Rules on credit card spending of serious concern for charities, seminar hears

Credit cards and travel expenses are the most common areas where difficulties arise for charities in relation to people getting improper financial benefits, the compliance and enforcement director with the Charities Regulator has said.

Addressing a webinar on charities and private benefit, Thomas Mulholland said he regularly finds that the trustees of charities don't know how many credit cards are being operated by their charity, if any.

“You’d be surprised how often they have no idea or who has the credit card, if there are credit cards.”

He was speaking at a webinar organised by the Bar Council’s Voluntary Assistance Scheme, which links barristers with charities in order to provide free legal support.

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“If there is a credit card in use by a charity, it shouldn’t be signed off on by the same person who spends on the credit card,” Mr Mulholland said.

The most serious issues that emerge about people privately benefitting from the resources of a charity often develop over time in long-established charities, he said.

Serious difficulties also develop where a charity is dominated by a single trustee, or where there is too much control by related parties, such as a family.

Mr Mulholland said that he sometimes is told that certain practices were not challenged because the person concerned “gets upset” when their actions are questioned.

He told the webinar about a small charity in the west of Ireland that had been paid €100 a month for the use of its logo by a business that collected used clothes nationwide for onward sale.

It ended the contract after the regulator’s office had queried the arrangement and its potential to convey a private benefit on the used clothing business.

Charities should not be used for private benefit. The charity had no way of knowing how much benefit the used clothing business was getting from the nationwide use of the charity’s logo, while the charity was only getting €100 a month.

Mr Mulholland said the regulator’s office, which has 40 staff, received 466 expressions of concern last year. About half turned out to be in relation to entities that in fact were not charities.

The issue of private benefit constituted only 3 per cent of all complaints, with the legitimacy of a charity being the most common issue raised.

Mr Mulholland said that it was a useful practice for those running charities to ask themselves, what would the public think if this became public knowledge? Transparency could save charities from a lot of potential difficulties.

The chief executive of Charities Regulator's office, Helen Martin, said it does not advise on the proper level of remuneration for the chief executives of charities.

“Not every charity requires a CEO, and this is something that we come across a lot. We see applications from charities that haven’t even started their activities and that are already talking about paying a CEO €150,000 a year and they haven’t yet raised a penny.”

She said there had to be a sense of reasonableness about what a board of trustees was approving.