Develop a Code of Practice for the Governance of Charities (IE0046)

To ensure charities, particularly those assisted by public funds, are held to the same high governance standards as other areas of public expenditure Objective: Strengthen the corporate governance standards of charities in order to promote transparency, accountability and improve citizen trust in this important sector. Status quo: In Ireland, billions of Euro are dispersed by the Government to charities to deliver services that in other jurisdictions are often delivered directly by the state. In recent years, a number of these bodies have been subject to investigations due to lax governance standards. The charities sector, through Charities Institute Ireland, has developed Fundraising Principles while the wider not-for-profit sector has developed The Governance Code, which is a voluntary governance code. DPER Circular (13/2014) ‘The Management of and Accountability for Grants from Exchequer Funds’ focuses primarily on accounting for funds. Ambition: To develop appropriate, proportional, clear and supported standards of governance for charities, including areas such as financial governance, transparency, recruitment and tenure. These standards will deliver better outcomes for our society through better focused charities where volunteers, staff, service recipients and all other stakeholders will have a common point of reference for governance standards. Lead implementing organisations: Charities Regulator. Timeline: January 2017 to June 2018
Commitment 13: Develop a Code of Practice for the Governance of Charities. OGP values: Governance, Anti-Corruption, Transparency. New or ongoing commitment: New. Lead implementation organisations: Charities Regulator. Other actors involved – government: All government departments that fund services via the charities sector 37. Verifiable and measurable milestones to fulfil the commitment. New or ongoing, Start date End date. Conduct consultation with all stakeholders and develop first draft of a Code of Practice for the Governance of Charities New January 2017 September 2017 Seek feedback on the first draft and then publish finalised Code of Practice for the Governance of Charities New October 2017 March 2018 Work with charity sector representatives to design a structured, supported rollout process New April 2018 June 2018.

✪13. Develop a Code of Practice for the Governance of Charities

Commitment Text:

Objective: Strengthen the corporate governance standards of charities in order to promote transparency, accountability and improve citizen trust in this important sector.

Status quo: In Ireland, billions of Euro are dispersed by the Government to charities to deliver services that in other jurisdictions are often delivered directly by the state. In recent years, a number of these bodies have been subject to investigations due to lax governance standards. The charities sector, through Charities Institute Ireland, has developed Fundraising Principles while the wider not-for-profit sector has developed The Governance Code, which is a voluntary governance code. DPER Circular (13/2014) ‘The Management of and Accountability for Grants from Exchequer Funds’ focuses primarily on accounting for funds.

Ambition: To develop appropriate, proportional, clear and supported standards of governance for charities, including areas such as financial governance, transparency, recruitment and tenure. These standards will deliver better outcomes for our society through better focused charities where volunteers, staff, service recipients and all other stakeholders will have a common point of reference for governance standards.

Milestones:

13.1. Conduct consultation with all stakeholders and develop first draft of a Code of Practice for the Governance of Charities

13.2. Seek feedback on the first draft and then publish finalised Code of Practice for the Governance of Charities

13.3. Work with charity sector representatives to design a structured, supported rollout process

Responsible institution: Charities Regulator

Supporting institutions: All government departments that fund services via the charities sector

Start date: January 2017

End date: June 2018

Editorial note: This commitment is clearly relevant to OGP values as written, has transformative potential impact, and is substantially or completely implemented and therefore qualifies as a starred commitment.

Context and Objectives

Ireland has witnessed several charity-related scandals in recent years. In late 2013, the Central Remedial Clinic admitted using charitable funds to increase the salaries of senior staff members.[Note: O’Brien, Carl, Wall, Martin, ‘Central Remedial Clinic used charity money to top up senior staff salaries’, The Irish Times, 28 November 2013, https://www.irishtimes.com/news/health/central-remedial-clinic-used-charity-money-to-top-up-senior-staff-salaries-1.1610631. ] In 2016, another Irish charity, Console, was involved in a scandal where the suicide bereavement charity’s founder, his wife, and their son accrued almost €500,000 in salaries and cars from 2012 to 2014, according to an audit by the Health Services Executive.[Note: McGarry, Patsy, ‘Give me a crash course in…charities’ controversy’, The Irish Times, 9 July 2016, https://www.irishtimes.com/news/ireland/irish-news/give-me-a-crash-course-in-charities-controversy-1.2715293. ] Given that billions of euros in state funds are given to charities, and that the public’s trust in charities decreased as a result of the scandals, standards in charities must be increased in order to promote transparency and increase public trust in these institutions. This commitment seeks to reform regulation of this sector by developing clear, robust standards of charity governance, particularly on the role of trustees (who make decisions on the charity as members of its governing body), financial governance, and the recruitment of charity employees. Specifically, the commitment calls for developing a Code of Practice for the Governance of Charities to:

•Engage in public consultation to develop the Code, using this as a basis to make the first draft,

•Seek feedback from stakeholders on this first draft and then formulate a final draft, and

•Implement the policy, including stakeholders in the process.

Given that consultation is at the heart of the first two milestones, and that stakeholders are involved in the implementation of the third milestone, the commitment is relevant to the OGP value of civic participation. The commitment is also relevant to the OGP value of public accountability, particularly in the implementation of the policy (Milestone 13.3) where the Charities Regulator will ensure that charities abide by the code. Abiding by the code (or not) ultimately means that the actions of charities will be monitored and subsequently charities will be held accountable for their actions as the process is rolled out and implemented. The specificity for all three milestones is high: there are clear goals, structured along a clearly delineated three-staged timeline, and with clear outputs related to the formulation and implementation of a regulatory policy. Given the nature of the scandals that have rocked the sector, the clear need to fill the regulatory vacuum in this area, and the need to reverse the current trend of citizens decreasing their donations to charities in the wake of these scandals,[Note: For an examination of a drop in public trust in charities post Console scandal, see: ‘Charities braced for a drop in donations – again,’ Independent.ie., 19 April 2018, https://www.independent.ie/irish-news/charities-braced-for-a-drop-in-donations-again-34891640.html. ] this commitment could have a transformative potential impact on the charity sector.

Completion

For the purposes of this report, the IRM researcher considered only the completion level of Milestone 13.1, as this is the only milestone scheduled to be pursued during the first year of the action plan. The other two will be coded as ‘not started’ because they are scheduled to start in after the first year of the plan.

The completion level of Milestone 13.1 is substantial, even though it is behind schedule. In terms of what has been achieved:

•A consultative Panel was established, met three times starting in April 2017, and developed initial ideas for the Code that will be taken into public consultation.[Note: On this panel, see: http://www.charitiesregulatoryauthority.ie/en/cra/pages/wp17000006. ]

•Shortly after the reporting period, starting in Q3/4 2017, the consultation process began with meetings in Cork, Galway, and Dublin.[Note: In this regard, the Charities Regulator (the main implementing institution of this commitment) kindly invited the IRM researcher’s team to attend the meeting in Dublin on November 21. ]

•During the reporting period, the Charities Regulator also clearly published on its webpage a link to an online questionnaire for stakeholders and citizens to make their views on how Irish charities should be regulated, allowing them to make their views on governance standards.[Note: See Charities Regulator Website, where survey is to be closed on 6 December 2017: http://www.charitiesregulatoryauthority.ie/en/cra/pages/wp16000075. ]

However, the first draft of the Code has yet to be released, given that public consultation was to be finalised in Q4 2017. This means that Milestone 13.1 is behind the scheduled date of September 2017.

The IRM researcher’s team attended the 21 November 2017 consultation event in Dublin and had the opportunity to meet with state officials and stakeholders from various charities at the event. Reflective of many of the attendees’ views, one participant told the IRM researcher’s team that Ireland needs tighter regulation in the area in order to increase public confidence in the sector. The participant thereby commended the government in its effort with this commitment and desire to include stakeholders in the formulation and implementation of the policy.

Next Steps

The government should make every effort to ensure that this commitment is finalised by the second year of the action plan. If so, it does not need to be included in the next action plan.

For commitment details, see https://www.opengovpartnership.org/wp-content/uploads/2001/01/Ireland_End-Term_...