Joe O'Brien (Dublin Fingal, Green Party) | Oireachtas source

I move: "That the Bill be now read a Second Time."

I am delighted to have the opportunity to bring the Charities (Amendment) Bill 2023 before the House. The passing of this Bill is an essential step to enhance and strengthen the existing framework for regulating charities in Ireland. The charity sector plays a crucial role in connecting the wider public with opportunities to support and improve communities and society at large. It also plays an integral role in the provision of services to our communities. According to available statistics, in 2022, just under 648,000 people volunteered with an Irish charity. The economic value of this voluntary participation is highly significant. It is estimated that these volunteers contributed in excess of €1 billion worth of their time to Irish charities and, in turn, to our communities. Indeed, figures show the number of those volunteering with Irish charities has more than doubled since 2018, and almost one in eight workers are employed within the charity sector. Our charity sector consists of over 11,500 organisations of different legal types and of varying sizes, large and small.

The approach taken in this Bill reflects this diversity in the scale and complexity of the organisations that make up the charities sector in Ireland. The amendments contained will further strengthen our valued charities sector, ensuring greater transparency, clarity and fairness, which will serve to enhance public confidence and trust in the sector itself.

This trust is vital to the work of our charities whose activities are integral to making Ireland an inclusive and thriving place to live, in bringing a sense of dignity and belonging to people's lives, and in putting the wellbeing of individuals and of communities at the heart of our society.

To ensure that our charities continue to thrive, we urgently require an updated legal framework that reflects the reality of operations on the ground. In this context, the Bill delivers on a programme for Government commitment to ensure that the Charities Regulator has the necessary powers to build trust and confidence in the management and administration of charities. With such a large number charities on the Public Register of Charities, the work of the Charities Regulator is vitally important. The regulator has made significant progress in recent years in enhancing compliance and enforcement measures. These measures include the introduction of the charities governance code and related supports and conducting statutory investigations into charities, as well as the publication of guidance on topics such as safeguarding and fundraising. The positive level of engagement by the sector with this code demonstrates the will and commitment that exists to enhance standards and practices.

The Bill will consolidate the existing legal framework for the Charities Regulator to conduct its statutory functions and further foster a culture of proportionate regulation. In particular, the extensive operational experience of the regulator has resulted in a number of the proposed amendments.

Pre-legislative scrutiny has also provided a great opportunity to discuss and examine the potential impacts of the proposed Bill. I have listened closely to the concerns raised during pre-legislative scrutiny. The recommendations of the committee have been carefully considered in the drafting process, taking into account those areas requiring greater clarification and further consideration. This has resulted in a number of changes to the original amendments proposed, as well as the introduction of new amendments to the Bill. For example, a new definition of “significant event” has now been included and the statutory requirement to report significant events, as contained in the published general scheme, has been removed. Instead, a revised provision has been included to allow the Charities Regulator to draft non-statutory guidelines or codes of conduct in respect of the occurrence of a significant event. The Bill also contains provisions that ensure charities that are also companies are held to the same set of rules as charities that are associations.

Fair and reflective regulation is the basis of this Bill. In this context, it is important to emphasize that the regulator already adopts a proportionate approach to regulation. The regulator engages directly with individual charities to support and enhance their understanding of both statutory reporting requirements and governance standards and works with the charities to bring them into compliance. The small number of cases in which the regulator has had to appoint an inspector reflects the constructive and proactive engagement undertaken.

There is an inherent risk that public confidence in the sector and its regulator will be eroded if the Charities Regulator is unable to effectively deal with concerns brought to its attention simply because the required powers are not provided for in statute. In this regard, and among the provisions contained, is an amendment to strengthen the powers of the regulator to intervene in instances where it is determined that no effective management or board oversight exists. The Bill also aims to avoid situations where charities and their volunteers, who give up their valuable time to do good for our communities, are unnecessarily overburdened with administration. In many cases, the Bill will ease the administrative burden on smaller charities. For example, this legislation will allow for the introduction of regulations which will increase financial reporting thresholds, which means a greater number of our smaller charities would be entitled to avail of an exemption to prepare and submit an annual statement of accounts.

In the context of administrative burden, the Bill provides for a number of exemptions and specific reporting requirements for those charities falling under the proposed, revised definition of an "education body". These amendments recognise that in respect of the identified provisions, education bodies are already subject to equivalent, statutory oversight from Government Departments and agencies respectively. The purpose of these amendments is to avoid duplication between the regulatory functions of the Charities Regulator and these same Departments or agencies respectively, and to avoid placing unnecessary additional administrative burdens on these types of charities and their trustees.

Charity trustees play a key role in developing public trust and confidence in the charity sector. Measures included in this Bill will provide clarity on the roles and responsibilities of trustees. It is important to emphasise that these are not new or additional duties. They are a statement of the duties to which charity trustees are already subject under common law and will not result in any additional burden. The codification of duties should help to guide charity trustees by providing greater clarity as to the nature of the duties that apply to all charity trustees, and by providing a point of reference for charity trustees to inform their discussions with each other and with their charity's employees and other volunteers. With this Bill, we are seeking to create an environment where trustees have a clarity of purpose in carrying out their duties and where people are willing and confident to volunteer to become trustees in the first instance.

The Bill will introduce the advancement of human rights as a recognised charitable purpose under Irish law, mirroring its key position within our national and international policy. Human rights is a concept already recognised and defined on a statutory footing in Ireland. However, Ireland is unusual among common law jurisdictions in not having the advancement of human rights defined as a charitable purpose. In addition, the Bill will also facilitate amendments in other areas, including sharing of information, intermediate sanctions, trustee remuneration and disposal of assets, amendments that will ultimately further enhance public trust and confidence in the charities sector.

Having set out the background, context and purpose of the Bill, I now want to set out its main provisions. The Bill is divided into three parts, with 40 sections in total. I wish to highlight that sections 17 to 19, inclusive, and 40 are developed from a number of amendments that were previously approved by Government and included in the Courts and Civil Law (Miscellaneous Provisions) Bill 2017. Additionally, the extensive operational experience of the regulator has resulted in a number of the amendments contained in this Bill.

Part 1 covers sections 1 and 2 and addresses preliminary and general matters. It contains standard provisions relating to the Title, commencement and definition of the Principal Act. Part 2 Bill includes sections 3 to 38, inclusive, and provides for a number of amendments to the Charities Act 2009. Part 3 contains sections 39 and 40 and provides for amendments to the Charities Act 1961 and the Taxes Consolidation Act 1997, respectively.

Section 3 includes updates to existing definitions, as well as the introduction of new definitions for the purpose of clarity under the Act. This includes an update to the definition of “charity trustee” to provide greater clarity on those persons to whom the term applies.

Section 4 clarifies the charitable purposes under existing law and establishes “the advancement of human rights” as a recognised charitable purpose under Irish law for the first time.

The provisions in sections 5 and 6 are intended to strengthen the broader regulatory landscape, including enabling the Charities Regulator to enter into administrative co-operation arrangements with other relevant bodies.

Section 7 includes a number of provisions that underpin a fair and equitable registration process for organisations seeking charitable status, as well as assisting the Charities Regulator in maintaining accurate and comprehensive information on the register of charities. This is of critical importance to public trust and confidence in the sector.

Section 9 will require that charities seek approval from the Charities Regulator in circumstances where they want to change their charitable purpose or change a specified clause. This amendment has been revised further to consideration of concerns raised at the Oireachtas joint committee.

Continued adherence to the principles of natural justice and due process was a key consideration in the drafting of provisions. In this context, amendments contained in sections 10 to 14, inclusive, set out in further detail the process involved where a removal of an organisation from the register of charities is proposed. In reference to concerns raised during pre-legislative scrutiny in respect of due process and fair procedure, I want to reassure the House that a decision by the regulator to remove a charity from the register is subject to an appeal to the Charity Appeals Tribunal and confirmation by the High Court. The Bill also expands the grounds under which appeals to the Charity Appeals Tribunal can be taken. The tribunal itself adjudicates on appeals against certain decisions of the Charities Regulator and is independent in the performance of its statutory functions. In addition to the removal process referred to, the Bill provides for the right to appeal the following: a condition to which a registration is subject; a decision in relation to the amendment of the charity's constitution; or a direction arising from an inspector's report. The Bill also provides for an increase in membership of the tribunal.

Among the provisions contained in section 15 is a requirement relating to the publication of a charitable organisation's registration number as it appears on the register of charities. This number is an extremely important identifier for the public and it is critical that all registered charities use this number in published materials.

As outlined, the Bill is a key step in facilitating the introduction of much-needed financial regulations for the charity sector. Currently, almost 41% of registered charities are companies and are not required to prepare an annual statement of accounts to the regulator due to an anomaly caused by the introduction of the Companies Act 2014. The Bill provides for the removal of an existing financial reporting exemption for registered charities that are companies which occurred following the introduction of the Companies Act 2014.

Section 16 clarifies the requirement for charities that are companies to keep proper books of account.

Section 17 will, among other things, increase the existing threshold to prepare an annual statement of accounts from €100,000 to €250,000, exempting approximately 4,300 charities from this requirement. As part of regulations to be introduced under this section, there will also be a requirement that a charity with a gross income or total expenditure exceeding €250,000 prepare an annual statement of accounts in accordance with the methods and the principles of the charity statement of recommended practice, SORP.

Section 18 clarifies that an annual audit or examination of accounts, as provided for under section 50 of the Principal Act, will apply to both incorporated and unincorporated charities whose gross income or total expenditure exceeds €250,000.

As highlighted, the Bill contains amendments related to codifying charity trustee duties and requirements.

Section 22 contains a statement of the duties of trustees. It is important to clarify that these are not new or additional duties. Charity trustees are already subject to these duties under common law. Including them in statute will further enhance and empower both existing trustees and potential trustees by giving greater clarity in respect of roles and responsibilities. These duties include to act in good faith, honestly and responsibly in the best interests of the charity, avoiding conflicts of interest, and exercising due care and diligence. Section 22 also introduces a new requirement for a minimum number of three trustees to sit on the board of a charity, clarifies residency requirements to include those trustees resident in the United Kingdom, and introduces the new definition of “connected relative”. This definition will help avoid any unintended and potentially unworkable limitations in the operation of the Bill in respect of persons eligible to sit as charity trustees.

Section 30 contains amendments which propose to expand the range of circumstances in which the Charities Regulator can impose intermediate sanctions for certain breaches under the Act. In circumstances where such sanctions are warranted, they can provide a more effective and balanced regulatory remedy as an alternative to prosecution. It is important to highlight that under the existing process, the Charities Regulator engages with the charity in question voluntarily in the first instance to bring it into compliance. Where the charity's response does not sufficiently address the concern raised, the Charities Regulator may seek further information by way of a statutory direction. If having issued such a direction, the Charities Regulator is not sufficiently assured by its engagement with the charity and significant concerns remain, it may propose the imposition of intermediate sanctions, with the agreement of the charity.

Section 31 contains an amendment which clarifies and strengthens the regulator's powers to intervene where there is no effective management or board oversight in a charity. It also provides for necessary protection for anyone appointed by the court to serve as a charity trustee, providing indemnity in respect of matters which occurred before his or her appointment, and for his or her own acts or omissions provided they have not been made in bad faith, are not negligent or do not constitute misconduct.

Section 34 clarifies when an agreement or appointment for goods or services can be entered into by a charity with a relevant person, and only then when permission is sought and granted by the Charities Regulator. These provisions are a result of engagement with counterparts across government and consideration of cross-sectoral impacts. It also facilitates an appeal mechanism to the District Court against a decision of the authority in respect of permission being refused.

The provisions contained in section 39, dealing with the Charities Act 1961, will provide legal clarity in respect of court-ordered schemes, assist in respect of dispositions of charity lands on terms that are advantageous to the charity, and remove the requirement for prior written notice on potential litigants intending to commence proceedings in relation to a charity.

Our charity sector is an important and valued part of Irish society. I look forward to working with Oireachtas colleagues in the coming months to pass this legislation that seeks to further enhance and consolidate the existing legal framework for the Charities Regulator to conduct its statutory functions and which reflects the reality of charity operations on the ground. I commend the Bill to the House.

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