Liam Twomey (Wexford, Fine Gael)
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The purpose of this meeting is to review the invest in Irish job scheme, which is a proposal to set up a job and social cohesion initiative. I welcome Mr. Frank Flannery, chairman of the Forum on Philanthropy and Fundraising, who is accompanied by Ms Deirdre Mortell, Ms Loretta Glucksman, Ms Caroline Casey, Mr. Paul O'Hara, Mr. Kieran McLoughlin, Ms Caitriona Fottrell and Ms Caroline Kennedy. The format of the meeting will be that Mr. Flannery will make some opening remarks and this will be followed by a question-and-answer session. I remind members, witnesses and those in the gallery that mobile phones must be switched off.

I wish to advise the witnesses that by virtue of section 17(2)(l) of the Defamation Act 2009, they are protected by absolute privilege in respect of their evidence to the committee. If they are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they will be entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. Members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable. I call Mr. Flannery.

Mr. Frank Flannery:

I wish to offer my sincere thanks and those of my colleagues for the opportunity to come before the committee to discuss what is - both in our opinion and from an objective point of view - an extremely important matter. During this discussion, we will outline some of the reasons why it is important. I will begin by introducing the other people in our delegation.

Ms Loretta Glucksman has come over from the United States today to be here, which indicates her view of the importance of this issue. She is the chair of the American-Ireland Funds and the head of the Ireland Funds worldwide. Ms Caroline Casey is founder of the Kanchi Foundation and also co-founder of Change Nation Ireland, of which the members may have heard. It has been a very strong initiative in the social economy during the past few years. Ms Deirdre Mortell retired a few days ago as chief executive officer of the One Foundation, which has been a huge force, particularly in projects related to social entrepreneurship but also in terms of social issues in Ireland. It has been very influential, including in areas such as children's rights and human rights generally. Mr. Paul O'Hara is a European director of Ashoka, which is another of the modern international social driver forces around social entrepreneurship, the social economy and objects to promote social cohesion. He is also co-founder of Change Nation. That puts in context of the background of the members of the delegation. When it comes to the questioning the real experts here are my colleagues rather than myself. My background has been in not-for-profit world and I know that extremely well, but I am not as knowledgeable about the philanthropic or fund-raising world. I am learning about that since I was asked to chair the Government's Forum on Philanthropy and Fundraising.

We represent civil society. We believe the not-for-profit sector is an undervalued part of the Irish economy. It employes approximately 102,000 people, which is more than the ICT and pharmaceutical industries combined. That gives members an idea of the scale of its impact. We also believe it is a very good place to invest money because expenditure in this sector is closed; there is virtually no leakage out. The employment it gives is local and the goods and services purchased are local. It has a really good, positive benefit. It has never historically had the benefit of an IDA-type or Enterprise Ireland-type of initiative or any of that type of official backing. It has always hung on as a adjunct to social service activities, Department of Health activities and so on. It has never been promoted but yet it has developed a great internal rigour, strength, lasting "stick-at-ability" and long-lasting, very solid activity. The type of employment it gives is not all highly specialised jobs; rather, it is ordinary people who are employed in this sector. It contributes very much to an aspect of Irish social development, which sometimes, in the rush for hi-tech this and hi-tech that, might be forgotten.

The political establishment has always been a good friend to our sector. I know that from my own life because I worked with governments of every political persuasion and I know that all the major political parties in Ireland have a very good feeling for the types of the organisation and social principle we represent.

The best Taoiseach in terms of the world of disability, which was the area of my major life's work, and the man who took the greatest interest in it, brought in a national disability strategy and the Disability Act was the former leader of Fianna Fáil and former Taoiseach, Bertie Ahern. If I was to pick who did most as a political leader for the disability area, I would objectively have to say he was the person, in my opinion, who did the most. The Sinn Féin Party, which is newer as a major force in our politics, would have a good feel for our sector in the way that it contributed to the work behind the peace process and developing conflict resolution and cohesion in communities. Through its meetings of what used to be Co-operation North, later Co-operation Ireland, the Glencree Reconciliation Centre and all the more modern and recent activities across the island, including throughout Northern Ireland, it has helped to develop, underpin and provide the foundation for the peace process.

The current Government has made some good moves which we greatly welcome. One is the appointment of the Minister of State, Deputy Seán Sherlock, with special responsibility for innovation, enterprise and jobs within two Departments and in that respect he has a special responsibility for the social economy and its development. That at least recognises the existence of this piece of our social map, which we welcome. The Forum on Philanthropy and Fundraising was set up by the previous Government, and a former Minister Pat Carey, who many of us know and fondly remember, made a particular contribution to it. The current Minister has given it a very good push forward and we have got to the stage of having a report published and agreed at Cabinet level. Now we are in the business of trying to implement a number of recommendations of that report, of which there are four. That is the stage we are at now. As well as identifying the strength, importance and the strategic value of the not-for-profit sector in our economy, the report also identified the growing crisis within it in terms of the financial resources to underpin it. Consequently, it recommends that we find ways to increase fund-raising from an average of €500 million to €800 million in a few years time. That, by any standards, is a challenging target in the current economic circumstances.

One of the reasons we are here is that there is a concept of a cliff in terms of philanthropic funds in Ireland. I know that is a bit clichéd but there is undoubtedly a cliff. The two major philanthropic funds in Ireland are closing down virtually at the same time which has never happened in any country. Atlantic Philanthropies - which members know and of which they will have had experience, in terms of the projects it undertook brilliantly throughout all of Ireland in our educational sector and in all other aspects of our society, including social change and human rights, in a much deeper way than people think - is closing down. The last grants are going out in 2013-2014 and then it will wind down. The One Foundation, which has expended more than €80 million in Ireland during the past ten years is also closing down this year. We are reaching a situation in which €50 million to €60 million per annum is being pulled; these are resources that are supporting 80 or more organisations all over Ireland. A great deal of this work has been done quietly and it is only when it happens that we will know the full extent of it.

One of the suggestions the forum made was that, as well as running a campaign to increase the overall giving, we should develop the educational capacity and professional integrity of fund-raisers on the grounds that one will not get good giving unless one has got good asking. It was also suggested we make sure the Charities Act, which has been on the stocks for some years, is implemented - that is something this sector wants to ensure is done, and we do know why it has not happened yet - and that all other aspects to do with the whole area of regulation and accountability are implemented, which would give a sense of security and integrity for givers to give. We have been also asked to set up a social innovation fund, largely supported by philanthropic funding but with some Government assistance to get it started. That is the fund which will begin the work of replacing the Ireland Funds and the One Foundation. At least it will be a start, and we hope it will be a significant start and not the only one in that it will inspire other similar activities to come into the system in order that we can have the beginnings of a new generation of trusts and foundations giving grants, which can pick up where the others are leaving off. Otherwise we are just looking at a black hole.

That would have a very depressing impact on a huge range of areas in our society.

That is the background to this discussion. What we are doing in our Giving Campaign is asking everybody in Ireland to give 1% of their time or money to a cause they believe in. In other words, we are promoting the concept of giving - that everybody does whatever they can. We want that principle to apply not just to the citizenry of Ireland but to the corporate life of Ireland. In other words, we want every company to give 1% of its profits to a cause it believes in. We are not dictating how it should be done. Inward investment companies which constitute such a large part of our corporate reality and who carry out magnificent philanthropy within their global corporate structure do not do enough of it in Ireland. Some hardly do it in Ireland at all. If they came up to our minimal standard of 1%, what a difference it would make to the resources behind the social economy and to social cohesion projects of all kinds. That is part of our message. We will have further discussions with the Government as to how that might be further stimulated. It is not included in what we are saying today but it is very much part of our agenda. We want the people of Ireland's time or money. We want corporate Ireland and companies involved in inward foreign investment to get behind this campaign. We notice that the Minister for Justice, Equality and Defence has introduced a scheme to attract foreign nationals who want to invest or set up a business in Ireland. Under the scheme, they can invest €500,000 in a philanthropic project or else put it into a business. That is very interesting. It is slow getting off the ground but we notice that in the past week or so, the Department has revised the terms and made it a bit easier for the inward investor to come in. That is aimed at people from China, Russia, India or Japan who would like to come and we want to attract them to do business in Ireland.

We do not want this campaign to leave anybody out. We feel that everybody should be challenged to come forward and do whatever they can. We were thinking mainly of how we will fund the social innovation fund. Our friends in the Ireland Funds were looking at a jobs generation scheme which they have designed on an Israeli model that has a world purchase to it and which they want to introduce here. It was felt that there was a certain part of our population that could do more. We were thinking of those Irish citizens who are largely living abroad because of the way their tax affairs are organised. Taxes are not a matter for us. We do not make the law. It is for the Government to decide on this matter, but we look at what the reality is. We said there could be extra money here. I am speaking as somebody who is looking to find money to invest in these causes. We made a proposal that people in this category who have the capacity should be asked and challenged to do more. We think many of them will have the capacity by being what they are and where they are. We asked that they be requested to make a donation of €5 million to a cause the Government can nominate and to pay an additional super levy on top of all taxes they pay in Ireland on Irish earnings for ten years and in return, they would get a certain benefit. I am not a tax expert. This benefit would not be fiscal and there no tax element to it. It is just a trade-off of a bit of extra time in Ireland for a contribution of €1 million for ten years to the Irish Exchequer and €5 million to a fund like the social innovation fund or such other objectives the Government might wish to nominate from time to time.

That is a very simple concept. It is very easy to leave this population aside. First, we have a crisis on our hands. Second, when we ask the ordinary people of Ireland, who are doing so much already and who have a well-deserved reputation for being generous givers, to do a bit more, we should not leave anybody out. The people of Ireland may not be planned givers but they are undoubtedly generous givers. We should throw the challenge out there fair and square. If this was to work and one in ten of the people about whom we are talking took this up next year, which would be a small enough take-up, that would create a fund of €200 million for the type of objectives about which I am talking. Over the lifetime of the scheme, it would give the Exchequer €400 million. If perchance 400 of them - there are that many or more of them - became involved one would be talking about creating a fund of €2 billion and an ongoing ten-year income stream of €400 million of completely new money with not one cent of displacement. It is worth thinking about. This kind of money is fresh new money coming into the economy. If one does what the Government has recently done or what is often done, namely, put an extra tax on spending or levy a property tax and take money out of people's pockets and earn €400 million that way, one must bear in mind that had one not taken that money from those people, they would have spent it somewhere else in the economy. That €400 million is not extra. Much of it is displacing income one would have received through purchase taxes, VAT, excise duties or other taxes. This money is objectively worth much more than the money one raises internally because it is external money coming in and is entirely additional and clean.

That is the proposition we are putting to the committee. I thank members for listening to us. I hope we will have plenty of opportunities to add value when answering their questions. I will be relying on my colleagues to do that. I have basically said enough. If anyone wants to ask me any particular questions, I will try and answer them. What we are doing is pretty penal and punitive. My biggest question going around talking to experts and different kinds of people has been whether anybody will pay this. I cannot say with absolute certainty how many or who will pay but various financial advisers have told me that we might get some. All I would say is that if it is made available, we will certainly go out and sell it. We will put up that challenge fair and square to all the people concerned and see what it brings in. We think it could be one part of a solution. It is only one part of a range of proposals we are trying to put together but we think it could be an important one. We think that in principle this segment of our population should not be left out of this challenge to do more.

Liam Twomey (Wexford, Fine Gael)
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I will start by asking Deputy McGrath to ask a series of questions. We will then go back and forth.

Michael McGrath (Cork South Central, Fianna Fail)
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I welcome Mr. Flannery and all his colleagues here today and thank him for his presentation. In respect of the scale of the not-for-profit sector and charities in general, I had not fully grasped that over 100,000 people are employed in the wider not-for-profit sector. I guess that would include many service providers like Rehab, COPE and the Brothers of Charity. Nonetheless, it is a very impressive figure. From looking at the forum's report, one can see that the annual philanthropy figure is about €500 million, which is not something I would have been fully appreciated. Not only do we have a patent cliff, we are facing a philanthropy cliff, which presents a very significant challenge to the country. I thank all members of the delegation for the work they are doing in their respective organisations for the country which continues to be hugely positive. They have been filling a deficit where the State has been unable to provide funding, services or opportunities for different programmes that undoubtedly merit it.

The proposal before us on the invest in Irish job scheme is very interesting and in principle seems to be quite a good idea, the major benefit being it is entirely additional money, which is the key point made by Mr. Flannery. There is no element of displacement or shifting money from one fund to another. The bottom line is the question Mr. Flannery asked, as to whether it would work, and nobody can be sure until it is given a go.

Does Mr. Flannery have any sense of the scale of the potential pool which can be tapped into, of Irish citizens who for their own reasons have remained outside the Irish tax net for the past five years? What level of research has been done to determine whether this would be a viable and attractive option for people who wish to make a contribution to the country? I assume Mr. Flannery has received taxation advice from practitioners on the issue and that it is doable with regard to double taxation agreements. I am sure this would require a change through the finance Bill and I assume his aspiration is to have it in place for the next budget and finance Bill. Does such a scheme operate successfully anywhere else? Is it is taken from a similar model where it has been proven to work? This is an important question.

Mr. Flannery referred to investment in a business or in philanthropic activities which the Government may designate or the donor may choose. How will this work in practice? Who will decide where the money goes? Who will administer it? Will it be administered centrally or will the person making the investment have a choice and final say as to whether it goes to a business, a company or a particular charitable purpose?

Why is it limited to Irish citizens only? I can understand it is the obvious place to start, and perhaps the proposal is to start with citizens, but other people may, through lineage or other reasons, have a connection with Ireland and may wish to participate in the scheme such as this. Could this be considered?

I take it this is restricted to individuals and not available to corporate bodies which would be non-tax resident in Ireland.

Liam Twomey (Wexford, Fine Gael)
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Before Mr. Flannery replies I wish to explain each of the main party spokespersons receives ten minutes, so when he is answering I ask him to be as concise as possible because I would like as many speakers as possible to participate.

Mr. Frank Flannery:

I invite my colleagues to comment if they wish to do so. With regard to research, much discussion about the scheme has taken place with finance houses such as PwC and KPMG, legal houses, the Institute of Taxation and others used to this world. We have made a proposal and it will have to be worked by those who put the final design on it on if it is to be implemented. It is done in a very simple way because simple schemes work best. People would get additional time in Ireland by paying money. The tax is additional to all existing taxes and would be a new superlevy which is not instead of anything. I do not know what it will look like when the drafters are finished.

I hope everybody will join in; I do not know whether the scale is too high but the potential is there. Most countries, including United States, Britain and Portugal, have implemented this measure in precisely this way. Several countries are trying to attract capital back to their countries and are doing so in different ways. Some are providing fiscal incentives to those bringing money to their countries, such as lower than usual tax rates. This is what Britain is doing to attract capital investment. Our residency requirements, as I understand it, are very restrictive and this proposal, if people sign up, would normalise it. Every country uses this type of measure in one way or another to try to regulate its affairs with the part of its capital structure conducting its business outside the country for business reasons.

I believe we will get a minimum of one in ten which would be very significant. I expect a hell of a sales campaign would be undertaken, taking people one by one and selling the idea to them.

Ms Loretta Glucksman:

The Ireland Funds met Carl Kaplan, the head of Korat, an identical model which has operated in Israel for 20 years. It has raised $300 million and its negative rate is 1%. It has generated more than 50,000 jobs. Its track record is beautiful and it is a very cohesive model. As Mr. Flannery stated, the real job will be getting people to sign up to this and getting the constituency we want to challenge to participate during this very difficult time in Ireland when there are no obvious sources of new money. This is staring us in the face to be utilised somehow, and the fact there is a feasible working model with a twenty year history is a very strong point.

Michael McGrath (Cork South Central, Fianna Fail)
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Who will administer the scheme and who will decide where the money goes?

Mr. Frank Flannery:

So far we have not gone into too much detail on the grounds that if the Government and the political establishment agree to such a proposal, they will have their own views on how it will be done. I strongly advocate initiatives such as the social innovation fund, which will see the establishment of a new body, and the jobs generation scheme, as the type of organisations to which money could go. One would be absolutely certain it would be distributed throughout the economy in the most effective possible way. There is a very strong emphasis on the social economy and social entrepreneurship. We will try to assist organisations. It would be a source of capital and development capital for the not for profit sector, which is being starved of resources in every size, shape and form at present. This is another aspect of it. The Government might very well state if people are contributing money that other types of operations would be equally valid. Who is to say relief of poverty or organisations such as the Society of St. Vincent de Paul are at least as necessary as some of the issues we are discussing? We are focusing on the jobs agenda, social entrepreneurship and innovation in the social economy. We believe this lines up fairly well with where the national sense of need is at present, but the Government, the Department of Finance and the Dáil must be taken into account.

If there is a scheme, it should be open. A venture that is of interest to me, given what I am doing, is starting. It is called the Cork Foundation - one of the Deputy's colleagues has an interest in it - and is getting purchase in Cork. It has the same focus. Why would it not be possible for people to nominate members of the target community with a Cork affiliation or interest to that area? The same would apply in Limerick or elsewhere. This flexibility could be built into the scheme.

Ms Caroline Casey:

I am a social entrepreneur who has set up a social enterprise. Something that people in this country are good at is investing in new ideas, but scaling is a major gap. When one scales a social enterprise or innovation, not only does one create a greater impact and ensure that the initial investment is not lost, as one does not want to throw money away, but one also creates jobs.

Regarding the Deputy's question on where the money should go, it is important that, through the job and social cohesion scheme, we consider organisations that have the capacity to scale and to use the money to increase their turnover and provide new employment to five individuals. Employment is low because of a lack of funds in the social sector as much as the small to medium-sized enterprise, SME, sector. The focus should be on impact.

Michael McGrath (Cork South Central, Fianna Fail)
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The potential pool of people to whom the proposed tax change would be attractive are those who already spend a great deal of time in Ireland. Under the current rules, if one spends more than 280 days over two years in the country, one is deemed to be tax resident. The witnesses' proposal would allow someone to spend 364 days over two years in Ireland and not be tax resident. As such, the proposal would be attractive to those who are spending a great deal of time in Ireland without tipping them over the threshold of tax residency. I suspect that this would not be many people.

Mr. Frank Flannery:

Yes. That is one of the elements that we will find out if we are given a chance to push this.

Michael McGrath (Cork South Central, Fianna Fail)
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It is a question of a return.

Mr. Frank Flannery:

I am led to believe that there are quite a few. Bear in mind, this proposal comes with a strong appeal. I am in no way an apologist for this population, as I have spent all of my life living and working in Ireland, as everyone in this room has. None the less, we view it as an opportunity to bring in additional funds to do necessary work.

There is also the possibility that those in question would then have a better relationship with the Irish people. Might the public at home not view them better if they did more for Ireland? Even if their residency status does not trigger it, they might simply desire to participate further in what Ireland is trying to do officially. That aspect is more philanthropic, but I would not rule it out. It has been proven worldwide that people with resources surplus to their requirements cannot take it all with them. There is no pocket in the shroud. The idea of dispensing one's extra funds while alive is gaining currency. We should give people opportunities to do so. We should certainly offer them the challenge. If they do not accept it, they do not accept it, but that would confirm what people say about them.

There are more reasons to do this, for example, one wants to help one's country more. Most of the people in question got a lot of help from this country to get to where they are. They could use this proposal to do extra and to give something back. That will be a part of my pitch.

Ms Loretta Glucksman:

May I make a point?

Liam Twomey (Wexford, Fine Gael)
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Yes.

Ms Loretta Glucksman:

Another model that could work is Music Generation, which we established some years ago. It makes music education available to 10,000 children and has created 130 jobs. We created a free-standing entity with money raised from our donors. It is free of the fund, as we raised the capital. The basic numbers in the scheme will be up to the committee and the Government, but there is a relatively small model at home that has been successful in just a few years.

Liam Twomey (Wexford, Fine Gael)
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I thank Ms Glucksman.

Kieran O'Donnell (Limerick City, Fine Gael)
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I welcome Mr. Flannery and I welcome others to Ireland. I wish to address a number of issues beyond those already mentioned. From the witnesses' experience with the Ireland Funds, the philanthropy forum and the One Foundation, how long would it take to get a project like this up and running on a practical level? What would be involved? The greatest challenge facing Ireland is employment. With employment, everything else would settle down. It is not that complicated. What measures should be put in place to employment-proof the funds being provided to various projects? I am not referring to the mechanics of how the funding would come through. Rather, I want to know whether the actual end project is worth it. There is no substitute for experience. Ms Glucksman referred to Israel. If one can find a model that works efficiently, there is no need to go to the trouble of inventing something that is untested.

What would be the timeframe for getting the project up and running, how would it be proofed and how would the social dimension fit into it? What are the witnesses' experience of Northern Ireland, which is rebuilding, and how will that situation play out? I want to get to the nuts and bolts. I want to examine the end product and work backwards, not work forward from the beginning. These issues can probably be addressed. I want to get to the shop window.

Mr. Frank Flannery:

I will ask Ms Mortell, who has worked with the One Foundation for the past ten years, to address the practical issues of what the scheme would look like and so on. Ms Glucksman might then contribute. Mr. O'Hara might tell us a bit about the kind of work in which his organisation is involved.

Ms Deirdre Mortell:

I thank Deputy O'Donnell for his question. I can speak from two angles. I am a co-founder of the One Foundation and, until approximately one week ago, ran it for the past ten years. Setting up a foundation or fund equivalent to the social innovation fund takes no time at all, but raising capital takes time. One can do nothing until one has the capital to reinvest or re-grant, depending on one's point of view. Hence, the urgency.

I will cite a few examples from my experience in the One Foundation. We were involved in providing growth capital to the not-for-profit sector. It largely went to social services, for example, children's services, youth services, some human rights services, migrant services and education. For the past seven years or so, we have been involved in providing growth capital to Educate Together. We did not provide it all in one chunk. We took three decisions at different points and Educate Together needed to re-satisfy the criteria each time. In that period, Educate Together has entered the second level sector and will open three new schools in 2014 with all of the jobs and local investment that entails, for example, building the schools and satisfying parental needs in the areas in question. During that eight-year period, Educate Together also added 12,000 new primary school pupils and approximately 30 new primary schools to its network. This is substantial.

Obviously it is in partnership with the State. It was growth capital from One Foundation that enabled them to be in the game and provide that option to parents, who ultimately, as is the current Government policy, will vote on which education provider they want in each area. That is a lot of jobs for not that much money.

That is a quick flavour of what is out there, but let me mention Headstrong, the national centre for youth mental health services that we co-founded with Mr. Tony Bates. It is a separate organisation that provides youth mental health services and it was founded in 2007, so it is not that old. It developed a Jigsaw model that provides, for the first time, integrated youth mental health services for 14 to 25 year olds. Ten sites have opened that are located all around the country, including in Ballymun, Donegal, Kerry and Galway, and there are a number of other Dublin initiatives. There is 26-county coverage, there are many high-quality jobs, and, more importantly, 3,600 young people have been able to access services that they could not get before 2008, when it opened. In addition, 90% of them have met their mental health goals and exited the service. The initiative is cost-effective, helps young people, prevents suicide and creates jobs. It is a win-win scenario.

I have given just two examples of things that we did in the One Foundation. I shall talk a little bit about the potential social innovation fund because it does not exist yet but the company has just been registered.

Kieran O'Donnell (Limerick City, Fine Gael)
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Think positively.

Ms Deirdre Mortell:

We will think positively. The social innovation fund will be interested in scaling examples that could be similar to those I outlined. Obviously we cannot say what it will do until the fund exists, holds a board meeting and sets criteria. It will scale the best of Irish social innovation and Headstrong would tick those boxes if it came along.

We have learned that in countries that invest in social innovation, particularly where such initiatives hit the cost effectiveness and job creation buttons but also result in improved outcomes for their beneficiaries, they contribute to the economy, not just society. Ireland is one of the very few European countries that have not established one, and we are playing catch-up. The UK has a number of social innovation funds. For example, Inspiring Scotland has a track record-----

Kieran O'Donnell (Limerick City, Fine Gael)
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What type of model funds them?

Ms Deirdre Mortell:

They are funded by a range of different things. Inspiring Scotland is funded by joint philanthropy by LloydsTSB Bank, a number of voluntary organisations and the Scottish Government. It is a Government and philanthropy leverage in the same way as we are thinking about here.

NESTA was established by the UK Government and raised money privately to run social innovation competitions on issues that are public policy problems. Let us say that it decides to run a competition on mental health or immigrant services so voluntary organisations would submit their ideas or model and compete for capital. There are many different models. They exist in Sweden, Serbia and in wider Europe. My organisation is examining the model based on the Obama Social Innovation Fund and the Scottish and UK models. There is a lot of evidence that the funds do good things for social purposes but they also create jobs in the economy.

Liam Twomey (Wexford, Fine Gael)
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Ms Mortell mentioned a Government-backed organisation that seems to act like a warehouse for funding. Is that NESCO?

Ms Deirdre Mortell:

NESTA. The organisation used to be called the National Endowment for Science, Technology and the Arts, hence NESTA. It has moved its mission on and just calls itself NESTA and is based in London. Inspiring Scotland purely focuses on children and young people and picks what it wants to focus on using different methods and models. There is lots of learning that we can build on.

Kieran O'Donnell (Limerick City, Fine Gael)
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Please boil it down to practicalities rather than an abstract description.

Ms Loretta Glucksman:

As I listened to my colleagues, their comments reinforced the subtle but very important difference in our roles. We do very similar things but from different starting points. The Ireland Fund is a philanthropy. What the other organisations do so well, every day, on the ground is charity. They deliver the product that we try to fund on the ground. They are the people who face this cliff. Mr. Flannery is right when he said that might sound cliched. However, if one is in that position then it is pretty scary. People will have depended on you for child care for autistic kids or whatever for all of these years and its awful to tell them that the funding is gone. We, the Ireland Fund, are the philanthropic source of the funds that these people use to do their amazingly essential work.

Deputy O'Donnell mentioned Northern Ireland in his question.

Kieran O'Donnell (Limerick City, Fine Gael)
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Yes. What has been learned from the fund's experience in Ireland?

Ms Loretta Glucksman:

In the early 1990s we became aware of the need for integrated education and that many parents yearned for the ability to establish schools where their kids could learn and play together. We got donors from the States that were interested and schools were established. At the start there may have been a handful of kids and two or three schools but today there are thousands of kids being educated this way. Money was raised philanthropically, mostly in the States but really all over the world, to make that happen. The integrated education movement has been a great success and Baroness May Blood has been the force behind it for many years. It was not rocket science. They had a good idea but needed the money, we raised the money and money flowed to them. Their track record has been astounding.

We back, in addition to my colleagues here, so many others. There is a great programme called No Mind Left Behind where we will get the money for children that need money. I have not written all the programmes down, but the model used is the same.

Mr. Frank Flannery:

Mr. O'Hara will also comment.

Mr. Paul O'Hara:

From a timing perspective, I do not understand the technicalities of what it will take to get the initiative over the line. Presumably, it is doable by the next budget. Then we will have to sell the idea and see if there is demand. A lot of investment is ready and things to back that would create jobs. I identify social entrepreneurs, help them to scale home-grown and international ideas and help the latter to expand into Ireland. Let me give a few examples. The committee is probably familiar with a project called CoderDojo.

Kieran O'Donnell (Limerick City, Fine Gael)
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Yes.

Mr. Paul O'Hara:

CoderDojo was started a couple of years ago by an 18-year old. He already has six full-time jobs in a Bank of Ireland office located at the end of Grafton Street. The scheme provides coding education to 4,000 children across Ireland in hundreds of centres. Coders will be the job creators of the future so there is immediate job creation and long term job creation.

Kieran O'Donnell (Limerick City, Fine Gael)
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Please explain the strategic aspect of the model.

Mr. Paul O'Hara:

Another model is called SIEL Bleu which is the first experimental model that we imported from France a few years ago. It provides adapted physical exercise for older people in order to keep them fit and healthy and out of the health care system. Recently McKinsey conducted a study of it. In France 50,000 older people use it every week which saves the French Government €3 billion every year simply by keeping people out of its health care system. The model has been run in Ireland for the past couple of years and provides four full-time and eight part-time jobs. It has great scaling potential. It is already in 30 centres around Ireland and serves 1,000 older people every week. The model is already providing a saving for the health care system. It is just a small investment but it is one that is ready for growth finance that could drive employment and reduce costs for the health care system.

Another model that is linked to the North of Ireland is called Routes of Empathy which originated in Canada. It is proven to reduce aggression, violence and disruption and increases kindness and compassion, etc., in young people. Nearly every school in Canada runs the programme and it arrived in Ireland in the past couple of years. Finance is provided by a combination of the Government, the HSE in the northwest, the health board in the North of Ireland, Unilever, some private philanthropists and the EU. A mixture of finance is used. The scheme now operates in 160 schools across the island of Ireland. The model is key to the restorative process in the North and is an example of one solution. The scheme already employs people. It is mainly volunteer-driven but there are permanent jobs. The model is ready to go to scale across thousands of schools.

Every young person has to master empathy. These are ideas that are solving key problems. They are reducing costs in the system and they are creating jobs. They are all ready to scale. I could list another 30 that are ready to scale. The demand is really strong. There are many great solutions but the key thing is that we need to get out and sell this to see what is out there for it.

Kieran O'Donnell (Limerick City, Fine Gael)
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Have the witnesses had the opportunity to do an audit of the type of projects that are vulnerable in terms of their sustainability for going forward to the fiscal cliff?

Pearse Doherty (Donegal South West, Sinn Fein)
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I welcome the witnesses. This Forum on Philanthropy and Fundraising document is an excellent one. It has busted a few myths for me and I am quite sad about some of the myths it has busted. We always had this impression that Ireland was the most giving nation in the world but the witnesses have outlined some very hard facts in regard to comparisons between ourselves and our closet neighbours. Some 15% of Irish donors give in a planned fashion compared to 36% of donors next door while the Irish figure in terms of percentage of disposable income is 0.8%, compared to 1.2%. The witnesses' analysis of high earners is stark. The top 400 earners in the country make up of 10% of charitable giving compared to 30% in the UK, Germany and the US. Corporations are worse. Only 1.4%, or €25 million, came from corporate donations in 2005, which is less than 0.1%, whereas in Britain, it was an average of 1.2% of their pre-tax profits. That is the standard.

I commend the witnesses on the views and proposals they have put forward, which merit further discussion. I will not have the time but I would like to go into a number of the taxation proposals in regard to charitable bodies and the hybrid rate of 33%. I will probably not get the chance but if I do, I will come back in later. I would like to talk about why the witnesses are here.

Any proposal that increases investment in philanthropy should be discussed and teased out. I have serious initial concerns about this proposal, which stems from the point of view that it is a fundamental change to the tax residency laws. We call these people tax exiles. They are Irish residents but they do not stay here for more than 182 per year and, therefore, they do not have to pay taxes on their global profits but only on their Irish interests profits. We know many of them and it has been reported in the media that they go to the limit. They will be here for 182 days per year, or 280 days over two years.

We saw an abuse of this system up to 2008. One of the proposals suggests increasing the number of days they can spend here in two consecutive years but the witnesses want to row back on the change made in 2009 when we got rid of the Cinderella clause where we had the jets taking off from Dublin Airport at 11.59 p.m. so that the day was not counted. I have serious concerns because it could lend to the view that we are selling tax residency. However, that is not to ditch the whole proposal and the concept.

The witnesses said there is a demand. The previous Government took in the domicile levy which would have had a lower threshold in terms of what people would have to contribute. The witnesses suggest a €5 million levy with no return for them on that €5 million. The domicile levy is €200,000, which can be written off against taxes on Irish interests. Only seven people paid the domicile levy in the last year for which we have figures. There are 11,307 people who made an income tax return in 2011 who have claimed they are non-tax resident. The pool of people to whom this could apply would be 11,307. We see with the domicile levy that it is very low.

The immigrant investor programme, on which the witnesses say this is modelled, is welcome in terms of bringing in new money but only nine people have signed up for it. I am not sure this will be the panacea and that is why I am concerned about it. If we only get four to seven people, there is an argument that it is money we never had, so let us grab it with both hands and invest it into social enterprises and philanthropy and try to keep the wheels moving as these to big projects start to wind down. However, there is another argument which is that some of these tax exiles have considerable interests in this State and some of them are very high profile and that to grant them additional days in this State is to facilitate their tax exile status. If they were to stay those extra days in the State, they would actually be taxed on their global profits, so they State would lose on out a lot of money.

I am not fully sure about taking the two steps the witnesses want, including increasing the number of days. The Cinderella clause takes it further because it will be an additional number of days because the day they fly off will not be counted. Currently, if they spend a minute in the State on a particular day, they are tax resident for that day. I am concerned about that.

The Department of Finance has done a review on tax exile status and the programme for Government commits that they will pay more. Did the witnesses look at the 183 days and going in reverse? For example, 163 days would apply but it would be 183 days if one made the €5 million levy and the €1 million contribution.

The witnesses acknowledged other issues which we would need to tease out in terms of where the investment would be in regard to the SMEs. The concept is good but it could be abused by a small number of people who would make huge gains as a result. Those are my views on that.

I refer to the other proposals in the document, including the proposal on the simplification of the Tax (Consolidation) Act and tax relief going to individuals. Will the witnesses talk through the proposals they have put forward? Proposal one is that it would all go to the charity. Proposals two and three are that the donor would keep it and so on. Why are those arguments being made?

Mr. Frank Flannery:

Deputy Doherty has hit several nails on the head. Nothing he said has not occurred to me 10,000 times. It is part of having a discussion. It is one those areas about which we are always bad at discussing, facing up to or doing something about in a coherent way. We prefer to leave it and say nothing about it. We should not do that. One way or another, we should try to grapple with it.

We would not have seen ourselves as being the final arbitrator of a scheme. The actual practicalities of a scheme would be a matter for discussions such as this. We are just putting out an idea in principle. One could do a little incentivising in regard to time in return for a significant contribution. Under the Minister for Justice and Equality's scheme, a €500,000 million contribution to a cause is required from these people from Japan, Russia or China. We have set the figures high. People might say they are impractically high but I am not so sure. We will find out.

According to a Revenue figure, there is a realistic population of maybe 450 people to whom this might be of potential interest, rather than that 11,000 which includes people who are working outside Ireland and whom it suits better to keep their main job outside Ireland but who come home all the time.

As they pay their taxes in that other country, they would not necessarily be interested in a scheme such as this.

Pearse Doherty (Donegal South West, Sinn Fein)
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The 11,500 people in question made income tax returns which means they might have had a tax liability in the State, but they are not tax-resident in respect of their global income.

Mr. Frank Flannery:

That is correct. If the Government is devising something around this scheme, I am sure it will state that once the aeroplane lands in a country or once a person enters a country that is regarded as being day one. It is on the second and third day where this might give some relief as currently devised. Perhaps in that context it is not such a fundamental change. If people in question are being asked to pony up an additional €15 million over ten years, of which €6 million will come in the first year, human nature being what it is, there has to be some incentive for them to do this. Otherwise, why write the cheque, because it is not small?

I agree that this would all be done and discussed very carefully by the Department of Finance, the Government and in the debates in the House on the finance Bill. I do not disagree with the Deputy; rather, I suggest there should be a realistic proposition in order that when we sell it, we would have something to sell. We think we can get some significant money out of this population, or at least we should be able to challenge them for it in a very direct way, as I said.

The Deputy employs the concept of the carrot and the stick; in other words, if an offer is made to the group and people do not take it up, there could be a negative impact, whereas if they take up the offer, there will be a positive impact. I just do not know about the practicality of the suggestion, but there is nothing in what we would say that would deny the operation of such an element to it - join and get a benefit and if after a period of years, a person does not join, he or she will begin to suffer the consequences. There would be a positive aspect to the scheme to encourage people to move in this direction. I do not know what the practicalities would be, but the Revenue Commissioners would know the practical consequences. That principle could easily be applied and it bears out the Deputy's argument that there is a fair degree of thought, work and talk to be undertaken about the scheme to make it practical and workable. From our perspective, that practical and workable form should be something we could propose to be able to tell people it would be in their interests to sign up to it. I would not see the notion of somebody coming into the State in the morning and going out in the evening and doing this time and again as part of any new scheme. That was never the intention, but the scheme has not been fully drafted at this stage.

Ms Deirdre Mortell:

I will explain why we put this proposal on the table. I am speaking from my experience in my position in One Foundation in the past ten years. On the question of why we would bring forward such a proposal, it is because the existing philanthropic cliff looks like being €50 million to €60 million a year, but it will be going within two years. We need to find money fast or there will be a car crash. It is a case of where one finds money that does not take it away from somewhere else in the economy. There are not very many places in which to look. In my experience over ten years, when we set up One Foundation, which was founded with tax-resident money, we really believed philanthropy was a relay race and that we would play our part for ten years, spend our capital and then other philanthropists would come in. That was the Celtic tiger and we were not expecting a recession. However, even during the Celtic tiger period, that did not happen and new philanthropies were not set up on any scale; in fact, there was hardly any. We learned that this took longer and we are not yet there in terms of potential Irish philanthropists, tax-resident or otherwise, actually going ahead and making these donations and of the scale we urgently need in the next two years. This would not always be our preferred scheme, but we are in a situation where we really need to find new money and we need to find it in ways that will not dislodge existing tax income or spending in the economy. We are undertaking a national giving campaign, but there is one group we are not targeting. There is an equity argument which questions why would some of our wealthiest citizens do not play their part in the national recovery and asks how can we encourage them to step forward.

Ms Loretta Glucksman:

Deputy Pearse Doherty has raised very salient points. I take great comfort from the fact that other countries are being very much less insistent with their tax exiles. We try not to use the term "tax exiles" because it is so toxic, but we all know what we are talking about. For example, Portugal is lowering the threshold without a financial requirement. In our view, this is punitive for that community who are the tax exiles. This is a significant investment - I do not care how much money a person has - it is a lot of money. I do not think Ireland could be perceived as being soft on the persons who are not paying taxes and who live outside for that reason. If people see the value of it and sign up to the scheme, that is an affirmation of how painful it is to be Irish and not live here. This gives them an opportunity to participate in a very difficult time for the country when we need this new money. I agree with Ms Mortell. My colleagues and I have thought long and hard and do not see another source for this amount of money in this rational way.

Mr. Paul O'Hara:

It is hoped if we can get 40 people - a possible number - that would equate to €400 million in new money for the Exchequer and €200 million in new fresh investment. Based on estimates, this would create 3,500 jobs. That would mean a cost of €36,000 per bed night. It should not be overlooked that this would be good value for the State.

Pearse Doherty (Donegal South West, Sinn Fein)
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I genuinely welcome this and the other proposals. As Mr. Flannery said, we can put flesh on the bones of this idea. If I thought there were hundreds of people availing of this scheme and some of them might attempt to abuse it, it could be justified by the number of genuine people who have Irish residency status in America or Canada or wherever else who want to contribute to this scheme, but the reality is that we all know there are people here who moved their interests overseas in order to reduce their tax liability. The State has been trying to restrict this behaviour. We have got rid of the Cinderella clause. The Commission on Taxation has recommended that we tighten further, for example, that the abode and centre of interests not be recognised on the basis of a number of days. Some of these individuals may buy tax residency because their accountants will advise them that €1 million per year for the next ten years will buy tax residency, with the clause that €5 million must be invested which may or may not provide a return. It is a cost of €1 million for tax residency for an extra 42 days per year. That is a significant bonus for people who deliberately moved their interests overseas in order to reduce their tax liability but still have interests here. It is a very cheap price. I am concerned about that aspect. While there would be a gain in terms of philanthropy, overall, there would be a loss to the State because if we were to change the tax residency rules to make them more restrictive, the State would benefit far more. These are my genuine concerns.

I have seen how the scheme has been abused in the past and this scheme could be open to abuse by a couple of individuals. While there would be a benefit for one section, there would still be a huge loss. We would be complicit in facilitating tax avoidance through making the system more open and more available for these people to do what they are doing. This goes against the grain of what is happening. It is appropriate this proposal is put on the table at this time, following the Department's review. We need to look at how this proposal can fit in to a system that will strengthen tax laws for tax exiles but also provide an incentive. It does not go in the direction of the carrot and stick approach I suggested, but it goes forward in a different direction. I am very conscious of the cliff we face and of the huge amount of work this movement has done and of the generosity of a number of people. I have seen the projects and we have benefited from them. I have also seen the results in terms of the peace process, not just funding for the process itself, but the support given by the organisations. It is hugely important this continues. I am unsure about how exactly, but we can tease it out. I am very open-minded on it.

Liam Twomey (Wexford, Fine Gael)
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We have run over time somewhat, but I will call on Deputy Humphreys to make his contribution.

Kevin Humphreys (Dublin South East, Labour)
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I thank the witnesses for attending and for the work they have done. I am very nervous with regard to an issue that could run again against the tightening up policy we propose. It has been said we could be talking about from 40 to 50 individuals. I know of one or two of these and have seen them come in to the media events around their donation and then fly out the next day. These people choose where they pay their taxes. They would originally have made their money in Ireland, but have not chosen to be tax exiles. Ms Glucksman said this was painful for them, but to be honest I think it is not painful enough. They should pay their taxes in Ireland.

The real concern is the 182 days and since the Government took office, it has tried to ensure this time is accountable and that these tax exiles cannot fly in an out as they please, as they had been doing. I hope this is very painful for them and wish it was a lot more painful, particularly for some individuals. Although I would like to mention them, I will not, but one or two of them live in the constituency I represent. This is my main concern in this regard. The 40 or 50 individuals, a couple of whom I could name, became tax exiles because they did not want to pay taxes in this State. They like doing media events and contributing to some of the high profile events we have here. Citizens would be annoyed if we started giving them additional days for €36,585 a day. That is not a lot of money for some of these individuals, but €585 is a lot for somebody on a low income. Why should people be able to buy domicile?

I understand why this proposal is being made, because I have worked with many organisations that have access to those funds, but even those organisations and individuals would have questions about this. Deputy McGrath asked what research had been done on this proposal and Mr. Flannery said he had spoken to a few financial houses. Last week, I discussed this with a few people who work in these financial houses and they had a broad grin on their faces. I understood from this that our financial houses here are fairly good at running a horse and four through our tax laws. That is where I come from on this. I fully respect the work that has been done on this proposal, but it would turn my stomach if some of these individuals were allowed have additional days in Ireland.

The same is probably true for many people here. They have seen these tax exiles make their money and leave the country but retain expensive show houses in Dublin and return to Ireland for their 182 days. If these people could buy additional residency, citizens would probably go along with Deputy Doherty's proposal to reduce the number of days they can spend in Ireland. I might go along with the proposal that if we reduced the number of days to 100 and offered an additional 30 days for a €5 million investment and €36,000 a day, we could look at that sympathetically. However, my concern is that this scheme could turn into another tax avoidance scheme.

Liam Twomey (Wexford, Fine Gael)
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Before the witnesses respond, Ms Mortell mentioned that One Foundation expected other organisations would come on board and take over the role it played, but even in the good times this did not happen. She sees it increasingly unlikely it will happen in poorer times. From the collective experience of all the witnesses of how philanthropy works, what is it about Ireland that makes it more difficult? We are a considered a generous people and people with an Irish heritage outside of Ireland are extremely generous with time, resources and funding to Ireland. What is the main problem here? Is it a legislative, policy, cultural or some sort of structural problem? Do we all work in our own little silos, doing our own thing and do we just not see the big picture?

Mr. Frank Flannery:

That is a fundamental point. I will comment and allow others to remark also.

Kevin Humphreys (Dublin South East, Labour)
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I think the Chair was trying to soften the question, but I do not know why he would do that.

Mr. Frank Flannery:

I understand the point the Deputy is making.

Kevin Humphreys (Dublin South East, Labour)
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It might be self preservation.

Mr. Frank Flannery:

There was an old and very powerful tradition of philanthropy in the eighteenth and nineteenth centuries. However, that was a different Ireland and society. Most of what was done in Ireland, in great public buildings, services, hospitals, etc., was done through philanthropy. Those were different times, but philanthropy was very strong. In a way, that same culture is still very strong in Britain.

What happened in Ireland was that this economic model was destroyed through the land Acts at the end of the nineteenth and beginning of the twentieth century, when there was a huge transfer of wealth, followed by an economic war and a period of extreme protectionism. This was followed by the free trade Act in the 1960s and then the European Economic Community in the 1970s, which blew away what remained of that old wealth, industry and thinking to a large extent. Some of the trusts still in existence here are old endowments from 100 or 200 years ago and they now only provide a small amount of money.

The wealth we have now in Ireland is a creation of the Ireland of the late 1950s, 1960s and since. This was driven by the State incentivising behaviour it wanted to encourage. It started off by making profit on exports tax free, back in the late 1950s. The first programme of economic expansion was built on such ideas. Then we incentivised inward investment through setting up a low corporate tax rate. We developed outfits like the IDA, Enterprise Ireland, Córas Tráchtála and so on, giving grants and assistance of all kinds to help people. More recently, when we did not have enough hotels, we created schemes for their development, until we had too many. We also created incentives for house building. Every activity in the economy we wanted to push, we incentivised it in a similar way. This is how we developed our economy.

The wealth we have now is relatively new wealth that came through in the 1960s, 1970s, 1980s and 1990s. Basically, the whole thinking in the past 50 or 60 years in Ireland has been to do with making money, but there is no generational feeling with regard to what to do with it. There certainly was no such feeling during the Celtic tiger era, when there was a mad dash to create more money. Anyone would say that what went on in the development explosion was that all of the profits from the previous deal were pumped into the next deal. It was a kind of frenetic process.

Ireland is now going through a reflective period.

We are coming out of a national tragedy in which everybody has suffered and there is a moment to reflect that when we do rebuild our economy we want to build it on sounder values so that we will not repeat the mistakes of the past. Nonetheless, we are dealing with human nature and the concept of incentive is useful. We are not proposing any fiscal or tax incentives but we are proposing some kind of incentivisation to get people to do it.

One of the problems with philanthropy in Ireland is that it has never in our lifetime been incentivised. If a company in Ireland spends money on research and development it is allowed a double tax relief on that expenditure, in addition to the normal 12.5% that it pays. It gets a break of 37.5% because research and development is seen as an activity to encourage and that is what the State does now. It does not encourage a company to give money to a good cause or to invest in a charity or social economy. The last budget decoupled this kind of giving from other tax-efficient activity. For a while it was nearly impossible for a company to give. Far from incentivising, we have been virtually penalising it. It has never been assisted here. There has never been a reason given to people to put their money in to philanthropy or good causes or into trusts or foundations. If we had the same number of foundations per head of population as the UK has we would have 500 or 600 but realistically speaking we have only approximately 20 and Atlantic Philanthropies has 85% of the total. We are in a very poor and weak state.

The Chairman asked the fundamental question and the answer is that we do not have philanthropy in Ireland because the State has never recognised it. The State does not encourage it. It has never incentivised it. We are beginning a debate here and we will continue to ask why not incentivise investment in the social economy and such projects, in the same way as we do research and development. The payback is much faster because these events happen quickly and one gets a 12-month payback and a substantial hit in two years, whereas in research and development it could be 10 or 15 years before the payback yet a corporation is incentivised to do research and development and not to do what we propose. We are putting out a challenge to corporate Ireland to give at least 1%, as is done in the UK.

Kevin Humphreys (Dublin South East, Labour)
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I have no problem with the idea of corporate Ireland giving 1%. I like it. The fundamental problem I have with this, however, is that it is like incentivising. There are tax exiles who made their money in Ireland and this gives them an additional day here for what would be a very modest sum of money out of their incomes. They are back in Ireland making more money on their investments. There is a lot wrong with our tax code and there was greed throughout the boom. A lot of the people who made money then were extremely greedy and this is probably why we did not see that giving. I would like to encourage giving. The 1% proposal is good and corporate Ireland should be encouraged to give that. The element of Mr. Flannery’s proposal with which I take issue is that of the 40 or 50 individuals he mentioned there are greedy people who are tax exiles, having made their money in Ireland and this would give them a get-out-of-jail card, even if only for one or two days, for what to them is probably a modest sum of money. Mr. Flannery knows the areas I represent where €36,000 would mean a lot to a community centre but we must be extremely careful of the message that this Government sends out. While I fully support Mr. Flannery, a tax exile has moved tax residency out of the country and we should be extremely harsh about anything that would give that person additional days in this country.

I fully support the other part of Mr. Flannery’s proposal but this element is incentivising people to be tax exiles in the first place. I know this applies to only 40 or 50 individuals. My colleagues here would probably be able to name them. If that was on the front page of a newspaper some citizens would be rightly outraged that we are allowing these people to come back into the country for additional days for what would be to them the paltry amount of €36,000 odd a day.

Mr. Frank Flannery:

The 40 individuals to which my colleague referred would generate €600 million.

Kevin Humphreys (Dublin South East, Labour)
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I would much prefer that they pay their tax in Ireland where they made their money.

Mr. Frank Flannery:

So would we all. There is no argument on that score whatsoever. We are not drawing up the tax code and presumably it is there for a purpose far more complex than I can understand. How it fits in with a global economy and why it is there at all I do not know but it is there and we are trying to deal with that reality.

Liam Twomey (Wexford, Fine Gael)
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I would like the other witnesses to make brief remarks on what has been said.

Ms Caroline Casey:

I can feel that this sticks in Deputy Humphrey's craw and I understand that. This is really uncomfortable. The Deputy said it would turn his stomach. It would turn my stomach too, as it would those of all of us who, like the Deputy, work in the sector. This sector is not just the not-for-profit sector. It is our country and it affects us all in different ways. If this goes belly-up it has many implications that are startling for those in government and for citizens. Even the Ireland Funds and the extraordinary work it does meets only 10% of the requirement to deal with the €50 million cliff about which we have talked.

Ms Loretta Glucksman:

Nine per cent.

Ms Caroline Casey:

I apologise, 9%. I am in the business of fund-raising and have been doing this for 13 years. I set up a foundation which engages business around disability. It is a really tough area to work in. It is terrifying, not just for the organisations that I run but for lots of those with which we work. There are huge cuts for this group of individuals. When we first talked about this I too was uncomfortable with it but then I asked should we cut off our nose to spite our face. If these people exist and they have money, and they do, as Ms Mortell said, why should they not pay? The Deputy is right, it should not be seen to be easy. It is not easy. We can make it difficult and agree the principles and try to find a way that does not make our stomach crawl but gets money from groups of individuals who have it. The situation will not just be desperate in two years’ time, it is desperate now, before these foundations shut down. There are foundations, organisations and communities shutting down all the time. It is already scary, before they leave. Although I do not like doing it, I see a group of individuals from whom we can get that money so why not get it? Let us look at how to do it because it is worth debating rather than cutting off our nose to spite our face.

Ms Loretta Glucksman:

Well said, Caroline. As Mr. McLoughlin and Ms Fottrell are tired of hearing me say, I would like to take a point of view of personal privilege. I speak as a philanthropist. Lou and I came to Ireland approximately 27 years ago, not with an organisation but because my Hungarian-Jewish husband loved Ireland. We came to know Ireland and became very active. We never asked for anything. We never looked for any recompense. I could not put a price on the satisfaction we have had over those 27 years. That is what philanthropy is about.

I share the Deputy’s revulsion. I hate to sully it by making it a barter system. That offends me. However, I am very scared - I cannot say it as eloquently as Caroline said it - of losing this money with no reasonable source to replenish it. We have raised $140 million in the past four years. I cannot tell the committee how hard that was.

Mr. McLoughlin can because he did it, but it was very difficult. We cannot meet this need. There is a vacuum. So, one swallows and finds out where to look for new sources of income. Please, do not assume that I like it. There are downsides but the upsides are so phenomenally more important that I will swallow without giving up my own philanthropic principles.

Stephen Donnelly (Wicklow, Independent)
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I will start by recognising the great work done by the witnesses. It has been my privilege to do a bit of work tangentially with the One Foundation and Ashoka. I am aware of Ms Casey's work with the Kanchi Foundation in changing mindsets about disabilities. We are all aware of the fantastic work done by the Ireland Funds.

We have gone into the detail on the trade-offs involved. I agree with many of the sentiments expressed by Deputy Kevin Humphreys, but I wanted to recognise that the witnesses are people who have dedicated themselves to making this country a better place. They could earn more money and do more with it working in the private sector.

I will not go over the downside of this proposal, as we all know that it potentially legitimises tax avoidance to some degree. However, it is a straight trade. We are selling people more days in Ireland. I would prefer the US system, under which no one cares what is paid abroad as long as the difference is paid in the US. This would get rid of the problem and bring money back to Ireland quickly. For example, if someone who used to live in New York now works in Saudi Arabia, he or she would pay 40% of his or her income to New York state and the federal system and nothing in Saudi Arabia. However, this system is probably a little radical for Ireland right now.

Kieran O'Donnell (Limerick City, Fine Gael)
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Deputy Donnelly could never be accused of being radical.

Stephen Donnelly (Wicklow, Independent)
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I am getting better at it as I become de-McKinseyed.

Kieran O'Donnell (Limerick City, Fine Gael)
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The Deputy is in politics.

Stephen Donnelly (Wicklow, Independent)
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I am not surprised by the data outlined by Deputy Pearse Doherty and to which Mr. Flannery referred. I was working in the McKinsey Dublin office when this work was done and I have been using those data. Sadly, we are less charitable than we believe. We have our moments. For example, the Irish gave more to the Darfur crisis per capita than any other nation on Earth. This is something of which to be proud. As a percentage of our net income, however, we do not do well. Our corporates are a disgrace. I have worked in philanthropy in the UK and the US. As per the 2009 McKinsey report, our corporates give €1 for every €12 that corporates in the UK give. The private sector in Ireland should be ashamed of itself. I hope that the various ideas presented at this meeting on a national giving campaign will make this obvious. Our corporates benefit from a variety of measures. For example, they enjoy one third less taxation than the rate in the UK. Even benefitting from that, they still only give one 12th what corporations in the UK give.

Sadly, our rich people are some of the meanest rich people in the world. The McKinsey analysis is a wonderful bar chart that shows the number of philanthropies established as a percentage of high net worth individuals of the population. An interesting graph that is not included in this documentation shows some European countries. At the bottom on its own, almost in need of its own scale, is Ireland. Mr. Declan Ryan was generous in funding the One Foundation. Mr. Chuck Feeney was also generous, as were a few others. Our rich people are in their own category of mean. It is not that they are 10% worse than the average. They redefine a new level of mean. A bunch of them do not even stay in the country to pay their taxes.

It would be great if this information got out and we started calling it as it was. We believe that we are a wonderful, gregarious and charitable nation. We are not. We have our moments, but we give less, our corporates give much less after paying much less tax and our rich people are the meanest rich people in Europe. I will not do well for political funding for the next election, but we must call it as it is.

This proposal is a practical solution. I am happy that the various members of the forum have suggested that it does not sit well with them, as it does not sit well with me either. I would prefer it if the people in question lived in Ireland and paid their taxes like everyone else. However, it is what it is.

I will ask a few specific questions. How would the distribution of the funds be prioritised? Let us take scenario C of the proposal. If 40 people participated, we could have investment of $200 million - I presume that is US dollars - in business and charities and extra revenue of $400 million to the Exchequer. That is a huge amount of money.

The proposal is called a job and social cohesion initiative, which sounds good. Selling it would be good politically, as everyone likes jobs, but my understanding is that it would take over from philanthropic money. Straightforward, good, valuable, local job creation is not what the One Foundation, the Ireland Funds or other bodies fund currently. They fund philanthropy and community-based measures. For example, they target disadvantaged youth, recidivism and so forth. As we know from Mr. O'Hara of Ashoka and Ms Casey, they also target social entrepreneurship. Would this initiative replace the philanthropic funding or would some of that funding drift towards straightforward and valuable, but non-philanthropic, non-social cohesion, job creation?

Mr. Frank Flannery:

I thank the Deputy for his comments. If this money emerges, precisely how it will be distributed has not been defined. We provided some strong recommendations, for example, investment in the social innovation fund of Ireland and the job generation scheme. They are different types of scheme, as the former would assist projects in the social economy. As Ms Mortell explained, these projects would be scalable and be capable of being successful and sustainable. In other words, they would not need continual help. They would have the capacity to stand on their own feet. Regardless of whether they would provide services to the community, the Government or whoever, they would need to be sustainable models. It is a real economy. The number of employees in the not-for-profit sector is 102,000. A real injection of energy could double that number.

The discussion on how this would be done is yet to be held. The Government or the scheme could identify certain categories of investment that were acceptable within the scheme, for example, the social innovation and job generation funds. It would depend on the emphasis placed by the Government or the Legislature on certain uses for the money. That is up for discussion to a certain extent, provided that the money is invested generally in the development of the social economy, services and jobs.

Why jobs? At the heart of Government policy is the issue of jobs. It will remain a high priority for a number of years. Investment in the not-for-profit sector is capable of a more efficient transfer of investment into employment than any other sector, albeit with the possible exception of opening new hotels or the like. The services sector can be good at generating jobs. There is little leakage of investment in the not-for-profit sector.

This proposal is not an attempt to replace philanthropy, but to increase the amount of money available by attracting new, non-displacing money. We do not want to set up a largely philanthropic-based social innovation fund that would compete with existing operators who are already struggling.

The market at the moment is too small for that. Our proposal is part of an effort to create a larger market which would generate more resources.

The Deputy referred to the finding in the most recent McKinsey report that our corporates give €1 for every €12 given by their counterparts in the United Kingdom. The headline figure is that 0.1% of corporate profits in this country are dedicated to philanthropy compared with a figure of 1.2% in the neighbouring jurisdiction. I do not know any reason for the discrepancy other than that Irish corporates are not switched on to giving, do not think about it and have no reason to do it. It is not a discussion they have with their auditors, tax advisers or anybody. One of the triggers internationally in encouraging giving, whether by corporates or individuals, is where a discussion takes place at the end of the year when people are doing their final returns. If one's philanthropic effort has some effect on one's final return, it becomes a matter of discussion. It has been shown that where that discussion does take place, the amount of giving increases fourfold on average compared with what is given in the absence of discussion. The problem is that this type of discussion would never take place in a company in Ireland because there is hardly any reason for it. In the case of expenditure on research and development, for example, there is a tangible incentive. There is no incentive at all to give philanthropically; it simply does not arise.

I do not know whether one can conclude that rich people are inherently mean. It is more likely that they are simply not switched on to giving and do not even think about it. Perhaps they have an idea that they will do something in their will. Our objective is to get the concept of giving while living into our system. Problems need to be solved now, not in 50 years' time. We would very much welcome a debate with the public wheel as represented by the Parliament and the political system in general and dragging in the Civil Service as well. We must, in the first instance, ascertain the capacity of the sector to deliver. We must consider how we can put some investment in, whether a body modelled on IDA Ireland, for example, might be appropriate. The bottom line is that there has never been a real attempt to develop the sector. It was always looked at as being relatively insignificant. Members today have expressed surprise at the scale of the sector and the reality that 102,000 people are employed in it. We are used to encountering people's surprise, but the reality is that there is scope to make the sector much larger. It is a sector offering tough employment. It is indigenously structured and will be there when other stuff is gone. It will never be off in some fancy lagoon, because it is not that type of thing at all. There is much to be gained in offering it real encouragement.

Our 1% campaign involves engaging with both the general public and with corporate Ireland - engagement of a fairly pressing nature in the case of the latter - to get the figure of 0.1% up to at least the standard 1%. We are hoping to drag in the inward investment contingent, which includes IBM, Google, Facebook and so on, to get it to do in Ireland what it is doing elsewhere. It is not enough for these companies to make their money in Ireland but do their philanthropy somewhere else. They must be encouraged to give us a share, because a little from them would make a huge difference to us. We have also been asking Irish citizens to do more. It is a matter for the Government to devise a more satisfactory tax regime. That is way beyond our reach and something we cannot really discuss. What we are saying is that the objective, in the meantime, is to drag the money out of these companies and individuals. We would take €600 million today if we got the contribution we are seeking from one in ten of our targets. That becomes €6 billion if we get all 400. In other words, the figures here are potentially large.

Stephen Donnelly (Wicklow, Independent)
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My observation from working in the social sector in the United Kingdom is that part of the problem for the sector here is that it has not professionalised. In London, by contrast, in the late 1990s and the 2000s, there was a move towards professionalisation and an acceptance, for instance, that it is necessary to pay decent wages to attract the right people, people who will bring in 20, 100 or even 150 times their wage in funding. By the international standards I have seen, the sector here is still very amateur. It is too small, there is not sufficient scale, and we see a hang-up on wages. It is fine to claim that we cannot pay comparable wages in this country, but one must then accept there will be a deficit in terms of professionalism.

The delegates have set out a funding mechanism whereby contributors would pay €5 million in the first year and €1 million per year for a further ten years, giving a total of €15 million. For the seriously wealthy people who are avoiding paying a very substantial amount of tax in this country by staying outside it, even though their families might live here all the time, such a proposal might well look like a great deal. They are essentially buying more time in Ireland for a sum which to them would be relatively insignificant. For others lower down the wealth scale, however, it is a more expensive proposition because it is a set amount. Did the forum consider whether rather than having an absolute contribution, it might be more helpful to look at a percentage of tax avoided? In the case, for example, of a person who currently avoids paying €100 million in tax, the offer might be that he or she would be eligible for the additional days if that figure were reduced to 85%. That type of mechanism would potentially bring in a lot more people and in the case of those earning the megabucks, and avoiding megabucks in tax payment, there would be scope to recoup a lot more than €15 million.

Liam Twomey (Wexford, Fine Gael)
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I remind members and delegates that we have run over time on this slot. Before calling Mr. Flannery to respond, I understand Mr. O'Hara wishes to comment.

Mr. Paul O'Hara:

I will be brief, Vice Chairman. Mr. Flannery has largely answered the point. There is something of a misconception that there is no correlation between philanthropy and job creation. What social entrepreneurs and others in the social sector are ultimately trying to do is solve problems. There are jobs in solving problems, as illustrated by the fact that 100,000 are currently employed in the sector. I agree that the sector has not professionalised in the same way as its counterpart in the United Kingdom.

The Deputy highlighted a problem of meanness in the corporate sector and among high net worth individuals. It is very clear that a cultural shift has to happen in this regard. I do not believe it is the case that people are inherently mean; it is simply that, culturally, it is not how things are done here. Likewise, a cultural shift is required in the citizens sector. We are talking, therefore, about two culture shifts. It is important to remember that there is a great deal of job creation in the citizens sector. There was a period through the 1990s where, in the 12 most developed economies in the world, the citizens sector was outstripping other sectors for job creation by a factor of three to one. The citizens sector can drive job creation in Ireland.

Stephen Donnelly (Wicklow, Independent)
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What I was trying to establish - Mr. Flannery essentially answered the point - was whether, for example, money raised here would be diverted to the types of initiatives that are meant to be covered by the micro-enterprise fund. I am satisfied the answer is "No".

Mr. Frank Flannery:

Our objective is that the two funds we are hoping to establish would link in with existing structures. We very much welcome the new initiatives which are coming through in the social economy at Government level, such as the one the Deputy mentioned. The Government has several schemes for job creation and it is paying lots of money to individuals to bring jobs into Ireland. However, the Government does not pay any money to anybody for the many thousands of jobs that would emanate from the work we are proposing. Our plan is to fund it in different ways and find new sources of money.

Members gave several suggestions as to how the basic proposal we have set out could be improved. I agree that it is vital to include safeguards to protect against abuse. Deputy Donnelly suggested making the contribution a percentage of forgone tax revenue. I do not have sufficient knowledge of the capacity of our system to evaluate how practical that suggestion might be. The thinking behind our proposal is that we go with something very simple, namely, a contribution of €5 million to a philanthropic endeavour which would be reasonably specified and, in addition, €10 million extra tax to the Minister for Finance. The Deputy is suggesting that this could be beyond the capacity of some of the people we are targeting. That might be so, but the point is that a scheme like this, once it is up and running, can be adapted and developed. The most important issue at this point in time is to get something in place.

Stephen Donnelly (Wicklow, Independent)
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I have a question for the Vice Chairman and the committee secretariat.

The Revenue Commissioners would be able to provide some analysis on this issue. Could the committee request that the latter run both scenarios, namely, that which is before us and another based on a range of perhaps 10%, 20% or 30% in tax forgone? I would be interested in discovering whether we are discussing a marginal difference here. If we are, then the best course of action is to go with the scenario that works. If not, will the money involved increase from €200 million to €2 billion if our guests were to get 10% rather than a set amount? Could we make a request to the Revenue Commissioners and the Department of Finance in this regard?

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I thank our guests for their presentation. The booklet is very interesting and certain of the facts it contains are revealing. I was genuinely torn when I listened to both the presentation and the suggestions made. Perhaps our guests could be of assistance in the context of my agonising over this matter. I love the concept of not-for-profit. I want an economy and a society that are not-for-profit.

Kieran O'Donnell (Limerick City, Fine Gael)
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Is that even if the Deputy is not a part of it?

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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That is before profit.

Kieran O'Donnell (Limerick City, Fine Gael)
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So Deputy Boyd Barrett is not against profit.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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That is just a part of it. I represent the radical wing of the party that wants a not-for-profit economy. I am very much in favour of the concept and I fully recognise the importance of the work done by the not-for-profit sector. Like everyone else, however, I am surprised by the size of the sector. The latter is a positive and if the sector is that big, if it works, if it creates employment, if it does good and if it solves problems, then perhaps consideration should be given to running the entire economy on a not-for-profit basis. We might be in a far better place than we are at present if the economy was run in that way. In circumstances where we are in dire need of employment and investment, it would be difficult to be opposed to or critical of anything that would increase investment and create employment in a sector such as that in which our guests are involved. I am, therefore, hugely sympathetic to what our guests are trying to do.

I must also consider the other side of the matter, however. I refer to the fact that in order to develop their sector, our guests are proposing that we should incentivise people who, in some cases, are tax exiles and who possess obscene amounts of wealth which they should not have and on which they pay very little tax. It is being suggested that we should reward or incentivise those to whom I refer in order to obtain money from them which they should be investing in our economy in any event. It was stated that we should "drag it out of them". I would be fully in favour of dragging this money out of them. However, it seems that what our guests are proposing is not that it should be dragged out of them but rather that we should beg them for it and reward them for giving it. If we were to do the latter, it would have the potential to really grate on the nerves of people who are pretty sickened by the gross inequalities of wealth. They are very sickened by the idea of enormously wealthy tax exiles being granted that status in the first instance. I suspect they would be quite angry that those individuals should somehow benefit from doing something which most citizens believe they should be doing through the tax system in any event. How do our guests reconcile this problem?

I am not the only person who is of the view that this is a problem. I will not mention any names but we all know the identities of some of those to whom I refer. There is genuine fury about super-wealthy tax exiles and tax refugees who pay so little tax. The same could be said in respect of corporations. People's fury could be intensified even further if they read our guests' report. While it is not possible to generalise about all of those involved, the report seems to indicate that we have - or damn near have - the meanest and greediest super-rich individuals and corporations in the western world. They are certainly meaner and greedier than their counterparts in comparable countries in Europe and in the United States. That is pretty shocking, particularly when one considers that they get such a good deal on their tax. How would our guests respond to what I believe is a real problem in this regard?

Mr. Frank Flannery:

I thank the members for their comments. I spent all my professional working life in the not-for-profit sector and I am also a firm believer in it. I am of the view that it can bring together the best practices of the private and public sectors in order to deliver a really good product in the context of value for money and properly motivated service. It can do so in a way that neither the for-profit sector nor the public sector - which is subject to other difficulties - operating on its own can do.

I have been considering and talking about this matter for most of my life. The tax system is what it is and we did not design it. If a small island such as Ireland had a way to benefit fully from all of its capital and income generation potential, then its needs could be much more easily satisfied. However, Ireland operates in a global economy. As politicians, Deputy Boyd Barrett and his colleagues have at least some opportunity to work away at it on occasion and to put forward their points of view. If the Deputy were in government, then he would have an even better opportunity of doing so. That, however, is the way the system works. We are outside that and all we can do is accept matters as they stand. We can, however, highlight the fact that there is more than one way to distribute income and surplus resources in a society. The one thing we have never considered in this country - the facts, as we found them, prove this - is that those at corporate level, high-net-worth individuals and people at government level can be persuaded that their surplus resources should be distributed for the improvement of humanity and society and the creation of social cohesion. Even within the capitalist system, there are arguments for doing that. Capital can exist and thrive better where there is a socially-cohesive society in which there are no extremes of poverty or hardship and where everybody obtains a fair or reasonable share.

In other countries such as the United States, Canada, Sweden, Norway, Germany, the United Kingdom and Luxembourg, to name but a few, there has been a huge development of philanthropy alongside pretty advanced social democratic models of government. Those models have enshrined many of the principles which we endeavour to enshrine in Ireland. Perhaps they are more advanced and do it better than we do. Philanthropy is thriving in the countries to which I refer because there will always be winners. What we are saying to the winners is that if they have surplus income they should consider - while they are alive - distributing it for socially useful purposes such as the elimination of disease or poverty, the promotion of peace, the creation of employment, etc. This country has huge problems with regard to poverty and a lack of employment and these will obtain for a number of years.

We have been charged with implementing the recommendations of the forum, which is an advisory body to the Government and which cannot do the latter. We are trying to challenge the system in this country to do a great deal more. We are also trying to get across the message that we are not as good as we believe ourselves to be. Irish people love to be praised.

That is one of our national characteristics, namely, that we respond very well to praise.

Ms Deirdre Mortell:

It is human nature.

Mr. Frank Flannery:

It is human nature but we probably got a slight overdose of that characteristic. Our corporate sector is not contributing in this area and, furthermore, it is not even thinking about it. We should incentivise that sector and give it a reason to contribute. If it treated investment in the social economy in the same way as it does investment in research and development, and I use that example as it is the one that comes to mind, there could be an equivalence. That would be an interesting thing to do. We should also focus on high-net-worth individuals. There is a huge movement in the United States where people who are very wealthy are putting half of their total wealth into trusts and foundations and distributing to good causes while they are alive. It is inspired by people like Chuck Feeney whom I mentioned. That movement is taking off. In Canada about 15 years ago philanthropy was almost discovered there and it is now a huge force in its economy and society. We can discover it now in Ireland and in 15 years time it could be a very large force for good in our society and economy. It could help to bring all these wealthy people back into a much more meaningful, creative and dynamic relationship with our country. All our rich people, all our companies in Ireland and all the inward investment companies here could participate and do their share. As was stated in our campaign, the entire citizenry would be involved and therefore it would be very dynamic. All gifts would be equally valued, whether it be a gift of giving of one's time for a day, money that somebody could afford or something very big. They would have an equivalence of value.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I appreciate the points Mr. Flannery is making. He has made the case very strongly that a bird in the hand is worth two in the bush and that we will take what we can get, notwithstanding the political campaign that some of us may be waging to change the tax policy.

Mr. Frank Flannery:

That is equally legitimate, if not more so.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Indeed, and I understand that. What would Mr. Flannery's response be to the problem I am raising about how that may impact on ordinary people's sense of grievance and injustice at the inequalities that exist in our society and the perception they could well draw from this, namely, that those who have done very well and who, in some cases, are tax exiles will be rewarded and begged from in order to fund socially necessary projects dealing with poverty and unemployment?

Mr. Frank Flannery:

I understand the Deputy's question.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I have another related question. Does Mr. Flannery not think there is a danger in what he is doing in that his organisation and we, as a society, could become dependent on these people and they would have us, to a certain extent, over a barrel in that if we were to threaten to do other things on the tax front or on the political front that they do not like, they could threaten to withdraw the philanthropy they would be extending to us?

Liam Twomey (Wexford, Fine Gael)
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That will have to be the end of the Deputy's contribution. Before Mr. Flannery responds, I wish to say a few words. All the delegates might like to make a few comments before we conclude. There should be as much as possible positive reasons for giving and there are many positive reasons for doing so. We are talking about incentives for giving but when we reflect on how the Irish people have acted in times of crisis, there is probably a groundswell into which we can tap and the people could be taught how to give on a long-term basis. Even after having been in politics for 12 years I probably still have a remarkable capacity to delude myself, but I think that people are full of good rather than being motivated by self-interest alone. All the delegates would have seen that in the work they do. I am talking about the remarkable capacity of people to do something good for their fellow man. It is a question of tapping into that. I do not see things as being quite as negative. Admittedly, we have also seen far too many cases where ethical behaviour has been well below standard in all parts of Irish society but such behaviour can also be seen across the world. We should not focus so much on such negative behaviour, rather we should focus on the positive behaviour. Even though Deputy Boyd Barrett said that perhaps we are allowing ourselves to be held over a barrel, life is like that. Many people who are strongly influential in Irish society and global society feel they have that power already. We should try to modulate it a bit and do the best we can.

Stephen Donnelly (Wicklow, Independent)
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The Vice Chairman is opening up a can of worms here.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Indeed, and that is before we even start to talk about human nature.

Stephen Donnelly (Wicklow, Independent)
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We are voting at 2 a.m., so we do have the time to go into this.

Liam Twomey (Wexford, Fine Gael)
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I will ask Mr. Flannery to respond to some of the questions that have been asked and the delegates to give their concluding remarks.

Mr. Frank Flannery:

I thank the members for their contributions. We wholly accept the validity of all the points that were made but we would also assert the absolute validity of the case we are making, namely, that there is real and present danger in this area. We have a small window of opportunity to put some provisions in place in order that we can begin to prevent a greater hardship occurring when all this money moves out of Ireland in the next two to three years or whenever. This issue has been identified in time and there is an opportunity to resolve it. We have done something more fundamental in bringing forward the report of the Forum on Philanthropy and Fundraising and in trying to implement it. It reveals a huge gap in our national culture and in our way of behaving. We hope that Ireland will discover the values of the not-for-profit sector in society, its effectiveness and efficiency in dealing with problems, in creating employment and in speeding up our recovery but also bringing to that recovery values which will enable us to avoid the excesses of our last experience. If this generation of politicians and citizens learns anything, it must be that. We got success and we built on it and then, collectively, we blew it. However, we have kept our head and we are thinking and learning from what happened. We will the learn lessons and will not do that again. We will build much more solidly and on a better and more long-term basis in the future with better values.

The concept of giving is where people do more than just what the law requires them to do and where this would be part of their culture and their thinking as individuals, families, communities, organisations, citizens, professionals and workers. Furthermore, those who are successful would build that into their life model and they would be of additional assistance to those who were not successful, and they would do it over and above what the State demands of them. It may well be that the State should demand that anyway but, none the less, we are dealing with the world as it is and we want to make the system that we have work much better.

I would hope that the members would say that there is a great deal of work to do done on this kind of thinking. It moves us into a slightly edgy area. There are real possibilities here. The 400 or 4,000 people who have significant resources should not be left outside the demands we are trying to make, rather they should be fully included. At a minimum we should seriously investigate how this might work. In response to Deputy Donnelly's point, I believe that at the beginning of the process it should kept as simple as possible. I can see the value of what he said, namely, that if it is decided that the contribution would be 10% or 15% and if somebody has as much in that respect, that it would be equivalently moderated and that person would contribute a great deal more. Perhaps that could be an eventual outcome of the process, but at least we want to bring the principle working into the process.

Human nature being what it is, if we could get this money, I would not see this as those people taking advantage of us. Such a measure should be drafted in such a way that this would not happen. It would be us making a significant demand on them to do much more and not just to say we do not like them but that they are enjoying certain facilities in our society and for that we want them to do much more.

If the State wants to frame it in such a way that all of that becomes difficult then that is a different matter. We never saw ourselves as writing a scheme. We are proposing an idea in principle. There is money to be got and this is the way we think we can do it. The Department of Finance and others are in a very good position to describe it in such a way that it avoids problems and gets the maximum return. We would like the committee to give us a little support. It is not the case that there is a final product but it could become a final product. It is well worth a try. The scheme could be reviewed after some time if necessary.

Kieran O'Donnell (Limerick City, Fine Gael)
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From listening to what has been said, we have a philanthropy model in Ireland but it is not sustainable. Effectively, 85% of funding came from two sources – Chuck Feeney in Atlantic Philanthropies and the One Foundation. We must come up with a model that is sustainable. What is at issue is the structure of the model and that one spreads it over a large number of philanthropists through The Ireland Fund and other funds. A philanthropy cliff of €50 million a year is coming down the tracks with a threat over the future of a considerable number of worthwhile projects that could be deprived of funding. From what I have heard in the forum’s presentation, the witnesses are looking for a broader model that is sustainable and will work. That is worth exploring.

Ms Loretta Glucksman:

If you do not mind, Chairman, we will start with Mr. O’Hara. He is one of the people who do the work and such people are much more important.

Mr. Paul O'Hara:

This is my second time in the Houses of the Oireachtas as we briefed the Seanad a few months ago. I have been most impressed by the dialogue, questioning and creativity. That is an aside.

In response to Deputy Boyd Barrett’s point, there is no doubt that this is a trade-off, but on balance, the upside by far outstrips the downside. It is not about begging; it is a trade. This is a product that can be sold. It is a good trade for the citizen. I remember Chuck Feeney saying that people used to come to him looking for €1 million. That was the price point which they always used to request. He asked if one had ever considered writing a cheque for €1 million; putting down the six zeros after the one. It is an incredibly difficult thing to do because it is a huge sum of money. I do not think this is an insubstantial amount of money for the majority of people we are talking about.

There are many great ideas that are ready to scale that will create guaranteed jobs. There are some good suggestions about how to finesse that and make it tighter. We have to work on it but I hope the committee will recommend going ahead with the proposal.

Ms Deirdre Mortell:

I want to reply to a couple of questions which were not answered previously. On whether anyone has been able to do a risk assessment, I can just speak for One Foundation which is supporting approximately 20 organisations in the current year 20% of which are seriously at risk of closure or are becoming so small that they really can no longer make an impact. Approximately 20% have successfully replaced our money and will be fine and 60% are currently busy cutting back, hopefully in strategic ways that will allow them to grow again very quickly. Cutting back means cutting services and jobs which fundamentally affects the missions the organisations are trying to achieve. That is just a quick and not very representative view but it does give an indication of what is happening. A total of 80% of the 20 organisations are at risk in one way or another.

To return to the broader agenda, we have talked a lot about whether we have the meanest rich people in western Europe, where our corporations stand, whether we give at all and what it all means. We have danced around the issue of whether we have a giving culture and, if we do not, how we can build one. There are short-term issues and long-term issues. We need to build a giving culture and it must have a broad base across the population involving individuals, corporations and others. We have referred to the plan that has been prepared for investment in Irish jobs. We have a plan that is based on international evidence and we have a group of people promoting the plan. Today’s meeting is part of the process of selling it.

We must build a giving culture but that will not happen overnight. Second, we have a short-term problem, due to the need to find €50 million to €60 million in the next 12 months to 18 months. That is why we have come forward with this proposal which might not be popular but if the committee does not like it we would like to know what is plan B. We do not have a plan B. There is a need to focus on the short term and the long term as the short term leads to the long term. We must get to a sustainable level but there is a short-term pot of money that we might be able to get through a short-term measure. I do not think it creates dependence. That is not our goal.

We talked a lot about super-rich people and all the tax forgone. If we could have got the data on the tax forgone, we would have presented it to the committee. We do not know the amount involved, how much money those 400 people make or how much tax they would pay if they did come back home to pay their tax and what the benefit would be. Therefore, we do not really know how much we could get and how much we could deploy for good causes. If the committee could get the data that would be great as it could better help shape our plan. In the meantime it is important that we have taken a shot at what might be the price point. It might be too high or too low. Much of the debate suggests that it might be too low but there is an equal risk that perhaps it is too high. The fact that we do not really know is something the committee must not forget in reaching its conclusions. Perhaps that is why a trial would make sense.

I encourage the committee to give due consideration to the issue. The "Why now?" question is very strong given the recent removal of money from the system. It is important to bear in mind the good that could be done. The first step in that direction is to build a giving culture.

Ms Caroline Casey:

I could not put it any better than Ms Mortell. It is so important that we build a giving culture. That is how the situation will change. It takes time to change culture. The way we can make things happen is to see good examples of what can be done really well. The best example of that is to continue the extraordinary social innovation and the work the sector is doing. If the sector does not survive it will be hard to be motivated or inspired by negativity. The culture change will come if we continue to support those organisations that help us.

What is important is how we frame the proposal. It is not about rewarding people or giving them something. We must demand things from people as citizens of this country because we need them. As we said to each other before giving our presentation, we are asking for help. It is hard to ask for help but we genuinely need help. This is not just about €50 million; there is a problem currently. We need help. There will be public outcry if more organisations that are delivering services that are required are lost. We must look at the two sides of this story and what might anger the public on both sides.

I agree with the point made about whether there is an alternative. We are open to it. If there is a pot of money at the end of the rainbow we are up for it. There is no problem in trying. Various approaches could be taken. Our request is for us to be allowed to try to see whether we can leverage the money along with all of the extraordinary proposals that are contained in the plan. We have a problem to solve both in the short term and the long term. I thank the committee members for their time. Like Mr. O’Hara I have been in the Houses of the Oireachtas twice in recent months and I have really enjoyed it. It is great to have a good discussion.

Ms Loretta Glucksman:

That was well said. Just a few weeks ago, the Ireland Funds had its international conference. We had primarily Americans but also Australians and Canadians. There were more than 250 delegates and we took them to see the projects that are run. There is no greater motivator for getting people involved than to see the product of what happens in daily lives.

To return to a point that was made earlier, the person whose child is no longer going to get help for special needs or the person whose elderly parents will not have access to hospice care will not care about the technicality of who stopped the money. They simply know it is no longer available.

They depend on the Government or somebody else to provide it. In that respect philanthropy in Ireland has to get much more sophisticated. As a practitioner I can say that one cannot duplicate the satisfaction from an investment. Regardless of how rewarding it is one will never get the satisfaction from any other investment than one gets from a philanthropic investment. Anyone we talk to in that regard will say that. Even though he does not like to say it publicly, Chuck Feeney is eloquent on that being the payback. It is not getting days, so to speak, or doing whatever else we have to do because we are faced with this crisis. It is the intrinsic value of helping the society one cares about. It is not nuclear science. It is very basic.

The Irish people are extraordinarily generous. They are also extraordinarily intuitive. This is not a learning curve. All we need to institute in Ireland is a workable format where Government philanthropists in the private sector are seen as equal partners acting for the common good. That is easy. The Irish people will get that. It will take a little time, but it will build. I thank the members for the privilege of being here. It was a unique experience for me and I was delighted I was able to attend.

Liam Twomey (Wexford, Fine Gael)
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Would Mr. Flannery like to respond?

Mr. Frank Flannery:

We have said it all, Chairman.

Liam Twomey (Wexford, Fine Gael)
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I thank Mr. Flannery and all the witnesses for attending today. The meeting was very informative. We are exhausted trying to take it all in and in terms of what needs to be done. As evident from the tone of the members, we are positively disposed to what the representatives are doing and we should try to work together in the future to see if we can move it on.

Ms Loretta Glucksman:

We cannot ask for any more than that.

Mr. Frank Flannery:

I thank the Vice Chairman and all the members.