Significant updates to Irish charity law are now in sight with the recent publication of the Charities (Amendment) Bill 2023 (the "Charities Bill").
In 2022, the Government proposed several significant changes to the Charities Act, 2009 (the "2009 Act") in the form of the General Scheme of the Charities (Amendment) Bill 2022 (the "General Scheme"), which we previously considered here. Following this, the Charities Bill was published on 22 December 2023.
While the Charities Bill is similar in many respects to the General Scheme, it also contains some significant departures from its predecessor. In this briefing, we examine the key proposed changes to Irish charity law under the Charities Bill and consider how it differs from the previous General Scheme.
New Developments
Provisions on amending constitutions
Under the General Scheme, charitable organisations were prevented from making any amendments, however minor, to their constitutions without the prior approval of the Charities Regulatory Authority ("CRA") and the CRA could not approve any amendments that would be contrary to the 2009 Act. This prohibition has been narrowed under the Charities Bill, with prior CRA approval only required for changes to a charitable organisation's charitable purpose or a "specified clause" (being a clause in the constitution that relates to the objects, income and property or the winding up of the charitable organisation).
Where a charitable organisation seeks prior approval for a change to its charitable purpose, the CRA is empowered under the Charities Bill to withhold its consent where it considers that:
- the proposed purpose is not a charitable purpose; or
- the charitable organisation has not demonstrated that it has or will have the "organisational structure or expertise" needed to advance the proposed charitable purpose.
In the case of a proposed change to a "specified clause", the CRA may withhold its consent where the proposed clause would be contrary to the 2009 Act.
The Charities Bill does not provide any guidance on how the CRA should exercise its discretion to withhold consent in the above scenarios and so it is yet to be seen how this will work in practice. However, as the Charities Bill separately allows the CRA to issue guidelines and codes of conduct on certain matters including the "content of the constitution of a charitable organisation", the CRA will be in a position to shape and issue future guidance in this area.
CRA approval for certain agreements and appointments
Currently, section 89 of the 2009 Act allows charitable organisations, under certain circumstances and subject to various restrictions, to enter into agreements with its trustees and people personally connected to them for the provision of goods and services to or on behalf of the organisation.
The General Scheme contained various changes to the section 89 regime, in particular the requirement for charitable organisations to obtain prior approval from the CRA in order to enter into such agreements. However, the Charities Bill goes further than this by deleting the current section 89 and replacing it with a new Part 6A to the 2009 Act.
Under the new Part 6A proposed by the Charities Bill, charitable organisations may enter into agreements with their trustees, people personally connected with their trustees and their members for the provision of goods and services to or on behalf of the organisation, provided that the remuneration is "reasonable and proportionate" in light of the good or service and person providing it. Part 6A also permits charitable organisations to appoint current employees as charity trustees.
Once enacted, Part 6A will require charitable organisations to apply to the CRA for approval before entering into any such agreements or appointments. Where charitable organisations have agreements or appointments already in place on the date that Part 6A comes into force that will continue for a further 12 months or more, they will have a 6-month period to apply to the CRA for approval of the existing agreement or appointment. Charitable organisations that are education bodies or public bodies are exempt from the requirement to seek CRA approval to enter into such agreements and appointments.
On receipt of an application, the CRA will have 12 weeks to issue a notice confirming its decision to approve or refuse the application. In either case, the CRA notice must provide reasons for the decision. CRA decisions may be appealed to the District Court within 21 days.
Charitable organisations will also be required to maintain a register of their agreements and appointments that have been approved by the CRA. Trustees of charitable organisations that breach the requirements of the new Part 6A will be guilty of an offence. Persons guilty of an offence under the 2009 Act are liable on summary conviction to a fine of up to €5,000 and/or a term of imprisonment of up to 12 months, or on conviction on indictment to a fine of up to €300,000 and/or a term of imprisonment of up to 10 years. The CRA has the power to prosecute summary offences under the 2009 Act.
CRA guidelines and codes of conduct
The General Scheme allowed the CRA to draw up codes and guidance relating to the general duties of charity trustees and charity trustees were required to have regard to these in the performance of their role. However, the equivalent provision in the Charities Bill is notably broader, allowing the CRA to issue and revise guidelines and codes of conduct "for the purpose of the performance of its functions under the [2009 Act]". The Charities Bill contains the following non-exhaustive list of what such guidelines and codes of conduct may relate to:
- the duties of charity trustees;
- minimum standards for the administration and management of charitable organisations;
- procedural requirements in relation to the occurrence of certain events concerning substantial damage to property, substantial reduction or loss in assets or occurrences that place a charitable organisation or its reputation at significant risk (referred to in the Charities Bill as "significant events");
- the content of the constitution of a charitable organisation;
- agreements for the provision of goods and services to charitable organisations by their trustees, persons connected with their trustees and their members in exchange for remuneration; and
- the appointment a current employee of a charitable organisation as a charity trustee.
Removal notices
The Charities Bill contains a new provision concerning the issue of "removal notices" by the CRA in situations where a charitable organisation is to be removed from the register. In such cases, the CRA must issue a notice to the charitable organisation that specifies the reasons the decision, directs the organisation to take such action that the CRA considers necessary to remedy the contravention and notifies the organisation that it may make written representations to the CRA in respect of its removal within 21 days of the notice.
The CRA must subsequently determine if the charitable organisation has complied with any direction by the date specified in the notice and consider any written representations that it has received from the organisation. The CRA must either withdraw the notice or inform the charitable organisation of the decision to remove it from the register within 6 months of serving the notice. Removal notices can be appealed to the Charity Appeal Tribunal (the "Tribunal") within 21 days of service and the Tribunal has the power to affirm the notice, revoke the notice or to revoke the notice and impose conditions on the charitable organisation. In any case, the CRA must make a summary application to the High Court for confirmation of its decision to remove a charity from the register.
Exemption of personal liability for certain charity trustees of education bodies
Another new development under the Charities Bill is the exclusion of personal liability in civil proceedings for certain charity trustees of education bodies for any acts done in pursuance of the 2009 Act or its regulations, provided that they have acted in good faith. This exemption applies to board members of schools recognised by the Minister for Education and management committees of education support centres, who are also charity trustees of the recognised school or educational support centre.
Key Retained Updates
The Charities Bill also retains several key updates to Irish charity law that were initially proposed in the General Scheme, such as:
- including the advancement of human rights as a charitable purpose;
- abolishing the fourth category of charitable purpose and its replacement with what was the previously non-exhaustive list of purposes that are considered to be of "benefit to the community" (with the addition of the advancement of human rights);
- introducing new statutory fiduciary duties on charity trustees;
- aligning the 2009 Act with the Companies Act 2014, by increasing the threshold for charitable organisations to file a full set of accounts from a maximum gross income or expenditure of €100,000 to €250,000;
- ensuring company secretaries and auditors are not automatically regarded as trustees of a charity; and
- releasing court appointed charity trustees from liability for actions taken by the charity prior to their appointment.
While many of these changes have been anticipated for some time, others such as the abolition of the non-exhaustive list of purposes that are beneficial to the community are unexpected and arguably beyond the intention of the proposed changes.
Looking Ahead
The Charities Bill has been initiated in the Dáil and will now undergo the legislative process as it passes through both Houses of the Oireachtas before ultimately being signed into law by the President of Ireland. Although an exact timeframe for this has not been confirmed, it is expected that the Charities Bill will be enacted later this year.
This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.
