David Hall: How we can rebuild our trust in charities
The past week lays bare the risks involved with inadequate regulation, writes David Hall
Published 03/07/2016 | 02:30
Charities are special. Society deems the work of a charity to be above ordinary commercial activity. Society has placed trust and confidence in these charities and the services they provide. Over the last week the country has been convulsed in horror, shock and anger at the catastrophic consequences of a breach of trust. This has rocked the charitable sector and the industry now faces the uncomfortable reality that public confidence is at an all-time low.
As someone who has been involved with charities for 20 years I have witnessed the excellent work they have done. The vast majority are well governed but the past week shows the risks involved in not adequately regulating the sector.
The first step has finally been taken and we have established a Charity Regulatory Authority. The recently appointed CEO John Farrelly is, I'm confident, the person to lead this important organisation and shape the regulatory landscape. Politicians in the last few days have commented on regulatory shortcomings, however, it is in their gift and only their gift to immediately effect change to the legislation.
The Minister for Justice should tomorrow commence part four of the Charities Act 2009. The Justice Committee should immediately review any additional powers that may be required. This will give powers of investigation to the regulator which allows him to do much of what has been commentated on this past week.
We must move now to protect confidence in the charitable sector and make sure there is no place for those giving it a bad name. There needs to be a balance between encouraging and promoting charities and protecting and securing funds, services, staff and users. There also needs to be a balance to ensure smaller charities do not get crushed by such regulation.
Immediately there are practical steps that could be taken to start restoring this confidence. Firstly, we must ensure, and be very specific about, governance. Confusion arises around some practices of board members. The rules around close family members or people in relationships being on boards together need to be set out clearly.
Board members' personal financial activities cannot be allowed to intertwine with activities of the charity. This is not simply about pay but about trustees/directors acting as contractors or letting property or other assets to the charity. Any director/trustee who benefits from the charity could allow the mission of the charity be warped by their own personal financial gain. Any payments to a trustee/director in any guise should be a mandatory reporting item to the regulator and inserted as an itemised entry into the charities' financial statements. (A worthwhile site is governancecode.ie.)
Next we need to talk about fundraising. No trust equals no funds. Funds from those who believe in the charities' cause or taxpayers' monies must be protected. A statement of guiding principles for fundraising should be adopted by the regulator and made compulsory.
So what guiding principles are needed? Honesty. Charities will always answer reasonable questions about fundraising activities and costs promptly. Charities will be open and make this information freely available. All charities will agree a donor charter, to give donors information and confidence about what the funds are actually used for. (Another useful site is ictr.ie)
Last but not least there's SORP, a Statement of Recommended Practice for financial reporting for charities. SORP has been used by the UK system for some time. This provides guidance for charities on how they should report their financial affairs, the information they provide and allows for standardisation and transparency. Critically it is impossible for items to be hidden by omission.
When a standard template is used for financial reporting everyone can compare organisations against each other. This allows for informed decisions to be made before donating hard cash.
The public response of anger and deep sense of betrayal following alleged wrong doing in Console has transfixed the nation. Given this outcry and a very difficult week for all especially the fantastic staff in Console, a remarkable thing happened: the Irish public saw who was responsible for the breach of trust. They realised when you look past that breach there are a group of dedicated and professional staff providing an exceptionally good service.
The messages of support and practical assistance have been over whelming.
Last Wednesday, I visited the Console helpline office. During my visit a number of calls were received. Each of them had a vulnerable person at the other end of the line going through a difficult time. This is one of the Console services that has changed and saved many lives. My aim in attempting to steady the ship is focused on the protection of these lifesaving services.
It would be shame that the actions of a few would destroy the important work done by the charitable sector. I believe the changes outlined here will go a long way to protect the public, government agencies, service users and most of all restore confidence.
David Hall is interim CEO, Console