Charities Bill 2007: Second Stage (Resumed).

Thursday, 1 November 2007

Dáil Éireann Debate
Vol. 640 No. 5

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Question again proposed: “That the Bill be now read a Second Time.”

Acting Chairman (Deputy Charlie O’Connor): Information on Charlie O'Connor Zoom on Charlie O'Connor I understand Deputy Moynihan was in possession. As he is not in the House I call on Deputy Mansergh. Fourteen minutes remain in the slot.

Deputy Martin Mansergh: Information on Dr Martin Mansergh Zoom on Dr Martin Mansergh I welcome the Bill. It is an ideal model of complex legislation in that it has been discussed with the various interests and agreed. It is long-needed and long-awaited legislation.

Irish people are very generous but it is important their donations go to bona fide charities. I remember being struck some time ago in regard to overseas aid, which is the subject of a number of charities, that voluntary individual contributions in Ireland are the highest in the OECD. I do not refer to the Government contribution which has considerably improved in recent years. There is a tradition of generosity.

We sometimes hear complaints about the difficulty of getting people nowadays to engage in active citizenship and volunteering. My experience down the country is that this spirit is still [1552]very alive and active. Many people are prepared to give a great deal of time and money to local organisations. I appreciate that sports clubs are one form of community activity that is covered by separate legislation but in most cases they are quasi-charitable institutions that include community halls, theatres and various social schemes funded by voluntary fundraising. It is amazing to see, even in what appears to be the smallest village with one shop and a few houses, the amount of money that can be raised for a worthwhile purpose.

Most familiar charities are well run but we are all approached by charities with which we are not particularly familiar. It is very important for confidence and generosity that the system is transparent so people can have confidence in it.

I did a radio programme on Newstalk 106 called “Talking History” and the subject was Gladstone. Looking through a book my eye was drawn to a bit of a fiasco Gladstone had with the charities legislation of 1863, which is presumably one of the predecessors of an Act, which shows that even the greatest statesmen sometimes have to mend their hand when it comes to legislative intentions. He wanted to tax charities and there were delegations of the great and good, including archbishops, dukes and the lot to prevent him. His philosophy was that since all money was on trust from God it should all be equally taxed. That approach was not followed.

He also had a view which is held by many contemporary philanthropists that money should be given away during people’s lifetime not necessarily after their deaths. In those days there was an occasional scandal masquerading as a charity. I came across one nice quote from his speech: “It is too much to suppose that hospitals are managed by angels and archangels and that their governors do not, like the rest of mankind, stand in need of supervision and occasional rebuke.” Public grants in many cases to charities in our jurisdiction make the public a party to the management of such funds.

  3 o’clock

There is perhaps one aspect of charities about which I have a little reservation in specific instances. I refer to the question of political advocacy. That should be kept strictly to the purposes of the organisation. A charity to which I subscribe, Oxfam, engages in what I consider to be partly misguided advocacy in regard to the Common Agricultural Policy — I have said this directly to some of the people involved. It is possible this aspect of Oxfam’s advocacy is funded by the British Government, which purely coincidently happens to be a major critic of the CAP. The fallacy in this instance is that the poorest of the African, Caribbean and Pacific countries have a stake in the CAP and it is the much more developed countries such as Brazil that tend to be against it.

I had some personal involvement as a member of the tax strategy group in the 1990s in what I thought was a very valuable legislative reform [1553]whereby individual contributions were offset against tax. Prior to 1998, corporate contributions only could be offset. There is of course a de minimis figure and the contribution must be significant but this reform has extended and facilitated charitable giving.

In a previous generation, this country, although poor, was nonetheless the recipient of some very important and valuable philanthropic or cultural contributions. One thinks of Chester Beatty, who left a priceless library of oriental documents and artifacts, or Sir Alfred Beit, who left the nation Russborough, or even Lord Gort, who left Bunratty Castle to the nation in the early 1960s, which was the foundation of much of the tourism effort in the Shannon area. I have just read — partly, I admit, for the purposes of this debate — a new biography by Conor O’Clery of Chuck Feeney, who for a long time was completely anonymous but who has made quite enormous charitable contributions, particularly to third level education in this country. Every single third level institution, north and south of the Border, has been a recipient of this philanthropy to the tune of hundreds of millions of dollars. As the book states, the Irish higher education system was subsequently better placed to provide graduates and researchers for the emerging Celtic tiger economy of the late 1990s. More recently, when there were certain financial difficulties in 2003, the temptation was to cut back research and development funding. Chuck Feeney intervened with the Taoiseach and, as a result, the Atlantic Philanthropies foundation put up the enormous sum of €178 million for a programme for research in third level institutions.

That is the case of one philanthropist who lives outside Ireland and who has helped transform the third level sector and third level research. Many people would like to encourage the practice and tradition of philanthropic giving, which is such an important part of American culture. Inevitably, it will be applied perhaps more to some purposes than others. We have had debates with regard to tax exiles, in some of which I have participated. One can get oneself into quite a lather suggesting that if one was in that position, one would live at home and pay one’s taxes. While I hope this is the case, none of us is likely to be in that situation so we are unlikely to be put to the test. It is a real challenge to encourage those who have made a great deal of wealth in our economy, and perhaps in their international activities since most of them operate internationally, to advance the social and educational and cultural life of this country, perhaps through a system of matching funding, as operated in the case of Chuck Feeney.

The Bill will establish a new body, the charities regulatory authority. It is Government policy that where new agencies are established the Government should first consider locating them outside Dublin. I appreciate that staff have been working in the Charities Commission, many of whom may wish to work in the same area. Nonetheless, I [1554]would like to put forward for the consideration of the Minister a location in south Tipperary that was earmarked on a cross-party basis as suitable for decentralisation. Tipperary town itself is receiving two decentralisation bodies so I do not make the case for my home town. However, at the other end of the constituency is the fine town of Carrick-on-Suir. I would be glad if the Minister and his colleagues would consider earmarking this body, or any other bodies to be established, with a view to locating them in that very attractive town.

Deputy James Reilly: Information on Dr James Reilly Zoom on Dr James Reilly I wish to share time with Deputies John Perry and John O’Mahony.

Acting Chairman: Information on Charlie O'Connor Zoom on Charlie O'Connor Is that agreed? Agreed.

Deputy James Reilly: Information on Dr James Reilly Zoom on Dr James Reilly I welcome the publication of the Charities Bill 2007 and note that the community and voluntary organisations that work for charitable purposes have been urging the Government to regulate charities for many years. The Bill is only one part of the infrastructure of support and development that is required if the community and voluntary sector is to make its important contribution to supporting sustainable and inclusive communities, acknowledged as a key role for the sector in Towards 2016. I take this opportunity to draw attention to the acknowledgement by Government contained in Towards 2016 that support will be required for charities to meet their obligations in the new regulatory environment, and the commitment by Government to provide additional resources to assist the sector in the transition.

The explanatory memorandum states that the purpose of the Bill is to reform the law relating to charities in order to ensure greater accountability, protect against abuse of charitable status and fraud, enhance public trust and confidence in charities and increase transparency in the sector. Key aspects of the Bill will provide for: a definition of “charitable purpose” for the first time in primary legislation, which is welcome; the creation of a new regulatory authority to secure compliance by charities with their legal obligations and also to encourage better administration of charities — we would all like to be assured the money we give goes mainly to the charity and not on administration; a register of charities in which all charities operating in the State must register; the submission of annual activity reports by charities to the new authority; updating the law relating to fund-raising, particularly in regard to collections by way of direct debits and similar non-cash methods; the creation of a charity appeals tribunal; and the provision of consultative panels to assist the authority in its work and ensure effective consultation with stakeholders. The Bill, together with the Charities Acts 1961 and 1973 and the Street and House to House Collections Act 1962, will provide for a composite regulatory framework for charities [1555]through a combination of new legislative provisions and retention of existing charities legislation, with updating where appropriate.

Organisations should not be excluded from the register of charities on the ground that they work primarily to promote political causes, an issue to which Deputy Martin Mansergh alluded. This proposal could lead to the exclusion of genuine charities from the register. To remove this risk of exclusion, the reference to “political causes” should be deleted at section 2, page 9, line 24, which defines an excluded body, so that the sentence reads “a political party, or a body, the principal object of which is to promote a political party or a political candidate”. The room for interpreting the term “political cause” could create problems for many charities.

The “purposes that are of benefit to the community”, as set out in section 3(8), must be amended to include the original categories included in the heads of Bill published in April 2006. These include the advancement of human rights, the advancement of social inclusion and social justice, the advancement of citizenship and the advancement of the effectiveness and efficiency of charities. In addition, where it occurs in the definitions in section 3, the word “promotion” should be replaced with the word “advancement”.

Section 3(8) should also cite the “advancement of the welfare of children” as being a charitable purpose, particularly in light of the lack of existing constitutional protections afforded to children. In addition, to ensure that the “purposes that are of benefit to the community” are not considered to consist solely of those cited, Part 1, section 3(8), which defines the term “purposes that are of benefit to the community”, should be amended to read: “In this section, purpose that is of benefit to the community shall include, but shall not be limited to...”

We need to protect the identity and independence of charities by ensuring that agencies under the direct control of a Government Minister, that is, State agencies, are not included in the register of charities. Otherwise, there will be confusion in the public mind about what are charities and what are State agencies. I understand the Health Service Executive could be construed as being a charitable agency. The HSE receives substantial State funding from citizens and should not feature on any charitable register.

This brings me to another, particularly objectionable issue. Fundraising regularly takes place for health care facilities such as Temple Street Children’s Hospital, the mammography unit in Ennis which has been closed, the Crumlin and Mater hospitals and dialysis, cystic fibrosis and autism services. It is the responsibility of the Government and HSE to fund and provide health care and people should not feel obliged to raise additional funds to help the Government do its [1556]job. This practice is wrong and diverts money from other charities which need our help.

Most charities want the fees imposed for filing returns or registering to be abolished. The Government should offer charitable institutions and causes support by removing these charges.

The duty of care that should to apply to trustees should be defined in the Bill in line with the treatment proposed in 2006. For organisations constituted as trusts, the legislation should include a provision to permit trustees to indemnify themselves against unintentional breach of trust using the charity’s assets, as was proposed in the heads of Bill published in 2006. At present, a trustee is not permitted to benefit in any way from the resources of a charity, a provision which prohibits the payment of insurance premiums by a charity on a trustee’s behalf. The Bill must explicitly permit charities to indemnify their trustees for unintentional breach of trust. For a provision of this nature to be workable, the Bill must also be amended to include the definition of the statutory duty of care which would apply to a trustee, as was recommended by the Law Reform Commission in its report on charitable trusts and legal structures for charities, LRC 80-2006. This would then permit insurance to cover unintentional breach of trust provided the trustee had attended to his or her duty of care under the terms of the Bill.

We need to support, rather than discourage, spontaneous community fundraising. Uncertainty surrounds the implications of the Bill for those who organise or participate in spontaneous community fundraising as a response to disasters, such as that which pertained during the tsunami crisis. The Bill needs to clearly set out the requirements or exceptions which would apply regarding permits in the case of exceptional, once-off community responses to urgent need. In the absence of such clarity, people may become unwilling to organise such responses for fear of falling foul of the law, which would be a terrible additional consequence for those already affected by a tragedy.

I ask the Minister to use this opportunity to remove the provision by which charities may only avail of a tax break for donations when they exceed a threshold of €250 per annum. In addition, those who make charitable donations should benefit from a tax break. Such a step would encourage greater philanthropy and significantly increase the funds available to charitable organisations.

Deputy John Perry: Information on John Perry Zoom on John Perry 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 com[1557]munity. 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 [1558]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 organ[1559]isations, 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.

Deputy John O’Mahony: Information on John O'Mahony Zoom on John O'Mahony Like others, I welcome this overdue Bill. The relevant legislation has not been updated in 40 years. Most Deputies have been involved in collecting for, paying to or administering charitable organisations. It is vital that the proper structures and regulations be put in place if the public is to know that their money is being put to the good use for which it was intended and if there is to be transparency and accountability.

The generosity of the Irish people knows no bounds. They have given a higher percentage of their incomes to charitable organisations than most other countries, but we would not need as many charitable organisations as we have were the Government to resource and fund the sectors for which the charities collect. The Bright Eyes charity in County Mayo has collected in excess of €1 million for necessary cancer service equipment at Mayo General Hospital, where people marched last Sunday in revolt at losing cancer services.

The Bill is important to charities that run a good show because it should eradicate the charities that do not reach the required standard of regulation. However, it is vital that support structures be put in place for those organisations. The people who volunteer their time and expertise should not be frightened off by the amount of red tape and regulations. We must take into account that modern society needs to encourage volunteerism.

I agree with the suggestion that the regulator should be fully Exchequer funded, as charities should not pay fees. Section 37 requires the authority to establish and maintain a register and each [1560]organisation to pay a fee. Smaller charities will find it difficult to fund those costs.

Will the Bill eradicate scams such as door-to-door second-hand clothes collections in the name of charities or the buying of mass cards that bear the printed signatures of priests in developing countries but have nothing to do with the charity, religious orders or missions? These scams are multimillion euro businesses and operate in every county. They have evaded current fraud and deception legislation, but it is obvious they will be able to avoid the proposed legislation because they will not describe themselves as charities. It will be a simple escape clause and the regulator will be unable to touch them. They give the public the distinct impression they are charities. For example, some give donations to charities based in developing countries to give their commercial activities credibility. They set out to deceive innocent citizens who do not have the time to examine the organisations’ activities. Often, traders and clothes collectors operate using unmarked vehicles and mobile telephones.

In a time when many voluntary organisations find it difficult to get volunteers, we need sufficient regulation to reassure the public but not so much that we frighten off volunteers in modern society.

Acting Chairman (Deputy Joe Costello): Information on Joe Costello Zoom on Joe Costello Deputy Aylward has one minute.

Deputy Bobby Aylward: Information on Bobby Aylward Zoom on Bobby Aylward After I prepared so well, the Acting Chairman is being hard. I welcome the broad thrust and sentiments of the Charities Bill. It is generally recognised that the many positive features of the proposed legislation will have significant bearing on the numerous people involved in valuable charity work. The effect of the draft legislation is important to the public, which contributes generously to many charitable causes year in, year out.

The intent is to introduce a comprehensive reform of the law as it relates to charities to ensure proper accountability, to protect against possible abuses of charity status and to eliminate the possibility of fraud. I endorse the Bill’s principles because its provisions will enhance public confidence in an important area of activity. The application of appropriate transparency and regulation will ensure improved public trust and the establishment of a sound legal and regulatory framework to facilitate the smooth and efficient administration and management of charitable organisations.

It is widely accepted that any practical measure to enforce proper oversight and encourage active compliance is constructive. This timely legislation will support the charity sector and assist in promoting its aims. It will foster increased public trust——

Acting Chairman: Information on Charlie O'Connor Zoom on Charlie O'Connor Will the Deputy move the adjournment?

[1561]Deputy Bobby Aylward: Information on Bobby Aylward Zoom on Bobby Aylward I will. I thank the Acting Chairman for this opportunity and I am sorry I was unable to speak for the ten minutes.

Acting Chairman: Information on Charlie O'Connor Zoom on Charlie O'Connor The Deputy will have another opportunity next week.

Debate adjourned.


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