The Charities Regulator in Ireland launched their Charities Governance Code (‘the Code’) in November 2018. It takes effect on 1 January 2020, with all charities required to comply from that date. From 2021, charities registered with the Regulator will be required to report their compliance annually as part of their Annual Return.
There were 10,305 charities registered with the Regulator at 31 August 2019. In the year to 31 December 2018, 686 individual concerns were raised with the Regulator in respect of 423 organisations. Of these, around 83% were in respect of ‘governance issues’, ‘legitimacy of a charity’ and ‘financial control and transparency’.
Governance ensures that basic processes and controls are in place which will ensure transparency and accountability within a charity, and will assist charity trustees in carrying out their statutory, regulatory and fiduciary duties. While rules, processes and policies are key in ensuring that the charity performs well and complies with legal requirements, good governance will only succeed if it is truly embedded in the culture and the fundamental structure of each organisation, with the trustees leading by example. This will go towards restoring public trust and confidence in the charities sector as a whole.
Given the diversity and range of entities within the sector, a one-size-fits-all model is not appropriate in the context of the scale and scope of Irish charities. However, it is clear that good governance ensures that charity trustees can carry out their statutory duties, which include, but are not limited to:
- ensuring that the charity is carrying out its charitable purposes for the public benefit;
- acting in the best interests of the charity;
- managing the assets of the charity;
- ensuring the charity keeps proper books of account; and
- acting with reasonable skill and care.
In addition to the publication of the Code, the Regulator has published the draft Charities (Accounting and Reporting) Regulations 2016; these regulations seek to enhance the accounting and reporting requirements for charities. At date of writing, these regulations have not yet been enacted. Further details can be found in our publication, ‘An Introduction to the Charities SORP’, available from our website.
The introduction of these accounting, governance and reporting regulations will increase transparency, incentivise best governance practice and enable charities to evidence this to the Charities Regulator, donors, beneficiaries and ultimately assist with the restoration of public trust in the sector.