This important charity law update relates to the Charities (Amendment) Act, 2024 and will be of interest to all charity trustees and boards of not-for-profit organisations.
Charities (Amendment) Act 2024
The Charities (Amendment) Act 2024 ("Charities Amendment Act") was signed into law on 10 July 2024 but has yet to be commenced. Once it is commenced it will introduce a number of changes to the regulation of Irish charities by the Charities Regulatory Authority ("CRA"). We have summarised below some of the main changes but charity trustees and senior management will need to be aware of all of the changes introduced by the Charities Amendment Act to ensure they understand whether the new regime affects the governance of their organisation.
Human Rights Organisations
One of the long sought after changes in the charities sphere is the inclusion of the "advancement of human rights" as a charitable purpose.
Organisations with specific references to 'human rights' purposes in their object clauses now potentially fall within the definition of a charity under Irish law. It is important to remember that as with other charitable purposes an entity will not be capable of being registered as a charity if it is not exclusively charitable in its purposes noting that political advocacy is not of itself a charitable purpose. Human rights organisations should consider whether their activities and objects are such that they fall within the definition. Where they do, they will need to prepare for application to register as a charity with the CRA no later than 6 months from the commencement of the relevant provisions of the new Act.
Main Changes for Charity Trustees
1 CRA approval of constitutional amendments extended
The approval of the CRA is now required for amendments to a charity's constitution regarding its name, objects, or charitable purpose, as well as changes to clauses dealing with income, property or winding up.
2 Remuneration of charity trustees – regulation of agreements/appointments
The Act introduces new requirements for CRA approval for certain agreements and appointments including agreements with charity trustees. This provision is intended to regulate the remuneration of charity trustees, members, and persons with whom the charity trustees have a personal connection.
3 Identification of members for non-company charities
The Act also contains provisions to clarify who the 'members' of a non-corporate charity are. This is important given the new approach to the regulation of agreements with members and will be an area for charities which are established by trust or unincorporated associations should keep under review.
4 'Removal' notices
New provisions concerning "removal notices" where a charity is removed from the register for breach of Sections 43 and 44 of the Charities Act 2009. In such cases, the CRA must issue a notice to the charity that specifies the reasons the charity is to be removed from the register. The charity may also be required to remedy its contravention of the Charities Act 2009. The charity may make representations to the CRA regarding its proposed removal from the register no later than 21 days from the date of the removal notice.
5 Potential guidance on 'significant event' procedures
The ability of the CRA to issue and revise guidelines and codes of conduct "for the purpose of the performance of its functions" under the Charities Act 2009. The Charities Amendment Act sets out a non-exhaustive list of what such guidelines and codes of conduct may relate to. These include guidelines relating to "procedural requirements" relating to a 'significant event' which is defined as: substantial damage to property; a substantial reduction in or loss of assets and events giving rise to significant reputational risk.
At this stage none of the provisions of the Act have been commenced so the changes highlighted above and all the other changes in the Act have yet to be formally implemented. Nevertheless, it is to be expected that the majority of the new provisions will be implemented in due course and charity trustees can use the time in the lead up to commencement to prepare for the changes.
Governance Update
Other recent governance matters for charitable organisations to be aware of include:
Charities Regulator Investigation into Homeless Charity
The CRA published their findings following a statutory investigation into the governance of a homeless charity (who have since ceased operations following the appointment of a liquidator). This report highlights the importance of adequate control and oversight by charity trustees, maintaining the register of charities entry to ensure all changes are recorded, and the need for adequate governance documents. More information on the duties of charity trustees can be found here.
Court Fines Charity for Failure to File Annual Report
The CRA initiated District Court proceedings early this year against a charity for failure to file their annual report. The charity was fined a nominal amount following a guilty plea.
It is crucial for charity trustees to ensure annual reports are filed on time as directors of charities themselves may be prosecuted for such failure. It is important to note that a court prosecution gives rise to the potential for significant reputational damage for both a charity and its directors.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.