Charity sector must improve compliance to boost public confidence

The Charities Regulator’s 2021 Annual Report, shows that only 64% of registered charities had filed their annual reports on time, which is within 10 months of the charity’s financial year-end. These annual reports provide an overview of a charity’s finances and activities in the previous year and are published on the public Register of Charities.

The Annual Report also shows that almost half of Irish charities have an annual income of less than €250,000, according to information supplied in annual returns for 2020. Fifteen per cent of Irish charities have an annual income of more than €1 million. 

Helen Martin, Chief Executive of the Charities Regulator said: “The question for charities is whether they can afford not to comply with the requirement to file annual reports. Funding is the number one concern for charities we surveyed¹ last year, and as inflation brings an increased cost of living, it will remain so. There is a strong link between greater transparency and accountability by charities and public trust in the sector, according to the public², making the charity’s annual report to the Charities Regulator an important means for registered charities to provide basic information to the public on their finances and activities in the previous year.”

Ms Martin commended charities on their hard work and dedication to a wide array of causes in 2021 and acknowledged the Covid-19 related challenges which the majority of charities continued to experience during the year. “Notwithstanding these challenges, we were heartened to see the level of positive engagement by registered charities with the Charities Governance Code³. Last year was an important one for registered charities as it was the first year they reported on their level of compliance with the Charities Governance Code. We are committed to working with charities as they seek to enhance standards of governance across the sector.”

“However, the decline in the number of charities filing their annual reports within the required timeframe is disappointing and remains a concern particularly given that research shows the reporting requirements are not considered to be unduly onerous by the charity sector4. Our registration and compliance units are assessing why some charities are failing to meet this statutory requirement with a view to addressing any underlying issues and encouraging increased compliance in 2022.”

The Charities Regulator provides a wide range of guidance to help charities to understand and comply with their regulatory obligations. The independent statutory body is responsible for maintaining the public register of charitable organisations operating in Ireland, as well as ensuring charities comply with their legal obligations, including carrying out investigations and taking appropriate enforcement action where necessary.

Some of the key highlights of the 2021 Annual Report include:

• 282 new charities were registered, including 98 schools, bringing the total number of registered charities to 11,426
• A new Statement of Strategy 2022-2024 was published

Compliance and Enforcement in 2021

The Charities Regulator’s seventh full year of operations saw continuing progress in the area of compliance and enforcement.

• Two statutory investigations were opened in relation to North Inner City Homeless and Birdwatch Ireland
• Two investigation reports were published, relating to Childfund Ireland and Cabhrú Housing Association Services
• 4,245 charities – equating to 69% of those that submitted annual reports – declared themselves to be in full compliance with the Charities Governance Code 2021, while 912, or 15%, stated they were partially compliant
• Eight protected disclosures were submitted to the Regulator in 2021. All were assessed by the Charities Regulator’s Compliance & Enforcement team in accordance with protected disclosure procedure.

There was an increase of 22% in the number of concerns raised – up from 466 in 2020 to 568 in 2021. Ms Martin said that the increase was not unexpected given the gradual resumption of activity by charities during the year, as public health restrictions eased, along with increased public awareness of charity regulation due to the significant role played by many registered charities during the pandemic. 

The top three areas of concerns were: governance (209 complaints/37%), legitimacy of charity (196 complaints/35%) and financial control and transparency (107 complaints/19%).

“While concerns relating to unregistered organisations remain high, governance and issues linked to financial control and transparency within registered charities continued to generate the most concerns among the public,” according to Ms Martin.

Speaking on the publication of the Annual Report, Minister Joe O’Brien TD, Minister of State with responsibility for Community Development and Charities said: “The 2021 Annual Report underlines the Regulator’s commitment to strengthening public confidence in our registered charities. While recognizing there is more to be done, the sector’s positive response to the Charities Governance Code demonstrates the will and determination that exists to further develop and augment standards and practices. The progression of the Charities (Amendment) Bill 2022 will also be of critical importance in assisting both the Regulator and our charity trustees in this regard.”

“In a year of continued challenge, posed by the ongoing impacts of COVID-19, I wish to thank the Chair and the Board of the Regulator, the management and staff, for their timely and effective provision of supports, guidance and oversight.”

Commenting on the launch of the Annual Report 2021, Patrick Hopkins, Chairperson of the Charities Regulator said: “Like all organisations and citizens across the country, the Charities Regulator started 2021 in lockdown and facing considerable uncertainty, as we prepared for another challenging year. Our commitment as an organisation to achieving our strategic priorities, along with the support we received from our stakeholders, helped us to meet these challenges. This also kept us focussed on our mission of regulating the charity sector in the public interest.”

Registration of Charities

The top five sectors in which Ireland’s 11,426* registered charities operated were: the advancement of education (5,982); community welfare (2,150); integration into society of those who are disadvantaged (1,570); relief of poverty or economic hardship (1,331) and community development (1,294).

Dublin has the highest number of registered charities at 3,140, followed by Cork with 1,177 and Galway with 661.

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