The dark side of irish charity

When the Asian tsunami struck, the Irish public dug deep and ended up donating €50m while the Irish Government gave another €20m. It was a remarkable response for a country of our size.

This generosity is the bright side of the charities story; unfortunately there is also a dark side. On the international stage, our generosity as a nation is lauded, but at home, behind the scenes, many of those directly involved in the running and managing of charities are uneasy about the loose framework in which they operate and would welcome tighter regulation, soon.

That's because legislation governing the running and regulation of charities hasn't changed for 40 years. Anyone can set up a charity and collect money – they don't have to register or file annual reports. And the actual number of charities in this country is unknown, although it is known that the Revenue Commissioners recognise approximately 6,000 charities for tax purposes. Part of the confusion is because the legal structure of charities varies wildly. There are trusts, companies limited by guarantee, and unincorporated charitable associations. Consequently, they vary widly in their financial reporting and corporate governance procedures.

A board member of one of the country's most respected charities complained recently to me about the casualness with which board directors of charities regarded their obligations. Many treat their positions, he said, with about the same degree of importance and care that they would bring to being nominated to a local residents association. But unlike residents associations, charities get millions of euro in donations every year from the public and the Government.

No matter how well-meaning and selfless people who get involved in charities are, they and the generous donations they attract will always be prey to less scrupulous individuals if sufficient safeguards are not put in place.

For the last ten years, successive governments have been threatening to tidy-up the sector and bring in new regulations, but progress has been tortoise-like.

In February 2004, Minister of State Noel Ahern, who oversaw a public consultation process on charities regulation, warned: "The lack of modern, up-to-date legislation leaves the charities sector wide open to a variety of abuses both nationally and internationally, such as money laundering, fraud, embezzlement, etc." Three years earlier, Justice Minister Michael McDowell compared the situation, and the potential for abuse, to "a time-bomb ticking away". He highlighted the high risk of a "black hole" emerging at a charity unless regulation was introduced. That would be tragic because the major asset of any charity is its good name and reputation. Public trust is the heartbeat that keeps the charity industry ticking along. Break or damage that trust and the ramifications for the entire industry would be dire.

Despite the publication of high-powered reports in 1990, 1995 and 2000 and numerous calls for change from various quarters including established charities themselves, very little has happened. There isn't even a clear definition of what a charity is in Irish law.

A Charities Regulation Bill, providing for an independent statutory body to regulate charities, is promised for the end of this year. But after so many false dawns, the attitude of many who care about this issue is that they'll believe it when they see it.

Ursula Halligan is TV3's Political Editor and Presenter of The Political Party, TV3, Sundays at 5pm