Not-for-Profits organisations and registered Charities face the need to adapt to an ever-faster changing regulatory and competitive environment. The reasons people engage and give funding has evolved since the 20th century.
In this article below, Guillaume Hernoux recaps the regulatory framework for Irish charities in Ireland.
6 principles for better charities
The world is better when people work together. And the word is better with charities. From the smaller charities of our local towns to the biggest ones, everyone should consider giving a bit of their time, money or skills for a better world. But how do those charities really operate behind doors? How to make sure that your charity reigns with the most trusted ones?
By law, charity trustees have individual and joint responsibilities for what happens in their charity. They are responsible as individuals and as a board for their charities meeting their legal duty. This article aims to explain in a simplified manner what are the state of Irish charities in Ireland, what are the legal duties of charity trustees, the main principles of charity governance and ten steps charities should follow to reporting on compliance.
The charity context in Ireland
Over the last couple of years, I have tried to work with companies having in mind sustainability as a key component of their strategy. Appian Asset Management, one of the most trusted investment company in Ireland organised last week a conference with Mazars and Mason Hayes & Curran (MHC) to explain their approach to the Charity Sector in Ireland.
MHC mentioned that at the end of 2018, Ireland had more than 9,000 registered charities. However around 15% have not completed their details on the Register and 1% didn’t even fill their annual report. Those charities are currently at risk and can be removed from the Register if they don’t disclose this information.
At a moment where the number of charities continue to grow year after year, the Charity Regulator has decided to bring a new approach and build a new code to help charities align their actions into key principles and better compliance to regulations.
As a Member of the Institute of Directors in Ireland, I’ve also got the chance to get a presentation of a new code regulating charities to help them meet their legal duty under Charity law. This code available in the Charity Regulator in Ireland website can be downloaded here. The code written in plain English is principle-based and should apply on a “comply or explain basis”
The six principles of charity governance
Charities trustees have the mission to make sure their charity is working properly and comply to the different legislations in place. In this sense, six different principles have been elaborated to help trustees to build their actions on a daily basis.
The first principle for trustees is to help advancing charitable purpose. The Charity Act 2009 defines four different categories with poverty, education, religion or any other purpose that a community can benefit. This should be indicated in the Charity governing document with the outcomes the charity want to achieve and how this will be done.
The second principle is about ethics and behaving with integrity. Values are key in a charity and trustees need to be independent and act on the interest of the charity, not on their personal ones.
Leading people is the third key principle. Trustees must clarify everybody’s roles and value the effort of the volunteers, employees and contractors. As every business, they have a duty of care and must promote respect inside of the charity.
Exercising control is set as the fourth principle. Planning is key but execution is even more important. Charity trustees must make sure the strategy is properly executed and understand the governing document of a charity is legally binding and needs to be respected. This means that funds must be controlled and risk must be reduced as much as possible.
The fifth principle is about working effectively as a team. Building a team with the correct talents from board members to volunteers is a must for a charity success. Trustees need to build a good mix of experience and skills and provide proper training to new charity trustees.
The sixth and last principle states the importance for trustees to be accountable and transparent.Accountability for charities means to stand in any circumstances for the charity values and being able to present it to any person querying the purpose of the history of the charity.
The legal duties of charity trustees
Charity trustees have the same obligations as any other director. However, on top of their business skills, they must have the sustainability component in mind linked to the purpose of any association.
Here are the legal duties that charity trustees need to comply with:
- Comply with their charity’s governing document
- Manage their charity’s resources responsibly
- Ensure their charity is carrying out its charitable purposes for the public benefit
- Act in the best interest of their charity
- Act with reasonable skill and care
- Be accountable and comply with the law
Other legal requirements beside the Charities Act 2009 exist for Charity trustees. It is recommended to pay a particular attention to the data protection legislation, the employment legislation and the health and safety legislation.
Ten steps to reporting on compliance
The Charity Governance Code available online on the Charity Regulator website offers a framework to follow to report on compliance every year. Here are the 10 simplified steps to follow:
- Read the code in full
- Decide if your charity is more complex for the purpose of the code
- For each standard, define the actions needed to meet this standard
- State each action next to the relevant standard in the Compliance Record Form
- If any standards do not apply to your charity explain it in the previous form
- Decide what evidence you can provide for every action undertaken
- State this evidence in the Compliance Record Form
- Review and agree the accuracy of the Form at a board meeting
- Declare your charity’s compliance level when submitting your annual report
- Review your alignment to the code standards every year before reporting it to the Charity Regulator.
How to get more information?
The Charities Regulator website offers plenty of information and documents on how to get support related to public questions as well as the charity questions.
Information for the Public is also available online, more particularly the Charities Register and how to raise a concern if needed. The Charity Regulator can be contacted online, by phone in Ireland at +353 1 633 15 00 or by email mentioned on their website.
The summer is coming and there is no better time to engage yourself in new activities or to make sure your charity is benefiting from all the respect it is due. Having better working charities will not only benefit society but also ourselves too. The world will say thank you and your community too!