Why the role of the charity regulator matters – a look to Ireland

January 20, 2014 at 13:27

I’ve been paying close attention to the unravelling story around one of Ireland’s leading charities in recent months. Breaking in the run up to Christmas, when the seasonal appeals were at their height, the ‘scandal’ (it’s had all the hallmarks of a classic Irish scandal!) has rocked the voluntary sector there, and hit trust and confidence in the worst of ways.  As happened on a smaller scale in the UK last summer, questions around executive pay and pay-offs are threatening to undermine public donations to charity.

The main charity in the spotlight is the Central Remedial Clinic in Dublin, a non-residential national centre for the care, treatment and development of children and adults with physical disabilities. It’s brilliant, really excellent, at what it does and makes a huge difference to the lives of the children and families it supports.  I can vouch for this as growing up I spent summers volunteering there, and many hours rattling collection tins in support of it.  It’s an independent organisation, but largely grant-funded by the Irish health services under ‘section 38’ grant funding arrangements for the delivery of services to which the public is entitled.  Under the terms of this funding, it must comply with the ‘Code of Practice for the Governance of State Bodies’. It’s also registered as a charity for tax purposes, and voluntary donations and fundraising are then used to meet the annual shortfall from state funding.

The recent coverage focuses on significant ‘topping up’ of senior salaries well beyond – to almost double – the Irish health service pay-scales, using donations.  Wider questions over pay-offs, recruitment policies and general governance have arisen too.  There’s a dash of politics thrown in the mix (as there so often is in Ireland!), and coupled with a general lack of transparency, the public response to the allegations has been one of sadness and outrage.

While legally the CRC Board may well have ticked all the boxes, for a country that’s faced the harshest form of austerity over the past 5 years, and seen its fair share of cronyism, back-handers and cover-ups, the apparent lack of accountability feels deeply unpalatable. An irony, and oft missed point in the reporting of this story, is that part of the rationale for the sizeable pay-offs were the Health Service Executive’s efforts to reign in salaries at the organisation to more affordable levels. All a little too late however, as the lid has now been lifted,  and it seems a full range of these part-state funded charities and their financial arrangements are now under the spotlight by the Irish Public Accounts Committee. While they are mainly health, social care charities and voluntary hospitals, a hither non-existent doubt has been cast in the public’s mind over the whole institution of charity in Ireland.

This crisis of confidence is affecting giving. I’m proud to say the Irish are traditionally a munificent bunch – topping the league as Europe’s most generous nation according to CAFs latest global giving survey. But Fundraising Ireland reported before Christmas that donations to some of the charities it represents had dropped by 40%, and this was before the latest round of allegations.

While increasing public scepticism about charity is also evident in the UK, a critical difference in Ireland is that there is currently is no charity regulator. Organisations can apply for charity status for tax purposes, but no formal register exists, and there are no mandatory standards in place to cover narrative and financial disclosures.

The legislation enabling the creation of a regulator was passed in the more affluent days of 2009 – but the country’s financial quagmire has pushed it on the backburner – until now that is. Recognising the financial constraints on the public purse, it will operate a charging model – charities will have to pay to register. Now I don’t necessarily think a regulator alone is the full solution and it won’t prevent this kind of thing happening again, but what it flags up for me is the vacuum that exists when there is an absence of regulation, and the reassurance that one can provide for the public, particularly in times of crisis.

The Charitable Regulatory Authority, when it is set up in haste next month, will set out the expected governance practices and rules for financial reporting including use of the Charity SORP, which some Irish charities, mainly international ones, already use.  This would require all of the larger charities to provide a full report on their income sources, expenditure, use of assets and the pay bands of their highest-paid employees. It would also allow for better governance of and improved comparative information about the major healthcare charities where there is co-mingling of state and donated funds.

The point this really drums home for me is to value the regulation and accountability framework that we do have here. While we may debate ad nauseum whether the Charity Commission is the sector’s policeman or friend, and may not always agree with how it performs its role, the fact is that it’s existence and the basic duties it performs are critical to upholding public support. Whatever criticism of it we may rightly have at the moment – we should also be grateful for the role it has played  in maintaining confidence and enhancing expectations of accountability, not just tackling abuse.