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Joint Committee on Social Protection, Community and Rural Development and the Islands debate -
Wednesday, 6 Jul 2022

General Scheme of the Charities (Amendment) Bill 2022: Discussion

We have received apologies from Deputy Flanagan and Senators Wall, Garvey and Murphy. I ask members to note that, to participate in this meeting remotely, they must do so from within the precincts of the Leinster House complex. I ask members and witnesses to turn off their mobile phones because they interfere with broadcasting equipment. I ask members attending the meeting remotely to use the raise hand function on Teams if they wish to contribute.

On behalf of the joint committee, I extend our deepest sympathies to the Minister of State, Deputy Joe O'Brien, on his recent bereavement with the loss of his late mother, Bridget. We offer our deepest condolences to him and to his family at this difficult time. May she rest in peace.

The first item on the agenda is the pre-legislative scrutiny of the charities (amendment) Bill 2022. The general scheme of the Bill was recently referred to this committee by the Minister for Rural and Community Development, Deputy Humphreys, for pre-legislative scrutiny. The primary legislation governing the operation of charities in Ireland is the Charities Act 2009, which provides for the definition of "charities", their operation and reporting requirements, and the establishment of the regulatory authority. This is important legislation. The purpose of the proposed Bill is to strengthen the charity sector and ensure greater transparency, clarity and fairness, which would serve to enhance public confidence in the sector. The proposals contained in the legislation seek to improve the operational capacity of the Charities Regulator to conduct its statutory functions, ensuring more proportionate regulation of the sector. A number of amendments to the Charities Act 2009 are proposed under the general scheme. These would remove the exemption whereby the relevant accounting reporting requirements in the 2009 Act do not apply to charities that are companies. I am pleased that we have the opportunity to consider this matter today.

I welcome officials from the Department of Community and Rural Development. We have with us the Minister of State with responsibility for community development and charities, Deputy O'Brien. I welcome Ms Bairbre Nic Aongusa, assistant secretary, community development. From the Department's community and voluntary supports and programmes unit, I welcome Mr. Kevin Power, assistant principal officer, and Ms Niamh Hoey, administrative officer.

Before we begin , I wish to explain some limitations to parliamentary privilege and the practice of the Houses with regard to references people make to another person in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege. Witnesses are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of a person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

The Department's information note has been circulated to members. To commence our consideration of this matter, I invite the Minister of State to make his opening remarks.

I thank the Chairman and the committee members for the invitation to attend to discuss the general scheme of the charities (amendment) Bill. I appreciate the flexibility they have shown in rescheduling today's session. I thank the Chair for his good wishes. I am joined by officials from my Department, including Bairbre Nic Aongusa, assistant secretary, Kevin Power, assistant principal, and Niamh Hoey, administrative officer.

This is important proposed legislation. The purpose of the proposed Bill is to strengthen the charities sector, ensuring greater transparency, clarity and fairness that will serve to enhance public confidence in the sector. The proposals contained seek to improve the operational capacity of the Charities Regulator to conduct its statutory functions, ensuring more proportionate regulation for the sector. Registered charities play an integral role in the provision of services to our communities. With more than 11,400 charities on the charities register, the work of the regulator is vitally important.

The Charities Regulator has made significant progress in recent years in enhancing compliance and enforcement measures.

This includes the introduction of the charities governance code and related supports; conducting statutory investigations into charities; and the publication of guidance in respect of topics such as safeguarding and fundraising.

There are a total of 32 heads in the general scheme. Heads 1 and 2 are standard provisions, while heads 3 to 32, inclusive, provide a number of amendments to the Charities Act 2009. The amendments proposed in heads 14 to 16, inclusive, and 31 have been developed from a number of previous amendments that were approved by the Government and included in the general scheme of the courts and civil law (miscellaneous provisions) Bill 2017. My officials have worked closely with the charities regulator in considering these amendments. My officials have also engaged counterparts across the Government to gain a greater appreciation and understanding of cross-sectoral impacts. Representations and feedback from the sector have also been incorporated into the general scheme.

The operational experience of the regulator since its establishment in October 2014 has resulted in a number of proposed amendments. There is a need for proportionate regulation and governance requirements for our charities. This Bill is a key step that needs to be implemented in order to allow for the appropriate regulation, particularly financial regulation, of the sector. I assure committee members that the issue of proportionality has been reviewed at length in the preparation of the general scheme. Fair and reflective regulation is the very basis for this Bill.

Almost 42% of all registered charities, those which are incorporated, do not currently have to submit an annual statement of accounts to the regulator. At the same time, we have existing financial thresholds for audit that are placing an unnecessary administrative burden on our smaller, mainly volunteer-led charities.

Among the actions in the proposed Bill are new financial thresholds that reflect the size and scale of a charity. This would not only afford the regulator more balanced and measured means for regulating the sector, but also lessen the administrative burden on these same smaller, mainly volunteer-led charities.

In May 2021, the charities regulator published new research findings on the views that charities have in the context of public trust and confidence in the charity sector among other things. It is clear from an initial review of the responses to the parts of the survey that there is considerable support for regulation generally and for the charities governance code among charity trustees, charity employees and other volunteers. The majority of those surveyed acknowledged the positive effect regulation is having on the sector and their individual charities.

Measures included in the general scheme will not only provide greater transparency for the public in relation to the finances of registered charities, but will also provide clearer guidance on the roles and responsibilities of trustees. It is important to highlight that these are not new or additional duties. They are a statement of the duties to which charity trustees are already subject under common law. By including them in statute, the regulator can raise awareness among trustees and achieve greater compliance by reference to the law.

The proposed Bill will also strengthen the powers of the regulator to intervene where no effective management or board oversight is available. Ultimately, these are all actions that will further enhance public trust and confidence in the sector. It is also proposed to update the definition of “education bodies”, providing for the removal of third level foundations from the definition. Third level institutions are entitled to register as charities, as are third level foundations. However, those third level foundations who obtain charitable status are not currently required to submit statements of accounts to the regulator. Furthermore, third level foundations do not come under the remit of the Office of the Comptroller and Auditor General either. This very issue was raised by the Committee on Public Accounts in November 2019.

The general scheme also includes a provision to provide greater defined clarity to those purposes that the charities regulator can consider as a charitable purpose. It is also proposed to add the advancement of human rights as a new category of charitable purpose in the proposed Bill. Human rights is a concept already recognised and defined on a statutory footing in Ireland, under the European Convention on Human Rights Act 2003 and the Irish Human Rights and Equality Commission Act 2014 respectively. However, Ireland is unusual among common law jurisdictions in not having the advancement of human rights defined as a charitable purpose.

This proposed Bill will ensure that our charities legislation is fit for purpose in order that the vital work of our charities can advance and flourish. I welcome the opportunity to discuss the general scheme of the Bill with the committee and to hear the views over the course of this process.

I want to express my condolences to the Minister of State on the death of his mam.

The Bill is really welcome. It is long overdue. Issues have arisen over the years that people have expressed concerns about. The advancement of human rights as a charitable purpose is really welcome. The alignment with the Companies Act for financial reporting will make a huge difference to the smaller charities in reducing the burden and getting their work done.

The release from liability of those on boards is also important, but the matter of issues that might have occurred prior to them becoming members of boards is important. It is very difficult to get people to become members of charity boards and directors. I will go into the difference about members later. Whatever we can do to make it easier for charities to recruit people to their boards is really welcome.

I commend The Wheel. It held a meeting last week with over 300 organisations. Many submissions have come in from them. I will pick up on some of those as well as ones I have identified. Under head 3, which contains to the new section 2 to be inserted into the 2009 Act, it is unclear what other office of the company applies here that would bring a company secretary into charity trustee status. If, for example, a company's secretary also fulfils the role of a data protection officer, will that trigger the trustee's status? It is not believed that was intended but the current wording could be interpreted that way. Does that make sense?

I am aware of the issue of secretaries potentially being trustees as well. We have a bit of work to do on that, but the bottom line is that trustees should not be remunerated for their role as trustees. There are exceptions to that but the regulator will require to be notified and requested for exceptions like that. We have a little bit of work to do around teasing that out but it is partly about defining the role of the trustee and of the secretary and if there is payment involved, to be clear what the payment is for. The bottom line is that charity trustees cannot be remunerated generally for their role as trustees. We take the Deputy's point on that.

Again under head 3, I refer to the definition of a member of a charitable organisation. A company limited by guarantee does not have shareholders, it has members so there is a view that the definition should include the term "or member". There is always confusion between a director and a member of a charity. Some people who join boards do not understand the difference where they are sitting on the board they are de facto legally responsible even though they are not a director. That may need a little more clarification. Will I go through the items one by one and we can come back?

The Deputy can go through them and then we will let the Minister of State come in. We can have a further back and forth. There is no difficulty. The Minister of State might bank the questions and then we will come back.

On head 7, the new section 29(6)(b) relates to the power of the charities regulator to withdraw the application for charitable status if they deem some documentation not to have been presented to the charities regulator. There is a feeling that while there may be some documentation that needs clarification or might need to be submitted, to remove the charity from the register for something that could be quite minor seems to be very blunt instrument.

Head 7, which contains the new section 39(b), relates to the power of the charity regulator to impose conditions. The type and scope of those conditions is unclear.

The penalties can be quite severe, including rejection or withdrawal of charitable status. I wish to tease out what those conditions would be.

Section 39(11b) is a new legal obligation that a charity shall not amend its constitution without prior approval of the Charities Regulator. For those involved in charities, making small or minor changes to a constitution does not change the concept of what they do, but it may change small aspects of it. I am not sure how that will work in reality if a charity has to contact the Charities Regulator every single time a minor amendment is made to its constitution. It could be quite onerous again. We should bear in mind that a lot of these boards are made up of voluntary members and people who have full-time jobs. We should be making it easy for people to sit on boards and be involved.

Head 8, section 40 introduces a requirement to notify the Charities Regulator of certain information forthwith. Some people found the term "forthwith" to be insufficiently precise and, again, unduly onerous. It was considered reasonable to specify the number of days. If the Charities Regulator can remove a charity in some cases without recourse to appeal, it is important that whatever the Charities Regulator asks for is specified so that people know what the consequences will be for them.

Head 9, section 43(2) and (2b) refer to the removal of a charity from the register. There is huge concern that there will be a wide range of powers to remove a charitable trust from the register for relatively minor issues, which could have a catastrophic effect both on the boards of trustees and the services that charities provide, some of which are essential health services. People understand that it is probably not the intention of the Bill to do that, but the intentions and the workings of the Bill could be two different things. Some of these services, such as those provided by the Irish Wheelchair Association and others, provide essential services. If someone is removed from the register for something he or she deems relatively minor, it could have a catastrophic effect on the charity itself because people's perception of the charity would be that there is something odd going on here. There is a feeling that it is not really the intention of the Bill, but it could be the effect.

Section 43(4A) also relates to reasons a charitable trust could be removed from the register and the provisions that a charity proposing to wind up its activities should communicate this to the Charities Regulator, which I do not have an issue with. There are about seven sections on this most of which are relatively minor. If a charity is proposing to wind up, it is reasonable and logical that it would have to inform the Charities Regulator. I have no major issue with that.

Does the Deputy have a bit more to contribute?

That is fine. Perhaps we could break it up and let the Minister of State in.

I was not sure what way would be easier.

I want to facilitate discussion on this matter. The whole idea is to try to tease this out. I do not want a complete over-and-back discussion, but I do not want to swamp the Minister of State either.

I understand that. I was trying to figure out what would be the easiest way to do this.

I will leave it to the discretion of the Deputy to group some of the points together as best he can. He can then take a break and allow the Minister of State to come in on them.

If the Minister of State answers those questions, we could let a couple of other speakers in and then come back to me, that would be easier.

Yes, I have no problem with that. It is important that all of these questions are asked in order to get some information. We will give Deputy Paul Donnelly a short break to let the Minister of State in, and we can come back to the Deputy afterwards.

I have answers on some points but not on others. I take some points on board, such as the point about membership needing to be clarified. On head 7, regarding documents missing, much of the intention is that there are intermediate sanctions that can be used as well. At present, the regulator has very blunt instruments. A lot of the time it is the nuclear option or nothing. Members will see there are a lot of intermediate options in the Bill. For example, documents missing that lead to someone being removed from the register would not be proportionate. The committee will hear me say the word "proportionate" repeatedly during the course of the debate.

One area I wish to give reassurance on is section 39(11b) around changes to the constitution of a charity. We do need to give clarity on this. It was never the intention that every single potential change to a constitution would require to be reported to the regulator. We are looking at three broad areas: the main objective being if changes are made to the charitable purpose; income and property clauses, which can be significant financially; and the winding-up clause. They are examples of three areas in which changes to the constitution would require notification of the regulator. I can understand how the wording would make people worry that it referred to every little thing. That is not the intention and it is important to make that point.

We will take the specifics of what the Deputy said and consider them. I will make general comments because I cannot always find the exact clause referred to by the Deputy. We envisage the charities appeal tribunal being used more rather than recourse to the courts. I again use the word proportionate. The removal of a charity from the register by the regulator would be the nuclear option, but I understand it would only happen when there is non-engagement by the charity. In terms of how the regulator works now, it is very co-operative, collaborative, and there is lots of engagement if there are questions or issues raised. Removal from the register is the last option and is not used very often.

They are general responses, but we will take back the specifics of what the Deputy asked. Generally, we are very open to input on the Bill. We are doing this with an open mind in terms of input and suggestions as well.

I acknowledge that because sometimes legislation comes before the committee that is effectively set in stone. At the end of the day, we all want legislation that stands the test of time. It is important that it is robust because there are weaknesses within the current regulatory system and we all accept that.

I echo Deputy Paul Donnelly's comments. There is a huge amount in the Bill that is welcome. The Minister of State used the word "proportionate" a lot in his opening statement. It is important to acknowledge that many small charities make vital contributions and do important work within communities. The regulatory burden that is placed upon them is extremely onerous. We all know of several charities that spend a lot of their time dealing with paperwork rather than the work they want to be doing. The Bill goes some way towards finding the necessary balance in that. The issue of transparency is vital. We all know of charities that have failed the transparency test in one way or another and the implications for fundraising across charities, generally, is impacted by that. If the reputation of one charity is damaged, it affects all charities across the board.

I have two general questions, the first being on financial thresholds for reporting. It was said that the small charities will not have the same reporting responsibilities as the bigger charities will have. How will those thresholds be set out and how will they be tracked over time, because we want legislation that will last?

I am interested in the point raised about third level. Deputy Conway Walsh will know that transparency in funding in third level is an area I introduced amendments on in the Higher Education Authority, HEA, Bill.

This seems like a very welcome piece of work in order to bring more oversight and more transparency to third level funding, but perhaps the Minister of State could tease out in a little more detail for me how that will work within the Bill.

Broadly speaking, there will be three categories of threshold. At present every registered charity has to submit an online annual report form. When its income or expenditure goes over €10,000, there is a higher requirement. We propose to raise that threshold to €25,000 because research has shown that the organisations under the €25,000 income line are largely volunteer-run. Deputy Ó Cathasaigh himself said it: we want to keep people on board so we want to keep people volunteering and getting involved at that level. The next level is from €25,000 to €250,000. The level of reporting required there will be higher up the scale again. At the top level, the threshold for which is going up as well, from €100,000 to €250,000, there are 1,000-plus charities. We have probably heard of the majority of them. Their requirements will go up as a result of this, but we have large support for that. They will be required to submit detailed accounts under the statement of recommended practice, SORP, headings. A lot of these larger charities are already doing that work anyway in respect of other reporting bodies they need to go to.

There was an issue with third level foundations, a simple lack of transparency and their not being required to submit accounts to the Charities Regulator. That is removed, so, because of the size of a lot of those charities, I guess they will end up in the top tier of €250,000-plus. We will get quite a bit of detail on their financial operations once this is processed, agreed and finalised, as is hoped.

The Minister of State has answered most of the questions I had. I express my condolences on the passing of his mum. I welcome the Bill. What we are trying to achieve in it in respect of transparency and effectiveness is very welcome. We need to ensure there are no unintended consequences. The more ambiguity we can remove from the Bill, the better.

My main query and my main reason for being here today relates to the thresholds. I was very concerned about the €10,000 threshold. I really welcome the fact that the Minister of State has moved that to €25,000. I still think there is a very big gap between the €25,000 and the €250,000 in the context of inflation and the activities of charities now and so on. That needs to be taken into consideration. This is head 14. I am finding in Mayo that so many volunteers are moving away from organisations. We really need to achieve protection for the volunteers, accountability and transparency here but in a way that we make this as unbureaucratic as we possibly can. Even very long-standing events in Mayo are cancelled this year, not because of Covid but because of the fact that the organisations involved cannot get enough volunteers to run the events. The impact of that in rural Ireland - and, I am sure, in urban Ireland as well - is quite severe. There is also the fact that so many of the things that should be done directly by the State and under the likes of the section 39 groups and others are done by registered charities carrying out that essential work. That not being carried out will have a really detrimental impact. If the Minister of State could look at the threshold, that would be really good. He says the Charity Appeals Tribunal will be used more. Maybe he could speak to what it will be used more for in respect of protecting people. We need to provide applicants and charities with greater independent legal recourse as well. Maybe the Minister of State could speak to that. I welcome his responses and his willingness to get this as right as possible and to work with everybody across the board in order that we have legislation that serves the communities in which these charities operate and those who contribute.

I echo the point my colleague, Deputy Paul Donnelly, made about avoiding the fact that there are questions raised when they do not need to be raised and the reputational damage that that may do to charities in respect of fund-raising and their good standing in communities.

We estimate that the middle income category of €25,000 to €250,000 includes 2,500 charities. I take Deputy Conway-Walsh's point about the threshold. As for her broader point about volunteers, I have responsibility for volunteering policy as well and I think that when people think of volunteering, many of them think of the front line and visible volunteers. I am always at pains when I get the opportunity, which I will take now, to thank all the less visible volunteers on boards who do not get seen. We had them very much in mind in this process as well because it is, as Deputy Paul Donnelly said, hard to get people to go on boards and to keep them on boards, and raising that threshold from €10,000 to €25,000 will help people more in reducing the administrative burden. I think the clarification of trustee responsibilities will also help. I know of situations in which people were reluctant to go on boards of charities because they did not know really what it involved and no one could tell them for certain in respect of the liability unless that person was a legal expert. Now, however, we will have clarity as to what those responsibilities are. That is a good thing.

I would be shuffling around bits of paper here for ten minutes telling the committee the different places the Charity Appeals Tribunal can be used more. In essence, there are places and situations at the moment where the only option for a charity or the regulator is to go to court to appeal a decision or an action of one kind or another. We are just trying to reduce that a little in order that it is easier to appeal a decision. I do not have a list of places to hand to the committee. They are scattered throughout the heads of the Bill. We will call that out just for our own information and to make it clearer. We can get back to Deputy Conway-Walsh on that as well.

Did the Deputy have-----

It was only that. Obviously, the question of third level is also of interest to me, as is what the Department is doing there in fitting in with the HEA Bill we recently dealt with, trying to get the balance there between autonomy and accountability.

In accordance with the categorisation of reporting we have, I would guess that most of the organisations will hit the top one, but they will be required to submit fairly detailed accounts to the Charities Regulator annually now. That is good for oversight and transparency. It had not been there before.

To tease out the question of the High Court just a little more, given that the Minister of State is removing one aspect of an appeals system from the courts system to the Charity Appeals Tribunal, there are concerns about the connection between the Charities Regulator and the tribunal. What would be the connection between both bodies? Are they the same organisation? I am just not clear-----

No. By the nature of their roles, they have to be separate and independent entities. To clarify, the secretariat is supplied by the Department but they are separate entities.

Again, there is just a concern when one aspect of an appeals system is removed whether that system is strong enough. It is a matter of the sense of confidence in that appeals system and that it is entirely independent. I take the Minister of State's point.

Another welcome aspect that I have raised on the floor of the Chamber is about people purporting to be a charity and using so-called charity numbers. The Chairman has raised it as well. It mostly is about people who go door to door to collect clothes. These operations are big, including a very large one in our constituency, and this issue needs to be addressed.

Head 20, the proposed new section 54B, relates to avoiding conflicts of interest. The Companies Act wording recognises there may be circumstances in which conflicts of interest arise and this could be managed within an organisation through its governance documents in respect of its members. The Companies Act has a similar wording which it is felt would be more appropriate than the legislation as proposed. Perhaps it could be looked at.

The proposed section 54B(3) in head 20 relates to an obligation to remove a trustee. It has been stated that it is not clear whether a charitable trust will be given the power to positively act to remove a charity trustee who is in default and that this point needs to be clarified. The issue relates to a person who may be bankrupt but has been discharged. Will the Charities Regulator be notified that it is agreed the person can remain on the board if the bankruptcy has been discharged? Does that make sense? There is an issue whereby a person can be disqualified from being a member of a board if he or she has been declared bankrupt. If that bankruptcy has been discharged, it is unclear whether the person can still remain as a member of the board.

Head 29 on the proposed amendment of section 89, deals with agreements between a charity and the charity trustees or connected persons. It has been stated there is a concern this does not take into account the possibility that some CEOs, especially of health-related charitable trusts, could be in breach of the section. The definition of "personal connections" is extremely broad and has the ability to encompass a very wide variety of persons. It is felt that this point could be clarified.

In another point, it has been stated there could be an addition to the Bill relating to section 39 of the Charities Act 2009. There is an area where electronic or tap donations are increasingly frequent and it is recommended that the provisions of the Charities Act 2009 be commenced as soon as possible. There should also be an opportunity for a charitable organisation to restructure itself and not have to go through the arduous task of having to register as a new charity.

The last piece is the register of merged charities. There is currently no way of knowing who is involved in a merged charity or where the charity came from. It has been recommended that a register of merged charities be established. It is interesting in that I went through a merger process myself and it was probably one of the most frustrating events through which I have ever gone. It took approximately two and a half years. There was a new board of a new company but if somebody went back to look at the two previous charities that merged into one, no one would have a clue from where it came. It would be useful to have a process whereby people could go back and track the lineage of a charity to see where it came from and whether there might be any issues coming from that.

Before the Minister of State comes back on that point, Councillor Laurence Fallon also has raised the issue of door-to-door collections mentioned by Deputy Paul Donnelly in respect of County Roscommon, where we have had a proliferation of them in the past. People have a sticker they circulate through letterboxes with a charity number on it, to give the impression that such organisations are legitimate registered charities. Is there a mechanism in the legislation whereby someone who is giving that impression can be pursued? Even though the person is not claiming to be a registered charity, by having a charity number the person is clearly giving the impression that he or she is.

I will work backwards on that because the Bill provides that an individual who is doing this now would be committing an offence. Previously, groups of individuals that were not organisations were going around purporting to be organisations. The Bill proposes that if in an individual is discovered doing so, he or she is committing an offence. That will improve things. It will not solve the issue because by its nature, it is very difficult to pin down. These individuals do not have offices or set operations. That is the hardest thing about it.

Almost on annual basis, if not more regularly these days, the Charities Regulator tries to put information campaigns out in the public domain about checking the bona fides of a company that puts a slip in the door. My experience is they tend not to put any number on the slip, because if they put even a fake number on it, someone might check it and discover the number is fake. My experience is that they do not put a number on the slip and just hope for the best. Unfortunately, people go for it. An awareness-raising exercise is part of the solution.

I will take away and look at what Deputy Paul Donnelly has raised on conflict of interest. I believe I will be saying that a couple of more times. I had not thought about or yet seen the detail on the obligation to remove a trustee with regard to bankruptcy. My instinct tells me we would need to look at what happens to people who discharge their bankruptcy in other situations and whether their slate is wiped clean, so to speak. We would need to have some consistency in that regard.

Head 29 relating to section 89, is around the CEOs potentially being employees. This goes back to the potential company secretary issue. We need to do more on to clarify the distinction between a trustee who is not getting paid for a trustee role and someone on the board who also is being paid for a different role. I acknowledge there is a bit of work to be done there. I did not quite get the Deputy's point on tap donations but I will take away the Deputy's point on merged charities and have a look at it. The Deputy might go back over the point on section 39 around tap donations.

There is a sense that there was a previous law that was not commenced with regard to door-to-door collections and the types of charities that are collecting. One even sees in churches that a donation can now be tapped. The request was made that as this provision of the Charities Act 2009 has not been implemented, tap donations might be added to this legislation. I will try to find the exact section.

Section 39 is the one the Deputy mentioned. It concerned the lack of the commencement of section 39 in the 2009 Act. Is that correct?

Why is that section not being commenced?

I believe it relates to section 93.

It is; I beg the Minister of State's pardon. Section 93 of the Charities Act 2009 was never commenced and therefore it is not currently law.

The issue we have with that is that An Garda Síochána and the Department of Justice have been consistent in their response that they do not have the capacity to enforce the amendments. In response, the Charities Regulator has created guidelines for charitable organisations and fundraising from the public to address issues around fundraising for charities. We are told consistently that the reason the section is not being commenced is that the capacity to implement it is not there.

The committee might want take that a bit further.

On the Minister of State's earlier response on door-to-door collections, an issue I have come across in the past and of which all of us have had experience, is that of commercial organisations contacting us about selling advertisements.

A prime example of that would be in a school journal. This purports to be of benefit to a particular school where the companies are acting on behalf of the school. It is not just schools but charities as well. Effectively, all they are is brass-plating a commercial operation and when you explore in detail by contacting either the school or the charity, they are getting a nominal fee to have their name associated with a particular commercial operation. Is there a mechanism to ensure that where a commercial business involved in a commercial operation is stating it is acting on behalf of a particular charity, it is obliged to clarify how much of that contribution is going towards the charity? For example, there are many radio ads at the moment where if you make a donation towards Ukraine or a famine in Africa, it is clearly stated a minimum of €2 of your text message contribution is going to this particular organisation. There are commercial companies that are operating on that basis, that is, selling advertising in particular publications, whether it be calendars or diaries and so forth, where there is no indication being given and when you delve into it, the proportion of the contribution actually going directly to the organisation is minimal.

Is the Chairman referring to where a charity subcontracts a private operator to do this? I am just trying to pin it down a bit first.

In many cases, it is the commercial company that approaches the charity. It says it is in the process of producing a calendar, is seeking sponsorship for it, will circulate it in a particular geographic area, would like to have the charity's name associated with it and for that purpose will give the charity a contribution. However, you may find out the proportion of the funds generated going to the charity are minuscule compared to the profit being made out of that particular enterprise. I do not think we can outlaw that and there are some legitimate fundraising mechanisms used for it. However, should there not be an obligation on that organisation to print or at least to state, when selling the advertisement, that this advertisement is being bought for €100, of which €2.50 goes to the school or the charity, when clearly although the impression given by the sales pitch is that it is the other way round, the reality is very different?

I am trying to tease this out a bit in my head. You have got a private operation that may be potentially misleading a private citizen about what they are selling to them.

My concern always though is what is happening with the public money. The charity is buying advertising, which it is entitled to do-----

No, it is the individual.

For example, let us say the Houses of the Oireachtas were a charity. A company named Paul Donnelly Publications contacts me to say it is circulating a calendar in the Roscommon area next December. It is selling advertising for it and the beneficiary of this is the Houses of the Oireachtas charity. It is selling advertising to me at €100 and clearly giving me the impression the vast proportion of the contribution I am making towards that advertisement in the calendar that is going to be circulated in Roscommon is going towards that particular charity. In reality, however, Paul Donnelly Publications is pocketing the substantial proportion of the profit being made-----

-----allegedly being made from that. The difficulty here is it is being sold on the basis the charity is the main beneficiary of it, where in fact the commercial company is getting the vast bulk of the profits from that.

The Chairman has opened my eyes up because I just recently did that.

I am quite surprised and I am going to find out today exactly how much money went to the school, because it was a diary.

We have all got caught for them.

Okay. I never knew that until the Chairman said that. It is interesting.

I have questioned it and gone back and found out the amount that is actually going to the school, charity or organisation is absolutely minuscule.

My understanding was this money was going to the school. That is certainly what I was led to believe. That is interesting.

As a basic principle, what we are trying to do here is ensure charities are more transparent and accountable in how they use their money. Let us see where we can take that principle with respect to the issue the Chairman is describing. We can see if furthering that principle and getting it ingrained a bit more, either legislatively or in guidelines, is something that will help a situation like that. I am not grasping it 100% but it strikes me there is something there in terms of the charity being able to explain itself as to why it used money in a certain way.

Maybe the way around this is to skin the cat another way, so to speak, such that there is an obligation on a charity, if it lends its name to a particular fundraising event, that the people from whom the contributions are being sought must be informed of the proportion going to the charity.

That may be the way around this but it is a problem. It does not just relate to registered charities, as Deputy Paul Donnelly, has spoken about. There are many more organisations out there getting caught in the same problem.

I can see how the name, label or logo of a charity on any product would make people more amenable to handing their money over on it. If there is not 100% truth and honesty about what is going on there, then that is something we are interested in and the regulator would be interested in. Whether it is guidance, legislation or policy I am not sure but let us look at that.

I thank the Minister of State. I am sorry for using Deputy Paul Donnelly's name in vain. Maybe he will have a summer project to get involved with now.

The invoice will be heading the Chairman's way.

Was there anything else we have missed out on the Minister of State wanted to add?

To add, there was some concern around the terminology in the general scheme around a "significant event". We have a little bit of work to do to put a bit of focus on that. We will be looking at the legislation in Scotland as well and how it elaborates on that term a little more as well. I am aware there are some who are a little concerned about the use of that phrase but we have a bit to do on that.

I am glad the Minister of State raised that. How is the retrospective nature of that going to be applied? I believe there is provision in there for it to be retrospective, which would be very helpful.

Yes, we will take on board. I do not think there will be huge desire to go trawling back through thousands of charities' actions in the past but there is a gap between what comes to the attention of the regulator and what does not. There are significant events that do not come to the regulator's attention that we would like to. It is not every little thing that happens but serious events. There should be a commonsensical feeling from the public in general that this was a significant event and the regulator should have known about it. It is that kind of space. We just want to give better oversight without requiring charities to report every single little thing they might currently consider a significant event. In essence, we have a bit of work to do to hone that down and define what the significant event is.

In a case where there is malicious intent, say where somebody wants to destroy the reputation of a charity because of a personality conflict or whatever it might be, what protections will be in the Bill against such an occurrence?

It strikes me that is a different area of law. That would be my first reaction, in that this is putting down a company's good name.

There is more that may need to be explored in relation to that one. Has the Minister of State concluded that question?

On the malicious intent question, it depends. What can be construed as malicious intent can sometimes be a real concern as well. If there is a real concern it can be reported to the regulator. I am a bit cautious about that and what might really be behind it. It could be malicious intent but it could also be a real concern. It is important that if there are real concerns they are reported to the regulator.

I want to convey my condolences to the Minister, Deputy Darragh O'Brien, on his recent bereavement.

Is there any aspect in the Bill that would deal with streamlining the process whereby groups can apply for charitable status? There would seem to be some inordinate delays associated with the processing of applications to become a charitable company. Is there any aspect of the Bill that will deal with that?

As the regulator is independent I am always careful about getting involved with applications for charitable status. I need to keep a bit of distance in that regard. The regulator has some discretion to waive certain requirements in exceptional circumstances. It is the regulator's decision as to when and how some requirements might be waived. This is as much as I would say on it for now. The regulator's office is pretty much fully staffed at the moment. I believe it is four or five short at the moment but that this is just a natural or lateral churn.

Once one applies to be a charity it is unclear as to whether one can operate as a charity while the application is ongoing.

My understanding is that one cannot do that. I will let my officials correct me, but unless one has the full status then one cannot do that.

There are a number of references to the UK and to EEA countries in the context of the operation of charities. My query is specific to the operation of charities in the North where, for example, a 32-county charity may have an office in the North but is also operating in the South. I cannot detail them here but we must be aware of some of the difficulties that may pertain to charities in the North that are also trying to operate in the South. It is in the context of advertising, fundraising and all of those issues. If somebody is donating money from the Twenty-six Counties to the office in the North some clarification is required in the new legislation as to whether it is legal for the charities to do this.

We need to put such provisions into the Bill as soon as we can because there is a bit of ambiguity there. At the moment, the regulator is using that clause I mentioned earlier about using her discretion. The regulator is using her discretion to retain some charities on the register. We need to deal with this aspect in the Bill in a clearer way.

On that point, is there a differential between a cross-border charity in this jurisdiction and in the United Kingdom, and a charity in this jurisdiction and in other parts of the European Union? I do not expect the Minister of State to have an answer to that at the moment but perhaps he might clarify it for us.

Correct me if I am wrong, but the intention is that UK-based charities would have a similar status and standing as EU-based charities. At the moment we are just in a little bit of flux and the regulator is using her discretion to get over that period. We will nail that down, hopefully, in this Bill.

Does Deputy Donnelly have any further questions?

No. That is it. Go raibh maith agat.

Does Deputy Rose Conway-Walsh have any questions?

I have one final question. The Minister of State will be aware that we are currently seeking public submissions on this legislation. We have already received a number of submissions and will be going through them in private session today. Is there any aspect of the changes proposed here by the Minister of State where he would like to hear from charities or members of the public around the operation of legislation at the moment or the proposed changes? Is there any particular aspect where the Minister of State, in finalising his position on the legislation itself, would like to get a view from the charities or the public?

To be honest there is no one particular aspect but in general we very much welcome input and we will be listening carefully to what people are saying. I have not had the chance to go through everything that has been submitted to date. I have read some of it. We will look at everything that is proposed to us. That is for sure. There is, however, no one area that comes to mind on which we would specifically welcome submissions. I would be slow to single out a particular area anyway. I suspect that the ones I do not think of would be the ones we should hear more about. It is about proportionality and balance. The proposed new thresholds will help a lot in that regard

I thank the Minister of State and his officials for assisting the committee in its consideration of this extremely important matter. The committee will consider these matters further in private session and we hope to report back to the Minister of State on the legislation without undue delay.

That concludes our consideration of the matter this morning and concludes the committee's business in public session. I propose that we go into private session to consider further business. Is that agreed? Agreed.

The joint committee went into private session at 10.37 a.m. and adjourned at 11.01 a.m. until 4 p.m. on Wednesday, 13 July 2022.