John Perry (Sligo-North Leitrim, Fine Gael)

I welcome the publication of the Charities Bill 2007. In particular, I welcome the definition of the term "charitable purpose" to include the advancement of community development, including rural or urban regeneration. My involvement in national politics stems from my participation in local voluntary organisations. I appreciate the critical role such organisations can play in maintaining a vibrant sense of local community. In my constituency, Ballymote Community Enterprise Limited was the first such organisation established in County Sligo. It has worked for local regeneration and the creation of long-term employment for many years. It is an organisation of people who give of their time and talents to improve the local community. Like many other people throughout the length and breadth of the country, they work as unpaid volunteers which means administration costs do not arise.

The Bill does not contain a specific provision concerning political advocacy by charities. The omission of any explicit reference to this role requires remedy. I accept that many charitable organisations legitimately engage in political advocacy as a means to achieve their charitable purpose. In this context, it is a service provided on behalf of a group of people, one which requires skills and resources beyond those normally available in the specific sector the organisations represent. The charitable organisation may be the best means to represent a particular community to the public and Government.

Activities which fall within an umbrella term such as "advocacy" can cover a wide spectrum, including the activity of advocacy towards a political objective. Voluntary associations of citizens united in a common cause can be a significant source of political power. They have money, organisational ability, relevant knowledge and information as well as energetic and active members. Charitable organisations engage in political advocacy for the purpose of attempting to change the law or influence Government policy. The more correct term for such activity is political lobbying, which I understand to be a deliberate attempt to influence political decisions through various forms of communication directed at policy makers on behalf of another person or group. By its nature, the lobbying process aims to have broad political consequences. Lobbying can be a valuable political function where the activity provides the public and Government with relevant information and incisive arguments bearing on matters of public debate. Such contributions can refine, enlarge and deepen public and government understanding of important issues leading to wiser decisions.

On the other hand, a number of difficulties arise with regard to the advocacy role of charitable organisations. The potential for abuse of political advocacy by organisations with charitable status must be recognised in the Bill. There are well documented arguments about the misuse of the sophisticated tools of special interest lobbying such as the use of campaign strategies which create unfair advantage in shaping legislation, advancing or opposing public agendas and affecting the implementation of public policy and law.

Political lobbying by charities contributes to a politics based on the pursuit of self-interest and group advantage rather than a civic politics based on the public good. In claimant politics, the body politic is fragmented into competing interest groups of narrow focus, often on a single advocacy issue, with a subsequent loss of civic solidarity and public spirit. Special interest group lobbying is a dominant fact of public life. In a strident competition for charity donations and government resources, the weaker and sometimes more deserving local charitable organisations will lose out, leading to a misallocation of national resources and thus systematic unfairness. Any inequality in access to public economic resources can lead to political inequalities in representation, access and influence, compromising the democratic principle of political equality.

Political advocacy by charitable organisations uses valuable resources that are subsequently unavailable for the primary purposes of the charity. The use of expensive information dissemination devices such as advertising involves the diversion of resources from the primary purposes of the charity. It is difficult to define clearly where advocacy ends and political lobbying begins. In practice, any form of advocacy includes an element of lobbying. It can be difficult to separate clearly administration from advocacy.

The December 2005 Comptroller and Auditor General value for money report, entitled Provision of Disability Services by Nonprofit Organisations, highlighted the need for a transparent system of monitoring to be in place to guarantee that charges levied on clients by non-profit organisations do not exceed the amounts specified, that pocket money allowances are available to clients and that rehabilitation training payments paid en bloc to non-profit organisations in respect of clients are passed on to them.

The report highlighted several cases where the financial statements carried qualified audit opinions owing to uncertainties regarding pension funding deficits and verification of fund-raising amounts. The report noted that expenditure on headquarters costs and overheads was not generally reported in a transparent manner and that the reward packages of the executives and management were not generally disclosed.

Members of the public who donate generously to a charity and Governments that give direct financial assistance to charitable organisations must know who is advocating which positions to whom and who is paying for it? They must have a clear and accurate picture of what public donations and money is being spent on. To ensure accountability, full public disclosure is necessary. For example, it was revealed a few years ago that the United States Agency for International Development, USAID, was spending 95% of its malaria budget on consultants and 5% on goods such as nets, drugs and insecticides.

There may be examples of such misuse of public resources closer to home, but we do not and cannot know this because there is no systematic collection or analysis of the costs incurred by charities. The real danger is that, for some organisations, the charitable income is used primarily to sustain the organisation itself. The old business saying that turnover is vanity and profit is sanity comes to mind. To address the potential misuse of resources by organisations with charitable status, the Bill must include an explicit reference to an obligation to full transparency and complete disclosure.

While the proposal to exclude from the register organisations that promote political causes is valid, the exclusion does not cover a situation in which the declared purpose of an organisation meets the criteria for registration as a charity, but its principle activity is the promotion of a political cause. For this reason, advocacy by charitable organisations requires adequate supervision.

Section 43 provides that the annual statement of accounts be prepared in accordance with such methods and standards as specified in the regulations. I propose that the Charities Bill 2007 be amended to give the regulatory authority an explicit power to specify the cost category headings to be used by charities in their reports to it and to limit the proportion of expenditure under particular cost headings.

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