COMMITTEE FOR SOCIAL DEVELOPMENT
OFFICIAL REPORT
(Hansard)
Charities Bill
28 February 2008
Members present for all or part of the proceedings:
Mr Gregory Campbell (Chairperson)
Mr David Hilditch (Deputy Chairperson)
Mr Mickey Brady
Mr Thomas Burns
Mr Jonathan Craig
Ms Anna Lo
Mr Fra McCann
Ms Claire McGill
Ms Michelle McIlveen
Witnesses:
Mr Kieran Doyle ) Department for Social Development
Mr Seamus Murray )
The Chairperson (Mr Gregory Campbell):
We now proceed to the Charities Bill Committee Stage clause-by-clause scrutiny, which I know everyone has been waiting for. I am sure that there will be tablets to keep everyone awake. We are joined by Seamus Murray and Kieran Doyle; you are very welcome, gentlemen.
Committee staff should have circulated further information from the Evangelical Alliance in relation to the public-benefit test. At last week’s briefing, the Committee asked the Evangelical Alliance to give further thought to how spiritual and tangible benefits could be recognised in the legislation; the Presbyterian delegation have talked about that today. The Evangelical Alliance correspondence should be considered when we reach clause 3.
Mr Seamus Murray (Department for Social Development):
What process would you like to follow?
The Chairperson:
In order to get through the Bill in a systematic fashion, I would prefer to simply start at the beginning, conclude and contain the remarks pertaining to each individual clause, park it, and then proceed to the subsequent clause, rather than return to repeated issues. Hopefully, each of the clauses can be dealt with compartmentally, and that may speed up our deliberations. Clause 1 is always a good place to start.
Mr Murray:
Part 1 of the Bill deals with the meaning of “charitable purpose”. From the comments that have been made in the various evidence sessions that the Committee has taken to date, there seems to be a general consensus on a broad definition of what a charity is. The focus seems to be on the meanings of “charitable purpose” given in clause 2, which lists the various headings. In particular, that focus has centred around the definition of “religion”. I refer members to clause 2(2)(c), “the advancement of religion”, and to the breakdown of that in clause 2(3)(a).
The headings themselves are an expansion of the original four Pemsel headings, which form the definition of “charitable purpose” that is accepted across the UK and used as the basis for the definition of “charity”. In effect, nothing really new is being introduced in the Bill — there is no new definition of “charity”. The headings in clause 2 are an expansion, a clarification and a modernisation of those original four headings.
During the consultation process we took account of suggestions, recommendations and thoughts concerning how we might provide that clarification of the words therein. In the evidence sessions, the one issue to which there has been most response is the use of the word “religion”. The definition that we have included is based on consultation with the Churches — in fact, the form of words used is one that was suggested by the Churches during that consultation. I acknowledge the point, made earlier by Rev Watts, concerning the definition of religion as involving:
“belief in more than one god”.
We will certainly consider his comments regarding that. We have sought, as far as possible, to make sure there is a level playing field; as always, people may suggest that we could possibly go that bit further and provide a wider, more expansive definition, but if that were applied to each particular clause, we would end up with a very large, substantial Bill. So, while providing that clarity, we have also tried to keep it at a level which is concise enough to provide a definition in legal terms.
The Chairperson:
On the issue of “one god” as opposed to “more than one god”, is there a problem in simply making that change, which seems straightforward? Saying “one god or more than one” would accommodate the substantial number of people whose belief is that there is one god, as well as the small number of people who believe that there is more than one.
Mr Murray:
That would be a technical change and would have no impact on the legality of the Bill.
Ms Lo:
I am concerned by the reference to a belief in god, because there are religions that do not have a god.
Mr Murray:
The Bill goes on to say that “religion” includes:
“any analogous philosophical belief (whether or not involving a belief in a god)”.
Therefore, there is a wide playing field. Although some concern was raised about that in the consultation responses, it is not for the state to determine what constitutes a religion.
The Chairperson:
How will “amateur sport” be defined in the Bill?
Mr Murray:
Again, we have followed the definition of “amateur sport” that is in the corresponding legislation from Scotland, and England and Wales. Some responses in the consultation suggested that we use a broader definition such as the European definition of “sport”. However, if the definition of “sport” were different in Northern Ireland to the rest of the UK, there could be tax implications. Therefore, we must be consistent in our approach.
The Chairperson:
Is the definition of “sport” the same in England and Wales as it is in Scotland?
Mr Murray:
Yes, it is.
The Chairperson:
And we are adopting a similar approach?
Mr Murray:
Yes, we are.
The other issue that was raised in some of the responses related to the Crown forces and armed forces. Previously, the charitable nature of the Crown forces and lifeguards has been recognised under charity law. In clause 2(4)(a) of the Bill, there is a reference to any previous acceptance of purposes that are:
“recognised as charitable purposes under existing charity law”.
The work of the Crown forces and the lifeguard and rescue services has always been recognised as having a charitable purpose, and that will be the same under this legislation. It is not explicitly stated in the Scottish legislation either.
The Chairperson:
So there is a difference between the Scottish legislation and the legislation in England and Wales?
Mr Murray:
There are differences, as one might expect because of devolution. However, the spirit and principle is the same in all the charities legislation across the UK because of the tax issue — there must be a degree of consistency.
The Chairperson:
Is there a reason for the Scottish legislation’s being slightly different?
Mr Murray:
They took a particular view in their consultation, and in their assessment of the consultation. In our process, the initial advisory panel that was established to look at the issue suggested the approach that we have taken, and endorsed this approach during the consultation process.
The Chairperson:
So the general thrust is the same.
Mr Kieran Doyle (Department for Social Development):
The exact words used in the Charities and Trustee Investment ( Scotland) Act 2005 are:
“advancement of public participation in sport … sport means sport which involves physical skill and exertion”.
The difference is in the style of presentation — the themes and principles on the promotion of sport are the same in the legislation for England and Wales, Scotland and Northern Ireland.
The Chairperson:
That definition is very similar to the one in our Bill, which states that “sport” will:
“promote health by involving physical or mental skill or exertion”.
Mr Doyle:
The difference is the presentational styles in the different jurisdictions.
Mr Brady:
There are sports that are specific to certain regions: for example, the GAA is not of much relevance in England or Wales, and shinty is a game that is specific to Scotland. Therefore, a definition involving physical exertion and participation applies to any sport — there does not have to be a specific definition of what the sport is.
Mr Murray:
It also includes mental exertion — for example, in playing bridge.
The Chairperson:
The Bill refers to “amateur sport”. The modern definition of “amateur” may be somewhat different from that of 30 or 40 years ago. Is there any intention to clarify what the word “amateur” means?
Mr Murray:
There are several issues in the legislation on which the charity commission will have to provide interpretation, guidance and advice. It is impossible to provide within the legislation detailed definitions of the various aspects, so that will be up to the new charity commission. It will follow some of the tested practice of the Charity Commission for England and Wales and the Office of the Scottish Charity Regulator, which have provided their own guidance.
The Chairperson:
Therefore, one of the commission’s tasks will be to offer guidance?
Mr Murray:
Yes, it will provide definitions.
The Chairperson:
Are Members content with clauses 1 and 2?
Members indicated assent.
Mr Murray:
The public-benefit test in clause 3 has provoked several responses. Members may recall from previous evidence sessions that the Department took as its example the Charities and Trustee Investment ( Scotland) Act 2005, which includes a public-benefit test.
It is important to note that, although there is no public-benefit test, per se, in the English legislation, that responsibility has been passed to the Charity Commission for England and Wales, and it has recently completed consultation on how it might apply that test. Therefore, in all jurisdictions, whether it is in the legislation, as in Northern Ireland and Scotland, or whether it is the responsibility of the Charity Commission for England and Wales, there will be a test of public benefit. That will ensure that charities can show what they provide to the public and how they do it. The main concern has surrounded the guidance and how it will be applied. Again, it will be the responsibility of the charity commission to provide guidance. There will be consultation on that guidance, and that is reflected in the Bill.
The other side of the issue is that there is also disbenefit. There are two balancing measures. The Committee will have heard evidence about the meaning of “disbenefit”, and whether it might be better to use other terms such as “harm” or “detriment”. We will certainly consider whether another term would be better. Consultation was carried out recently by the Charity Commission for England and Wales, and some of the responses suggested that the terms “harm” or “detriment” might be more modern and might denote more easily understood concepts.
Essentially, disbenefits must be weighed up by the charity commission. For example, in the case of a private health clinic, the provision of health services is to the public benefit. However, if the clinic charges fees of a level that preclude public accessibility, there is a potential disbenefit. The onus would be on the charity commission to weigh up the matter to decide whether that clinic passes the public-benefit test. The test provides a way to measure the level of benefit.
The public-benefit test will probably not be an issue for the majority of charities in Northern Ireland. Nonetheless, it is important to have that safeguard, so that the commission can make a judgement about charities in the future.
The Chairperson:
I think that you were present when the Presbyterian Church in Ireland gave evidence earlier, and you might have heard the issue of the public-benefit test raised. Has the Department looked at the possible effect on smaller religious groups that might find it difficult to pass a public-benefit test in future, due to their size?
Mr Murray:
Religion is one of the charitable headings; it has been recognised in existing legislation as having a charitable purpose. Religion was one of the four Pemsel headings, so it is well embedded in legislation. It will be recognised in this Bill. On the question of whether its public benefit might be challenged, it would be incumbent on someone to challenge externally whether religion is or is not a charitable purpose. If the purpose is accepted under this legislation — once it is passed — it will be very difficult for someone to prove that religion no longer meets the requirements of the legislation and, therefore, should be removed from it. In many cases, it will not be incumbent on the charity commission to make that judgement, other than to say whether a religion meets the legislation as constituted, and whether it meets the public-benefit test by providing a public benefit. The charity commission will not make moral judgements about whether matters are spiritually good; it will simply decide whether the legislative requirements are met.
Mr Cobain:
The charity commission’s guidance will be as important as the legislation. Given that that guidance will set precedents for future court cases, will we have an opportunity to consider it?
Mr Murray:
The guidance will have to be issued by the charity commission.
Mr Cobain:
Will the Committee get to review that guidance?
Mr Murray:
The charity commission’s guidance will be subject to consultation and, clearly, the Committee for Social Development will play a key role in that consultation process.
Mr Brady:
The word “disbenefit” is not in common usage; where did it come from?
Mr Murray:
It is probably a legal term.
Mr Brady:
Probably?
Mr Murray:
It is also used in Scottish legislation.
Mr Brady:
Perhaps, it is a legal Scottish term.
Mr Cobain:
It is a bit of Ulster Scots to keep the balance.
Mr Brady:
It was just that I had never really —
Mr Doyle:
It may have been used as a legal drafting term; however, it is used in the Charities Act 2006 and in the Charities and Trustee Investment ( Scotland) Act 2005.
Mr Brady:
It is not designed to aid comprehension.
The Chairperson:
Much legislation is not.
Mr F McCann:
Concerning special provisions about recreational charities and sports clubs, clause 5(3) states:
“A registered sports club established for charitable purposes is to be treated as not being so established, and accordingly cannot be a charity.”
Who or what would be affected by that?
The Chairperson:
We are jumping ahead to another clause. Stick to the matter in hand, and we will come to that clause next but one. That will mean that we will not have to jump back and forward.
Mr Craig:
Before we move on, is there any reason under the sun why spiritual benefit cannot be included in the public-benefit test?
Mr Murray:
Clearly, we are still involved in the Bill’s drafting and consultation process. If we start picking out bits and pieces in order to provide definitions, we will end up trying to provide the detail within the legislation itself, which will result in a cumbersome piece of legislation.
In addition, if members recommend that something be included in a particular part of the Bill, consideration must be given to how that impacts the rest of the legislation. The spirit — pardon the pun — is encapsulated in the legislation.
Mr Brady:
There are 186 clauses, which, by definition, makes the Bill cumbersome. If additional elements, such as Jonathan’s proposal to include spiritual benefit, were to be included in the Bill, how much more cumbersome could it get?
Mr Murray:
If the Committee wishes, we can certainly consider that proposal and investigate whether it could be done and the impact that such a proposal might have on the rest of the legislation. It would be necessary to consult with our drafting people to determine whether there would be a knock-on effect.
The Chairperson:
Are members content with clause 3? The Department will consider the spiritual element and report back to us.
Members indicated assent.
Ms Lo:
The categories listed in clause 2(2)(j) —
“youth, age, ill-health, disability, financial hardship or other disadvantage”
— are some, but not all, of those listed in section 75 of the Northern Ireland Act 1998. Is there any reason why the other section 75 groups were left out?
Mr Murray:
“Other disadvantage” covers all the other section 75 categories.
The Chairperson:
That is an earlier clause.
Mr Murray:
Clause 4 deals with the operation of the public benefit requirement. The charity commission will produce, and consult on, the necessary guidance on that. Some of the responses argue that all changes should be referred for consultation, but if only minor technical changes are required, it would be an inefficient use of resources to refer those changes for consultation. That should only be required when significant changes are proposed.
The Chairperson:
You are probably aware that the Northern Ireland Council for Voluntary Action (NICVA) has suggested a wording similar to the Charities and Trustee Investment ( Scotland) Act 2005, regarding no material impact to the guidance. Has that been given consideration?
Mr Murray:
Consideration is being given to including that change.
The Chairperson:
Are members content with clause 4?
Members indicated assent.
The Chairperson:
We are making good progress, although I hesitate to say that.
Mr Murray:
Clause 5 deals with special provisions about recreational charities, sports clubs, and so forth. The existing legislation, in relation to recreational sports clubs, will be amended to reflect the new Charities Bill. The wording of the clause, as the member said, is cumbersome, but that is how those things are drafted.
Essentially, if a recreational sports club is constituted so that it has a private membership, it is not defined as being open to the public. Such clubs can still apply for certain relief, under a separate piece of legislation, but they cannot be considered charities because of the issue of the broader public benefit. Clubs with private members, because of their nature, exclude to some degree.
Members may recall that there was some correspondence from Donaghadee Sailing Club; and we had a very positive meeting with it. There are examples, in England and Wales, of similar sailing clubs having been recognised as charities. However, those clubs have slightly different constitutions that enable them to qualify as recognised charities. The Donaghadee Sailing Club is going to pursue that in its own right. Ultimately, it is down to the issue of public benefit, and the accessibility to the service or the sporting activity that a club provides.
The Chairperson:
Is the club aware of the current drafting of this section?
Mr Murray:
Yes.
The Chairperson:
Is it content?
Mr Murray:
It is content with how we intend to take that issue forward.
Mr F McCann:
Does this clause only affect or impact clubs with private memberships?
Mr Murray:
The clause affects any sporting club that, constitutionally, restricts or excludes broader public access to it. Any recreational or sporting club, by its nature, could claim to be open for anyone to join, only to have barriers in place, such as charging exorbitant fees, or a male-only membership. Those types of organisations do not operate for the benefit of the wider public and, therefore, do not qualify as a charity.
Mr F McCann:
I am wary of anything that is so broad; it does not specifically mention clubs with private memberships. There are sports clubs set up in different areas to deal with specific issues. Those clubs may start off as temporary organisations — it could be a football team or whatever — but end up running forever. They may fall under the provisions of this clause because they do not fit in anywhere else.
Mr Murray:
They will still qualify as charities if they fall under the heading of the promotion of amateur sport and meet the public benefit test. Presumably, those clubs would meet those criteria as they do not have exclusive memberships. Clause 5 deals with clubs that fall under another piece of legislation, and applies to those.
The Chairperson:
Are members content with clause 5?
Members indicated assent.
Mr Murray:
Clause 6 provides for the establishment of the charity commission for Northern Ireland, and details the structure of that body in relation to the commissioners. It makes provision for a chief commissioner, a deputy chief commissioner, and up to five other commission members. The clause also sets out the requirement that at least one member be a legally qualified person, and provides some detail on what constitutes a legally qualified person. Are there any comments on that?
The Chairperson:
Most people would probably suggest that a “legally qualified” person means a solicitor or someone in the legal profession. Have you considered specifying that in the legislation?
Mr Murray:
It is specified in clause 6(6).
The Chairperson:
Clause 6(4)(b) states:
“at least 1 member is legally qualified.”
Mr Murray:
We considered whether more than one member should be legally qualified, but the commission is a small body. The appointment of the commissioners will go through the public appointment process, and criteria will be established. The appointments will follow due process: the posts will be publicly advertised, people will be invited to apply, and when the selection process is complete, the Minister will approve the appointments.
The Chairperson:
There could be as many as seven appointments.
Mr Murray:
To ensure a robust commission, the mix of skills, backgrounds and knowledge will form part of the criteria that will be established as part of the public appointment process.
Mr Cobain:
Gender balance is a hobby horse of mine, and I want there to be a strong emphasis on that. To end up with five or seven male commissioners would be horrendous. It would not reflect society, and females get a raw deal when it comes to public appointments.
The Chairperson:
That is ironic, Fred, but it is a relevant point nonetheless.
Mr Murray:
Those involved in the public appointments process are aware of the need to increase female participation on boards across Northern Ireland. Interestingly, the Commissioner for Public Appointments recently gave a presentation to the Department in which she talked about how section 75 and the equality agenda relate to representation on boards. As we go through the public appointment process, we will be conscious of trying to get a gender mix.
Mr Cobain:
Can nothing be added to ensure that that happens?
Mr Murray:
To add anything further would simply duplicate the existing equality legislation and section 75.
The Chairperson:
Will the make-up of the commission, as described in the Bill, be the same as set out in the Charities and Trustee Investment ( Scotland) Act 2005, or are there differences?
Mr Murray:
The Office of the Scottish Charity Regulator (OSCR) has more members, but we will look to it for the profile and background of what should constitute commissioners, particularly in relation to their role and function, and we will apply that to Northern Ireland.
The Chairperson:
How many legal professionals are in the Office of the Scottish Charity Regulator?
Mr Murray:
I am not sure.
Mr F McCann:
Further to Fred’s point, is there a problem with reflecting what he said about ensuring a gender balance? To do so would clearly set out the rules of appointment, rather than waiting for someone to take an equality case against the commission.
The Chairperson:
Would gender balance normally be stipulated in the Bill?
Mr Murray:
Not to my knowledge. It is embodied in the existing terms for the public appointment process The Commissioner for Public Appointments oversees and audits the process to ensure that it has been followed correctly.
Mr Cobain:
The process could be followed correctly and still result in five male commissioners.
Mr Murray:
There is the potential for that to happen, because it is a public appointment process. However, given that the process is merit-based, other issues could arise and cause difficulties. By following the public appointments process, we meet the requirements.
The Chairperson:
I take your point.
Ms Lo:
It is also important that the board should not consist exclusively of lawyers. People from the charity sector are needed to sit on the commission, because they are in the business.
Mr Murray:
That is down to setting out in the initial criteria the mix of skills required to ensure a functioning, efficient and effective commission.
Mr Cobain:
We will wait and see what happens.
The Chairperson:
Are members content with clause 6?
Members indicated assent.
Mr Murray:
Clause 7 simply seeks to outline the key objectives of the commission and its role, functions and nature. Clearly, the commission will first and foremost be a regulatory body. There are five objectives. The first is the public confidence objective, and the second is the public benefit objective, which deals with what charities provide to people in Northern Ireland. The third objective, the compliance objective, is about meeting the requirements of the legislation itself. The fourth objective is the charitable resources objective, which is about the commission promoting and overseeing how charities manage their resources. The accountability objective is about enhancing the accountability of charities to the general public and demonstrating how effectively they use the resources. The rest of the clause simply provides more detail on those objectives.
The Chairperson:
The issue of the purpose of the commission, including valuing the importance of charities to civil society, was raised with the Committee. Has that been considered?
Mr Murray:
Clause 9(2) reflects that:
“the Commission must, in performing its functions, act in a way which is compatible with the encouragement of—
(a) all forms of charitable giving, and
(b) voluntary participation in charity work.”
That reflects its role in encouraging participation in charity work.
The Chairperson:
Are members content with clause 7?
Members indicated assent.
Mr Murray:
Clause 8 defines the commission’s activity and work, which will involve determining whether an institution is a charity or not; improving the administration of charities; and investigation into misconduct, where required. Members will recall that part of the legislation deals with public collection certificates and licences. Importantly, it deals with disseminating information in connection with charities and how they perform those functions for the general purpose. It also deals with the commission’s role and functions in making the public more aware of those. It is also about giving advice and information to the Department and to the Assembly on other activities and on the operation of the commission or the meeting of any of its objectives. That may well constitute an annual report that goes to the Minister and DSD and then through to the Assembly.
The Chairperson:
What about the issue of the commission being both an adviser and a regulator?
Mr Murray:
Concerns were raised about that in the evidence sessions. As members will know, the Charity Commission for England and Wales has performed that function efficiently for umpteen years, and it has done so to a very high standard.
The Chairperson:
What about the situation in Scotland?
Mr Murray:
In Scotland, the Office of the Scottish Charity Regulator performs similar functions. There have been some suggestions about the operational side, which would involve different coloured guidance forms, as opposed to legislative regulatory requirements. That would make the two roles clear. Given that the commission will have the expertise in one place, it seems sensible that it should perform both functions. We also acknowledge that many bodies in the charitable and voluntary and community sector have a good deal of knowledge as well, and we hope that they will continue to perform that function.
Ms Lo:
Bodies such as the Equality Commission have dual roles too, in that they monitor as well as advise.
The Chairperson:
Yes; that is right.
Are members content with clause 8?
Members indicated assent.
Mr Murray:
Clause 9 deals with how the charity commission runs it business, the requirements on the commission to make best use of its own resources and its internal performance. I know that Mrs McGill had reflected some concern about the effective use of resources in the commission, and whether it had the potential to grow and expand beyond its role. This clause seeks to ensure that the commission uses the money that it receives effectively and efficiently in order to carry out its functions.
The Chairperson:
Are members content with clause 9?
Members indicated assent.
Mr Murray:
Clause 10 deals with other areas in which the commission will perform its various functions. That may include issues such as a trustee’s relationship to a charity or involvement in the administration of a charity.
The Chairperson:
Are members content with clause 10?
Members indicated assent.
Mr Murray:
Clause 11 deals with the official custodian for charities in Northern Ireland. I suppose the best way to describe a custodian would be as a caretaker. Should a problem arise with a charity as regards administration, the commission has the power to appoint an official custodian to look after that charity in the interim period to ensure that the charity’s assets are protected.
Ms Lo:
Are you saying that an existing member of staff will adopt that additional role when necessary?
Mr Murray:
The person appointed to act on behalf of the charity commission will not be a member of staff.
Mr Hilditch:
Perhaps it has escaped my attention, but do any of the six clauses dealing with the commission indicate the length of the term that a commissioner will serve? Is that person appointed for life?
The Chairperson:
Is the length of the term that a commissioner will serve specified in the schedule?
Mr Doyle:
I will check whether that is covered under staffing; I do know that the commissioners appointed to the Office of the Scottish Charity Regulator will serve a term of three years.
Mr Murray:
The schedule states that the term will be five years.
The Chairperson:
Is there a limit on the number of terms that a commissioner can serve?
Mr Murray:
I am not sure whether that is specified; I will confirm that.
Mr Hilditch:
Equally, how many terms can the chair and deputy chair serve?
The Chairperson:
And, indeed, is there a limit on the number of terms that office holders can serve?
Mr Murray:
I will check that also.
The Chairperson:
Are members content with clause 11?
Members indicated assent.
Mr Murray:
Clause 12 deals with the charity tribunal for Northern Ireland. Members may recall from the previous evidence session that appeals made against charity commission decisions are initially reviewed by the commission itself — there is an evaluation of the process that led to that particular verdict. If people are still dissatisfied, they can appeal to the charity tribunal. That will be operated through the Northern Ireland Court Service, and it will establish a panel to hear those appeals. No cost will be incurred in doing that — unless they decide to appoint a solicitor for themselves. So, importantly for charities, this is a non-fee process, which makes things much easier. We have worked closely with the Northern Ireland Court Service throughout this process, and it reflects the overall structure for tribunals established by the Court Service.
The Chairperson:
Are members content with clause 12?
Members indicated assent.
Mr Murray:
Clause 13 relates to the role of the tribunal and how it will carry out its duties. A question was raised at a previous evidence session about the appointment of special advocates. We have consulted the Office of the Legislative Counsel on that matter, and there have been instances of special advocates being appointed. That can be done in the legislation, and we will consider how to factor that in
The Chairperson:
Are members content with clause 13?
Members indicated assent.
Mr Murray:
Clause 14 reflects, as does clause 15, the standard processes of the charity tribunal conducted through the Northern Ireland Court Service.
The Chairperson:
Are members content with clause 14?
Members indicated assent.
Mr Murray:
Clause 15 deals, as does the previous clause, with the proceedings of the charity tribunal, specifically intervention by the Attorney General.
The Chairperson:
Are members content with clause 15?
Members indicated assent.
Mr Murray:
Clause 16 concerns the register of charities. All bodies operating as charities under the law in Northern Ireland must be registered in the register of charities. That is critical in ensuring that there is full public accountability. The clause details what the register should contain — the names and details of the charities— and also provides the power for the charity commission to remove from the register any institution that it considers to be no longer functioning. The Office of the Scottish Charity Regulator sent letters to those charities listed by HM Revenue and Customs in order to establish whether those charities were still in operation. Interestingly, it was able to remove a significant number from the register because they appeared to no longer function.
The Chairperson:
Is there a reference to charities in the register being granted designated religious charity (DRC) status or having DRC after their name?
Mr Murray:
That point was raised during the evidence session, and having taken advice from the Office of the Legislative Counsel, we think that it can be reflected in that section.
The Chairperson:
Will it be compulsory for a passporting regime for mutual recognition of charities?
Mr Murray:
That is, perhaps, linked to clause 167, which deals with institutions that are not charities under the law of Northern Ireland. The Department considered that following representations from the Charity Commission for England and Wales. It highlighted some of the difficulties that it had experienced with charities that were established in England and Wales but also operated in Scotland. The Charities and Trustee Investment ( Scotland) Act 2005 states that those charities that operate in Scotland must be registered there. Therefore, some charities had to amend their constitution to enable them to do so in Scotland. Having considered that, the Department included clause 167, which provides for recognition of those charities that are registered in England, Wales or Scotland, but are still required to register in Northern Ireland. There will be a parallel register for those charities outlined in clause 167.
I hesitate to use the term “passporting” because that possibly suggests that you simply accept the bona fides coming straight across in a simplified form. It certainly does not remove the requirement to register, or to report and make a financial return to the charity commission in Northern Ireland in order to fulfil the public accountability aspect.
Ms Lo:
Clause 16(2) states:
“Every institution which is a charity under the law of Northern Ireland must be registered in the register of charities.”
NICVA is querying whether that is worded strongly enough to ensure that every charity that operates in Northern Ireland will be required to register. The clause in the previous draft seemed more concise.
Mr Murray:
The clause reflects previous comments about institutions outlined in clause 167. Clause 16 and clause 167 state that any charity that operates in Northern Ireland will be required to register and to make annual returns. There are no exceptions or exclusions with regard to that.
The Chairperson:
Are members content with clause 16?
Members indicated assent.
Mr Murray:
Clause 17 outlines the requirements on the trustees of a charity to comply with the legislation and ensure full and correct registration. The Department is sensitive to the fact that feedback received has shown that some trustees of smaller charities are daunted by the obligations of meeting the requirement of the legislation placed upon them. Nonetheless, to ensure public accountability, trustees of charities must comply with rules regarding registration, supplying of details and notification of a change of trustee. That is unavoidable, and the onus will be on the charity commission to provide advice and guidance on those matters.
The Chairperson:
Are members content with clause 17?
Members indicated assent.
Mr Murray:
Clause 18 allows individuals the facility to apply to the charity commission with concerns about the registration of a charity or their name appearing on a charity. The charity commission should hear and consider concerns about names or addresses being shown on the register.
The Chairperson:
Are members content with clause 18?
Members indicated assent.
Mr Murray:
Clause 19 places a requirement on charities to display the name of the charity, the reference and registration number, as recognised by the charity commission, on all headed notepaper, reports, and annual publications. Documents used by English-based charities always display the registration number. Again, that is to enhance public awareness and ensure public accountability, and allow the public to check that, if they so wish.
If the charity registration number does not appear, for example, when someone is collecting, that may raise a question of whether it is a bona fide charity.
The Chairperson:
Are members content with clause 19?
Members indicated assent.
The Chairperson:
Clause 20, which gives the charity commission the power to require a charity’s name to be changed, was referred to by the representatives from the Presbyterian Church.
Mr Murray:
This clause deals with several issues, the main one being duplication. If there are two charities with the same name, the Commission can require one of them to change its name, if that is considered necessary.
The clause also allows the charity commission to require a charity to change its name if that name is considered to be offensive. Interestingly, as Kieran mentioned earlier, there was the case recently of a charity in Scotland that had quite an offensive name. OSCR required it to be removed from the register because of the nature of the name. Therefore, that scenario does occur, and this clause gives the commission the power to deal with it.
The representatives from the Presbyterian Church were concerned about the multiplicity of charity names that include the word “Presbyterian”. I note the different examples of these that are listed in the submission; however, each organisation still has a distinct name, so I would not foresee any registration difficulties.
Ms Lo:
You mentioned that OSCR actually deleted a charity from the register because it did not like the name or felt that it was offensive. Does that mean that the charity commission can request that a charity changes its name?
Mr Murray:
Yes, it can.
Ms Lo:
So if the charity does not want to do that, then it will be removed from the register?
The Chairperson:
Presumably it is not just because the commission does not like the name, but because the name is perceived to be offensive.
Mr Doyle:
In the Scottish case, the name was described as being very offensive to the general public.
The Chairperson:
I do not think we will proceed down that route.
Are members content with clause 20?
Members indicated assent.
Mr Murray:
Clause 21 deals with instances where a charity is also a company. In that instance, if a charity is required to change its name for any particular reason, clearly there is a requirement for the company’s board of directors to effect that change also, and the clause reflects that requirement.
The Chairperson:
Are members content with clause 21?
Members indicated assent.
Mr Murray:
Clause 22 provides an outline of the commission’s powers to institute inquiries where it has concerns about the operation of a charity, and how those powers should be applied. The commission may be able to appoint an individual — an accountant, a solicitor, or another person working in the legal profession — to act on its behalf and to carry out an investigation into the finances of the charity in question.
The Chairperson:
Will you explain what is meant in subsection 5, where it mentions a 10-mile radius? What is that about?
Mr Murray:
That is intended to limit the amount of expenses provided to the person who is appointed to carry out an inquiry, so that person is entitled to expenses only if he or she is required to travel more than 10 miles to conduct the inquiry.
The Chairperson:
Is that something that is in place for most tribunals that are established?
Mr Murray:
It is not a tribunal. It is an inquiry that will be carried out by someone — an accountant, for example — appointed to act on behalf of the commission.
The Chairperson:
But the individual will be under the jurisdiction of the commission?
Mr Murray:
Yes, the individual will be appointed by the commission to act on its behalf.
The Chairperson:
Are members content with clause 22?
Members indicated assent.
Mr Murray:
Clause 23 details further the commission’s power to request documents, papers and evidence for an investigation or inquiry into a charity. It mirrors the nature of the legislation in place in England and Wales.
The Chairperson:
Are members content with clause 23?
Members indicated assent.
Mr Murray:
Clause 24 sets out the powers that the commission will have to acquire information that would be disclosed to it in continuance of an investigation.
The Chairperson:
Are members content with clause 24?
Members indicated assent.
Mr Murray:
Clause 25 is a cautionary clause for individuals who may believe that they can fool the commission in the information that they provide to it. It sets out the penalties that may apply to that and the action that may be taken against that.
The Chairperson:
That would be a serious offence. Are members content with clause 25?
Members indicated assent.
The Chairperson:
That brings us to Part 6 and clause 26.
Mr Doyle:
The term “cy-près” is a strange one. It is an old French-Norman word that means “as near as possible”. It is a legal scheme that the charities branch of the Department for Social Development uses to wind up charities or change their purpose. The Department currently deals with cases in which the net assets are less than £50,000. Above that, the case has to go to the High Court. The figure of £50,000 was set to assist charities. The cy-près principles in the Bill will mean the £50,000 limit’s being removed. The function of preparing the cy-près will move from the charities branch to the charity commission, which will have the power, as part of its general functions, to carry out all cy-près schemes. However, it will reserve the right to go to the High Court, particularly if there are potentially controversial circumstances.
The Chairperson:
Does that mean that a case could go to the High Court whether it involved a relatively small sum or a significant sum?
Mr Doyle:
Yes, that is correct.
Mr Murray:
The key issue is that instead of having to go through the High Court, charities will now go through the charity commission, and the charities will make a saving on the process. That makes life easier for charities.
The Chairperson:
Are members content with clause 26?
Members indicated assent.
Mr Doyle:
Under clause 27, it will fall to the charity commission to decide how the cy-près is drawn up. Cy-près means “as near as possible”, so if, for example, the charity has a trust fund for a specific purpose, when the cy-près scheme is made, the net assets must be applied to purposes that are similar to the original spirit of the scheme.
The Chairperson:
Are members content with clause 27?
Members indicated assent.
Mr Doyle:
Cy-près can be quite a complicated area and it involves complex legal schemes being drafted up. Clause 28 contains various provisions to cover scenarios in which different inputs may come from different people. It deals with what the charity commission’s response should be to certain solicitations.
The Chairperson:
Are members content with clause 28?
Members indicated assent.
The Chairperson:
Clause 29; we are still on cy-près schemes.
Mr Doyle:
Yes, it is quite a big area.
The Chairperson:
As near as possible.
Mr Murray:
Clause 29 further expands upon the nature of cy-près schemes, how those should be applied by the charity commission and the principles that underpin them.
The Chairperson:
Are members content with clause 29?
Members indicated assent.
Mr Murray:
Clause 30 deals with charities that have been established by Royal Charter in England, of which there are a number. It is an aspect of cy-près that applies to a certain group of charities established under a slightly different format from others. It deals with the broader issue of cy-près, but for a particular group of charities.
The Chairperson:
The Committee has not received any correspondence or communication on this issue. Members can draw their own conclusions from that. Are members content with clause 30?
Members indicated assent.
Mr Doyle:
Under clause 31, the charity commission may, by order, exercise the same jurisdiction and powers that are exercisable by the High Court to establish a scheme; appoint, discharge or remove trustees; and vest or transfer property. It is basically the same type of legal powers that the High Court has.
The Chairperson:
Are members content with clause 31?
Members indicated assent.
Mr Murray:
Clause 32 grants further expansion of the charity commission’s powers if it decides that it is necessary to alter how charity property is applied. If a charity ceases to operate, the commission will be able to make a decision on applying the charity’s property to a similar charity or, as Mr Doyle said, to a charity that has “as near as possible” the same nature and principal activities.
The Chairperson:
Are members content with clause 32?
Members indicated assent.
Mr Murray:
Members may recall that clause 33 is one of the clauses that raised concerns relating to the designation of religious status. If a religious body is successful in obtaining designated religious status, clauses 33 to 36 will not apply. Clause 33 relates to instances when the charity commission thinks that there is a need to intervene in a charity’s functions and processes because of concerns about maladministration or mismanagement. The clause, therefore, aims to protect the charity’s assets and its functioning. Clause 33 details the process for that. For religious charities, as members will recall, there is recognition and particular Government structures in place. If they receive that status, there is recognition of a process through which they will deal with this issue themselves.
The Chairperson:
Are members content with clause 33?
Members indicated assent.
Mr Murray:
Clause 34 will be a last resort in most cases, but it provides the commission with the power to suspend a trustee or trustees of a charity when it is concerned that their actions are a risk to the operation of the charity’s business.
The Chairperson:
Clause 34(1)(a) refers to a whole series of severe provisions in clause 33(1).
Mr Murray:
There will be thorough investigations.
The Chairperson:
Are members content with clause 34?
Members indicated assent.
Mr Murray:
Clause 35 follows from clause 34 in many respects. If there is a requirement to appoint an interim manager, for instance, to look after the charity’s operation and to protect the business of the charity and its assets, the charity commission has the power to appoint someone to look after it while the investigation is ongoing.
The Chairperson:
Are members content with clause 35?
Members indicated assent.
Mr Murray:
Clause 36 follows on from clauses 34 and 35 with regard to how the commission may handle the business of a charity if its trustees have been suspended or if it is the subject of an investigation. The commission may direct the charity in how to operate its business in order to safeguard it.
Ms Lo:
Why are clauses 33 to 36 not applicable to charities that have designated religious status? You might have explained that to me already, but I cannot recall.
Mr Murray:
The consultation process, particularly with the Churches, has led to a recognition that many of them have different governing structures in place. They have unique governing structures, which are underpinned, in many cases, by law. Rev Watts, from the Presbyterian Church, provided evidence to the Committee earlier this morning. His organisation has been established for umpteen years, and its constitution is 200 pages long. There is, therefore, a unique history and governance situation with regard to how the court structure within a Church operates and runs its business. Furthermore, some Churches have their own processes for investigating, suspending and dealing with cases of maladministration and misconduct. We recognise that that process is unique to them, and that is why those clauses and the designated religious status around those clauses acknowledge that.
Ms Lo:
Is that sensible? You are saying that, where a Church has an untrustworthy trustee, under this legislation, he or she can continue as a trustee — because the Church has special status — until the Church itself deals with it.
Mr Murray:
There are a number of things to be pointed out. One is that in granting designated religious status, beyond the existing criteria that we will talk about later, the charity commission has to be satisfied about the governance arrangements in place. That is one of the key issues in granting designated religious status; we need to be assured as to how the organisation deals with such matters.
It is also important to note that under this legislation, notwithstanding designated religious status, the charity commission still reserves the right, where it sees fit and appropriate, if it is dissatisfied about what has taken place, to carry out an investigation. Therefore, designated religious status is not a carte blanche. The charity commission will intervene if it sees that there is a problem or if you are not operating the governance processes correctly. So, there are safeguards in place which may address the concern that you have raised.
The Chairperson:
Are members content with clause 36?
Members indicated assent.
Mr Murray:
Clause 37 follows on from that. If a charity is under investigation or there are concerns about it, the charity commission may, if it feels it to be appropriate, direct that its property be safeguarded or held in trust properly to protect the charity’s assets.
The Chairperson:
Are members content with clause 37?
Members indicated assent.
Mr Murray:
Clause 38 enables the commission to provide information to the charity about why it is taking various actions under the previous clauses.
The Chairperson:
Are members content with clause 38?
Members indicated assent.
Mr Murray:
Clause 39 requires the commission, where it has taken action, to make it public knowledge so that people are aware that, in the case of an ex-charity, it has acted to suspend trustees or protect property. There might, for example, be a difficulty with a charity to which members of the public might want to make, or be making, donations. Therefore, it is important to make the public aware of difficulties and problems so they can decide whether they want to suspend their donations.
The Chairperson:
Are members content with clause 39?
Members indicated assent.
Mr Doyle:
Clause 40 states that the charity commission has the power to appoint or remove a trustee of a charity through:
“an order relating to the official custodian, or … an order under section 33(1)(ii)”.
The Chairperson:
Are members content with clause 40?
Members indicated assent.
Mr Murray:
Committee members may recall an issue that arose, in relation to an earlier clause, about the official custodian — a caretaker for a charity who looks after its property until the charity is dissolved or the property is disposed of. Clause 41 allows for removing the trusteeship of the property from the custodian at the point when that takes place.
The Chairperson:
Are members content with clause 41?
Members indicated assent.
Mr Murray:
Clause 42 is self-explanatory. These are supplementary provisions that apply to the particular role of the custodian.
The Chairperson:
Are members content with clause 42?
Members indicated assent.
Mr Doyle:
Clause 43 is a provision to enable the charity commission to introduce orders to set up common investment funds. Charities that have funds can get authorisation or approval to put those moneys into certain investment funds.
The Chairperson:
Are members content with clause 43?
Members indicated assent.
Mr Doyle:
Clause 44 is the formal procedural guidance for drafting the schemes to establish a common deposit fund.
The Chairperson:
Are members content with clause 44?
Members indicated assent.
Mr Murray:
Clause 45 details the Scottish and English legal definitions of “a charity”, because they are referred to in the previous clauses.
The Chairperson:
I take it that those definitions are lifted directly from the legislation there?
Mr Murray:
They are legal definitions.
The Chairperson:
Are members content with clause 45?
Members indicated assent.
Mr Murray:
Clause 46 details an additional charity commission power concerning various charity property, and it follows on from previous clauses that deal with the protection of charities and their assets.
The Chairperson:
Are members content with clause 46?
Members indicated assent.
Mr Doyle:
If a charity does not have a specific power to make ex gratia payments under its constitution, the charity commission will have that power. Charities will be required to apply to the charity commission for authorisation or approval for such payments, and clause 47 is the formal provision that enables that to happen.
The Chairperson:
Are members content with clause 47?
Members indicated assent.
Mr Doyle:
Clause 48 is a charity commission power that will enable it to make decisions, and give directions, about funds in dormant bank accounts. For example, if funds are held in the name of a charity that cannot be traced, or are lying dormant in an account, they might be directed to a similar charity.
Mr Murray:
It is important to note that that would follow a proper investigation and attempts to track down the original charity’s trustees.
The Chairperson:
Is there a defined timescale for reaching such a point?
Mr Murray:
Clause 48(8)(a)(ii) refers to a period of five years.
The Chairperson:
Are members content with clause 48?
Members indicated assent.
Mr Murray:
Clause 49 refers to the other role of the charity commission, which Ms Lo mentioned earlier. It will act as both a regulator and an adviser. This clause provide the commission with the power to give guidance.
The Chairperson:
Are members content with clause 49?
Members indicated assent.
Mr Murray:
Rev Watts’s point about membership is interesting. Clause 50 will allow the charity commission to check whether the membership claimed by a particular charity is bona fide and who the members are. It is a safeguard.
Ms Lo:
Is there also a need to stipulate the minimum number of members required in order to constitute a charity? For example, if I set up a charity with only two members, would that pass the public-benefit test?
Mr Murray:
That is not determined by the number of members. You, as an individual, could establish a charity. It is about the service that you provide. However, where you claim to have a membership of x people in order to demonstrate that your organisation is providing a public benefit, and we are concerned about whether your claims about what you were doing were bona fide and about how many members were involved, clause 50 provides the charity commission with the power to investigate those claims. Nevertheless, there is no rule that one must have x members. The public services provided by an individual, or a group, can legitimately meet the public-benefit test.
The Chairperson:
So, it is a safeguard against the situation where there is concern about a particular charity advertising the fact that it has x members in order to collect funds? Quite apart from the other checks, does this power enable the commission to confirm whether the charity actually has the number of members that it claims?
Mr Murray:
It is a general safeguard for the public. People may make claims about the nature of a charity, or how big it is or its role or function. This clause expands the powers of the charity commission to check the backing of the charity and who is involved in it apart from its trustees.
The Chairperson:
Are members content with clause 50?
Members indicated assent.
Mr Doyle:
Clause 51 authorises the charity commission to hold any documents that are deposited with it by charities.
The Chairperson:
Are members content with clause 51?
Members indicated assent.
Mr Murray:
Clause 52 has raised concerns. Charities may reasonably be concerned at the cost of employing solicitors in relation to the performance of their functions. That was raised in the evidence session, and we have sought advice on it.
Mr Doyle:
We checked the existing legislation. The origin of this clause is section 9 of the Charities Act ( Northern Ireland) 1964. That section has never been invoked in 40-odd years. The Solicitors ( Northern Ireland) Order 1976 deals exclusively with solicitors’ costs. We may, therefore, investigate this clause with the Court Service, which has particular responsibility for that piece of legislation, to see whether this is duplication. The clause requires further consideration.
The Chairperson:
What happens when a dispute arises?
Mr Doyle:
It will be dealt with under the 1976 Order. In that, there is provision for scrutiny of a solicitor’s bill.
The Chairperson:
Does that allow for a hearing to determine the facts of the case?
Mr Murray:
Yes. Our concern is that we may be including a provision that is covered by other legislation. We do not want duplication.
Mrs Lo:
What if a charity buys a property, and gets a solicitor to deal with the conveyancing? Will the cost of that be taxed?
Mr Murray:
No. This is where the charity commission is concerned about charges that a solicitor makes to a charity for a particular service. There is a process by which there can be a separate adjudication of the level of costs that have been applied.
Mr Cobain:
It is not a tax.
The Chairperson:
Are members content with clause 52?
Members indicated assent.
The Chairman:
We were scheduled to consider the Bill up to clause 52 today, so we can all regard that mission as accomplished. Thank you very much, Mr Doyle and Mr Murray. It has been a difficult Bill to go through, but the process has been informative and we have established a template for the rest of the Bill.