Consultation on Charities Regulatory Authority: Functions, Fees, and Reporting, Study notes of Law

Download Consultation on Charities Regulatory Authority: Functions, Fees, and Reporting and more Study notes Law in PDF only on Docsity! 1 IMPLEMENTATION OF CHARITIES ACT 2009 CONSULTATION BY THE DEPARTMENT OF JUSTICE AND EQUALITY THIS CONSULTATION WILL REMAIN OPEN UNTIL 5.00PM, WEDNESDAY 20TH MARCH 2013 How to participate in this consultation: This is an online consultation. You can participate in this consultation by answering the questions below and then clicking the “submit” button at the end of this document. The consultation covers three areas: • Charities Regulatory Authority • Register of Charities • Financial and Activity Reporting by Registered Charities to the Charities Regulatory Authority For each of these areas this document gives a brief summary of the approach being considered by the Department and then invites answers to a number of specific questions. You are also invited to make more general comments if you wish. You will receive an email acknowledging your submission and containing a copy of your responses for your own records. You are encouraged to make your submission online, however, if there is a reason you cannot use the online form, you can print off and complete this form in hard copy and send it to "Charities Consultation, Charities Regulation Unit, Department of Justice and Equality, 51 St. Stephen's Green, Dublin 2”. The same deadline of 20th March will apply. If you need us to send you a hard copy of the form, please contact Charities Regulation Unit at charitiesconsultation@justice.ie 01-6028264 or 01-6028263. Before the end of the consultation period, the Department of Justice and Equality plans to host a stakeholder meeting on the proposals. This will be an opportunity to hear about the proposals contained in the consultation document and to raise questions and give your views as part of the consultation. Further information on arrangements for this meeting will be available in the coming weeks. If you think you would be interested in attending such a meeting, please register your interest as this will help us put in place the necessary arrangements for the meeting. Please note that, depending on the level of interest, it may be necessary to limit the numbers attending such that not everyone who registers their interest may be able to attend. Please register your interest using the form on the last page of this document. 1. Introduction The Department of Justice and Equality is holding a public consultation about the implementation of the Charities Act 2009. The Charities Act was enacted to reform the law relating to charities in order to ensure greater accountability and protect against abuse of charitable status and fraud. It aims to enhance public trust and confidence in charities and to increase transparency in the sector. Most of the legal changes contained in the Charities Act have not yet been implemented. The Act provides for the establishment of a new independent regulator for charities – the Charities Regulatory Authority. This has not yet taken 2 place. It is only when this regulator has been established that most of the other changes in the Act can be brought into force. In November 2011, the Minister for Justice and Equality, Mr. Alan Shatter, T.D., announced that the full implementation of the Charities Act had to be put on hold because of the costs associated with setting up the regulator. This decision was taken because of the need to reduce Government spending, and not because there had been a change in Government policy on the regulation of charities. The Department of Justice and Equality has since examined how best to advance the aims of the Charities Act in the current circumstances. We explored whether steps could be taken to regulate charities without establishing an independent regulator. Because of the type and range of powers that the new regulator has under the Act, it is not possible to take effective steps to regulate the sector without either first establishing the regulator or repealing the Charities Act and bringing forward new legislation on the regulation of charities. As statutory independent regulation of the charities sector remains a Government policy objective, the Department is now working to establish a Charities Regulatory Authority, as provided for in the Act, but in a way that takes account of the changed budgetary circumstances. This consultation is an opportunity for charities, other stakeholders, and members of the public to contribute to this process and to respond to some options suggested by the Department. 2. Scope of this Consultation This consultation is about the implementation of the Charities Act 2009. It takes the Act as its starting point and, therefore, is not a policy consultation on the wider issue of charities regulation. This consultation is not about whether in principle there should be statutory independent regulation of the charities sector. That issue was the subject of extensive consultation while the Charities Act was being developed. Current Government policy on the regulation of charities is aligned with the provisions of the Charities Act and so the focus at present is on bringing these provisions into force. 3. Charities Regulatory Authority This part of the consultation is about the Charities Regulatory Authority. This is dealt with in sections 12-38 of the Charities Act. Section 13 of the Act provides for the establishment of a Charities Regulatory Authority. This Authority will take on the existing functions of the Commissioners of Charitable Donations and Bequests of Ireland. For more information about the work of the Commissioners, go to www.charitycommissioners.ie. In addition to the functions of the Commissioners, the new Authority will have a number of other general functions that are set out in the Act as follows: (a) increase public trust and confidence in the management and administration of charitable trusts and charitable organisations, (b) promote compliance by charity trustees with their duties in the control and management of charitable trusts and charitable organisations, 5 • The objects of the charity (this refers to the charitable purpose for which the charity has been established, e.g. “education”, “relief of poverty”, etc.). The Register will be published online by the Authority. The Authority can decide to include other information in the Register. The initial register compiled by the Authority will consist of organisations that have been granted a charitable tax exemption by the Revenue Commissioners – that is, any organisation that has been given a “CHY” number by Revenue. Under Section 40 of the Charities Act, all CHY holders will be automatically granted charitable status and placed on the Register of Charities. As provided for in Section 40 of the Charities Act, this part of the Register of Charities will be compiled by the new Authority on the basis of the information held by Revenue on these organisations. Charitable organisations that do not have a CHY number will not automatically be entered on the register. Once the Authority is established and the Register is in place, these organisations will be invited to apply to the Authority for charitable status and inclusion in the Register. As the Authority will be established initially on a small scale, this process will be carried out on a phased basis. There will be a suitable transitionary period during which charities can continue to operate as charities even though they have not yet been placed on the Register. This period will be set in regulations by the Minister for Justice and Equality. 4.1 Annual Fee This part of the consultation is about a proposed annual fee that registered charities will be required to pay to the Authority. Under section 39 (2) and section 40 (5) of the Charities Act, the Authority is permitted to charge each charity a fee to cover the costs of establishing and maintaining the Register of Charities. In order to make it possible to maintain the Register in the current fiscal climate, it is now intended that this provision will be used. This will apply both to CHY holding charities that are automatically registered and non-CHY holding charities that subsequently apply for registration. The level of the fee will be set by the Minister for Justice and Equality. The Department of Justice and Equality invites views on a proposed structure for this fee. In proposing this fee structure, we have tried to balance the need to set the fees at a sufficient level to recover the cost to the taxpayer of establishing and maintaining the Register of Charities with the need for an equitable fee structure that recognises the wide variety of organisation size and income within the charity sector. It is proposed that each charity will pay an annual fee based on its gross annual income. Income will be categorised according to five bands, with a different fee set for each band. The bands proposed below are largely aligned with the financial reporting thresholds for charities described in Section 5 of this consultation. 4.2 Proposed Structure for Annual Fee Gross Annual Income Annual Registration Fee Less than €1,000 Token fee, e.g. €10 Between €1,000 and €50,000 €75 Between €50,000 and €100,000 €100 Between €100,000 and €500,000 €200 Over €500,000 €500 6 It is proposed that this fee structure will be put in place on an interim basis and reviewed by the Minister, in consultation with the Authority, after three years. 4.3 Consultation Questions on Register of Charities and Registration Fee In preparation for the establishment of the Register of Charities, the Department invites views from stakeholders and the public on the implementation of this part of the Charities Act. This is to help us to plan for the systems and resources that will be needed to establish and maintain the Register of Charities. In responding to this section of the consultation, please consider the following questions: CONSULTATION QUESTION 2 What are the main reasons you would consult the Register of Charities? CONSULTATION QUESTION 3 How often do you think you would consult the published statutory Register of Charities? 7 CONSULTATION QUESTION 4 What, if any, information additional to that required under Section 39 (7) of the Charities Act do you think should be included in the published Register of Charities? The information that will be required under Section 39 (7) of the Charities Act is: • The name of the charity; • The principal place of business of the charity; • The address of each premises in the State at which the charity operates; • The names of the charity trustees; • The charity registration number (to be assigned by the Authority); • The objects of the charity (this refers to the charitable purpose for which the charity has been established, e.g. “education”, “relief of poverty”, etc.). CONSULTATION QUESTION 5 Do you agree with the proposed fee structure?  yes  no If not, please let us know why. 10 Additional option for format of annual accounts of charities with incomes not exceeding €100,000 (see Section 48(3)(a)) If a charity’s gross annual income or total expenditure lies above €10,000 threshold but below €100,000, the charity has the option of preparing an income and expenditure account and a statement of assets and liabilities instead of an annual statement of accounts. Charities in this category will be required to file these accounts each year with the Authority. The table below summarises what this will mean in practice for charities in terms of financial reporting to the Authority. Gross annual income or total expenditure of charity €10,000 or less Between €10,000 and €100,000 Above €100,000 Type of accounts to be kept by charity Proper books of account Proper books of account Proper books of account Requirement for annual statement of accounts None. Choice of two options: a) annual statement of accounts; or b) income and expenditure account and statement of assets and liabilities Annual statement of accounts Level of external scrutiny of accounts required None. Choice of two options: a) accounts may be audited; or b) accounts may be examined by an independent person approved by the Authority. Audited accounts Level of financial reporting to Charities Regulatory Authority No annual financial reporting. a) Annual statement of accounts plus auditors report; or b) (i) Income and expenditure account and statement of assets and liabilities plus report of an independent examiner; or Annual statement of accounts plus auditor’s report must be filed. 11 (i) Annual statement of accounts plus report of independent examiner Must be filed. 5.2 Consultation Questions on Financial Reporting by Charities to the Charities Regulatory Authority CONSULTATION QUESTION 7 Do you agree with the proposed income thresholds for financial accounting and reporting by charities?  yes  no If not, please let us know why. CONSULTATION QUESTION 8 Are there alternative income thresholds to those proposed above that you would prefer to see put in place?  yes  no If so, please describe them here. If you are answering this question, please remember that the income thresholds can only be set within the ranges contained in the Act. 12 As shown in the summary above, there are certain requirements that the annual statement of accounts of a registered charity will have to meet, depending on the income of the charity. The Minister for Justice and Equality may also specify further detailed requirements by way of regulation under section 48 of the Charities Act. The Department invites views on what should be included in any mandatory requirements for charity accounts that might be set by regulations at a future date. CONSULTATION QUESTION 9 What information would you like to see included in the annual financial reports provided by registered charities to the Charities Regulatory Authority? 15 YOUR DETAILS First name : __________________________________ Last name : __________________________________ Please indicate if you are responding as an individual or on behalf of an organisation  organisation  individual Address: __________________________________ __________________________________ __________________________________ __________________________________ Email Address: __________________________________ If you are responding on behalf of an organisation, please answer the following: Organisation name : __________________________________ Please indicate the sector to which the organisation belongs.  Charity, please specify sub-sector ___________________  Community/Voluntary  Accountancy  Legal  Educational  Central Government  Local Government  Other, please specify ________________________ If you are responding as an individual, please indicate your main reasons for participating in this consultation. ___________________________________________ ___________________________________________ ___________________________________________ ___________________________________________ The Department of Justice and Equality intends to publish the responses to this consultation, subject to the agreement of respondents. Please indicate if you are willing to have your response published. Subject to the provisions of data protection 16 legislation, a full list of all respondents to the consultation will also be published.  Yes - I am willing to have my response published  No - I do not wish to have my response published 17 Stakeholder meeting on the proposals contained in the Consultation Document on the Implementation of the Charities Act 2009 Register your Interest to Attend First name : __________________________________ Last name : __________________________________ Organisation name : __________________________________ Email Address: __________________________________