Our Charity Law and Not-for-Profit team breaks down some recent developments in the sector, including the Charities (Amendement) Act 2024, Budget 2025 and new legislation for AHBs.
Charities (Amendment) Act 2024
The Charities (Amendment) Act 2024 was signed into law on 10 July 2024. This legislation is not operative until commencement order(s) are made. So, for now we must all familiarise ourselves with the changes.
This is an amending Act. This means that it makes various updates, amendments and appeals to the Charities Act 2009. Please listen to Alice Murphy in the attached webinar recording in which she provides a lot of detail about the 2024 Act.
There are certain aspects of the 2024 Act that have been well advertised, such as:
- The inclusion of the advancement of human rights as a charitable purpose
- The fact that in general terms, a person who is the company secretary, or secretary to the governing body of a charity, will no longer be considered a charity trustee, and
- The makeup of charity trustees
- There must be a minimum of three individuals
- There is a change to the residency requirements, and
- It is key to now check the relationship between trustees given the definition of “connected relative” and the need to have a majority who do not fall within that definition.
The following are two aspects of the 2024 Act that will require action by charity trustees and understanding by executives within charities, so that all parties are ready to take steps when the commencement orders are made.
Members of a charity
The 2024 Act has introduced a definition of “member” of a charity. For charities that are established as companies, their members are defined under company law and those organisations have been obliged to keep a register of their members pursuant to company law, so this new definition will not be new to them. However, for non-company charities this is a new concept, and for them, “member” will include those who are entitled to appoint, nominate or vote for the appointment of a person as a charity trustee of that organisation. This should be considered and understood, as along with the new definition comes an obligation to maintain a register of members which must include:
- The name and address of each member
- The date on which the member was entered on the register, and
- The date they ceased to be a member.
Every non-company charity will have to consider if they have “members” who fit within the definition. They will need to carefully check their governing instrument to see what group of people is entitled to appoint, nominate or vote for charity trustees. Unless the Charities Regulator issues any guidelines to the contrary, all of these persons will have to be included in the new register of members.
The definition of “member” is also relevant to new sections 88A, B and C which introduce a new framework permitting “remuneration” to relevant persons for the provision of a service to or on behalf of the charity. This is a welcome new section, but it is important that charity trustees are aware of their obligations if proceeding with such remuneration. “Relevant person” includes:
- A member of the charity
- A charity trustee, or
- A person with whom a charity trustee has a personal connection.
A charity can only provide remuneration to a relevant person, if this does not conflict with it’s governing instrument and it is recorded in an agreement that complies with the section. Such an agreement must be referred to in the annual return filed by the charity and the charity trustees must include a declaration that they are satisfied that the agreement is in the best interests of the charity. In addition, every charity has to keep a register of the agreements.
Charity trustees are each guilty of an offence if they breach this section. Charities should therefore be reviewing their register of members, for those who have one, to see if any of their members are in receipt of remuneration and consider if the charity is therefore impacted by these new sections.
Mandatory notifications
Section 39 (11A) requires that a charity shall “as soon as may be” notify the Charities Regulator in writing if certain specified things happen. The list includes:
- If the charity breaches a condition of its registration
- If it is proposed to wind up a charity or to cease its operations
- If information regarding a charity trustee that was provided in the application for charitable status ceases to be correct, and
- A charity trustee resigns or is appointed.
Failure to make these notifications will be an offence. It would be helpful if the Charities Regulator were to provide guidance on how such a notification can be made and what is meant by “as soon as may be”.
Budget 2025
Ministers, Jack Chambers and Paschal Donohoe delivered Budget 2025 on 1 October 2024. Various spending measures introduced in the budget will increase funding to users and providers of charitable services. Initiatives announced that are specific to the sector include:
Charitable donations
The Finance Bill 2024 introduces new measures that provide greater access to tax benefits under the Charitable Donations Tax Scheme, including:
- Charities will no longer have to hold a CHY number for at least two years before it can apply for donations relief under the scheme – this will be helpful for new charities as up until now it was necessary for a charity to have a CHY number for two years before making an application for section 848A Donations Relief. We will keep you informed on the timing of this proposal.
- Charities will have a longer timeframe from the date of a donation to use the funds raised under the scheme. It is currently a requirement for charities that hold a CHY number to seek the prior consent of the Revenue Commissioners if they wish to accumulate funds for a period in excess of two years from when they received the funds. The Finance Bill notes that a charity can continue to hold it’s CHY tax exemption if it applies its income to a charitable purpose by the end of the fifth year after the year in which the income was received. We remind charity trustees however, of their duty to manage the charitable assets and use them to give effect to the charitable purpose. A charity exists and thrives by delivering on its charitable purpose, not by accumulating funds for no planned reason. Once again, we will keep you informed of the progress of this measure through the Finance Bill.
- The Finance Bill also proposes that those making donations to sports bodies should be entitled to choose whether the income tax relief on their donation will be provided to them or to the sporting body.
- And finally, the Finance Bill introduces changes to the tax exemptions that apply to sporting bodies to facilitate long term investments for the purposes of future capital projects and meeting sport equipment needs, to support Ireland’s high-performance athletes and sports participation.
Important new legislation for approved housing bodies (AHBs)
The Housing (Miscellaneous Provisions) Bill 2024 (the Bill) is moving quickly through the legislative process and looks set to be enacted before the end of the year. The new Bill, which was only initiated on 27 September 2024, seeks to amend certain provisions of the Housing (Regulation of Approved Housing Bodies) Act 2019. The proposed changes will be of particular interest to the 450 AHBs that were “deemed registered” with the Approved Housing Body Regulatory Authority (AHBRA) on 1 January 2022.
If the Bill is enacted as it is currently drafted, once commenced, it will empower AHBRA to register all “deemed registered” AHBs without any further action required from the AHBs in question.
This means that a “deemed registered” AHB will no longer have to actively submit an application for registration with AHBRA. This is quite a big change from the current position where AHBRA has set deadlines for the submission of an application for registration by each “deemed registered” AHB depending on its size. If the Bill is not enacted and commenced by the end of 2024, any AHB with 300 or more dwellings will still be required to make an application for registration with AHBRA by 31 December 2024.
Likewise, AHBs with between 50 – 299 dwellings will also be required to submit an application for registration by that date, unless they have received an extension from AHBRA. We will be keeping a close eye on the Bill as it works its way through the legislative process. If you have any queries on any of the changes proposed under the Bill, please do get with a member of our Charity Law & Not-For Profit team.
Charities Regulator Annual Report
The Charities Regulator published its annual report in July 2024. The report provides great detail regarding the sector and the work of the Charities Regulator for the calendar year 2023. Here are a few highlights and some commentary on what we are seeing in the sector:
- At the end of 2023, there were 11,516 charities on the Register of Charities; 130 new charities were registered in 2023 and 120 were deregistered.
- As all charity trustees should know, every charity has to submit an annual report to the Charities Regulator within 10 months of the financial year end of the charity. In 2023 58% of charities filed their annual report on time; by the end of 2023, a total of 78% of charities had filed their annual report. The Charities Regulator has been running a targeted compliance programme against charities that were either late or had not filed at least one annual report. Notifications were sent to over 1700 such charities in 2023. The Regulator issued “intermediate sanctions” against some charities – where the charities in question were removed from the Register of Charities for a period of time until the filings were brought up to date. In addition, the Regulator initiated formal court prosecutions against eight charities.
- As charity trustees also know, charities are asked to declare their level of compliance with the Charities Governance Code when submitting their annual report. 5365 charities declared full compliance in 2023. The Charities Regulator continues to do “spot checks”.
What these statistics remind us of is the obligation on all charity trustees to know their responsibilities and duties. The Charities Regulator issued 12 publications in 2023, which included new guidance notes that all charity trustees should be keeping up to date with.
Remember the need for charity trustees to receive induction training on their responsibilities and duties. The new Charities (Amendment) Act 2024 includes the duties of charity trustees in list form – this is a welcomed development.
What we are seeing in the sector
Our Charity Law & Not-For Profit team continue to provide advice to the sector on all aspects of a charities day-to-day activities. Compliance with good governance continues to be top of the list in terms of enquiries. While ensuring compliance with good governance is key, the life of a charity trustee, and the agenda of trustee meetings, could be spent on governance alone. A good chair should ensure that generally a board agenda focuses on strategic thinking and the actual mission of the charity, and only then the specific governance issues should be addressed.
Charity trustee training is absolutely key. You may have read about the former supermodel, Naomi Campbell having received a five year ban from the Charity Commission in England & Wales from running a charity, following a highly critical inquiry by the Commission revealed financial misconduct and mismanagement at her charity, “Fashion For Relief”. The news reports noted that Ms Campbell had run up extensive bills for hotel rooms, spa treatments, and cigarettes, all charged to the charity.
In one short comment on the sanction imposed, Naomi Campbell said by way of mitigation “I am not in control of my charity”. This is a lesson to all charity trustees – you must be in control of your charity and if you have any concerns in that regard, take action now.
The following are two specific queries we are coming across on a more regular than usual basis, that might be useful to share:
Delegation of specific tasks to executive
There can sometimes be a lack of clear understanding of:
- What tasks charity trustees have delegated to the executive
- The precise terms of that delegation, and
- Who in fact is in control of the decision making process in relation to those delegated tasks.
Charity trustees can delegate tasks, but they cannot delegate responsibility of their legal duties. It is important that any delegated tasks/functions are clearly set out in a written document and there is a clear understanding of the process of “reporting back” and actual decision making between the executive and the trustees.
Acceptance of donations
Charities should have clarity on when they should either accept, refuse or return a donation. If a charity knows that a particular donation cannot be used for the specified purpose, or for instance it is not in the best interests of the charity to accept the donation with the specific intention attached to it, then the charity should engage with the donor, to either “repurpose” the donation, and if that is not possible, then to refuse or return it. Donor intent is key.
Charities should consider having a Gift Acceptance and Refusal Policy. In instances where the donor cannot be found and the donation cannot be used in accordance with donor intent, we have made cy-pres applications to the Charities Regulator to apply to change the use of the donation, which can be a very useful tool to unlock cash or assets.
For more information and expert advice, please contact a member of our Charity Law and Not-for-Profit team.
The content of this article is provided for information purposes only and does not constitute legal or other advice.
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