Alan Shatter (Dublin South, Fine Gael) | Oireachtas source

I thank those who tabled this motion. It is an important one. As we discuss and debate these issues and travel the road of putting in place what I hope will be a regulatory system, it is right that we ensure transparency in what we are doing.

I am, of course, very familiar with the Jack & Jill Children's Foundation. I met Senator O'Brien's husband, Mr. Jonathan Irwin, before I met her. It was quite a number of years ago. The charity does extraordinary and very difficult work with families who are often traumatised. It is work of great value.

I was particularly moved to hear Senator O'Donovan's experience. I wish his daughter-in-law well and hope she has recovered from what must have been a dreadful trauma in her life. I confess that I would enjoy seeing him try to run the distance but I know I would not survive beyond 1 km either. We could both have fun in that context. I wish the Senator well over the weekend and hope the rain keeps away.

I felt I should attach some importance to this motion rather than just giving a brief reply. I felt I should say something in detail about charities, our intentions and those engaged in charitable work. Charitable work, as everyone acknowledges, is extremely important across many sectors of society. When one thinks of the many diverse areas in which charities are active, encompassing health and social care, education, youth and community work, environmental and animal welfare protection and arts and culture, to name but a few, it is clear to one that "charitable work" can mean many different things to different people and its value can be realised in many different ways. We have extraordinary diversity in our charitable organisations, ranging from highly professionalised charity companies with multi-million-euro annual turnovers to small local groups made up of volunteers, and everything in between.

Some charities rely heavily on public funding and may deliver services on behalf of the State. Others depend on private donations or commercial activities, and many more on combinations of these.

With such diversity of work, size, structure and income sources, one might wonder how meaningful it is to think in terms of a single charity sector at all. However, that would be to ignore the critical common factor that all charities share, the primacy of the charitable purpose or objective. Charities exist to advance the charitable purpose for which they were established and to deliver the public benefit that their charitable purpose entails. This sets them apart from all other forms of enterprise and gives them a unique responsibility and a unique and valued place in the fabric of our economy and society. For the most part, charities discharge this unique responsibility ably and effectively, and meet the high expectations we have of them and they have of themselves with energy, creativity and integrity. I am well aware that charities in Ireland today are facing and overcoming many challenges daily as they adapt to reduced income and increased demand for services. I commend the dedication of the workers and volunteers involved and I welcome those who are present today in the Gallery.

Levels of public trust and confidence in charities in Ireland are consistently found to be high, and rightly so. Trust is essential to charities - the trust both of their donors and volunteers and of their beneficiaries. The public needs to feel sure that the hard-earned money it so generously donates to charities is spent wisely and with care and goes to help those who need it the most. Charities work hard to foster and protect this trust. The public also needs to know that when it donates food, clothing or other items to charities it is distributed or disposed of in a manner that benefits those intended. Of course, no sector of this size is characterised by uninterrupted good practice. As illustrated by the recently broadcast revelations about the charity clothes recycling business, there is always a risk of the public being misled or insufficiently informed. There is also a risk of malpractice or abuse of charitable status through deception, or of others, through criminal activity, benefiting from charitable donations. Unfortunately, when this occurs in one area it can damage trust more widely, leading to adverse impacts on charities that are fully transparent and are run effectively and efficiently and that have, in fact, invested much time and effort in ensuring high standards in their work and accountancy practices.

Recognition that public trust and confidence in charities was a precious commodity that needed to be proactively supported and enhanced was, perhaps, the primary motivation for the introduction of the Charities Act, which had all-party support when it was introduced. It was passed with cross-party support in 2009. This Government remains committed to these objectives. The measures contained in the Act to put in place a dedicated system for the regulation of charities are designed to enhance trust and confidence in the sector in a number of ways.

Increased transparency is one important part of the overall approach. In addition to establishing a public register of all charities, the system of regulation will, in time, result in the public availability of an annual activity report for each registered charily. Of course, many charities already publish annual reports and there is much good practice throughout the sector with respect to information disclosure. I encourage all charities to adopt a transparent approach and make available such information as would help potential donors to make informed choices and have confidence that their donations are being used as intended. Such measures, when placed on a statutory footing through the bringing into force of the relevant sections of the Charities Act, will also help to align arrangements for the oversight of the charity sector here with the recommendations of the international Financial Action Task Force. This inter-governmental body has a remit to promote effective measures against money-laundering and terrorist financing and has identified the global non-profit sector as particularly vulnerable to abuse for the financing of terrorism. Putting in place a dedicated charities regulator in line with the requirements of the Charities Act will strengthen the oversight of the sector here in Ireland. Very few people in this State would associate charities with terrorism and the possibility of laundering funds. This is one of the classic illustrative reasons that international bodies engaged in philanthropy also wish to ensure full transparency.

It was particularly disappointing to learn in the House this afternoon that there are charities in the State which had the possibility of being funded through international philanthropy but which, as a consequence of their poor accountancy practices, were unable receive the funding that was on offer. Ultimately, it is not funding simply for the charity but for the individuals on whose behalf the charity is working. Bad practices in the areas of accountancy and transparency mean there is less available for those who are in need and whom the charity was created to assist.

Increased transparency is just one, albeit very important, element of the regulatory framework provided for under the Charities Act. The charities regulatory authority to be established will have a range of functions and powers that will facilitate the development over time of a comprehensive and balanced system of regulation. In addition to the initial task of developing and maintaining a register of charities, these will include advisory, monitoring, investigative and enforcement functions, as well as the granting of charitable status to eligible organisations. This system of regulation will be new to all of us. It is important that charities are supported in meeting their new obligations under the Charities Act when they come into force and that the regulatory requirements are applied across the sector in a manner that is proportionate and sensitive to the different situations of different charities. By maintaining the consultative approach that we have adopted throughout this process, I am confident that this can be achieved.

Notwithstanding this clear rationale for proceeding with the implementation of the Act, it is also important to remind the House that there is already in existence a broad range of regulatory oversight measures that can apply to charities. Many charities are already subject to scrutiny by various State bodies in cases in which they receive State funding. Many charities receive significant levels of Government funding through grants, contracts for service delivery and so forth. As regards how they use and account for these public funds, these charities are subject to the oversight of the relevant grant-making or contracting Departments and agencies and, where appropriate, the Office of the Comptroller and Auditor General. The Revenue Commissioners have granted charitable tax exemptions to almost 8,000 charities and have significant powers to ensure that such charities comply with tax law. A full list of these charities is available to the public on the Revenue Commissioners website. Many charities are companies limited by guarantee, as was mentioned by Senator Colm Burke, and, as such, are also subject to the provisions of company law and are generally required to provide certain information to the Companies Registration Office under the Companies Acts. This information can be accessed by the public. Such charities would also potentially be subject to scrutiny by the Office of the Director of Corporate Enforcement. Charities that take the form of a trust are subject to the provisions of trust law. Of course, any business entity is subject to general criminal and fraud legislation.

While the Government remains committed to progressing the implementation of the Charities Act and the dedicated regulatory framework that it will usher in for charities, it is also important to recognise that the charities sector is at present far from unregulated. To suggest it is would be misleading and would fail to acknowledge the value of the effort invested by many charities in meeting existing regulatory obligations.

Turning again to the new requirements that will come into force under the Charities Act, clearly the development of such a system of regulation will have resource implications. This has created an additional and significant challenge to the further implementation of the Charities Act at this time. As this House will be aware, following the transfer of responsibility for this legislation to my Department in mid-2011, I decided to defer further implementation of the Act and explore possible alternatives and low-cost variations on the course of action that had been designed before the economic downturn. Without prejudice to the issue of resources, Government policy with regard to the regulation of the charitable sector remains aligned with the provisions of the Act. With this in mind, my Department is now working to develop proposals for bringing key provisions of the Act into force on a phased and low-cost basis.

I will take this opportunity to say a little about what we have done so far and how we envisage the next steps. In January last, I published for consultation outline proposals for implementing key provisions of the Charities Act.

Stakeholder consultation has been a strong characteristic of this policy area for many years and we are fortunate to have an informed and engaged stakeholder community. Delays in the implementation of the Act had understandably led to some frustration on the part of active stakeholders and some frustration on my part as well. It was entirely due to the reduction in the resources available to my Department. It has perhaps led to some confusion in the charities sector and among the public on the position on charities regulation as well. I took the view it was important to consult with stakeholders on the approach now being considered to communicate clearly our intentions and to ensure that the implementation process is informed by the views and concerns of engaged stakeholders.

The consultation document invited views from stakeholders and members of the public on proposals for the establishment of a charities regulatory authority on a phased and low-cost basis. Views were also sought on issues connected with the creation of a statutory register of charities, including a proposal that some of the costs to the Exchequer of establishing and maintaining this register would be offset through the application of a modest annual registration fee to be set at a level proportionate to the income level of each registered charity. The consultation also invited views on the form and content of annual reports to be made by registered charities to the new authority. As these reports are to be made public by the authority for all publicly-funded charities, this is perhaps the key mechanism through which the transparency of the sector can truly be enhanced.

I was pleased with the response to the consultation. Some 160 written submissions were received and they are currently being reviewed in my Department. Following the consultation, we are also developing more detailed proposals for the establishment of a charities regulatory authority, including with respect to resourcing and a timeframe for implementation. This work is informed by the submissions received in the context of the consultation process. Once this work is complete, I hope to bring the proposals to Government, following which the consultation submissions will be published by my Department where consent has been given by the author - it is given in the majority of cases. At that time, I also hope to be able to give a firm indication of the process and timeframe for the establishment of the charities regulatory authority.

While this evening's debate is primarily focused on statutory provisions, I take this opportunity to remind the House of the important part that complementary voluntary approaches can play in enhancing public trust and confidence in the charitable sector. We should recall that the responsibility for enhancing the transparency and accountability rests primarily with charities. Voluntary, sector-driven approaches to better practice are an essential part of a strong and accountable charity sector. Statutory regulation is simply a complement to this, not an alternative. As progress is made on the implementation of the Act, so the Government also hopes to see a continued drive from within the sector for improvements in transparency and accountability where necessary.

As noted earlier, a particular issue in this regard was highlighted by the recently-broadcast investigation on charity clothes recycling. I imagine many Senators share my concern at the finding that allegedly, in certain cases, a small proportion of the potential income derived from clothing banks appeared to reach the charitable cause with which the bank was identified or associated. As Minister for Justice and Equality, I am keen to see greater transparency in agreements between charities and companies that own clothes recycling bins in order that the donor public know exactly what is happening with their donations and how much of what they donate is actually being used for the benefit of those whom the charity has been established to help. Of course the bringing into force of the reporting provisions of the Charities Act will support increased transparency. Anyway, donors should not have to wait for statutory regulation before charities tell them what is happening to their donations. Where charities are working together with the private sector in any shape or form and where there is a sharing of moneys as a result of particular activities between the charity and a business with which it is in partnership, it is important to have maximum transparency with regard to the arrangements in place. This gives public confidence to the work the charity is doing and some assurance that the majority of funds raised are truly benefiting those for whom they are donated. It is in the interests of the charities to be upfront about this and I hope we will see genuine leadership from the charities sector on this issue following the recent revelations.

I congratulate those in "Prime Time" and RTE for their careful investigative work in revealing and bringing to public attention the activities of an organised crime gang targeting clothing banks. Burglary, theft and all types of criminal activity are, of course, to be condemned, but there is something particularly nasty and callous in the actions of those who steal, for their own benefit, charitable donations intended to help those in genuine need. I have asked the Garda Commissioner for a report on the activities of gangs involved in this particularly cynical and despicable type of criminality and the action that can be taken to bring them to justice.