Charity regulation in Northern Ireland Frances McCandless Chief Executive

Objectives Overview of charity law and the Commission  Background  Registration of charities  Casework  Investigations  Monitoring and compliance Charity accounting and reporting

Background Before the Charity Commission for Northern Ireland: Charities were largely self regulating with no registration and limited regulation by statutory authorities HM Revenue and Customs registration was discretionary and should not be confused with compulsory charity registration Charity administrative matters were dealt with by the Department for Social Development and the High Court Brings charity regulation into line with Scotland, England and Wales

Establish and maintain an up-to-date public register of charities Identify and investigate misconduct or mismanagement Monitor compliance by charities with their legal obligations Provide consents for charities to make changes to keep their charity effective, for example: – Changing name – Changing purposes – Authorising transactions Provide advice and guidance on a wide range of matters relating to charity law and trustees’ duties - Running your charity guidance for charity trustees Role of the Commission

Registration overview Which organisations need to apply? Exclusively charitable purposes Governed by the law of Northern Ireland Control and direction over governance and resources No exceptions or exemptions When do need to apply? When called forward - in tranches Tranches drawn from registration lists Check to see if you are on one of the three regsitration lists: Deemed listNon-deemed listSpecial circumstances

Registration - the benefits Public transparency Public accountability Enhanced public trust with potential to lead to increased donations Meet statutory obligation to register Access to funding streams only open to charities Visible regulation Public ability to quickly and easily search for charities working in particular areas

Applying for registration Online process Provided with a unique password Three months to apply once you receive a password Recommend that you prepare for registration in advance by reviewing and considering Registering your charity in Northern Ireland guidance Don’t have to complete online process in one sitting No activity – system times out after 30 minutes Save your application as you go along Different routes for different types of charity, for example charitable company asked for charity number System has help information System indicates which information is available on the public register

What do you need to apply? Recommend Up to date governing document Trustee declaration Details of charity trustees: DOB and contact Bank details Most recent annual report Latest set of financial accounts Must Read Public benefit requirement statutory guidance Read our Registering your charity in Northern Ireland guidance 12 charitable purposes guidance Running your charity guidance Purposes and public benefit toolkit

The public benefit requirement Commission duty to produce guidance and charity trustees must have regard to it. Public benefit is defined in Charities Act Purposes must be for the public benefit Charities must: know and be able to identify the purposes of their charity work to advance and promote these purposes only be able to identify which description of charitable purposes in the Charities Act their own organisation’s purposes best fit be able to confirm that their organisation’s purposes are exclusively charitable.

What are charitable purposes? A charity’s purposes set out what the charity seeks to achieve Normally found in the governing document Must fully state what the charities purposes are so they are clear to: the charity trustees the beneficiaries and supporters the general public A purpose is not charitable if it: does not fit under one or more of the descriptions of purposes in the Charities Act, or is not for the public benefit, or is political; that is, to make a change in law or policy in a jurisdiction, or is unlawful.

The 12 charitable purposes Environmental protection or improvement Education Health, saving lives Relief of those in need Arts, culture, heritage, science Citizenship, Community development Human rights, conflict resolution, reconciliation, promotion religious racial harmony, equality, diversity Animal welfare Religion Amateur sport Relief of poverty Supporting guidance Any other charitable purpose

What are the public and the benefit elements? Benefit: this is the way in which an organisation’s purposes are beneficial and the extent to which they are beneficial. The benefit must: flow from the charity’s purposes be capable of being demonstrated be beneficial, not harmful. Benefits must be capable of being demonstrated: recognisable identifiable definable capable of description Harm must not outweigh any benefit, example, case law vivisection of animals verses public health.

What are the public and the benefit elements? Public: For a charity’s purpose to satisfy the public element it must know who the intended beneficiaries are and how they might benefit. The benefit which may flow from the charity’s purposes must: be to the public or to a section of the public not provide a private benefit to individuals unless this benefit is incidental. What is a section of the public? are connected by a particular charitable need or social circumstance share a profession share a geographical area share a common characteristic or disadvantage, for example: elderly The nature of the public benefit and the way it may be demonstrated will be different for each purpose and for each set of circumstances within that purpose. All purposes must meet the public benefit requirement - limited exception – poverty exception

Assessing your application Key factors Commission will look at: Apply principles of charity law Check eligible to register Check purposes fall within 12 charitable purposes Determine whether organisation’s purposes meet the public benefit requirement Ensure purposes are exclusively charitable Ensure trustees are eligible to act as trustees May request further information or offer guidance The process is expected to take up to 3 months but this is dependent on complexity of case and need for further information. ‘case by case basis’

Successful or unsuccessful Successful Details placed on register of charities Obtain a charity registration number Charity welcome pack Subject to monitoring and compliance requirements Unsuccessful Explain why Organisation need to consider next steps – for example may need to amend governing document May be able to reapply Registration or non registration can be reviewed by the Commission and/or appealed to the Charity Tribunal.

Casework The Commission’s consent may be required for some actions: Authorising certain transactions Requests for schemes Consents for charitable companies Closures and mergers Changing your charity’s name

Investigations The Commission seeks to protect charities where there has been serious misconduct or mismanagement in the administration of the charity. When will the Commission investigate? significant financial loss serious harm to beneficiaries and, in particular, vulnerable beneficiaries threats to national security sham charities set up for an illegal or improper purpose serious non-compliance in a charity that damages reputation. When do we not get involved ? Internal disagreements and disputes Services provided by the charity Fundraising methods Employment and unfair dismissal Contracts and legal action against the charity

Investigations Latest lessons learned from concerns about charities – March 2014 – Charity property – Payments and expenses for trustees – Disagreements and disputes within a charity – Recruiting and managing staff Key lessons in charity governance– July 2013 – Transparency – Conflicts of interest – Defining membership – Closing a charity

Monitoring & compliance Six main monitoring objectives: 1.check for compliance with charity law 2.discover where there is misconduct, mismanagement and inappropriate use of charitable property and funds 3. encourage good practice 4. provide information about the charity sector 5. provide information on each charity 6. provide an up-to-date register of charities in Northern Ireland. Guidance online available soon Prospective duty of auditors (s.67) Monitoring of accounts and reports submitted annually by registered charities: critical in promoting openness, transparency and compliance with charity law

Charity accounting & reporting: regulations Full accounting & reporting regulations not yet in place – interim period from 1 April 2014 DSD consultation early 2015? Regulations unlikely to be in place before April 2015 Similar to England and Wales Guidance and Commission consultation once regulations known

Consultation in autumn 2013 Launched on 1 April 2014 Charities to submit:  Annual monitoring return  Copy of accounts (in format they are currently prepared)  Copy of trustees’ annual report (if applicable)  Copy of auditor’s/examiner’s report (if applicable) Charity accounting and interim Reporting

When to report to the Commission:  First full accounting period beginning: On or after 1 April 2014; and On or after registration date  Submitted within 10 months of end of accounting period Charity accounting and interim reporting:

Charity accounting and interim reporting CHARITYABCD REGISTRATION DATE PERIOD END DATE31 st December31 st March30 th September30 th June PERIOD OF ACCOUNT12 months REPORTING PERIOD END* FILING DEADLINE** * First full accounting period after registration ** 10 months after the accounting period end Filing deadline examples

Annual monitoring return:  Three sections (income thresholds)  Declaration  Key questions  Online form  Guidance Financial statements:  As currently prepared  Receipts and payments: Guidance Example and toolkit  Company law obligations and filing requirements unchanged Charity accounting and interim reporting

Charity accounting & reporting: SORP New SORPs (Statement of Recommended Practice) released July 2014 Two separate SORP are documents have been released: One for charities using FRS 102 One for charities using FRSSE Both are effective 1 January 2015 Adoption of SORP is not currently a legal requirement Regulations from Department for Social Development (DSD) will address this Until then use of the SORP continues to be best practice

Charity accounting & reporting: SORP The Commission has observer status on the SORP Committee – pending full membership once Northern Ireland regulations have been made CIPFA are now the official publisher SORP event to be held in Northern Ireland at appropriate time Recruitment now open to the new SORP committee, which will make recommendations to the body authorised to organise the Charities SORP review, draft revisions and undertake the consultation process.

What next? Receipts and payments accounts: draft introductory notes – open for comment The full accounting and reporting regulations Commission guidance consultation Charity SORP event

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