Oonagh Breen and Phil Smith are the authors of ‘Law of Charities in Ireland’, a timely handbook which details how all charities in Ireland can ensure that they are legally compliant with all aspects of charities law. This complex area is clearly and concisely explained by the two leading experts in the charity law field. Grainne McMahon, Content Editor with Bloomsbury Professional caught up with Oonagh and Phil to discuss the book and the law surrounding the regulation of charities.
Phil and Oonagh, congratulations on the book. Can you tell me how the book came about?
Oonagh: Like all good double acts we each blame the other! We had both been involved in advisory capacities on the drafting of the Charities Bill that became the Charities Act 2009 and we had a very good working relationship.
Phil: We were both conscious of the changes that this new statutory regulatory framework would make to the lives of charities, their charity trustees and their volunteers so we came up with the good idea of us putting our heads together and preparing a handbook to assist charities on their new compliance journey.
You mentioned before to me that the book was a labour of love and both of you were working on it for some years. Can you tell me about that?
Phil: We started work on this book while the Act was still in preparation – back in 2007 – and worked very hard to have many chapters in draft for 2009 when the Act was passed. But as many people will remember, by 2009 Ireland was not in good shape financially and the government of the day did not have the funds to bring the Act into force or to establish the Charities Regulatory Authority until late 2014. Even then, the CRA did not receive enforcement powers until 2016.
Oonagh: It’s hard to write a book about legislation that is not yet in force! We knew it would happen eventually but it did mean that we spent the next decade of our lives, rewriting and revising chapters of the book with some chapters seeing between 10 and 17 different draft versions.
I think people would be quite interested in how you know one another and how you came to work together on the book?
Phil: We first met in early 2000 when Oonagh was co-opted on to the Law Society’s Law Reform Committee.
Oonagh: This committee, of which Phil was a member, was embarking upon a study on how charity law might be reformed and so began a wonderful working relationship that lead to a Law Society Report in 2002 and a 20 year friendship ever since.
You were very keen that this title would be a handbook?
Oonagh: The introduction of a modern charity regulation framework was, and still is, daunting for many charities, most of which are small, have few staff and are mostly run by volunteers giving of their free time and energies. We were determined that while we wanted to ensure that the book was sufficiently rigorous to meet the standards of a formal, thorough practitioners’ text it would also present the content in way which would be accessible as a handbook to guide charity trustees, managers, staff and volunteers through the compliance maze.
Phil: We were conscious that many charities would find meeting legal costs a challenge so it was important, not least for improving the level knowledge about responsibilities and obligations, that some readers might be able to make at least some progress towards a solution to an issue under their own steam.
This book is very useful for someone wishing to set up a charity; what would you say to anyone wishing to set one up?
Oonagh: Read chapter one of our book before you do anything!
Phil: If cross-border aspects are involved, read chapter 12 next.
Oonagh, you are a lecturer in UCD, can you tell me a little about your legal background?
I studied law at UCD and at Yale Law School and have taught law at UCD for the past 25 years. I teach equity and the law of trusts (where charitable trusts are an integral component) but I also run a clinical module for masters students in NGO law, governance and social change. These students come from law, public policy and development aid backgrounds and many of the questions that we attempt to answer in this book have been prompted by questions from my students and the ‘adopted charities’ that they have worked with over the years.
Phil, you advise on charities law in Arthur Cox in addition to pensions. That must be a very interesting combination of law?
I studied chemistry at Oxford University and converted to law at York Law School. I qualified into the pensions team at Rowe & Maw (now Mayer Brown) in London before moving to Ireland in 1999. I had come across charity law both in the UK and then on moving to Ireland primarily through investment and trust law queries – both fields involve tax exempt investment trusts run by trustees with fiduciary responsibilities primarily dictated by the governing documentation. While ostensibly pensions might be thought of as a ‘narrow’ speciality (trusts established under one chapter of the Taxes Act) and charity law as ‘broad’ (not least because of the variety of charitable enterprises across society) in practice there is a lot of similarity in the governance issues and administrative decisions that arise. In both cases trustees are managing moneys for other people or purposes and have to deal with routine administration as well as the unanticipated unusual events. The well-honed nature of the principles of trust law is demonstrated by the way in which they can be applied systematically to such a broad range of eventualities to provide practical solutions to trustees in hard places. No two days are the same in either practice area.
Phil, what are the challenges that clients often face when they come to you in relation to charities?
A wide variety! The most common challenge facing those who wish to set up a charity is understanding that laudable urge to do good comes with responsibility, administration, regulation and obligations. There is a good reason for this in the form of tax relief being provided and the alienation of property for application to charitable purposes. Some founders are initially a little taken aback that doing good is not easier!
Can you tell me about the Charities Act 2009 and what implications that had for charities?
In a first, the act introduces a registration requirement for all charities. No matter what your size or your legal form, if you are a charity you must be registered with the CRA. With registration comes annual reporting duties on your activities and on your finances. Charities also have to meet certain governance requirements and must answer to the CRA for their compliance with good governance standards on an annual basis from 2021. So, the implications for those who control, manage or run charities is that time must now be given over at every board meeting to thinking not just about what you are doing (for example, in advancing your charitable mission) but about how you are doing it (is it in a manner compliant with the Charities Act). The aim of the act is to ensure greater transparency and accountability by charities and thereby increase public confidence and trust in them.
How are charities regulated – if you could tell me a little about how the 2014 Companies Act affected charities?
Corporate charities are most commonly (but not always) established as companies limited by guarantee. CLGs were affected in a manner similar to other companies. Examples would be the memo and articles being replaced by the single Constitution; and the optional provisions of the Companies Act being capable of being invoked in the Constitution. If charities have not updated their constitution for the 2014 act then this is something that is overdue for review.
What are the biggest challenges for charities today?
In current times, the biggest challenge for charities is staying afloat. There is an increasing demand for charitable services across many fields at a time when charities have not been able to fundraise due to the pandemic restrictions and have had to cancel many events that would have enabled them to raise funds. Not every charity is fortunate to have a reserve fund for a rainy day so just staying solvent is a big challenge for charities at present, particularly given the fact that many of their staff are working remotely and even board meetings have had to move online. A corollary of solvency is the issue of mergers and collaboration whether promoted by the charity’s own board or by pressure from funders/donors.
The book deals with many areas surrounding charities and the law –I imagine there was such a vast array of topics which you could include in the book. Was it difficult to narrow these down to matters such as tax, employees, governance, trading and closing down a charity?
We attempted in this first edition to chart the life cycle of a charity so we move from setting up a charity, meeting your reporting and governance requirements right through the life cycle of managing staff and/or volunteers through to merging or winding up a charity. We hope that between the covers there is useful advice for all charities no matter what stage of the life cycle an organisation is at.
What areas surrounding charity law require reform?
Oonagh: The annual reporting of charities urgently requires reform. The Act allows the Minister to issue regulations setting out the reporting standards for unincorporated charities. To date, no such regulations have been issued under the Act. As a result, the Regulator receives but does not publish the charitable accounts of unincorporated charities which makes up 50% of registered charities. Given that the purpose of the Act is to bring greater transparency and accountability, reform needs to happen here to ensure the Act works effectively.
Phil: For the past number of years, we have been waiting on an amendment to the Charities Act that would allow the Charity Regulator to oversee charitable companies in the same way that it currently has power to oversee charitable associations. At present, the financial reporting of charitable companies is governed solely by Companies legislation, which has become more lenient overtime, as it is aimed at for-profit companies that do not have a public benefit purpose. Ensuring that the Charities Act treats all charities in a similar manner when it comes to financial reporting would be more equitable.
There was some negative headlines about charities in recent times and some people may now be wary of donating to charities, concerned that their donations may be going into large salaries in some charities. What advice would you have for someone who wishes to donate to a charity but wants to ensure their money is going to the right place?
Do your homework! Check that the charity is registered on the CRA Register. Check the Benefacts database to access further governance information on the charity in terms of the sources of funding, tenure and composition of the board and destination of expenditure. Bear in mind that large complex charities (for example, hospitals, multi-national development agencies) may be entirely justified in paying significant salaries in order to secure the services of senior, professionally qualified employees to run large, complex, important services potentially involving vulnerable service users.
Have you any tips for aspiring authors in the tax or legal field?
Make full detailed reference notes as you go along however tempting it might be to get a rough draft down first and come back to the detail later. It saves so much time later. Find the time to review the draft index.
Described as an '...exemplary use of all the techniques that can be employed to create a convenient body of knowledge for those with differing understandings of the area,' - Law of Charities in Ireland can be purchased here.
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