Irish Red Cross cutbacks may raise ‘concern’ over finance use

Cutbacks to the international arm of the Irish Red Cross due to a funding shortfall could raise questions about the financial management of the charity, a recent internal memo to the organisation's senior staff and board members warned.

The June 6th memo, obtained by The Irish Times, reveals the charity considered a range of emergency cost-saving measures, such as selling property and closing regional offices, to avoid a financial crisis.

The charity announced last month it was restructuring its organisation, due to a major drop in income in recent years. The international department of the charity is to be wound down and its functions will come under secretary general Liam O’Dwyer’s brief. The department was responsible for managing humanitarian projects in Nepal, Gaza, Myanmar and the Philippines.

John Roche, head of the international department, is to be made redundant as and from September.

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Darren Ryan resigned from the organisation's board in late May, over concerns about the financial management of the charity. Mr Ryan had raised concerns that "restricted funds" donated for specific causes, such as disaster relief efforts and humanitarian work, had been spent meeting other costs, The Irish Times understands.

In his resignation letter to the charity's chairman, former Fianna Fáil minister Pat Carey, Mr Ryan said he was stepping down over the concerns he raised.

In a statement to The Irish Times, Mr Ryan said he found his position "untenable" following a failure to receive answers to questions "pertaining to restricted funds within the Irish Red Cross". He raised the questions in an email on April 25th, and again at a board meeting on May 19th, he said.

Donation purpose

In a statement, the Irish Red Cross said: “We can confirm that no monies from restricted funds have been spent for any purpose other than for which they were donated. This was clarified to all board members . . . at the meeting in question.”

The cutbacks to the charity’s international arm would have a “negative knock-on effect on the experience and reputation” of the Irish Red Cross, the internal memo stated. “This could in turn affect the fundraising capacity of the organisation,” it said.

From 2015 to 2017, fundraising income dropped from €4.3 million to €2.5 million. The organisation budgeted for donations of €673,700 to the end of April this year, but only brought in €504,624, which “had a dramatic effect on our financial sustainability”, the memo said.

“The restructuring has not been required due to poor use of funds. The internal concern for us is we budgeted an amount which hasn’t been raised,” a spokeswoman for the charity said.

The Irish Red Cross has approximately €700,000 in restricted donations that were raised in specific international and national appeals.

One senior staff member, commenting on the condition of anonymity, said there was concern over the charity’s ability to ensure international donations would be spent appropriately, due to the planned cutbacks.

The memo set out several different options to help achieve more than €1 million in emergency savings. These included selling a large building used as a training centre in Kilbeheny, Co Limerick, which was bequeathed to the charity.

The board decided against selling the donated property, which it estimated could have raised €200,000. Closing the charity’s regional office in Limerick to save €92,000 a year was also considered.

The eventual decision taken to close down the international department will save an annual estimated €90,000. But the memo warned the cuts could call into concern “how we have used our funds”.

Service levels

“There is also a concern that our own members could see the changes being made as a reduction in the service levels to them, and they too may vocalise concerns about this and funds management,” it said.

The organisation has received €739,000 a year from the Department of Defence since 2012. Minister of State for Defence Paul Kehoe met charity officials on May 31st, where they made an appeal for extra funding. A department spokeswoman said Mr Kehoe asked the Red Cross to prepare a business case for any additional funds.

Mr Kehoe is to meet officials from the charity “shortly” to discuss recent issues around the charities’ restructuring, the spokeswoman said.

One reason the charity’s donations are significantly down is “due to the lack of emergency appeals”, a Red Cross spokeswoman said. “The last major appeal run by the Irish Red Cross was for Nepal in 2015. Two other large appeals which were also run that year were the Syria appeal and the migration crisis appeal,” she said.

Two into Three, a non-profit consultancy firm that tracks fundraising levels, said there was a 6 per cent increase in charities’ incomes in 2015, according to its report released last September. However, income in the international sector remained static, it said.

International aid charity Trócaire reported significant increases in public donations, from €22 million to €29 million in the last year, a spokesman said. Goal also recorded a significant increase in fundraising, up to €3.8 million in its 2017 annual report.