Alan Shatter (Dublin South, Fine Gael) | Oireachtas source

I apologise to the House. I have some sort of a bug and cannot guarantee that I will not start croaking at some unexpected moment. I will try to keep going.

I will make some general comments which are of relevance to the contributions made by Senators before returning specifically to what some Members said. Since I last addressed this House on the regulation of charities, I have, as Senators have noted, taken steps to advance the implementation of the 2009 Charities Act. I want to inform the House of the progress made and thank Members of the Seanad for the supportive comments they have made, save for one Member, for what we have been doing. As I informed the House on the previous occasion, the architecture I inherited for implementing the Act, as envisaged by the previous Government, was financially unfeasible in the current economic climate. We had to look at how we could best bring the legislation into force and provide for the necessary oversight and transparency in a manner that did not impact on public finances and the Exchequer and was also fair to charities.

Before I come to those issues, I will first address the important issue of charity fund-raising and the concerns that have been highlighted in that regard. I highlighted some such concerns in the Dáil recently and I am pleased to have an opportunity to expand on them. We are fortunate in Ireland to have a vibrant and diverse charity sector. Some speakers named some of the very good charities we have and I do not want to start naming them for fear of leaving some out and causing upset. However, we have a good charity sector which provides a broad range of services. People engage in a broad range of activities, with many thousands acting as volunteers and engaging in charitable work and fund-raising. Throughout the country, communities are supported in countless ways by the efforts of those who work and volunteer for charities. Many charities support their work through raising funds from members of the public. When they do this they, in turn, benefit from a long-standing tradition in this State, to which many Senators made reference, of generosity towards charity fund-raising. Much of the valuable work carried out by charities is made possible by the enduring willingness of people to give to charity, even in times of financial difficulties.

Fund-raising from the public for a charitable cause brings with it certain very important responsibilities. These are substantially concerned with ensuring the proper governance of charities. Those who donate to charity have an expectation that a reasonable proportion of what they donate will go to the primary cause of the charity, in particular, to benefit or assist the specific group or category of individuals for whose benefit the charity was created and to provide the specific service or services to which the charity is dedicated. Charities have an ethical obligation to meet this expectation as best they can. Where the method of fund-raising involves the sale of a product such as a lottery ticket or scratch card, this obligation is no different. Charities using such methods need to bear this in mind when determining the proportion of funds raised that are used in the giving of prizes and to meet other costs, including salaries, allowances, benefits and administration expenditure. In circumstances where such fund-raising schemes are supplemented by State funding, the profitability of the schemes and the usage of donors' money and State-provided funds are matters of legitimate concern for the Government and members of the public.

In circumstances where such fund-raising schemes are supplemented by State funding, the profitability of the schemes and the usage of donor's money, as well as State provided funds, is a matter of legitimate concern for the Government and for the public. My decision in 2012 to wind down the charitable lotteries scheme over three years was informed by precisely such concern. It is not in the public interest for State funds to be used to prop up charity fund-raising schemes that have a low level of profitability or that the State continues indefinitely with a State funding scheme that incentivises bad practises.

Where public concern emerges with respect to charity fund-raising, there is a potential for public confidence in the charity sector as a whole to be damaged. Charities who apply the highest standards to their fund-raising can suffer when other charities take a different approach. I am aware that many charities are reporting drops in their donations following the disclosures about the use of charity funds at the Central Remedial Clinic and issues that have arisen with regard to Rehab. The reductions experienced, of course, are not only attributable to these matters and are partially the consequence of the financial difficulties that have affected so many in the State but recent controversies that relate to the charitable sector have clearly had an impact. For anyone to deny that is the case - and no-one in the Chamber has done so - means that they are not in tune with reality.

I want to say something about what I would describe as charitable hybrids, something Senator van Turnhout, in particular, made reference to. Organisations engaged in a mixture of both charitable and commercial activities need to understand that their commercial ventures do not exclude them from their ethical obligations to deal properly with donated funds or financial assistance provided by the Government. I believe there should be the maximum visibility as to the use of such funding to ensure that it is properly applied for charitable purposes, and not used to promote commercial activities or to partially pay salaries of those engaged in what are essentially commercial activities. Trust and confidence needs to be rebuilt. Critical to this is greater transparency about how charities conduct their businesses and what they do with the funds so generously given to them. That includes full transparency with regard to salaries paid, in particular to those in leadership positions in charities. While some charities demonstrate high standards of governance and transparency, the picture is far from uniform across the sector. I believe that increased transparency can only help strengthen the charities sector. The establishment of the new system of charities regulation, provided for under the Charities Act, will assist in this process.

Under the Act, I will establish an independent charities regulatory authority. I intend to make appointments to the board of this new body by Easter so that it can come into operation later this year. In this connection I recently issued a call for expressions of interest for suitably qualified persons who wish to be considered for appointment to the board. I also intend to appoint an interim chief executive and fill a number of administrative positions in the authority by the end of this month.

Under the Charities Act, the new authority will compile and publish a comprehensive register of charities. Each registered charity will make a report to the authority every year. In the case of any charity that is funded by donations from the public, these reports will be made available to the public. This will provide donors with an important source of information about how their donations are used. It should also tell us more about how our charities are run, how they manage their resources and what are their main areas of expenditure.

The need for transparency also extends to the issue of remuneration, allowances and other benefits that apply to those who manage, are employed by and retire from charities. It is important that charities address concerns that have arisen in this regard. It is not in the public interest that these matters be concealed, that they be opaque or that they be a mystery. I fail to understand why, when a request is made for transparency with regard to the salary of CEOs in major charitable organisations, it gives rise to any hesitancy, confusion or delay in making the information available. Rather, information made available should meet a reasonable standard of transparency and give an adequate picture of the sources and uses of funding at any given charity. Charity trustees and directors have been placed in a position of trust. It is important to the overall health of the charity sector that their behaviour is in keeping with this and that they regard themselves essentially as trustees of the donations they receive from a generous public.

It is my firm belief that the changes the Charities Act will introduce - including greater transparency - will benefit our charities. I am encouraged that this view is shared by many within the sector itself, where there is strong support for the implementation of the new system of regulation.

I am aware that the current environment is difficult for charities as they are experiencing increased demand for their services at a time when resources are under pressure. It is also a time when many members of the public, who in the past have donated generously, may find themselves under personal pressures which inhibit their capacity to contribute to charities, or which make it impossible for some. We all know of individuals who have worked in charities raising funds for those in need or for essential services who, as a result of the economic collapse, businesses closing down and the difficulties in recent years, find themselves now dependent on charities in circumstances in which they never envisaged, or that such circumstances would arise and impact on them during their lifetime.

The steps I am now taking to improve the regulation of the sector will help to ensure the strength and vibrancy of the sector into the future. By encouraging high standards and fostering good practice, we can help to protect and, where necessary, restore public trust and confidence in our charities. I believe this is of particular importance to enable charities that have made a substantial contribution to continue with their work in the years to come. The importance of this, in the context of assuring the donating public of the probity of charities, cannot be overemphasised at a time when organisations, such as Atlantic Philanthropies, are expected to wind down and end their engagement with charitable and voluntary organisations in this State. Transparency, responsibility, accountability and good corporate governance are crucial to public confidence. As a Minister in Government, I make no excuse for demanding this of all bodies in the charitable sector.

I shall briefly turn to some of the comments made by members during the course of this discussion. Senator Conway referenced that what we are now doing is effectively a starting point. Yes, setting up the regulatory authority is a starting point. I hope and expect, by next autumn, that the legislation will be fully brought into force. It should and will provide the transparency necessary.

A number of Senators made reference to the need for easy access to information, on a website, in which one can know, if one wishes to donate to a charity, that the donation has been made to a charity, what it does with the moneys donated and, if it receives public moneys what it does with the moneys. This should include what part goes in administration, what part goes in perhaps promoting some product it is selling to raise funding, what part goes overall in salaries and, in the context of those who are earning large salaries, what part goes to them. In this regard there is clearly no need, for example, to ascertain whether a charitable organisation employs a cleaner to come in to clean once a week and how much the cleaner is paid. However, where there are people in management positions, where there are people in receipt of substantial funds, the public is entitled to know the relevant information. Accounts, of course, must always be properly audited.

I have a concern where we have charities and where individuals who are working for those charities are earning salaries in excess of what the Taoiseach of this country is earning. Serious questions arise in that context. While this can become confused where some charities are engaged in both commercial business ventures and in charitable activities, there is a need for full transparency. It is my hope that the starting point of what we are now doing, bringing legislation into force, allowing the authority members to be appointed, giving them an opportunity to provide a roadmap and a work plan and then bringing the legislation into force before the end of this year, will ensure that we have the starting point and very rapidly we will have the fulfilment of what is intended.

Senator Ó Murchú made the point that the charitable sector touches on every aspect of Irish life and society. We all know that to be true. Senator Higgins raised a matter about which she has concerns. We will look into the issues she has raised. I have limited powers in these areas and these may be issues for the authority to look at upon its establishment.

However, charities must behave with propriety at all times and that is of crucial importance.

I thank Senator Mary Ann O'Brien. She made a contribution as many Senators did, with which I have no disagreement and she emphasised, as I did, the importance of corporate governance. As someone who has been involved in, and done substantial work with, a charity, I thank her for her constructive engagement with me over the past 18 months. We have been engaged along with my officials in a broad consultative process with the charity sector about how we bring in the legislation without it becoming a burden on the public and taxpayers, increasing public expenditure, being unfair to any charity, imposing on charities a cost they can ill-afford and unfairly impacting on donations. We managed to work through this and we have a scheme now with which we hope to proceed.

Senator O'Donovan raised the issue of ensuring the regulatory authority pays for itself and does not become a burden on the State. I do not anticipate it will incur the costs he referenced in the context of England. However, there will be a scheme through which, depending on their size and the funding available to them, charities will contribute to the cost of the regulatory authority. It will be spread among all the charities, which will be obliged to comply with the legislation and the requirements of the authority. It will not be a major burden but, cumulatively, the scheme should provide for the self-funding of this particular body.

Senator Mary Ann O'Brien mentioned SORP and the need for consistency in accounting policies and principles. I anticipate that will be demanded by the authority. We should have that consistency among all bodies in the non-profit sector whether that relates to donations they receive from the public or funds they receive from the State. There should be a consistency of accountancy approach and clear visibility regarding audit accounts with no mystery about them. They should also be readily understandable for one reason only, which is that those interested become familiar with the manner in which the accounts are presented. In the commercial sector, despite regulatory and company law provisions, there can be exotic presentations on occasion in obscure language about issues that people would prefer received no public notice. In that context we need clarity and simplicity. That will be an important job for the regulator and part and parcel of this should be a website providing access to all this information in an easy and user friendly way.

I will not upset a certain Senator any more than I have but Senator Mary Ann O'Brien could give the lie to the notion that we only woke up to do something in this area over the past few weeks because of the ongoing controversy. I have been working on this with my officials for the best part of two years. There was a detailed consultative process after it became clear that in the financial circumstances we inherited in 2011, it would be impossible to implement the legislation, as originally envisaged. We examined how we could do it differently and what were the alternatives and we engaged in a consultative process. I recall speaking at a conference about this issue. We are where we are without any controversy. Last July, the Cabinet made a decision that as we headed into 2014, we would proceed to implement the legislation and preparations had to be undertaken in advance of that. Rather than responding to an emergency, therefore, there has been a careful and considered approach. It was important to bring the charity sector with us because we need co-operation. I expect the issue of non-compliance with the legislation and the requirements of the regulatory authority will be addressed.

Senator Noone raised a good matter that she discussed previously with me in private, which is a charity quality assurance mark. That would be an excellent project for the new authority to consider. Where charities are recognised as fully transparent and compliant and creating no difficulties, they should be given such a mark. It should be open to review on an annual basis in the context of accounting practice and of information that becomes available. That would be of benefit to the general community.

I join in congratulating Senator Quinn on his 21 years service in the House. It is a happier moment that mine was. Just as I reached 21 years service in the Dáil, I lost my seat. No one applauded me and it was sad personally but the world, strangely, continued on. I hope the Senator continues to enjoy his time in the House. He will not have to experience the wrath of the electorate over the next few years. I often agree with him but I disagree with him on one matter. He said politicians do not want this transparency. He can bet that I want this transparency sooner rather than later and I wish we had it many years ago. This is why I have been so engaged in dealing with this.

Senator Moran also referred to transparency and I have addressed the issues raised by Senator van Turnhout. Senator Colm Burke made reference to the Department of Health and its awareness of irregularities. If there are irregularities, as we have witnessed with the CRC, the Committee of Public Accounts can play an important role in bringing transparency where bodies are in receipt of public money. Departments can engage their functions when organisations seek additional funding for a new year to ensure they have accounts from the previous year and if any issues of concern arise, to ensure they are properly addressed.

Senator Landy asked about appointments. We have advertised them and the legislation provides for criteria regarding the qualities of individuals to be appointed to the authority. It will be an objective exercise in appointing, I hope, appropriate people to this body in accordance with the legislation. The appointments will be made based on the skill-set of individuals required for the authority to properly work. That is the only relevant criterion. Diverse skills are needed on the part of these individuals.

I have come to end of my reply and I hope I have left out nothing important. Members will be pleased to know my voice is about to go. I have to keep it functioning because I have justice questions in the Dáil tomorrow morning. I thank Senators for their interesting and constructive contributions. We had a worthwhile debate on charities some months ago before the recent disclosures and excitement but it was also an important part of our consultative process along the road to implementing the legislation. I hope when we next discuss this issue the regulatory authority will be in place and its work will have commenced.