Check against delivery
Ladies and Gentlemen,
I was very pleased to be invited to the ICTR Conference today. Indeed, this is probably the first opportunity I’ve had to speak publicly at any length on the subject of charities regulation since the transfer of the function to my Department earlier this year.
In taking on the charities regulation function, in the context of the reorganisation of Government Departments in May this year, I recognised that, as it involves the provision of a new service, it would present a particular challenge. In difficult times such as we are experiencing, one’s natural instinct is to batten down the hatches, retrench, and focus only on what has to be done, rather than on what ought to be done.
Indeed, I have had to make some very hard decisions since my appointment. There are many projects - worthy initiatives, in an ideal world - that it is simply not possible to support at the present time because of resource limitations.
So where does charities regulation fit into the overall scheme of things in 2011?
Well, firstly, I am aware that this regulatory initiative has been long awaited. I also know that the consultative, open, approach taken in the development of the legislation, resulted in the passing of an Act that was welcomed by all parties in the Oireachtas, and by the Irish charities sector. I also know that many representatives of the sector, including ICTR, have been calling for regulation for many years.
The Act provides for a comprehensive statutory regulatory framework for Irish charities. It is a fine piece of legislation of its type. It must be recalled however that the drafting of the Bill and the passage of Act coincided with a time of extraordinary growth in the economy, and it was not envisaged that putting in place the resources to implement would be a major obstacle. Given that context, in hindsight, it could, perhaps not too unfairly, be described as an "idealised" regulatory framework.
But the world has changed since early-2009 when the Charities Act was passed. The Irish Government, under the agreement with the Troika, is committed to reducing public service numbers, not increasing them. It is committed to increasing the efficiency of service delivery, which the Government is doing, for example, in the case of the legal and medical professions. It is committed to reducing bureaucracy, and reducing the number of State bodies and eliminating duplication.
The Charities Act must now be considered in that context. As must the future regulation of the Irish charities sector! We must be honest and consider what we can practicably achieve in the current climate.
Charities are already subject to scrutiny from a number of sources, such as the Director of Corporate Enforcement, Revenue, and are of course subject to wider criminal and fraud legislation, so it is not the case that the sector is unregulated.
However, in my view, dedicated regulation of the Irish charities sector, if feasible, would be a welcome development. It is a significant industry! A significant employer, a fact which is often forgotten when we speak of the "not-for-profit" sector, but which is of great importance in times such as these!
It provides many important services, particularly to those on the fringes of Irish society, those who may perhaps never have seen the benefits of the boom, but who are now suffering. There is a huge social dividend to what Irish charities, and the many thousands of volunteers who give so generously and selflessly of their time, do.
The anomaly is that it is at times such as these, when resources are tight, that charities themselves need public support more than ever as the demands for their services increase. I am mindful, in that context, that the Charities Act would, if fully commenced, place an additional burden of compliance in charities and their trustees.
But there is a pay-off, a "win-win", from regulation, for the sector itself, for the State, and of course for the public, and I include both donors and beneficiaries in the latter.
The Irish charities sector – thankfully - has the confidence of the Irish public at the moment. But what is this confidence based upon? Is it based on a general perception that because of the very fact that they are "charities", it follows that they must inherently be "good"? Whilst I expect that this is probably the case in most instances, it is a fact that an unregulated sector, any unregulated sector, is potentially open to abuse, to practices such as money laundering and fraud ,particularly when neighbouring jurisdictions have regulation in place, and when there is essentially freedom of movement across the EU for charities.
I know that there are many Irish charities that efficiently and effectively utilise their resources to maximise the achievement of their objectives, but there are probably others, as in any other sector, that do not!
However, realistically, I simply cannot see that we are in a position to fully implement the Charities Act on a statutory basis at the moment. Just by way of comparison, the Scottish Charities Regulator, which is perhaps the closest comparator to this jurisdiction, has almost 50 staff to fulfil its statutory functions, as one of my fellow speakers today can readily attest! In our current circumstances, there is no real likelihood of us matching the Scottish model.
Of course, the option is there in the Act for the Authority to impose a filing fee on charities to enable it to offset some of its costs. However, given the fact that most Irish charities are very small organisations with extremely limited resources, particularly these days, this would not be my preferred option. Whilst the small number of large Irish charities probably wouldn’t have an issue with such a fee, the same could not be said perhaps for the vast majority of much smaller charities. However, this is an option we must keep on the table should other approaches not prove possible.
But I think at this time, we need to be pragmatic. We need to go back to the basics. What were the principles behind the Act? What was it intended to achieve? And how can we best achieve this in the current circumstances?
I think we can sum it up the objectives of the Act quite simply.
It was intended to enhance public confidence in the Irish charities sector by increasing the transparency of Irish charities through a proportionate regulatory framework.
So what can we do to protect the sector, prevent abuse, and maintain public confidence?
I am currently taking legal advice in terms of what might practicably be done within available resources, but, subject to this legal advice, and particularly given the long-stated desire across the sector for regulation, I would hope that we will be in a position to take steps to enhance the regulation of the sector.
However, I believe that this regulation must involve, in the first instance, much greater participation from the sector in the charitable fundraising Codes of Practice project. Although I am hopeful my Department will be in a position to continue to support the Codes project in 2012, if this is to happen, I would have to be convinced that there will be greater buy-in from the sector so as to ensure value for money, and a measurable return for the State’s considerable investment.
Despite the considerable efforts and groundwork undertaken by ICTR, and the substantial investment to date from the Exchequer, the number of charities that have actually signed up so far for the Codes is disappointing. Whilst I would like to publicly acknowledge the fundraising charities that have signed up, the overall level of take-up thus far does not demonstrate the genuine hunger for regulation that representatives of the sector have always asserted exists. Regulation through codes of practice has always been seen as a key element of this regulatory process, no less than statutory regulation.
An effective interface between charities and donors in the context of collections is hugely important to ensuring that public confidence is maintained. That is why I believe that buy-in to the codes will have a hugely positive outcome for fundraising charities. I certainly do not see any negative aspect to getting involved in terms of enhancing the reputation of your charity and sending out a clear signal that, firstly, you are committed to regulation and, secondly, you are committed to operating to the highest standards. As a member of the public, I would be much more likely to support a charity that can tangibly demonstrate its commitment to fundraising in an acceptable manner, than one that hasn’t.
Indeed I would see involvement with the codes of practice as an ideal forerunner to the development of a better governed, more transparent charities sector
When my Department has obtained and considered the legal advice as regards what we can feasibly do in the short to medium term, pending hopefully, when resources permit, the implementation of the Charities Act in due course, we look forward to working with the Irish charities sector. Ultimately, we all want the same outcome. We have a shared vision of a professional, highly regarded, and transparent charities industry.
However, individual charities will have to stand up and be counted and demonstrate that this long stated desire for regulation is genuine and will be translated into action on their part. Regulation will not work without buy-in from the Irish charities sector. And I stress that buy-in begins with signing up to the fundraising codes of practice. Indeed, I am exploring ways under which adherence to the Codes might potentially be a requirement for collection permit applicants.
To reflect on the theme of today’s conference "Whither or Wither Charities? – that is the question", we must do the best we can to ensure that charities do not wither. We will always need charities and it is in the State’s interests, the public interest, and in the best interests of charities themselves, that we ensure that we have a confident, transparent Irish charities sector. I would see that bodies such as ICTR will have a critical role to play in achieving this outcome.
I would like to congratulate and thank ICTR for 20 years of constructive and successful input on behalf of Irish charities.
I hope you enjoy today’s programme, and wish you all every success with your future charitable endeavours. I would particularly urge all the ICTR members here today, and charities generally, to sign up to the fundraising codes of practice without delay.
Go raibh maith agaibh!