More than one in three charities are not filing annual returns on time, says regulator

When choosing a charity to donate to, people will often pick a cause that’s close to their heart. But also top of their list is transparency and accountability, as people seek to support charities that they feel are above board following a small number of high-profile cases of poor governance in recent years.

The voluntary sector has become highly regulated of late. The Charities Regulator was established in 2014 as part of efforts to promote public trust and confidence in the management and administration of the more than 11,600 charities operating in Ireland.

Charitable organisations are now obligated to provide annual reports incorporating an overview of their finances and activities in the previous year. These are then published on the public Register of Charities.

Yet more than one in three charities are not filing annual returns on time, according to the Charities Regulator’s 2021 Annual Report, published earlier this year. This marked a further decline in the number of charities filing their annual reports within the required time frame. In response, the regulator said it was “disappointing”, and urged all charities across Ireland to comply with their legal requirements to boost overall public confidence in the sector.

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This follows a piece of research carried out by the regulator in 2021, which found that while 86 per cent of people believe charities are important, only 36 per cent place a high level of trust in them, and a significant proportion believe there should be greater transparency.

Focus Ireland’s director of fundraising & marketing, Amy Carr says the level of oversight in the charity sector has increased significantly in recent years but says it is absolutely crucial that charities comply with their statutory obligations under the Charities Act.

“These requirements can seem onerous, but once you get going you find out that it is not as daunting as you might have thought,” she says. “It’s not just a legal requirement but it is vitally important for the charity sector to comply because we really need to boost public confidence in charities so that people feel confident that when they donate, their funds are going to organisations that will best use the funds for the intention in which it’s been given.”

Focus Ireland is “heavily” reliant on fundraising income, Carr says. “We understand that people want to have confidence that their money, [which] they give in good faith, is going to an organisation that they trust. We pride ourselves on maintaining the highest levels of governance so that we can provide this to our supporters.” Focus Ireland was one of the charities recently shortlisted for the 2022 Good Governance Awards, an initiative that recognises and encourages adherence to good governance practices by non-profit in Ireland. “We are absolutely thrilled about this but it goes to show that we set the highest standards for ourselves. We try to bring quality to every aspect of the organisation.”

Compliance is now part of the culture in larger charity organisations, Carr says. “In Focus Ireland we have internal structures that are hugely supportive of good governance,” she says but notes that smaller charities may not have the same resources.

“There is no getting around the fact that it is disappointing if charities and organisations aren’t complying, we are not making any excuses for them. It is absolutely vital that community and voluntary organisations comply with the charity require’s requirements, and we call on them all to do that,” says Ivan Cooper, director of public policy at The Wheel, the national association of charities.

Cooper, however, says that there is a significant cost in supplying this information, which can suck up resources charity organisations simply do not have. He also argues that there is significant duplication in much of the information that needs to be provided, making for a system that is wholly inefficient for the voluntary sector and the relevant Government departments and agencies tasked with this oversight.

According to the Wheel’s most recent member survey, more than a third of charities reported that they were required to provide the exact same compliance data to multiple sources. In addition, only 30 per cent of those respondents said they had dedicated compliance staff.

“These organisations experience a really significant challenge in meeting these increased compliance requirements,” Cooper asserts. “Charities need the resources to do so.”

The Wheel, in its pre-Budget submission, recommended a comprehensive review of all existing compliance and regulatory requirements. This would streamline procedures and reduce duplication, Cooper says. “That would benefit everybody – not just the voluntary sector but the Government departments and agencies involved in this oversight.”

The Wheel is also calling on the Government and relevant departments to look at establishing a working group to work with the voluntary sector to recommend how unsupported compliance requirements and costs could be provided for. With over half the money spent by charities in Ireland coming from the State, Cooper says it makes sense that this funding should include the cost of meeting compliance requirements.

“An investment is needed,” he says. “The Government put several million euro into equipping The Charities Regulator to ensure that the charity sector complies with these requirements, but no similar investment has been put into the capacity of the voluntary sector to meet those requirements. Compliance and good governance are absolutely essential and we are all in favour of the highest standards but it comes at a cost.”