welcome provisions set out in the General Scheme which have long been awaited such as:
the inclusion of the promotion of human rights as a charitable purpose;
the increase of the threshold for filing of a full set accounts from a maximum gross income or expenditure of €100,000 to €250,000 (which aligns with the requirements of the Companies Act 2014);
clarification that company secretaries are not automatically deemed to be charity trustees;
releasing court appointed charity trustees from liability for actions taken by the charity prior to their appointment.
2.2 Further provisions
There are a number of other provisions which, in their present format, raise a concern that they may be disproportionate in their operation including:
a prohibition on amending any element of a charity’s constitution (however minor in nature) without prior approval of the Regulator;
the obligation for charity trustees to notify the Regulator as soon as practicable where there are reasonable grounds to believe that a “significant event” (which term is not defined) has occurred or is likely to occur.
a new offence of causing the public to believe that a body (who is not a registered charity) is a registered charity. This will be of particular relevance to anyone promoting or fundraising for an organisation which is not a registered charity in Ireland (even if it is a registered charity elsewhere);
giving the Regulator the power to remove a charity from the Register of Charities entirely (effectively bringing that charity to an end) in a range of circumstances including:
failure to obtain prior approval of the Regulator to the amendment of the charity’s main object or its name;
failure to notify the Regulator if information on the Register of Charities is no longer correct;
breach of duty by a charity trustee;
failure to disclose a “significant event”.
2.3 Other possible provisions for inclusion
There are some issues which could have been addressed which would have been very beneficial to the sector including:
the definition of the terms “operate” and “carrying on activities” in relation to the requirement to register as a charity (these are currently not defined leading to uncertainty);
the definition of the term “advertising”. At present it is not clear precisely what constitutes “advertising”. For example, if an individual were to highlight a foreign charity’s activities or event in Ireland, e.g. by posting about it on their social media pages, both that individual and the foreign charity could be in breach of the Act;
the inclusion of a “de minimis” threshold for registration, to avoid organisations carrying out very minimal activities in the State being obliged to register.
3. What next?
With the pre-legislative scrutiny process having recently concluded, the Committee has just published their “Report on the Pre-Legislative scrutiny of the General Scheme of the Charities (Amendment) Bill, 2022”. The report sets out 9 recommendations, including:
ensuring that more provisions are linked into the intermediate sanctions set out in the General Scheme, rather than moving directly to enforcement;
the insertion of a definition of “significant event”;
the introduction of guidelines on engagement by the Regulator with charity trustees in relation to any proposed changes to the information held on the Register of Charities;
the need to conduct more work on the issue of “crowd funding” in advance of the publication of the Charities (Amendment) Bill.
4. Conclusion
While the publication of the General Scheme is a welcome development, it would seem that further work is needed to ensure that the legislation strikes the right balance between the need for regulation that is robust, but also proportionate. With no indication yet as to when the Charities (Amendment) Bill is due to be published, it remains to be seen whether the legislation will ultimately achieve that goal.
About the Authors
Alice Murphy
Alice is a Partner in the Mason Hayes & Curran LLP Corporate department, specialising in Charities & Not-for-Profit. She helps charities navigate the legal, regulatory and governance issues successfully, so that they can focus on their mission and service delivery. Alice provides strategic advice to charities and not-for-profits, to enable them to plan future service delivery, expansions and restructures, depending on the needs of their sector. She is regarded as a leading practitioner in her field and prides herself on helping her clients to deliver their charitable services in an efficient and effective way. Her practice serves a very wide variety of registered charities and non profits with a focus on healthcare, education, housing and religious charities.
Claire Colfer
Claire is an Associate in the Charities and Not-for-Profit team of Mason Hayes & Curran LLP. Throughout her career Claire has worked with a variety of privately and publicly funded charitable organisations operating in a range of sectors including healthcare providers, educational institutions and religious orders. Claire has also acted as company secretary to charitable companies working closely with Boards and in particular Chairs of Boards to assist them in meeting their legal and regulatory obligations and furthering their charitable objectives. In a personal capacity, Claire has held a number of governance and oversight related roles with charitable organisations, both nationally and internationally.