Charitable status of not-for-profit Pobal being reviewed

The company that manages Government and EU social inclusion programmes is to review its status as a registered charity, following questions about its entitlement to fees received from the Department of Children.

Pobal, a not-for-profit statutory agency, began the review following confirmation by the Charities Regulator that it is examining the status of all statutory agencies listed on the register of charities.

These examinations follow repeated questions in the Dáil about why Pobal, a not-for-profit State agency, is considered a charity when it received €13.5 million in fees in 2016 for the disbursement of €204 million in funds on behalf of the Department of Children.

Minister for Rural and Community Affairs Michael Ring said: "Pobal has informed my department that it has commenced a review of its charitable status. The Charities Regulator has been informed of the process. It is expected that the review will take three to four months.

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"The board of Pobal will communicate the outcome of the review to my department through our existing corporate governance and oversight arrangements," Mr Ring said in a written parliamentary reply to Independents4Change TD Mick Wallace.

The regulator also informed the Wexford TD that “as part of our activity in 2018, the authority intends to initiate a review of those charities, which are on the register, that are also statutory bodies”.

Revenue

In a letter to Mr Wallace in February, chief executive of the regulatory authority John Farrelly said his office had worked closely with the Revenue Commissioners over the past two years "on the issue of entities that were deemed registered pursuant to section 40 of the Charities Act 2009 and a significant number have been removed from the register".

Mr Farrelly said that in 2014, Pobal and more than 8,000 other organisations “including a number of State bodies” satisfied the criteria of Section 40 of the 2009 Charities Act, exempting them from tax.

But the regulator stressed that “all entities on the (charities) register by virtue of section 40 are only deemed registered for so long as there continues to be an entitlement to such an exemption from the Revenue Commissioners”.

Internal audit

Mr Wallace has raised the issue a number of times in the Dáil and also highlighted an internal departmental audit in 2014 which expressed concerns about payments made to Pobal to monitor compliance among childcare providers.

"The auditors could not understand the annual fee of €2.5 million it received," he said, although he acknowledged that the audit was before the appointment of Minister for Children Katherine Zappone.

The auditors understood the department employed Pobal without a tender process and this approach had not been formally justified, and the auditors did not know whether the contract with Pobal would be line with EU directives if legally challenged.

“This is supposedly a not-for-profit charity,” Mr Wallace said. “The EU directive states that contracts greater than €135,000 must be advertised and a competitive tendering process carried out.”

Ms Zappone told the TD in the Dáil that legal advice “has indicated there is no obligation on Government departments to tender the contracts or arrangements made with Pobal for the management of funds”.

She added that this reflected the Teckal exemption in EU procurement law “which states that open advertising and tendering rules for public contacts do not apply where a public body obtains services from in-house sources”.