David Stanton (Cork East, Fine Gael)
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We have no apologies, which is interesting. The purpose of this part of the meeting is to have an engagement with Mr. Paddy Hopkins, chairman-designate of the Charities Regulatory Authority. On behalf of the joint committee, I welcome Mr. Hopkins and thank him for giving of his time to be here. The format of the meeting is that I will invite Mr. Hopkins to make a brief submission of approximately five minutes, after which we will have a question-and-answer session.

I draw the attention of Mr. Hopkins to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are 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 parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

I ask everyone present to turn off their mobile phones or to put them in airplane mode. I invite Mr. Hopkins to make his opening statement.

Mr. Paddy Hopkins:

I am honoured to be nominated by the Minister for Justice and Equality, Deputy Frances Fitzgerald, as chairperson-designate of the Charities Regulatory Authority, CRA. I look forward to the challenge and the opportunity to work with the board, the executive and stakeholders to deliver on the statutory obligations of the authority.

I retired just over 18 months ago, having spent most of my work life with Enterprise Ireland and its predecessor organisations. I was appointed a board member of the Charities Regulatory Authority in May 2014 and have also been a member of its finance, audit and risk committee. My professional background is in financial management, corporate governance and corporate administration. Prior to my retirement, I was company secretary and manager of the corporate services division at Enterprise Ireland. In this position, I had responsibility for the company secretaries office, finance with a budget of €300 million, grants administration, legal, facilities-procurement and oversight responsibility for internal audit. I was a member of the Enterprise Ireland executive committee, chairman of the finance committee and a member of the staff resource committee. I was also an Enterprise Ireland nominee director on the Crafts Council of Ireland for six years from 2006 to 2012, as well as chairman of its finance and audit committee.

My experience as a member of the executive senior management team at Enterprise Ireland has prepared me well for the role of chairman of the CRA in particular in the areas of strategy and policy development, corporate governance, audit and risk management and compliance.

Outside of work, I have a keen interest in the voluntary sector and have been involved with the St. Joseph's conference of the Society of St. Vincent de Paul based in Tallaght and its east region finance committee. Following my nomination as chairman designate of the CRA, I have resigned from this position. My work with the Society of St. Vincent de Paul reinforces the importance of the charity sector and the necessity that the public has confidence in its operation. I was also chairman and treasurer of Kilmacud Glenalbyn Sports Club Limited, a not-for-profit company which administers the affairs of a large south Dublin sports complex.

The establishment of the CRA has come at a critical time for the charities sector. For the great majority of charities which are compliant and committed organisations working to improve conditions in our society, the CRA framework is an opportunity to demonstrate to its support base in the community the highest standards of probity. The successful operation of the CRA will, in no small way, assist the sector's ultimate strength and sustainability by providing it with the regulatory and developmental tools needed to operate effectively. This is vital in restoring and building the confidence of the community in the vital work the sector carries out every day. Charities, above all, depend on trust. It is the primary job of the CRA to ensure they are enabled to operate to the highest standards of transparency.

My vision for the board is that the board members and staff of the board will work together to deliver on our mandate as set out under the Charities Act 2009 in a considered, timely and effective manner. Section 14 sets out the functions of the authority. It is critical the authority is seen to be effective in delivering on its mandate. I will be working closely with the staff and our stakeholders to ensure the resources required are put in place.

I want to urgently build on the progress made since establishment. Progress to date includes the development of an online system to facilitate charities applying for registration and supplying information to the CRA. The register currently contains approximately 8,000 charities representing the majority operating in Ireland. These are now registered with the authority. Other progress includes the provision, through its website and active programme of stakeholder engagement, of extensive information to the charities sector on its obligations and duties under the new regulatory regime; the implementation of an interim process for the handling of complaints of alleged abuse of charitable status or fraud in charities, including an initial review and assessment by the CRA to determine whether any further action is appropriate; transfer to and set up of a new office location in Waterloo Road, Dublin 4; sanction in April for ten additional staff; and the establishment and operation at board level of appropriate sub-committees in line with best governance practice.

Short-term objectives for 2015 include: preparing, and having the board approve, a three-year strategy for CRA; further developing of the online registration system and website content; completing processing of new applications by charities under section 39 of the Charities Act 2009; getting necessary staffing resources in place and fully operational; commencing receipt of annual reports and accounts from registered charities; continuing broad engagement with stakeholders, in particular on charity accounting and reporting guidelines; and continuing to develop the capacity to deal with complaints as set out in the interim complaints process pending the introduction of powers under Part 4 of the Charities Act 2009.

I pay tribute to my predecessor, Mr. Conor Woods, who has resigned as chairman for family and personal reasons. Mr. Woods gave huge commitment and leadership to the authority since its formal establishment on 16 October 2014. While he has resigned from the board, he has kindly offered to assist the authority in any way possible into the future.

I intend to fulfil my responsibilities by working closely with the chief executive officer and staff, relying on the expertise, judgment and support of the other members of the board and with the support and assistance of our sponsoring Department, the Department of Justice and Equality.

I thank the committee for its attention. I look forward to the challenge presented to me by this appointment. I sincerely hope that when I report back to the committee, substantial progress will have been achieved in delivering on the CRA mandate.

David Stanton (Cork East, Fine Gael)
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Thank you, Mr. Hopkins.

Gabrielle McFadden (Longford-Westmeath, Fine Gael)
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On the development of the online system to facilitate charities applying for registration, I know from my dealings with different groups, everyone wants to register as a charity for various reasons. Can Mr. Hopkins talk us through the application process and how the applications are vetted, so we know they are actually charities?

Mr. Paddy Hopkins:

Basically, an online system was set up and developed by the executive of the CRA to facilitate charities applying in the first instance for registration. It sets out quite a detailed document. There are drop-down pages to facilitate different types of charity, whether it is company or a non-incorporated entity. When this is completed and comes into the CRA, the CRA then reviews it to check it complies with the legislation. Following that checking and validation, it is then set up as a registered entity, or not as the case may be. In some instances, there may need to be some deliberations or legal advice sought as to whether the entity is a charity or not within the meaning of the Act.

Gabrielle McFadden (Longford-Westmeath, Fine Gael)
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Are all 8,000 charities vetted?

Mr. Paddy Hopkins:

All applications for registration are vetted.

Katherine Zappone (Independent)
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From my experience, there are different structures involved. Some charities can be non-incorporated while others can be established as companies, making them subject to the rules set down by the Director of Corporate Enforcement. Other charities have been established as trusts. As a member of the CRA's board, has Mr. Hopkins encountered any obstacles or does he foresee any when consolidating the forms of the charities under current regulations?

Mr. Paddy Hopkins:

There will be some issues in determining whether an entity is a charity or not. If it is a limited company and registered with the Companies Registration Office, then its accounts will come from that office and we will not have to ask it to submit separate accounts. If a non-incorporated entity has a turnover of over €100,000, we will ask it for audited accounts.

We will have to do some work to determine whether an entity is a charity. To that extent, we have retained legal advisers, following a competitive tendering process, to advise us on that particular area as such. Otherwise, we would have to go back to the Attorney General's office in each case. We may still have to do that but we will now be relying, in the main, on the company of solicitors we have retained.

Katherine Zappone (Independent)
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That is great and helpful to know.

Will Mr. Hopkins expand a little on his statement about engagement with stakeholders? Has the board had any engagement with stakeholders? If so, have any procedural or policy issues been identified in light of that?

Mr. Paddy Hopkins:

There are several mechanisms of engagement. Many of our board members are associated with charities in their own way, so they will be articulating the views of the CRA to their own corporate entities as such. Our hard-working chief executive officer has spent much time communicating with Chartered Accountants Ireland, the Institute of Directors in Ireland and, recently, with the Arts Council advising them on the CRA's requirements and rules and how to comply with them.

Katherine Zappone (Independent)
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This committee has a sub-committee on human rights that has been taking a look at the possible inclusion of human rights organisations in the definition of a charitable organisation. Does Mr. Hopkins have any comment to make about that?

Mr. Paddy Hopkins:

Any entity that is created for the greater good falls within the definition of a charity. When that entity is in place and makes an application to the authority, it would be reviewed and we would come back with a definitive answer. Personally, I would be disposed towards it if the entity certainly seems to be for the greater good.

Finian McGrath (Dublin North Central, Independent)
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I welcome Mr. Hopkins and wish him well in his future role as chair of the Charities Regulatory Authority. In his submission, Mr. Hopkins said that he was very involved in the voluntary sector, particularly the Society of St. Vincent de Paul. In respect of his activities with the society in Tallaght, was his role full or part-time and did it just deal with financial issues?

Mr. Paddy Hopkins:

It was very much a part-time role that involved visitation in Tallaght. We have a chapter there and get requests for support on a weekly basis. We meet once a week and then do visitations. I was purely on the ground meeting the people, which is I why emphasise that it brings home to one the need for charities, the good work they can do and the importance of having trust in and integrity within the sector.

I also mentioned in my statement that I was on the east region finance committee of the Society of St. Vincent de Paul for about a year. The society is a very large and dispersed type of organisation and the finance committee was trying very hard to bring about corporate governance structures to facilitate more effective and efficient management of resources. I stepped down from that because of my designation as chair of the CRA.

Finian McGrath (Dublin North Central, Independent)
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The reason I went in that direction was because I think it very important that those who work in the charities sector have front-line experience rather a purely bureaucratic role. This is one of the problems we have had over the past ten or 15 years in respect of charities. People working in that sector do not necessarily have front-line experience.

Mr. Hopkins knows that charities have taken a major hit over the past five or six years and the public has become very sceptical following the CRC and Rehab Group affairs. People tell me regularly that if they are going to give a few bob to a proper charity, they want to know that their few euro is going directly where they intend it to go. Can Mr. Hopkins as chair of the CRA help to win back the confidence and trust of the people in respect of the charities sector because there is a major problem? I am part of that because following recent issues, I pause every time someone asks me for something for a registered charity. I know members of the public want to be supportive and Irish people are very supportive but they feel there is an element of doubt there. Can Mr. Hopkins, as chair of the CRA, help to win back that trust?

Mr. Paddy Hopkins:

One of key mandates is to develop such confidence in the sector. When we produce the guidelines and direction for the charities sector and when the charities make their returns to the CRA, the returns will be published on our website. One hopes that will bring about a transparency that may or may not have always been there. Historically, larger charities in particular would always have completed their accounts but sometimes it might have been quite difficult to interpret those accounts and get down to the nitty-gritty of what these accounts were saying. Our website will display transactional-type information as well. I hope that a combination of the guidelines we set out and publishing reports from charities will help and bring about that confidence. It probably will not happen overnight. By adopting the very best practice within our own operation, we will provide an example to charities which we want to comply with best practice.

Finian McGrath (Dublin North Central, Independent)
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In his submission, Mr. Hopkins said there are 8,000 charities. Will there be ten additional members of staff or is that the total number?

Mr. Paddy Hopkins:

No, they are additional.

Finian McGrath (Dublin North Central, Independent)
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There are 8,000 charities. One of Mr. Hopkins's short-term objectives is to commence receipt of annual reports and accounts from registered charities and to continue broad engagement with stakeholders in respect of accounting and reporting guidelines. Does he think this is enough and that he will have the resources to deal effectively with it? Again, because of our experiences with the banking crisis and the lack of proper auditing systems, there is an element of doubt among many members of the public. Does Mr. Hopkins think the CRA will be able to deal effectively with accounts and annual reports effectively and bring back trust?

Mr. Paddy Hopkins:

Those additional members of staff have now come on board and we are in the process of putting them in place. It is one thing to put them in place but another to make them fully operational. When they are in place, it will certainly help us significantly in that part of the work. The other piece of work that will be very important is the area of compliance and enforcement. This relates to Part 4 of the Charities Act 2009 which has not been commenced yet. We will be looking for another tranche of staff. Since my appointment as chairman designate, I have met senior managers in the Department of Justice and Equality to seek another tranche of staff to look at the enforcement side of the Act. This will help reinforce the powers of the legislation.

Niall Collins (Limerick, Fianna Fail)
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I wish Mr. Hopkins well in his new role and thank him for appearing before us today. What is the difference between a charity and a not-for-profit organisation or is it the same thing?

Mr. Paddy Hopkins:

They can be the same but they can also be two separate entities. A not-for-profit entity may not be a charitable organisation. I have been involved with Kilmacud Crokes GAA club. While it is a not-for-profit entity, it is not a charity.

Niall Collins (Limerick, Fianna Fail)
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In light of Mr. Hopkins's work programme and what he said about his short-term objectives, which involve commencing receipt of annual reports and accounts of registered charities, and following on from Deputy Finian McGrath's comments about the CRC and the other issues that were raised in other Oireachtas committees, does the CRA intend to ensure that when charities submit their accounts, they clearly identify the remuneration packages of the CEO, the director or the senior executive team? I have seen accounts from some organisations where the remuneration of the entire staff was given but there was no breakdown regarding the remuneration of the CEO, director or the senior management team. Does the CRA intend to address this in terms of rebuilding the trust and confidence the charities sector needs to regain?

Mr. Paddy Hopkins:

A group made up of some board members and some external experts is drawing up guidelines on best practice and what should be included in reports. It would be my view that salaries and bonuses of CEO and senior management should be highlighted in line with best practice in the code of practice for the governance of State entities. Until those guidelines are fully in place, we probably do not have an enforcement role in it but we will certainly recommend very strongly that this be case to bring about transparency.

Niall Collins (Limerick, Fianna Fail)
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Does the CRA have the authority or power to request details of a salary or remuneration package of any individual within a registered charity?

Is the regulator entitled to that information? If I ask Mr. Hopkins to provide salary or remuneration information on the senior team of a registered charity, is he entitled to get that information and provide it to me?

Mr. Paddy Hopkins:

I understand we do not have power to request that type of information but we have powers to recommend best practice in terms of publishing accounts and associated information.

Niall Collins (Limerick, Fianna Fail)
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Would Mr. Hopkins like to have that power?

Mr. Paddy Hopkins:

It would probably be helpful as another spoke in the wheel of transparency and regulation.

David Stanton (Cork East, Fine Gael)
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I join my colleagues in wishing Mr. Hopkins well. What fees do charities pay to register?

Mr. Paddy Hopkins:

Currently there is no fee for registration. The legislation allows us to charge a registration fee but that is something the board will have to consider.

David Stanton (Cork East, Fine Gael)
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In the discussions with the various charities, was there not an understanding that charities would be expected to make a contribution towards the costs of the regulator through a nominal registration fee, depending on the size and turnover of the charity?

Mr. Paddy Hopkins:

That is correct. I know from my work with the Society of St. Vincent de Paul there was an expectation that a fee would be introduced. The board will have work to do in terms of determining an appropriate fee structure and how fees would vary among charities based on the size and scale of the entity concerned.

David Stanton (Cork East, Fine Gael)
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When the board has made that decision, I ask Mr. Hopkins to inform the committee about what it decided. What is the regulator's relationship with Revenue in regard to granting charitable status?

Mr. Paddy Hopkins:

We have a strong working relationship with Revenue. Our CEO and some of our staff have met with Revenue officials on numerous occasions and there has been a transfer to the regulator's database of data on companies registered for charitable status. Our CEO and one of the senior managers had a meeting with Revenue in Nenagh last week to further develop the relationship.

David Stanton (Cork East, Fine Gael)
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Could the situation arise whereby a body can be registered as a charity with the regulator but does not have charity status with Revenue?

Mr. Paddy Hopkins:

I think that could happen, yes.

David Stanton (Cork East, Fine Gael)
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That could cause confusion.

Mr. Paddy Hopkins:

I think it would be a minority situation but it is possible.

David Stanton (Cork East, Fine Gael)
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Concerns have been expressed about groups purporting to operate as charities which are not registered with the regulator, the Companies Registration Office or Revenue. Has a strategy been developed to identify these groups and ensure they are brought into the regulatory net so that the sector can continue to build on its reputation?

Mr. Paddy Hopkins:

The Minister extended the deadline for registration of what are known as non-CHY charities to the middle of April 2016. If an entity purporting to act as a charity has not registered after that date, and if Part 4 has been enacted, we would be in a position to issue proceedings against that entity.

David Stanton (Cork East, Fine Gael)
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What will happen in the meantime?

Mr. Paddy Hopkins:

In the meantime we do not have formal powers to pursue that issue but if we receive a complaint we can assess the issues arising.

David Stanton (Cork East, Fine Gael)
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Does Mr. Hopkins wish to make any final comments?

Mr. Paddy Hopkins:

I thank members for their time and for giving me the opportunity to appear before them. I would be happy to return to the committee with our CEO, perhaps when we issue our annual report, to update members on our progress. I would hope to be in a position to report significant progress in bringing about a stronger and more transparent environment for the charity sector.

David Stanton (Cork East, Fine Gael)
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On behalf of the committee I thank Mr. Hopkins's predecessor, Mr. Conor Woods, for his work and wish him well in the future. I understand he is continuing to assist Mr. Hopkins for the time being. I wish Mr. Hopkins and his team well in their important work and I look forward to seeing huge progress in this area under his stewardship.