THE APPOINTMENT OF a provisional liquidator to the charity Console brings to an end a turbulent few weeks for the charity.
The fact that Pieta House is going to take over its services is welcome news.
There is a danger in the midst of all the hysteria and public anger that we will forget that the charity carried out fantastic work which no doubt played a role in saving many lives over the years.
It would be a real tragedy if we could not take some positives and learn valuable lessons from Console’s sudden demise.
Need for regulation
The charity sector employs approximately 105,000 people, with a turnover of €7 billion per annum and around 8,500 organisations which have charitable status.
The Charities Act was passed by the Oireachtas in February 2009 with the aim of regulating the sector, but it was parked.
After a number of high-profile scandals, such as the CRC and Rehab controversies in late 2013 and early 2014, there was alarm amongst the public, many of whom learned for the first time that the sector was unregulated.
These scandals forced the government to establish the Charity Regulatory Authority (CRA) and appoint a regulator.
The vast majority of service providers, professions, and trades, such as doctors, accountants, and solicitors, are regulated. Yet it is only now that the charity sector is being overseen by a specific designated body.
Charitable organisations must now apply to the CRA to be registered. It is an offence for an unregistered charitable organisation to carry out activities in the State, or to advertise or engage in fundraising from members of the public. The CRA has a critical role to play in ensuring public trust and confidence is maintained in the sector.
Cult of the personality
With many charities that get into difficulties, the founder has a strong personality that is left unchallenged. The lack of checks can cause irreparable damage to the charity.
The erosion of boundaries can be slow, subtle and silent. The absence of an effective and adequately resourced regulator has once again been highlighted.
If the necessary section of the Charities Act (part 4) had been enacted, the charities regulator would have been applying to the court to protect the assets of the charity and not the delinquent charity itself.
Empowering the charities regulator
The Minister for Justice has committed to enacting part 4 of the Act in September which will be most welcome.
This section will give the CRA real teeth to take action in cases of delinquent charities. For example, the CRA can appoint an inspector to investigate the charity. They can request the accounts and records from the trustees. They can enter and search the premises of a charity. They can also seek orders protecting the assets of the charity from the High Court.
The Minister also announced an increase in staff numbers at the CRA from 20 to 36. The CRA is currently under-resourced and understaffed. For a new charity wishing to be registered with the CRA, it takes from six to nine months before a case officer even looks at the application.
The Scottish Charity Regulator, established in 2005, oversees 23,500 not-for–profit organisations with a staff of 55. Scotland has a similar population to that of Ireland. There is a risk that the CRA will be not fit for purposes if it does not get the necessary resources to carry out its functions.
It is estimated that there are approximately 200 charities in Ireland involved in the suicide prevention area. There is also a high concentration of voluntary services involved in addiction.
A more regulated environment for the sector may force some smaller under-resourced charities to close or merge with similar charities.
This would be a good thing.
By getting rid of duplication, funds can be targeted more effectively and less needs to be spent on administration.
It’s not about the ‘charity’ but the people it is privileged to serve.
Lack of engagement from charities
Since the Governance Code (the code of practice for the voluntary sector) was launched in March 2012, only 895 organisations have signed up, and only 270 are compliant. There are currently over 19,000 non-profits in Ireland. These figures do not inspire a sense of commitment to change.
There has to be a balance reached between ‘hard’ regulation (enforced by the State) and ‘soft’ regulation (encouraging charities to sign up to voluntary codes of good practice). Hopefully, there will now be a better buy-in from charities to this voluntary code in the future.
Being a registered charity is not a right but a privilege which needs to be guarded jealously by the charities. If charities are not in a position to embrace the new regime of greater regulation and more public scrutiny, they need to ask themselves searching questions, and either wind-up or join forces with similar charities.
Work done by charities
The collapse of Console has put charities under a spotlight and at the centre of public debate. But it has also reminded us of the incredible and very often selfless work they undertake.
Where the State lacks the capacity and compassion to deliver key public services, the charitable sector fills this void. Approximately 68% of charities income comes from the State. The State recognises that charities can do a better job in the delivery of these services. There are also considerable cost savings the State makes.
We need to look critically at this crisis to ensure that this never happens again. This means learning lessons about the need for regulation and buy-in from the charities themselves to maintain our trust.
Cormac O’Ceallaigh is a solicitor specialising in charity law.
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