Cantillon: Charities pay price for dated regulation

It was a calamity waiting to happen. And it couldn't have come at a worse time. The run-up to Christmas is critical for Ireland's charity sector and revelations that in at least one case money from charitable donations had gone to meeting executive salaries and pensions have predictably gone down poorly.

Many now fear that giving will be less generous this year as people worry about the destination of their offerings. Ultimately, of course, it will be those charities look to help, and frontline staff who lose.

But charities and the Government have both been slow to bring governance in this rapidly growing sector up to date.

The Wheel, a group whose purpose is to support charities, recently noted that there was great variation in terms of the quality and range of information currently provided by charitable companies in their financial statements.

“Some charities comply with the minimum standards required under company law, some Irish charities go beyond the minimum, whilst some even comply with the Statement of Recommended Practice for Financial Reporting by Charities standard, which is recommended best practice by the Accounting Standards Board,” it noted, before outlining changes that are due to materialise next year under the Charities Act.

That Act, passed in 2009, replaced legislation dating back to 1961. Already very belatedly introduced, key elements were deferred in 2011 by a new Coalition Government desperate to save money. Who’s saving now?

Charities in Ireland handle close to €6 billion annually and employ more than 100,000 people above and beyond volunteers.

Lack of regulation is such that various sources in the sector cite the number of Irish charities anywhere between 8,000 and 24,000.

The bottom line is incredibly simple – Irish people, regularly hailed for their generosity, want to know that their money is going where they were told it would, and that any expenses are accounted for fully and transparently. They don’t want to have to take a course in reading accounts to find that information: they shouldn’t have to.