Mr. John Farrelly:

On behalf of the Charities Regulatory Authority, I thank the Oireachtas Joint Committee on Health for the invitation to attend and give our views on the topic of regulation and scrutiny of charities receiving grant aid by the HSE under section 39 of the Health Act 2004. I am joined today by my colleagues, Mr. Rory Geraghty and Ms Ciara Cahill. We are especially delighted to be here as it is the first time since my appointment on 16 May that the charities regulator has appeared before a committee of the Oireachtas. Prior to my current role, I worked as the deputy chief inspector of social services in HIQA, regulating designated centres for people with disabilities and older persons, a number of which receive some section 39 funding.

Over the past number of years, the actions of a small few people in a small few charitable organisations have undermined public trust and confidence in all charitable organisations. Good people doing good work and who respect the law should be acknowledged and assisted, not tarred by the wrongdoing of others. This is why I believe that targeted and proportionate regulation of the sector is essential. By ensuring that charities are well regulated, my office can ensure the accountability of charitable organisations to donors, beneficiaries and the public.

I will speak a little about the public register. A statutory requirement and strategic objective of the charities regulator is to ensure that the register of charities is complete and accurate as per the requirements set out in the Charities Act 2009. All charitable organisations must be in compliance with the Charities Act 2009 or face losing their charitable status. Currently, nearly 8,000 charitable organisations on the register were deemed to be registered for the purposes of the Act because immediately before the commencement of the register they had an entitlement to an exemption under section 207 or section 208 of the Taxes Consolidation Act 1997 and the Revenue Commissioners had issued each organisation with a number, commonly referred to as a CHY number.

The charities regulator is aware of 778 HSE-funded section 39 charitable organisations. These organisations are deemed registered by virtue of holding a charitable tax exemption or CHY number on 16 October 2014. At present, 530 are in compliance with the registration and reporting requirements under the Charities Act 2009. Of those not in compliance, 13% have engaged and are coming into compliance; while 19% have not engaged. If this remains the case, they will risk losing their charitable status.

I will also speak about working with other State bodies. I hold the view that the sharing of information by relevant State bodies is key to ensuring charities are well regulated while also ensuring the reduction of regulatory and administrative burden on the charities. Currently, it is possible that a section 39 organisation providing health services, for example, may be required to provide large amounts of information to the HSE to acquire funding, to the primary regulator of its services and also to the charities regulator. It may also be a fact that all of these State bodies could hold relevant information, which, if appropriately passed to any of the other bodies, could facilitate better decision making and risk assessment.

The duty of the charity regulator is to ensure compliance with charity law. If during this process we gain information that indicates non-compliance with the various health Acts, the Charities Act 2009 facilitates the sharing of this information with the relevant regulator. We also take the view that this information would need to be shared with the primary funder or commissioner of the services on behalf of the State, which in this case is the HSE.

As a regulator, I hold the view that any organisation that procures services on behalf of the State has both a legal and moral responsibility to ensure that these services are delivered to the highest standards. Public money is sacred and if there is any indication that there has been mismanagement or inappropriate spending, funding bodies must intervene and take the appropriate action. It is the policy of my office to encourage funders, particularly State organisations like the HSE, to be vigilant and regularly risk assess organisations to which they are providing substantial amounts of money. This is why staff in my office have met with representatives from the HSE to initiate a formal agreement and engage in ongoing discussions regarding the compliance of sections 38 and 39 bodies with the charities Acts.

In addition to meetings with the HSE, staff in my office have also met other State bodies such as the Revenue Commissioners, An Garda Síochána, the Office of the Director of Corporate Enforcement and the Companies Registration Office to develop and establish data sharing agreements. All of these meetings were initiated by my office and organisation because of the principles and approach that we believe are required. This process is ongoing and, when complete, these agreements should allow for a multi-agency approach to tackle any anomalies with registered charitable organisations, including fraud, poor corporate governance and financial mismanagement.

In terms of raising concerns, a primary function of the regulator is to increase public trust and confidence in the management and administration of charities. My experience to date points to the fact that while robust auditing, monitoring and governance checks are paramount, unsolicited information from staff and the public is one of the key mechanisms that enables regulators to point their attention to non-compliance and risk. The public are our eyes and ears. We rely on them to inform us of potential breaches of the law. This is why, within two weeks of commencing as CEO on 16 May, I put in place a dedicated concerns e-mail address and phone line, both of which are monitored on a constant basis. This is a direct line for the public to contact the regulator. We protect the identity of the person who raises a concern with our office and by processing all of the information given to us in confidence. Each concern raised goes through a risk assessment procedure that allows our staff to identify what action, if any, is necessary. On some occasions this may involve handing material over to other law enforcement agencies. In other cases, it might mean actively engaging with a particular charity to resolve issues around corporate governance.

Part 4 of the Charities Act 2009 commenced on 5 September. It gives investigative and protective powers to the charities regulator and includes the capability to impose sanctions if a charity breaches certain obligations. The introduction of Part 4 of the Act is a positive and welcome step for charity regulation in Ireland. The powers it confers will allow us to take steps to ensure that charitable organisations are protected and well managed. Where breaches of the Act are suspected, the regulator can now work proactively to prevent and counter mismanagement and protect charitable organisations. These powers will be applied in a proportionate and fair manner, recognising that the majority of charities require support rather than enforcement. I know that many of the Deputies and Senators present, and in general, have queries on the registration of certain charities in their constituencies. We have established a dedicated e-mail address for Members of the Oireachtas.

In conclusion, I began my five-year term on 16 May 2016. I see the lifetime of my appointment as a long-term commitment to regulating a challenging and quite congested sector. I hope that throughout this challenge I will have the support and co-operation of all State bodies, especially those that fund charitable organisations with public moneys. I thank the committee for listening and look forward to working with everyone.