Session 2007/2008

First Report

COMMITTEE FOR SOCIAL DEVELOPMENT

Report on the Charities Bill
(NIA 9/07)

Ordered by Committee for Social Development to be printed 1 May 2008
Report: 30/07/08R (Committee for Social Development)

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Membership and Powers

The Committee for Social Development is a Statutory Departmental Committee established in accordance with paragraphs 8 and 9 of the Belfast Agreement, section 29 of the Northern Ireland Act 1998 and under Standing Order 46.

The Committee has power to:

consider and advise on Departmental budgets and annual plans in the context of the overall budget allocation;
consider relevant secondary legislation and take the Committee stage of primary legislation;
call for persons and papers;
initiate inquires and make reports; and
consider and advise on any matters brought to the Committee by the Minister for Social Development.

The Committee has 11 members including a Chairperson and Deputy Chairperson and a quorum of 5.

The membership of the Committee since 9 May 2007 has been as follows:

Mr Gregory Campbell MP (Chairperson)
Mr David Hilditch (Deputy Chairperson)
Mr Mickey Brady
Mr Thomas Burns
Mr Fred Cobain
Mr Jonathan Craig
Ms Anna Lo
Mr Alban Maginness
Mr Fra McCann
Mrs Claire McGill
Miss Michelle McIlveen

Report

Executive Summary

Introduction

Consideration of the Bill

Clause-by-Clause Scrutiny of the Bill

Appendix 1

Minutes of Proceedings Relating to the Report

Appendix 2

Minutes of Evidence

Appendix 3

Written Submissions

Appendix 4

Other Papers

Appendix 5

List of Witnesses

Executive Summary

1. The overall aim of the Bill is to introduce an integrated system of registration and regulation as well as supervision and support of registered charities. In particular the Bill will:

provide a definition of “charity” and “charitable purpose”;
establish the Charity Commission for Northern Ireland (CCNI) and the Charity Tribunal for Northern Ireland;
create a register of charities;
provide for a new form of charitable body (a charitable incorporated organisation); and,
deal with the regulation of charities and public charitable collections.

2. The Committee agreed that it was content with clause 1, clauses 4 to 15, clauses 17 to 26, clauses 28 to 31, clauses 33 to 44, clauses 47 to 51, clauses 53 to 56, clauses 58 to 65, clause 68, clauses 71 to 91, clauses 94 to 98, clauses 105 to 106, clauses 109 to 113, clauses 115 to 121, clauses 123 to 145, clauses 147 to 158, clauses 160 to 164, clauses 167 to 179, clauses 181 to 186, schedules 1 to 5 and schedule 7.

The Committee agreed to recommend to the Assembly that the following clauses be amended as agreed between the Committee and the Department for Social Development (the Department):

Clause 2 – Meaning of “charitable purpose”

Clause 2(3)(a)(i) to read – “a religion which involves belief in one god or more than one god,”.

Although it did not preclude a belief in ‘one god’, clause 2 as drafted did not specifically mention a belief in one god. This amendment would reflect that the advancement of religion also includes a belief in one god.

Clause 3 – The “public benefit” test

Clause 3(3)(a)(ii) to read – “detriment incurred or likely to be incurred by the public,”.

Clause 3 as drafted uses the term “disbenefit”. Substituting the word “detriment” in place of “disbenefit”, would remove the ambiguity of the term disbenefit.

Clause 16 – Register of charities

Clause 16(4) to read -

“(4) The register shall contain—

(a) the name of the charity,

(b) if the charity is a designated religious charity within the meaning of section 165, a statement to that effect, and

The insertion of clause 16(4)(b) would ensure that the charities register contains a separate statement if an organisation has been granted designated religious charity status.

Clause 52 – Power to order taxation of solicitor’s bill

The Department agreed to remove clause 52 from the Bill as it duplicated provisions already contained within existing legislation i.e. the Solicitors (Northern Ireland) Order 1976.

Clause 122 – Power to transfer all property of unincorporated charity

Clause 122 to read -

“(b) either-

(i) it does not hold any designated land, or

(ii) the total market value of all designated land which it holds does not exceed £90,000.00; and

(13A) In this section “market value”, in relation to any land held by a charity, means—

(a) the market value of the land as recorded in the accounts for the last financial year of the charity, or

(b) if no such value was so recorded, the current market value of the land as determined on a valuation carried out for the purpose.”

This amendment would provide for an exception for a transfer of designated land that has a value of £90,000 or under.

Clause 159 – Power of Department to give financial assistance to charitable, benevolent or philanthropic institutions

The Department agreed to remove clause 159 from the Bill as Article 3 of the Social Need (Northern Ireland) Order 1986 already makes corresponding provision for Northern Ireland in this respect.

Clause 165 – Application of Act in relation to designated religious charities

Clause 165(3) to read – “No order shall be made under this section unless a draft of the order has been laid before and approved by a resolution of the Assembly”.

This amendment would reflect the provisions in clause 167(7), ensuring that any order made by the Department to extend exemptions to designated religious charities would be subject to approval by resolution of the Assembly.

Clause 166 – Designation, etc of religious charities

Clause 166(3)(c) to read – “has been established in Northern Ireland for at least 5 years;”.

A number of criteria have to be met to achieve designated religious charity status. Clause 166(3)(c) as drafted requires a charity to be established in Northern Ireland for at least 10 years. This amendment would reduce the requirement from 10 years to 5 years.

The Department agreed to remove clause 166(3)(d) from the Bill which would have required a religious organisation to have had at least 1000 members.

Amendments to the Bill following amendments made to the Charities Act 1993 (contained in the Companies Act 2006)

3. As a result of the introduction of the Companies Act 2006, a number of technical amendments are required to dovetail charity and company law. The Department proposed amendments to clauses 46, 66, 67, 69, 70, 92, 93, 99, 100, 102, 103, 107, 108, 180 and schedule 6 of the Bill following amendments made to the Charities Act 1993 and the introduction of the Companies Act 2006. Minister also gave notice of her intention to oppose the question that clause 104 stand part of the Bill. The Committee agreed to recommend to the Assembly that the clauses and schedule be amended as agreed between the Committee and the Department. The text of the amendments can be found at Appendix 4.

Miscellaneous drafting amendments and corrections

4. The Department proposed miscellaneous drafting amendments and corrections to clauses 27, 32, 45, 57, 114, 146, 180, and schedules 6, 8 and 9 of the Bill. The Committee agreed to recommend to the Assembly that the clauses and schedules be amended as agreed between the Committee and the Department. The text of the amendments can be found at Appendix 4.

Guidance to be issued by the Charity Commission for Northern Ireland

5. The Committee noted that the Charity Commission for Northern Ireland will issue detailed guidance on a number of areas including the role and duties of trustees and the public benefit requirement. The Committee looks forward to considering this guidance at a later date.

Enabling powers

6. The Committee noted that the Bill will introduce enabling powers to make regulations in a number of areas including annual statements of accounts, annual reports and annual returns by charities. The Committee looks forward to receiving and scrutinising the policy proposals for these regulations in due course.

Introduction

1. The Charities Bill (NIA 9/07) (the Bill) was referred to the Committee for consideration in accordance with Standing Order 31(1) on completion of the Second Stage of the Bill on 15 January 2008.

2. The Minister for Social Development (the Minister) made the following statement under section 9 of the Northern Ireland Act 1998:

“In my view the Charities Bill would be within the legislative competence of the Northern Ireland Assembly.”

3. The overall aim of the Bill is to introduce an integrated system of registration and regulation as well as supervision and support of registered charities. In particular the Bill will:

provide a definition of “charity” and “charitable purpose”;
establish the Charity Commission for Northern Ireland (CCNI) and the Charity Tribunal for Northern Ireland;
create a register of charities;
provide for a new form of charitable body (a charitable incorporated organisation); and
deal with the regulation of charities and public charitable collections.

4. The Bill as drafted has 14 Parts and 9 Schedules as follows:

Part 1: Introductory

Part 1 comprises clauses 1 to 5 and deals with the definition of “charity” and “charitable purpose”. Clause 3, which sets out the public benefit test in relation to charitable purpose, specifies that no particular purpose is to be presumed to be for the public benefit. When determining whether a body provides public benefit, regard must be had to how any benefit gained by members of the institutions and disbenefit incurred by the public compares with the benefit gained by the public.

Part 2: The Charity Commission for Northern Ireland

Part 2 comprises clauses 6 to 11 (and Schedule 1) and provides for the establishment of a body corporate to be known as the Charity Commission for Northern Ireland. Clauses 7 to 10 deal with the Commission’s objectives, functions, general duties and incidental powers. Clause 11 provides for an “official custodian” for charities in Northern Ireland.

Part 3: The Charity Tribunal for Northern Ireland

Part 3 comprises clauses 12 to 15 (and Schedules 2, 3 and 4) and covers the creation of a Tribunal to hear appeals against some types of decisions made by the Commission.

Part 4: Registration of Charities And Charitable Names

Part 4 comprises clauses 16 to 21 and requires the Commission to keep a register of charities. The Bill does not provide for any exemptions from the requirement to register.

Part 5: Information Powers

Part 5 comprises clauses 22 to 25 and empowers the Commission to institute inquiries into any aspect of the work of a particular charity or class of charities. The Commission will be able to call for the disclosure of documents and to disclose information in pursuit of its functions.

Part 6: Application of Property Cy-Près and Assistance and Supervision of Charities by Court and Commission

Part 6 comprises clauses 26 to 57 and covers the powers of the Commission and the Court to make schemes for the protection of charities. Clauses 41 and 42 deal with the circumstances in which property can be vested in the official custodian while clauses 43 and 44 enable the Commission or Court to establish “common investment funds” and “common deposit funds”.

Part 7: Charity Land

Part 7 comprises clauses 58 to 63 (and Schedule 5) and allows charities to dispose of charity property in most circumstances. Charities must seek an order of the Court, or of the Commission, before disposing of charity property in certain circumstances, for example, where the disposal is to a connected party.

Part 8: Charity Accounts, Reports and Returns

Part 8 comprises clauses 64 to 73 (and Schedule 6) and deals with the duty of charities to keep accounting records, issue statements of accounts and arrange for their accounts to be audited. Clause 65 empowers the Department for Social Development to prescribe the form and contents of such accounts for a charity with an annual income in excess of £100,000. Clauses 66 and 67 further specify the auditing requirements to be placed on a charity in accordance with its income. Clauses 69 and 70 set out the requirement on charities to prepare annual reports and specify the arrangements for public inspection of such reports.

Part 9: Charity Trustees

Part 9 comprises two Chapters covering clauses 74 to 95. Chapter 1 deals with the incorporation of charity trustees and in particular, clause 74 empowers the Commission to issue a certificate of incorporation establishing the trustees of a charity (not the charity itself) as a body corporate. Chapter 2 sets out a number of other provisions relating to charity trustees, including provisions concerning persons disqualified for being trustees and remuneration, etc.

Part 10: Charitable Companies

Part 10, which comprises clauses 96 to 104, makes provision with respect to charitable companies including rules covering amendments to their objects and the audit and examination of their accounts.

Part 11: Charitable Incorporated Organisations

Part 11 comprises clauses 105 to 121 (and Schedule 7) and provides for the constitution of Charitable Incorporated Organisations, a new legal entity for charities. Its purpose is to avoid the need for charities that wish to benefit from incorporation to register as companies and be liable to dual regulation.

Part 12: Powers of Unincorporated Charities

Part 12 comprises clauses 122 to 129 and deals with the rules under which unincorporated charities may transfer their property to other charities, replace their current charitable purposes with new ones, or modify their constitutional powers or procedures.

Part 13: Funding of Charitable Institutions

Part 13 comprises four Chapters covering clauses 130 to 160. Chapter 4 provides definitions for “charitable institution” and “collector”. Chapter 1 deals with the regulation of public charitable collections – both street collections (described as “collections in a public place”) and those conducted door-to-door. Clauses 136 to 141 cover the need for individuals or organisations that wish to promote collections to obtain a public collections certificate and empowers the Commission to either issue or refuse such a certificate. Clauses 142 to 148 deal with the requirement on promoters to obtain a permit for most public collections and empower the Commission to issue such permits. Chapter 2 provides for the detailed regulation and control of fund raising and Chapter 3 empowers the Department to give financial assistance to bodies whose activities directly or indirectly benefit the whole or any part of Northern Ireland.

Part 14: Miscellaneous and Supplementary

Part 14 comprises clauses 161 to 186 (and Schedules 8 and 9). It contains provisions relating to the merger of charities, the application of the Bill in relation to designated religious charities, and institutions which are not charities under the law of Northern Ireland, and deals with a number of technical matters relating to the Commission.

Schedule 1 – The Charity Commission for Northern Ireland

Schedule 2 – The Charity Tribunal

Schedule 3 – Appeals and applications to Tribunal

Schedule 4 – References to the Tribunal

Schedule 5 – Meaning of “connected persons” for purposes of section 58(2)

Schedule 6 – Group accounts

Schedule 7 – Further provision about Charitable Incorporated Organisations

Schedule 8 – Minor and consequential amendments

Schedule 9 – Repeals

5. During the period covered by this Report, the Committee considered the Bill and related issues at 15 meetings - on 31 May 2007; 10, 17, 24 and 31 January 2008; 7, 14, 21 and 28 February 2008; 6 and 13 March 2008; 3, 10 and 17 April 2008 and 1 May 2008. The relevant extracts from the Minutes of Proceedings for these meetings are included at Appendix 1.

6. The Committee had before it the Charities Bill (NIA 9/07) and the Explanatory and Financial Memorandum that accompanied the Bill.

7. On referral of the Bill to the Committee after Second Stage, the Committee wrote to key stakeholders. On 16 January 2008 advertisements were inserted in the Belfast Telegraph and News Letter, and on 17 January 2008 an advertisement was inserted in the Irish News seeking written evidence on the Bill. In addition, the Northern Ireland Council for Voluntary Action (NICVA) publicised, via its website and newsletters, that the Committee was seeking written evidence on the Bill.

8. A total of 53 organisations responded to the request for written evidence and a copy of the submissions received by the Committee is included at Appendix 3.

9. On 31 May 2007, prior to the introduction of the Bill, the Committee took evidence from Departmental officials on the purpose and main provisions of the proposed Bill. The Committee took further evidence from Departmental officials on 10 January 2008. Following the referral of the Bill for Committee Stage, the Committee took evidence from CO3 on 17 January 2008; the Northern Ireland Council for Voluntary Action (NICVA) on 24 January 2008; the Volunteer Development Agency on 31 January 2008; Cleaver Fulton Rankin Solicitors on 7 February 2008; the Police Service of Northern Ireland on 14 February 2008; the Evangelical Alliance Northern Ireland on 21 February 2008; the Presbyterian Church in Ireland on 28 February 2008; and Magheraknock Mission Hall and a group made up of representatives from the following religious groups: Jordan Victory Church; Kingdom Life Faith Centre; Moira Pentecostal Church and Mount Zion Free Methodist Church, on 6 March 2008. The Minutes of Evidence are included at Appendix 2.

10. The Committee began its clause-by-clause scrutiny of the Bill on 28 February 2008 and concluded this on 17 April 2008 – see Appendix 2.

Extension of Committee stage of the Bill

11. On 12 February 2008, the Assembly agreed to extend the Committee Stage of the Bill to 27 June 2008.

Report on the Charities Bill

12. At its meeting on 1 May 2008, the Committee agreed its report on the Bill and agreed that it should be printed.

Consideration of the Bill

13. On 31 May 2007, prior to the introduction of the Bill, the Committee took evidence from Departmental officials on the purpose and main provisions of the proposed Bill – see Appendix 2. The Committee noted that the overall aim of the Bill was to introduce an integrated system of registration and regulation as well as supervision and support of registered charities.

14. The Committee took further evidence from Departmental officials on 10 January 2008, as it understood that changes had been made to the proposed Bill. The officials outlined the changes that had been made to the proposed Bill as a result of discussions that had taken place between the Department and some religious bodies in Northern Ireland and other regulators across the United Kingdom and Ireland – see Appendix 2.

15. One of the key changes that had been made to the proposed Bill was the introduction of designated religious charity status (clauses 165 and 166). The Committee noted that the Commission would have the power to recognise certain charities as “designated religious charities’ (if specific conditions were met) and that clauses 33-36 of the Bill would not apply to those charities. In effect, this would mean that the Commission could not remove trustees or appoint an interim manager to protect members and any other trustees if there was a suspicion of wrong-doing. However, the Commission would have the power under clause 22 to investigate a designated religious charity if it believed there were grounds to do so.

16. The Committee welcomed the introduction of the Commission’s power to designate religious charities, given that such charities would already have sufficient internal governance structures in place to deal with investigations, suspensions, maladministration and misconduct.

17. During consideration of oral and written evidence submitted to the Committee, it became clear to Members that there was some misunderstanding around the designation of religious charities. A number of religious charities believed that, if they could not satisfy the conditions to be designated as a religious charity, they would be unable to register as a charity or that their charitable status would be removed. The Committee would wish to highlight that: 1) any religious organisation would be able to apply for charitable status and that an organisation’s ability to satisfy the conditions to be met to achieve designated religious charity status would have no bearing on an application, and 2) a religious charity would not lose its charitable status if it was unable to satisfy the conditions to be met to achieve designated religious charity status. An Assembly Research and Library Service briefing note which provides information on designated religious charity status is attached at Appendix 4.

Evidence from the Chief Officers 3rd Sector

18. On 17 January 2008, the Committee took oral evidence from CO3 (Chief Officers 3rd Sector) - see Appendix 2. CO3 advised the Committee that it welcomed the establishment of a Charity Commission (the Commission) and strongly emphasised the need for it to be independent; properly established; adequately resourced; and, accountable in its operations. CO3 expressed a number of concerns in relation to the Bill, including:

The potential increase in levels of bureaucracy and accountability for charities, and in particular, smaller charities. Given that the legislation will not sit in isolation, CO3 highlighted the possibility of overburdening organisations by requiring them to prepare submissions and annual returns for various departments as well as the Commission;
Proportionality in relation to regulation and auditing requirements. CO3 was of the view that the legislation did not adequately recognise the need for proportionality and that this would affect the Commission’s ability to regulate charities of all sizes;
The lack of obligation on the Commission to consult on any revision to the public benefit test guidance; and
The Commission’s objectives. CO3 considered that the Commission’s objectives did not reflect that it should value and safeguard the importance and contribution of charities in Northern Ireland.

Evidence from the Northern Ireland Council for Voluntary Action

19. On 24 January 2008, the Committee took oral evidence from NICVA (Northern Ireland Council for Voluntary Action) – see Appendix 2. NICVA expressed its support for the Charities Bill, however it raised concerns in relation to a number of overarching areas of the Bill, including:

The Commission’s role to give advice on matters of regulation and more general guidance. NICVA was of the view that the Commission should give regulatory advice but that general advice should be given by independent umbrella bodies in the sector;
The register of charities. NICVA welcomed the establishment of a register of charities to be maintained by the Commission, however, it questioned whether or not the wording used in the Bill was sufficient to ensure that every charity which operates in Northern Ireland will be required to register, and whether or not a separate non-compulsory register would be established for those charities that are not charities under the law of Northern Ireland but which operate for charitable purposes in or from Northern Ireland;
The role of trustees. NICVA recommended that the general duties of trustees be included in the Bill;
Legal representation on the Commission. NICVA considered that the Commission’s membership should include more than one legally qualified member;
The lack of obligation on the Commission to consult on any revision to the public benefit test guidance; and
The need for adequate resourcing of the Commission. NICVA argued strongly for the Commission to be well resourced to allow it to fulfil its functions and not hinder the administration of charities.

Evidence from the Volunteer Development Agency

20. On 31 January 2008, the Committee took oral evidence from VDA (Volunteer Development Agency) – see Appendix 2. VDA expressed its support for the Charities Bill and highlighted the vital role played by volunteers in the charitable sector in Northern Ireland. VDA raised a number of concerns in relation to the Bill, including:

The potential for the legislation to create a greater and unnecessary bureaucracy. Particular concerns were raised regarding proportionality in the provision of annual accounts information;
The Commission’s general duties. VDA was of the view that the legislation should state clearly that the Commission should value and safeguard the contribution of charities;
The definition and role of a trustee. VDA felt that the legislation should include a wider definition of a trustee and a trustee’s role, to give clarity as to what is expected of such individuals;
The need for adequate resourcing of the Commission. VDA argued strongly for the Commission to be well resourced to allow it to fulfil its functions and avoid unnecessary delays for charities;
The lack of obligation on the Commission to consult on any revision to the public benefit test guidance;
The definition of sport. VDA expressed concern that the definition of sport related exclusively to the promotion of health; and
The Commission’s role in issuing permits for collections. VDA felt that local councils, with local knowledge, would be better placed to issue permits for charity collections.

Evidence from Cleaver Fulton Rankin Solicitors

21. On 7 February 2008, the Committee took oral evidence from Cleaver Fulton Rankin Solicitors (CFR) – see Appendix 2. CFR welcomed the establishment of a Commission and the new regulatory framework for the charity sector in Northern Ireland. CFR pointed out that the need for transparency and openness should be balanced by proportionate reporting levels and emphasised the importance of properly resourcing the Commission to allow it to carry out its functions. During the evidence session, CFR highlighted a number of practical points which it felt needed clarification, including:

The registration of charities. CFR felt that the legislation should be clearer about which organisations would be required to register as a charity and recommended a compulsory register for charities that are not charities under the law of Northern Ireland but which operate for charitable purposes in or from Northern Ireland;
The definition of ‘operates’. CFR felt that it was important to define the term ‘operates’ within the legislation;
The obligation on section 167 institutions to prepare, in respect of each financial year, a financial statement and a statement of activities. CFR highlighted that such organisations would only be required to prepare such documents and recommended that they also be required to submit them to the Commission so that they could be made available for public inspection;
The lack of obligation on the Commission to consult on any major revision to the public benefit test guidance. CFR was keen for charities to be consulted, given that a change to the public benefit guidance could result in a charity losing its status at some point;
Taxation of a solicitor’s costs. CFR was of the view that there should be taxation of solicitors’ costs, but was concerned that this provision may be in conflict with the provisions of the Solicitors (Northern Ireland) Order 1976;
Charity accounts, reports and returns. CFR had some concerns that the requirement for all charities to make their accounts publicly available may have a negative financial impact on smaller charities due to the costs associated with audits. CFR was of the view that trustees should be able to select an appropriate person to scrutinise accounts;
The receipt of legacies. CFR highlighted that the receipt of a legacy could mean that a charity would fall into a higher level of auditing scrutiny for a given year, and that there would be a higher financial cost attached to this;
The regulation of small company charities. CFR identified a gap between company law and charity law in respect of who would regulate small company charities;
The transfer of property of an unincorporated charity to a charitable incorporated organisation. CFR recommended that an exception be made for a transfer of designated land which had a very low value;
Designated religious charity status. CFR was of the view that the register of charities should contain a statement if a body has applied for/has been granted designated religious charity status and should indicate whether such a designation has been withdrawn for any reason;
The Department’s power to modify any provisions of the Bill with regard to designated religious status. CFR considered that any order made by the Department to modify such provisions of the Bill should be approved by resolution of the Assembly; and
Mergers of charities and the transfer of gifts. CFR expressed some concern that a gift that takes effect on or after the date of a merger could be lost if there is a gap between the date of a merger and the date a merger is registered. CFR recommended that a gift be effective from the date of transfer to avoid any loss.

Evidence from the Police Service of Northern Ireland

22. On 14 February 2008, the Committee took oral evidence from the Police Service of Northern Ireland (PSNI) – see Appendix 2. PSNI welcomed the proposals contained in the Bill, and in particular, those relating to the establishment the Commission and a register of charities. PSNI also welcomed the controls to be put in place to prevent the criminal exploitation of charities or the establishment of mock charities. A number of issues were raised during the evidence session, including:

The need to notify PSNI individuals of a charitable collection taking place. Although PSNI welcomed the introduction of a centralised point for the issue of certificates for charitable collections, it identified a need for the local district or area commander to be notified when a charitable collection would be taking place in their area; and
The need for a formal Memorandum of Understanding (MOU). PSNI recommended that a formal MOU be drawn up between the PSNI and the Commission to provide a framework for closer working arrangements on issues of mutual interest, such as vetting arrangements for applicants, trustees etc.

Evidence from Evangelical Alliance Northern Ireland

23. On 21 February 2008, the Committee took oral evidence from Evangelical Alliance Northern Ireland (EANI) – see Appendix 2. EANI welcomed the opportunity to contribute constructively to the scrutiny of the legislation and raised a number of issues, including:

The need for missionary work, at home and overseas, to be viewed as part of the advancement of religion. EANI felt that the legislation was unclear about whether public benefit must be gained in Northern Ireland or whether it could be gained overseas;
The need for the public benefit test to take account of benefits that are not tangible, for example, spiritual benefit;
The use of the word ‘disbenefit’ in relation to the public benefit test. EANI argued strongly for the term ‘disbenefit’ to be replaced by the word ‘harm’. EANI was of the view that the word ‘disbenefit’ was vague and had never been tested in law;
The lack of obligation on the Commission to consult on revisions to the public benefit test guidance. EANI appreciated that consultation for a minor revision would not be the most effective way to proceed. However, it was concerned that it could develop into a loophole whereby major revisions of the guidance could be introduced without consultation; and
The lack of opportunity for smaller religious organisations to achieve designated religious charitable status.

Evidence from the Presbyterian Church in Ireland

24. On 28 February 2008, the Committee took oral evidence from the Presbyterian Church in Ireland (PCI) – see Appendix 2. PCI supported the main aims of the Bill however it raised a number of concerns, including:

The lack of opportunity for smaller religious organisations to achieve designated religious status;
The absence of a definition of ‘public benefit’. PCI was concerned that, in the future, the spiritual aspect of what religious organisations do might be questioned as to whether or not it is of public benefit. PCI argued strongly for the legislation to recognise that spiritual nurture and development is also of public benefit;
The definition of religion. PCI felt that the definition of religion should include the belief in one, or more than one god;
The Commission’s power to change the name of a charity. PCI was concerned that a number of organisations used the word ‘presbyterian’ in their name and sought some assurance that the Presbyterian Church would be able to continue to use the word ‘presbyterian’;
The format for annual statements of accounts. PCI supported high levels of transparency and accountability but was concerned about the impact the legislation would have on some of its congregations in respect of the prescribed format for statements of accounts;
The effect bequests might have on reporting requirements. PCI pointed out that the receipt of a legacy could mean that a charity would fall into a higher level of auditing scrutiny for a given year, and that there would be a higher financial cost attached to this;
The registration of trustees. PCI advised the Committee that it had approximately 1,200 trustees and was concerned that all would have to be registered individually; and
Changes to the Law of the Church (Church Code). PCI was concerned that the legislation would require it to report to the Commission, every change made to the Law of the Church.

Evidence from Magheraknock Mission Hall

25. On 6 March 2008, the Committee took oral evidence from representatives of Magheraknock Mission Hall – see Appendix 2. The representatives welcomed the provisions in the Bill that would allow for scrutiny of charities to ensure that they were being legally managed for public benefit. However, the representatives had serious concerns in relation to some of the criteria to be satisfied to achieve designated religious charity status, namely the requirement for a religious organisation to have at least 1000 members and the requirement for it to have been established for at least 10 years.

Evidence from Kingdom Life Faith Centre, Moira Pentecostal Church, Mount Zion Free Methodist Church and Jordan Victory Church

26. On 6 March 2008, the Committee took oral evidence from representatives of Kingdom Life Faith Centre, Moira Pentecostal Church, Mount Zion Free Methodist Church and Jordan Victory Church – see Appendix 2. The representatives supported the main aims of the Bill, but raised some concerns, including:

The criteria to be met to achieve designated religious status. It was felt that the requirement to have at least 1000 members and to have been established for at least 10 years was discriminatory;
The lack of recognition of ‘church discipline’. Representatives were concerned that an interim manager or trustees who may not agree with a church’s ethos could be appointed by the Commission to administer or manage the property and affairs of a charity; and
The bureaucracy in relation to charitable appeals and public charitable collections.

Clause-by-Clause Scrutiny of the Bill

27. The Committee undertook its formal clause-by-clause scrutiny of the Bill on 3, 10 and 17 April 2008 – see Appendix 2.

Clause 1 – Meaning of “charity”

28. The Committee agreed to clause 1 as drafted.

Clause 2 – Meaning of “charitable purpose”

29. The Committee noted the conditions to be met for a body to be recognised as a charity in law, namely that its charitable purpose falls under the 12 heads as listed at clause 2(2), and that it is of public benefit. The Committee welcomed that the current four heads of charity (relief of poverty, advancement of education, advancement of religion and advancement of arts and culture) would be replaced by 12 charitable purposes and that there would be a residual purpose that would leave scope for future developments in the charitable sector.

30. The Committee highlighted differences between the Bill’s charitable purposes definition and that within the English Charities Act 2006, including the absence of the promotion of the efficiency of the armed forces or the Crown, police, fire rescue services or ambulance services, and the inclusion of the advancement of peace and community relations (under the heading relating to human rights and resolution of conflict). Concern was expressed that potentially conflicting issues may arise as to how an institution, which is a charity under Northern Ireland law, avails of tax exemptions under the Income and Corporation Taxes Act 1988. The Committee drew attention to the possibility that HM Revenue and Customs (Bootle) may apply the law of England and Wales in determining charitable purposes when a Northern Ireland registered charity applies for a tax exemption. The Committee was reassured by the Department that the promotion of the efficiency of the armed forces, the Crown etc., although not explicitly mentioned in the legislation, is and always has been a charitable purpose in the United Kingdom. The Committee was further reassured by the Department that it had worked closely with HM Revenue and Customs during the drafting of the Bill and that a Memorandum of Understanding between HM Revenue and Customs and the Commission was under consideration.

31. The Committee considered whether a broader definition such as the European definition of “sport” should be adopted. However, after discussion with the Department it was satisfied that the definition was sufficiently broad and acknowledged that it was the same definition as used in the rest of the United Kingdom.

32. The Committee raised a concern in relation to the definition of ‘religion’ for charitable purposes. The Committee was content that non-deity and multi-deity groups would be able satisfy the definition for charitable purposes but expressed concern that the definition, although it did not preclude a belief in ‘one god’, did not specifically mention a belief in one god.

33. At the request of the Committee, the Department agreed to amend clause 2 to reflect that the advancement of religion also includes a belief in one god.

34. The Committee agreed to clause 2 subject to the Committee being satisfied with the wording of the proposed amendment. The Committee agreed to the text of the amendment as proposed by the Minister.

Proposed amendment, clause 2(3)(a)(i)

“(3) In subsection (2)—

(a) in paragraph (c) “religion” includes—

(i) a religion which involves belief in one god or more than one god,”.

Clause 3 – The “public benefit” test

35. The Committee noted the requirement for all charitable purposes to provide public benefit, and that it would not be presumed that a purpose of a particular description was for public benefit. The Committee had some sympathy with those bodies that felt that the advancement of religion should be presumed to be of public benefit but agreed that there should be no exemptions.

36. The Committee considered that benefits to the public must be capable of being recognised, identified, defined or described but not necessarily be capable of being quantified or measured. The Committee agreed that the need for benefits that are not tangible or measurable, such as spiritual benefits, should be recognised by the Commission in determining whether or not a charitable purpose is for public benefit.

37. The Committee raised concerns in relation to the use of the term ‘disbenefit’. It was argued that the term ‘disbenefit’ was ambiguous and ill-defined and was vulnerable to political exploitation. In considering this matter, the Committee noted that the Charity Commission for England and Wales used the terms ‘detriment’ or ‘harm’ and agreed that either would be more appropriate.

38. At the request of the Committee, the Department agreed to amend clause 3 to substitute the word “detriment” in place of “disbenefit.”

39. The Committee agreed to clause 3 subject to the Committee being satisfied with the wording of the proposed amendment. The Committee agreed to the text of the amendment as proposed by the Minister.

Proposed amendment, clause 3(3)(a)(ii)

“(3) In determining whether an institution provides or intends to provide public benefit, regard must be had to—

(a) how any—

(i) benefit gained or likely to be gained by members of the institution or any other persons (other than as members of the public), and

(ii) detriment incurred or likely to be incurred by the public, in consequence of the institution exercising its functions compares with the benefit gained or likely to be gained by the public in that consequence”.

Clause 4 – Guidance as to operation of public benefit requirement

40. The Committee noted that this clause provided for the Commission to produce guidance on the operation of the public benefit requirement. The Committee agreed that the guidance should: raise awareness and understanding of the public benefit requirement amongst the charitable sector and the public; explain clearly and concisely how the public benefit requirement operates in practice; and, explain fully the requirement for charity trustees to report on public benefit.

41. A number of respondents expressed concern that the Commission would not be obliged to consult on any revision to its public benefit guidance, if it felt it was unnecessary to so. The Committee agreed that the Commission should reserve the right to have the discretion to make minor changes to the guidance but, given that the public benefit test would be applied in line with the guidance, the Committee was of the view that any material changes to the guidance should be subject to public consultation.

42. The Committee agreed to clause 4 as drafted.

Clause 5 – Special provisions about recreational charities, sports clubs, etc.

43. The Committee considered the implications of this clause which would preclude a registered Community Amateur Sports Club (CASC) from becoming a charity. The Committee raised this matter with the Department and was reassured to note that a CASC could amend its constitution and objectives to be recognised as a charity and that the Commission would provide advice and guidance on this matter.

44. The Committee agreed to clause 5 as drafted.

Clause 6 – The Charity Commission for Northern Ireland

45. The Committee noted that this clause provided for the establishment of a Charity Commission for Northern Ireland, and detailed the structure of that body in relation to its Commissioners. In response to an enquiry by the Committee, the Department informed Members that the appointment of Commissioners would be subject to the Public Appointment Process to establish criteria, and that the whole process would be overseen by the Office of the Commissioner for Public Appointments. The Committee was content that the Commission should include at least one legally qualified member. The Committee agreed that, while appointments to the Commission should be based on merit, efforts should be made to ensure that the charity sector is adequately represented and that there is a fair gender balance.

46. The Committee agreed to clause 6 as drafted.

Clause 7 - The Commission’s objectives

47. The Committee noted that the Commission would be first and foremost a regulatory body and was content with its five objectives. The Committee was content that the Commission’s duty to value the importance of charities to civil society was reflected in clause 9.

48. The Committee agreed to clause 7 as drafted.

Clause 8 – The Commission’s general functions

49. The Committee considered the general functions of the Commission including its role as both regulator and advisor. In considering this matter, the Committee noted that the Charity Commission for England and Wales had performed a dual regulatory and advisory function efficiently for a number of years and that the umbrella bodies for the sector had continued to play an important role in providing advice and guidance to charities. The Committee was content with the Commission’s dual role. The Committee agreed that it was important for the Commission to differentiate between its advisory and regulatory functions and make it clear in all its communications, the distinction between advice and instructions.

50. The Committee acknowledged the excellent work of the umbrella bodies in Northern Ireland in providing advice and guidance to the charitable sector and expressed a desire to see this work continue.

51. The Committee agreed to clause 8 as drafted.

Clause 9 – The Commission’s general duties

52. The Committee noted that clause 9 dealt with how the Commission performs its functions. Members had expressed some concern about the effective use of resources and whether the Commission had the potential to grow and expand beyond its role. However, the Committee was content that this clause seeks to ensure that the Commission operates and uses the money that it receives in an efficient, effective and economical manner.

53. In considering the Commission’s general duties, the Committee reflected on the regulatory burden that would be placed on charities, and in particular, smaller charities. The Committee agreed that the Commission should, in performing its functions, have due regard to its duty to ensure that regulation is fair and proportionate.

54. The Committee agreed to clause 9 as drafted.

Clause 10 – The Commission’s incidental powers

55. The Committee agreed to clause 10 as drafted.

Clause 11 – The official custodian for charities in Northern Ireland

56. The Committee agreed to clause 11 as drafted.

Clause 12 – The Charity Tribunal for Northern Ireland

57. The Committee agreed to clause 12 as drafted.

Clause 13 – Practice and procedure

58. At the request of the Committee, the Department agreed to consider how clause 13 could be amended to allow the Commission to make provision for applicants to be represented by special advocates at a Charity Tribunal. The Department considered that there was merit in this suggestion and agreed to consider further if and when there were developments in this area in England and Wales.

59. The Committee agreed to clause 13 as drafted.

Clause 14 – Appeal from Tribunal

60. The Committee agreed to clause 14 as drafted.

Clause 15 – Intervention by Attorney General

61. The Committee agreed to clause 15 as drafted.

Clause 16 – Register of charities

62. The Committee noted that all bodies operating as charities under the law in Northern Ireland must be registered in the register of charities. The Committee also noted that under clause 167, all bodies that are not charities under the law of Northern Ireland, but which operate in Northern Ireland, must also be registered in a parallel register of charities.

63. The Committee had asked the Department to consider if clause 16 could be amended to ensure that Assembly approval was required for any further exemptions for designated religious charities. The Committee subsequently agreed that an amendment was not required as this provision would be included in the amended clause 165(3).

64. At the request of the Committee, the Department agreed to amend clause 16 to ensure that the charities register contained a separate statement if an organisation had been granted designated religious charity status.

65. The Committee agreed to clause 16 subject to the Committee being satisfied with the wording of the proposed amendment. The Committee agreed to the text of the amendment as proposed by the Minister.

Proposed amendment, clause 16(4)(a)

“(4) The register shall contain—

(a) the name of the charity,

(b) if the charity is a designated religious charity within the meaning of section 165, a statement to that effect, and

Clause 17 – Duties of trustees in connection with registration

66. The Committee agreed to clause 17 as drafted.

Clause 18 – Effect of, and claims and objections to, registration

67. The Committee agreed to clause 18 as drafted.

Clause 19 – Status of registered charity to appear on official publications, etc.

68. The Committee agreed to clause 19 as drafted.

Clause 20 – Power of Commission to require charity’s name to be changed

69. The Committee noted that this clause would allow the Commission to require that a charity changes its name for certain reasons e.g. if it is the same name as that of another charity (whether registered or not), or if it is considered to be offensive or misleading. The Committee sought clarification from the Department that the Presbyterian Church in Ireland would not be required to change its name because other charities had ‘Presbyterian’ in their names. The Department assured the Committee that providing each organisation had a distinct name i.e. that it was not the same as, or in the opinion of the Commission too like another charity’s name, a name change would not be required.

70. The Committee agreed to clause 20 as drafted.

Clause 21 – Effect of direction under section 20 where charity is a company

71. The Committee agreed to clause 21 as drafted.

Clause 22 – General power to institute inquiries

72. The Committee agreed to clause 22 as drafted.

Clause 23 – Power to call for documents and search records

73. The Committee agreed to clause 23 as drafted.

Clause 24 – Disclosure of information by and to the Commission

74. The Committee agreed to clause 24 as drafted.

Clause 25 – Supply of false or misleading information to Commission, etc.

75. The Committee agreed to clause 25 as drafted.

Clause 26 – Occasions for applying property cy-près

76. The Committee agreed to clause 26 as drafted.

Clause 27 – Application cy-pres of gifts of donors unknown or disclaiming

77. The Department proposed a technical amendment to clause 27. The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 28 - Application cy-pres of gifts made in response to certain solicitations

78. The Committee agreed to clause 28 as drafted.

Clause 29 – Cy-pres schemes

79. The Committee agreed to clause 29 as drafted.

Clause 30 – Charities governed by charter

80. The Committee agreed to clause 30 as drafted.

Clause 31 – Concurrent jurisdiction with High Court for certain purposes

81. The Committee agreed to clause 31 as drafted.

Clause 32 – Further powers to make schemes or alter application of charitable property

82. The Department proposed a technical amendment to clause 32. The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 33 – Power to act for protection of charities

83. The Committee noted that clause 33 would not apply to a designated religious charity. The Committee strongly supported this exemption, given that such a charity would already have sufficient internal governance structures in place to deal with investigations, suspensions, maladministration and misconduct.

84. The Committee agreed to clause 33 as drafted.

Clause 34 – Power to suspend or remove trustees, etc. from membership of charity

85. The Committee noted that clause 34 would not apply to a designated religious charity. The Committee strongly supported this exemption, given that such a charity would already have sufficient internal governance structures in place to deal with investigations, suspensions, maladministration and misconduct.

86. The Committee agreed to clause 34 as drafted.

Clause 35 – Supplementary provisions relation to interim manager appointed for a charity

87. The Committee noted that clause 35 would not apply to a designated religious charity. The Committee strongly supported this exemption, given that such a charity would already have sufficient internal governance structures in place to deal with investigations, suspensions, maladministration and misconduct.

88. The Committee agreed to clause 35 as drafted.

Clause 36 – Power to give specific directions for protection of charity

89. The Committee noted that clause 36 would not apply to a designated religious charity. The Committee strongly supported this exemption, given that such a charity would already have sufficient internal governance structures in place to deal with investigations, suspensions, maladministration and misconduct.

90. The Committee agreed to clause 36 as drafted.

Clause 37 – Power to direct application of charity property

91. The Committee agreed to clause 37 as drafted.

Clause 38 – Copy of order under section 33, 34, 36 or 37, and Commission’s reasons, to be sent to charity

92. The Committee agreed to clause 38 as drafted.

Clause 39 – Publicity relating to schemes

93. The Committee agreed to clause 39 as drafted.

Clause 40 – Publicity for orders relating to trustees or other individuals

94. The Committee agreed to clause 40 as drafted.

Clause 41 – Entrusting charity property to official custodian, and termination of trust

95. The Committee agreed to clause 41 as drafted.

Clause 42 – Supplementary provisions as to property vested in official custodian

96. The Committee agreed to clause 42 as drafted.

Clause 43 – Schemes to establish common investment funds

97. The Committee agreed to clause 43 as drafted.

Clause 44 – Schemes to establish common deposit funds

98. The Committee agreed to clause 44 as drafted.

Clause 45 – Meaning of “Scottish recognised body” and “England and Wales charity” in sections 43 and 44

99. The Department proposed a technical amendment to clause 45. The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 46 – Power to authorise dealings with charity property, etc.

100. The Department proposed a technical amendment to clause 46 to reflect amendments made to the Charities Act 1993 as contained in sections 181(4) and 226 of the Companies Act 2006. The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 47 – Power to authorise ex gratia payments, etc.

101. The Committee agreed to clause 47 as drafted.

Clause 48 – Power to give directions about dormant bank accounts of charities

102. The Committee agreed to clause 48 as drafted.

Clause 49 – Power to give advice and guidance

103. The Committee agreed to clause 49 as drafted.

Clause 50 – Power to determine membership of charity

104. The Committee agreed to clause 50 as drafted.

Clause 51 – Powers for preservation of charity documents

105. The Committee agreed to clause 51 as drafted.

Clause 52 – Power to order taxation of solicitor’s bill

106. At the request of the Committee, the Department agreed to remove clause 52 from the Bill as it duplicated provisions already contained within existing legislation i.e. the Solicitors (Northern Ireland) Order 1976.

107. The Committee agreed that clause 52 should be removed from the Bill. The Minister gave notice of her intention to oppose the question that clause 52 stand part of the Bill.

Clause 53 – Power to enter premises

108. The Committee agreed to clause 53 as drafted.

Clause 54 – Proceedings by Commission

109. The Committee agreed to clause 54 as drafted.

Clause 55 – Proceedings by other persons

110. The Committee agreed to clause 55 as drafted.

Clause 56 – Report of section 22 inquiry to be evidence in certain proceedings

111. The Committee agreed to clause 56 as drafted.

Clause 57 – Powers in relation to certain English, Welsh and Scottish charities

112. The Department proposed a technical amendment to clause 57. The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 58 – Restriction on dispositions

113. The Committee noted that no land held by or in trust for a charity could be disposed of without an order of the Court or of the Commission. The Committee sought an assurance from the Department that the restriction on dispositions would not apply to the regulation of co-ownership housing schemes. The Department assured the Committee that there was an exemption for such schemes under clause 58(10)(a).

114. The Committee agreed to clause 58 as drafted.

Clause 59 – Supplementary provisions relating to dispositions

115. The Committee agreed to clause 59 as drafted.

Clause 60 – Release of charity rentcharges

116. The Committee agreed to clause 60 as drafted.

Clause 61 – Restrictions on mortgaging

117. The Committee noted that clause 61 would not apply to a mortgage for which “general or special authority” had been given in accordance with clause 58(10)(a). The Committee was satisfied that mortgages under legally established schemes, such as co-ownership housing schemes, would be excluded.

118. The Committee agreed to clause 61 as drafted.

Clause 62 – Supplementary provisions relating to mortgaging

119. The Committee agreed to clause 62 as drafted.

Clause 63 – Interpretation of Part 7

120. The Committee agreed to clause 63 as drafted.

Clause 64 – Duty to keep accounting records

121. The Committee considered the duty on trustees to keep accounting records as a very important part of maintaining and building public confidence in the charity sector. The Committee agreed that the Commission should ensure that any relevant guidance for trustees should be comprehensive and easy to read.

122. The Committee agreed to clause 64 as drafted.

Clause 65 – Annual statement of accounts

123. The Committee was in favour of a high level of transparency and accountability in respect of a charity’s financial activity but recognised that charities already faced considerable levels of auditing and reporting requirements. The Committee noted that the format for an annual statement may be prescribed by regulation. The Committee agreed that, in considering the format for annual statements of accounts, the Commission should take into consideration the audit requirements of other regulatory bodies.

124. The Committee agreed to clause 65 as drafted.

Clause 66 – Annual audit or examination of charity accounts

125. The Committee noted the three distinct income bands which would determine a) whether accounts would be required to be examined or audited; and, b) who would be eligible to conduct an examination or audit. The Committee was content that the differing levels of auditing requirements based on income would address any proportionality issues raised.

126. The Committee had some sympathy with those organisations that had expressed concern that the receipt of a legacy for a given year could move a charity into a higher income band, resulting in a higher level of auditing requirement than would have been the case if the legacy had not been received. The Committee acknowledged that this could have financial implications for a charity but agreed that it would not be appropriate to disregard certain types of income when considering audit thresholds.

127. The Committee understood that this clause would not apply to charities that are also companies (clause 66(10)) and that companies would continue to be regulated by company law. However, the Department informed the Committee that the Companies Act 2006 was being enacted over a period of time, and that amendments would be made in order to dovetail company and charity legislation in England and Wales. The Department advised that it was monitoring the situation and that amendments would be made to reflect changes in company law. The Committee noted that clause 181 provided a power to make such amendments.

128. The Department consequently proposed technical amendments to clause 66 to reflect amendments made to the Charities Act 1993 as contained in the Charities Act 2006 (Charitable Companies Audit and Group Account Provisions) Order 2008; and the Companies Act 2006 (Consequential Amendments, etc.) Order 2008 – Schedule 1, paragraphs 1 and 192. The Committee agreed to the text of the amendments as proposed by the Minister. The text of the amendments can be found at Appendix 4.

Clause 67 – Supplementary provisions relating to audits, etc.

129. The Department proposed a technical amendment to clause 67 to reflect amendments made to the Charities Act 1993 as contained in the Charities Act 2006 (Charitable Companies Audit and Group Account Provisions) Order 2008; and the Companies Act 2006 (Consequential Amendments, etc.) Order 2008 – Schedule 1, paragraphs 1 and 192. The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 68 – Duty of auditors, etc. to report matters to Commission

130. The Committee agreed to clause 68 as drafted.

Clause 69 – Annual reports

131. The Committee noted the duty on charity trustees to prepare, in respect of each financial year, an annual report to be sent to the Commission. The Committee noted that the format for an annual report may be prescribed by regulation. The Committee considered that the requirement to produce an annual report was important in respect of maintaining and building public confidence in charitable activities. However, it agreed that the Commission should seek to request information commensurate with the size of a charity.

132. The Department proposed a technical amendment to clause 69 to reflect amendments made to the Charities Act 1993 as contained in the Charities Act 2006 (Charitable Companies Audit and Group Account Provisions) Order 2008; and the Companies Act 2006 (Consequential Amendments, etc.) Order 2008 – Schedule 1, paragraphs 1 and 192. The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 70 – Public inspection of annual reports, etc.

133. The Department proposed technical amendments to clause 70 to reflect amendments made to the Charities Act 1993 as contained in the Charities Act 2006 (Charitable Companies Audit and Group Account Provisions) Order 2008; and the Companies Act 2006 (Consequential Amendments, etc.) Order 2008 – Schedule 1, paragraphs 1 and 192. The Committee agreed to the text of the amendments as proposed by the Minister. The text of the amendments can be found at Appendix 4.

Clause 71 – Annual returns by charities

134. The Committee noted the duty on each charity to prepare, in respect of each financial year, an annual return to be sent to the Commission. The Committee noted that the format of such a return may be prescribed by regulation. The Committee considered that the requirement to produce an annual return was an important issue in respect of maintaining and building public confidence in charitable activities. However, it agreed that the Commission should seek to request information commensurate with the size a charity.

135. The Committee agreed to clause 71 as drafted.

Clause 72 – Offences

136. The Committee agreed to clause 72 as drafted.

Clause 73 – Group Accounts

137. The Committee noted that clause 73 made provision for charities with a parent body to submit a group account rather than individual accounts for each charity. The Department advised that it would be for the charity, rather than the Commission, to decide whether to submit a group account or individual charity accounts.

138. The Committee agreed to clause 73 as drafted.

Clause 74 – Incorporation of trustees of a charity

139. The Committee agreed to clause 74 as drafted

Clause 75 – Estate to vest in body corporate

140. The Committee agreed to clause 75 as drafted.

Clause 76 – Applications for incorporation

141. The Committee agreed to clause 76 as drafted.

Clause 77 – Nomination of trustees, and filling up vacancies

142. The Committee agreed to clause 77 as drafted.

Clause 78 – Liability of trustees and others, notwithstanding incorporation

143. The Committee agreed to clause 78 as drafted.

Clause 79 – Certificate to be evidence of compliance with requirements for incorporation

144. The Committee agreed to clause 79 as drafted.

Clause 80 – Power of Commission to amend certificate of incorporation

145. The Committee agreed to clause 80 as drafted.

Clause 81 – Records of applications and certificates

146. The Committee agreed to clause 81 as drafted.

Clause 82 – Enforcement of orders and directions

147. The Committee agreed to clause 82 as drafted.

Clause 83 – Gifts to charity before incorporation to have same effect afterwards

148. The Committee agreed to clause 83 as drafted.

Clause 84 – Execution of documents by incorporated body

149. The Committee agreed to clause 84 as drafted.

Clause 85 – Power of Commission to dissolve incorporated body

150. The Committee agreed to clause 85 as drafted.

Clause 86 – Interpretation of Chapter 1

151. The Committee agreed to clause 86 as drafted.

Clause 87 – Persons disqualified for being trustees of a charity

152. The Committee understood that the charities legislation in the Republic of Ireland had not yet been enacted, therefore it was not possible at this stage to amend the Bill to extend the provision to disqualify trustees who had been removed from office in the Republic of Ireland. However, the Committee asked the Department to consider if the clause could be amended to disqualify trustees who had been removed from office in other countries where charities legislation did exist. The Department advised the Committee that it did not hold information on charity regulation outside the UK and Ireland and that this suggestion would not be practical. The Committee accepted the Department’s response. The Committee agreed that the Department should revisit this area when the Republic of Ireland’s charity legislation has been enacted, and give consideration to an amendment to the legislation that would allow the disqualification of trustees who have been removed from office in the Republic of Ireland.

153. The Committee agreed to clause 87 as drafted.

Clause 88 – Person acting as charity trustee while disqualified

154. The Committee agreed to clause 88 as drafted.

Clause 89 – Remuneration of trustees, etc. providing services to charity

155. The Committee agreed to clause 89 as drafted.

Clause 90 – Supplementary provisions for purposes of section 89

156. The Committee agreed to clause 90 as drafted.

Clause 91 – Disqualification of trustee receiving remuneration under section 89

157. The Committee agreed to clause 91 as drafted.

Clause 92 – Power to relieve trustees, auditors, etc. from liability for breach of trust or duty

158. The Department proposed a technical amendment to clause 92 to reflect amendments made to the Charities Act 1993 by paragraphs 7-12 of Schedule 3 to the Companies Act 2006 (Consequential Amendments) Order 2008.The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 93 – Court’s power to grant relief to apply to all auditors, etc. of charities which are not companies

159. The Department proposed a technical amendment to clause 93 to reflect amendments made to the Charities Act 1993 by paragraphs 7-12 of Schedule 3 to the Companies Act 2006 (Consequential Amendments) Order 2008.The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 94 – Trustees’ indemnity insurance

160. The Committee agreed to clause 94 as drafted.

Clause 95 – Trustees

161. The Committee agreed to clause 95 as drafted.

Clause 96 – Winding up

162. The Committee agreed to clause 96 as drafted.

Clause 97 – Alteration of objects clause

163. The Committee agreed to clause 97 as drafted.

Clause 98 – Invalidity of certain transactions

164. The Committee agreed to clause 98 as drafted.

Clause 99 – Requirement of consent of Commission to certain acts

165. The Department proposed a technical amendment to clause 99 to reflect amendments made to the Charities Act 1993 as contained in sections 181(4) and 226 of the Companies Act 2006. The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 100 – Name to appear on correspondence, etc.

166. The Department proposed a technical amendment to clause 100 to reflect amendments made to the Charities Act 1993 by paragraphs 7-12 of Schedule 3 to the Companies Act 2006 (Consequential Amendments) Order 2008.The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 101 – Status to appear on correspondence, etc.

167. The Department proposed a technical amendment to clause 101 to reflect amendments made to the Charities Act 1993 by paragraphs 7-12 of Schedule 3 to the Companies Act 2006 (Consequential Amendments) Order 2008.The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 102 – Duty of charity’s auditors, etc. to report matters to Commission

168. The Department proposed a technical amendment to clause 102 to reflect amendments made to the Charities Act 1993 as contained in the Charities Act 2006 (Charitable Companies Audit and Group Account Provisions) Order 2008; and the Companies Act 2006 (Consequential Amendments, etc.) Order 2008 – Schedule 1, paragraphs 1 and 192. The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 103 – Investigation of accounts

169. The Department proposed a technical amendment to clause 103 to reflect amendments made to the Charities Act 1993 as contained in the Charities Act 2006 (Charitable Companies Audit and Group Account Provisions) Order 2008; and the Companies Act 2006 (Consequential Amendments, etc.) Order 2008 – Schedule 1, paragraphs 1 and 192. The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 104 – Annual audit or examination of accounts of charitable companies

170. The Minister gave notice of her intention to oppose the question that clause 104 stand part of the Bill. The Committee agreed that clause 104 should be removed from the Bill.

Clause 105 – Nature and constitution

171. The Committee agreed to clause 105 as drafted.

Clause 106 – Constitution

172. The Committee agreed to clause 106 as drafted.

Clause 107 – Name and status

173. The Department proposed a technical amendment to clause 107 to reflect amendments made to the Charities Act 1993 by paragraphs 7-12 of Schedule 3 to the Companies Act 2006 (Consequential Amendments) Order 2008.The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4. The Committee also agreed to the text of a new clause (107A) to be inserted after clause 107- Civil consequences of failure to disclose name and status. The text of the new clause can also be found at Appendix 4.

Clause 108 – Offences connected with name and status

174. The Department proposed a technical amendment to clause 108 to reflect amendments made to the Charities Act 1993 by paragraphs 7-12 of Schedule 3 to the Companies Act 2006 (Consequential Amendments) Order 2008.The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 109 – Application for registration

175. The Committee agreed to clause 109 as drafted.

Clause 110 – Effect of registration

176. The Committee agreed to clause 110 as drafted.

Clause 111 – Conversion of charitable company or registered industrial and provident society

177. The Committee agreed to clause 111 as drafted.

Clause 112 – Conversion: consideration of application

178. The Committee agreed to clause 112 as drafted.

Clause 113 – Conversion: supplementary

179. The Committee agreed to clause 113 as drafted.

Clause 114 – Conversion of community interest company

180. The Department proposed a technical amendment to clause 114. The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 115 – Amalgamation of CIOs

181. The Committee agreed to clause 115 as drafted.

Clause 116 – Amalgamation: supplementary

182. The Committee agreed to clause 116 as drafted.

Clause 117 – Transfer of CIO’s undertaking

183. The Committee agreed to clause 117 as drafted.

Clause 118 – Regulations about winding up, insolvency and dissolution

184. The Committee agreed to clause 118 as drafted.

Clause 119 – Power to transfer all property of unincorporated charity to one or more CIO’s

185. The Committee agreed to clause 119 as drafted.

Clause 120 – Further provision about CIO’s

186. The Committee agreed to clause 120 as drafted.

Clause 121 – Regulations

187. The Committee agreed to clause 121 as drafted.

Clause 122 – Power to transfer all property of unincorporated charity

188. The Committee had asked the Department to consider if this clause could be amended to provide for an exception for a transfer of designated land that had a very low value. Legislative Council advised the Department that the term ‘of a very low value’ would be unacceptably vague and that a figure would need to be quoted. The amended clause was drafted on this basis and a figure of £90,000 has been quoted.

189. The Committee agreed to the text of the amendment as proposed by the Minister.

Proposed amendment, clause 122 (b) and (13A)

“(b) either -

(i) it does not hold any designated land, or

(ii) the total market value of all designated land which it holds does not exceed £90,000.00; and

(13A) In this section “market value”, in relation to any land held by a charity, means -

(a) the market value of the land as recorded in the accounts for the last financial year of the charity, or

(b) if no such value was so recorded, the current market value of the land as determined on a valuation carried out for the purpose.”

Clause 123 – Resolution not to take effect or to take effect at later date

190. The Committee agreed to clause 123 as drafted.

Clause 124 – Transfer where charity has permanent endowment

191. The Committee agreed to clause 124 as drafted.

Clause 125 – Power to replace purposes of unincorporated charity

192. The Committee agreed to clause 125 as drafted.

Clause 126 – Power to modify powers or procedures of unincorporated charity

193. The Committee agreed to clause 126 as drafted.

Clause 127 – Power of unincorporated charities to spend capital: general

194. The Committee asked the Department to consider the comments made by the Charity Commission for England and Wales in relation to available endowment funds. The Department consulted the Office of the Legislative Counsel and advised that it would await any amendments in Great Britain before making a corresponding provision for Northern Ireland.

195. The Committee agreed to clause 127 as drafted.

Clause 128 – Power of larger unincorporated charities to spend capital given for particular purpose

196. The Committee agreed to clause 128 as drafted.

Clause 129 – Power to spend capital subject to special trusts

197. The Committee agreed to clause 129 as drafted.

Part 13 - Chapter 1 of the Bill (Clauses 130 - 148)

198. The Committee had expressed concern that Part 13, Chapter 1 of the Bill (Public Charitable Collections) would not apply to internet fundraising activity. The Committee raised the matter with the Department and was informed that internet fundraising was an evolving area and would be difficult to regulate at this point. The Committee noted that the Department had held discussions with other charity regulators who are compiling advice and guidance in the area of internet fundraising and that the Institute of Fundraising for Great Britain had issued a code of practice for internet fundraising which was available to charities in Northern Ireland. The Committee accepted that regulation at this stage would not be appropriate but agreed that the Commission should consider this matter and issue appropriate guidance for Northern Ireland.

Clause 130 – Regulation of public charitable collections

199. The Committee agreed to clause 130 as drafted.

Clause 131 – Charitable appeals that are not public charitable collections

200. The Committee agreed to clause 131 as drafted.

Clause 132 – Other definitions for purposes of this Chapter

201. The Committee agreed to clause 132 as drafted.

Clause 133 – Restrictions on conducting collections in a public place

202. The Committee agreed to clause 133 as drafted.

Clause 134 – Restrictions on conducting door to door collections

203. The Committee agreed to clause 134 as drafted.

Clause 135 – Exemption for local, short-term collections

204. The Committee agreed to clause 135 as drafted.

Clause 136 – Applications for certificates

205. The Committee noted that clause 136 dealt with the method of applying to the Commission for a public collection certificate. The Committee highlighted the need for the PSNI to be informed of when a collection would be taking place in a given area. The Committee agreed that the Commission should liaise with the PSNI in relation to public collections, and that the relationship between the Commission and the PSNI should be defined in a Memorandum of Understanding.

206. The Committee agreed to clause 136 as drafted.

Clause 137 – Determination of applications and issue of certificates

207. The Committee agreed to clause 137 as drafted.

Clause 138 – Grounds for refusing to issue a certificate

208. The Committee agreed to clause 138 as drafted.

Clause 139 – Power to call for information and documents

209. The Committee agreed to clause 139 as drafted.

Clause 140 – Transfer of certificate between trustees of unincorporated charity

210. The Committee agreed to clause 140 as drafted.

Clause 141 – Withdrawal or variation, etc. of certificates

211. The Committee agreed to clause 141 as drafted.

Clause 142 – Applications for permits to conduct public charitable collections

212. The Committee noted that clause 142 detailed the manner in which a person should apply to the Commission for a permit to conduct a public charitable collection. The Committee also noted that the Commission would provide advice, guidance and support in this area.

213. The Committee agreed to clause 142 as drafted.

Clause 143 – Determination of applications and issue of permits

214. A number of respondents to the Committee’s consultation on the Bill expressed some concern regarding the Commission’s duty to issue permits to conduct public charitable collections. It was considered by some that local authorities with local knowledge would be best placed to issue permits. The Committee raised this matter with the Department. The Department advised that, in the present legal framework, there would be little alternative but for this function to fall to the Commission. However, the option would remain open in the future to involve local authorities. The Committee agreed that the Commission should be adequately resourced to allow it to fulfil its function in relation to the issuing of permits and that the transfer of this function to local authorities should be considered in the future.

215. The Committee noted that clause 143(3) would allow the Commission to decide on the manner and the timescale of a permit. In effect, this could mean that a permit for a charity shop association or an individual charity shop could be open-ended.

216. The Committee agreed to clause 143 as drafted.

Clause 144 – Refusal of permits

217. The Committee agreed to clause 144 as drafted.

Clause 145 – Withdrawal or variation, etc. of permits

218. The Committee agreed to clause 145 as drafted.

Clause 146 – Appeals against decisions of Commission

219. The Department proposed a technical amendment to clause 146. The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Clause 147 – Regulations

220. The Committee agreed to clause 147 as drafted.

Clause 148 – Offences

221. The Committee agreed to clause 148 as drafted.

Clause 149 – Prohibition on professional fund-raiser, etc. raising funds for charitable institution without an agreement in prescribed form

222. The Committee agreed to clause 149 as drafted.

Clause 150 – Professional fund-raisers, etc. required to indicate institutions benefiting and arrangements for remuneration

223. The Committee noted that this clause would require professional fundraisers, when collecting money or property, to indicate: which institute or institutions would benefit; how the fundraiser’s remuneration in connection to the appeal would be determined; and the amount of that remuneration. The Committee considered that this would be of great benefit to the public, enabling them to be more discerning about where and to whom they made donations.

224. The Committee agreed to clause 150 as drafted.

Clause 151 – Other persons making appeals required to indicate institutions benefiting and arrangements for remuneration

225. The Committee agreed to clause 151 as drafted.

Clause 152 – Exclusion of lower-paid collectors from provisions of section 151

226. The Committee agreed to clause 152 as drafted.

Clause 153 – Cancellation of payments and agreements made in response to appeals

227. The Committee agreed to clause 153 as drafted.

Clause 154 – Right of charitable institution to prevent unauthorised fund-raising

228. The Committee agreed to clause 154 as drafted.

Clause 155 – False statements relating to institutions which are not registered charities

229. The Committee agreed to clause 155 as drafted.

Clause 156 – Regulations about fund-raising

230. The Committee agreed to clause 156 as drafted.

Clause 157 – Reserve power to control fund-raising by charitable institutions

231. The Committee agreed to clause 157 as drafted.

Clause 158 – Interpretation of Chapter 2

232. The Committee agreed to clause 158 as drafted.

Clause 159 – Power of Department to give financial assistance to charitable, benevolent or philanthropic institutions

233. The Committee agreed that clause 159 should be removed from the Bill as Article 3 of the Social Need (Northern Ireland) Order 1986 already makes corresponding provision for Northern Ireland in this respect.

234. The Minister gave notice of her intention to oppose the question that clause 159 stand part of the Bill.

Clause 160 – Interpretation of Part 13

235. The Committee agreed to clause 160 as drafted.

Clause 161 – Register of charity mergers

236. The Committee agreed to clause 161 as drafted.

Clause 162 – Register of charity mergers: supplementary

237. The Committee agreed to clause 162 as drafted.

Clause 163 – Pre-merger vesting declarations

238. The Committee agreed to clause 163 as drafted.

Clause 164 – Effect of registering charity merger on gifts to transferor

239. The Committee had asked the Department to consider how this clause could be amended to make provision for any gift which takes effect on or after the date of the transfer, to take effect as a gift to the transferee. The Committee was concerned that a gift that takes effect on or after the date of a merger could be lost if there is a gap between the date of a merger and the date a merger is registered. The Department was of the view that the possibility of losing the benefit of a gift between merger and registration would act as a strong incentive to register mergers promptly. The Committee accepted the Department’s view and agreed that an amendment would not be necessary.

240. The Committee agreed to clause 164 as drafted.

Clause 165 – Application of Act in relation to designated religious charities

241. At the request of the Committee, the Department agreed to amend clause 165 (to reflect the provisions in clause 167(7)) to ensure that any order made by the Department to extend exemptions to charities in this area would be subject to approval by resolution of the Assembly.

242. The Committee agreed to clause 165 subject to the Committee being satisfied with the wording of the proposed amendment. The Committee agreed to the text of the amendment as proposed by the Minister.

Proposed amendment, clause 165(3)

“(3) No order shall be made under this section unless a draft of the order has been laid before and approved by a resolution of the Assembly”.

Clause 166 – Designation, etc of religious charities

243. At the request of the Committee, the Department agreed to amend clause 166(3)(c) to reduce the requirement for a charity to be established in Northern Ireland from 10 years to 5 years, and to remove clause 166(3)(d) which would have required a religious organisation to have had at least 1000 members.

244. The Committee was content that the Commission would still retain sufficient powers to exclude faith-based charities which did not have sufficient governance and accountability arrangements in place.

245. The Committee agreed to clause 166 subject to the Committee being satisfied with the wording of the proposed amendment. The Committee agreed to the text of the amendment as proposed by the Minister.

Proposed amendment, clause 166(3)(c)

“(3) Those conditions are that the charity—

(a) has the advancement of religion as its principal purpose;

(b) has the regular holding of public worship as its principal activity;

Clause 167 – Institutions which are not charities under the law of Northern Ireland

246. The Committee had asked the Department to consider how this clause could be amended to make it clear that there was a link between it and clause 16 (Register of charities). The Department was of the view that there was a need for further clarification on this issue rather than an amendment to the legislation. The Department advised that Section 167 institutions, which are not charities under the law of Northern Ireland, but which operate in Northern Ireland, would be registered separately from Section 16 charities (charities that operate under the law of Northern Ireland). In effect, a parallel register would be in operation. The Committee noted that a Section 167 institution would also be required to register its activities in Northern Ireland and report to the Commission for Northern Ireland. The Committee accepted that an amendment to the legislation would not be necessary.

247. The Committee agreed to clause 167 as drafted.

Clause 168 – Manner of giving notice of charity meetings, etc.

248. The Committee agreed to clause 168 as drafted.

Clause 169 – Manner of executing instruments

249. The Committee agreed to clause 169 as drafted.

Clause 170 – Transfer and evidence of title to property vested in trustees

250. The Committee agreed to clause 170 as drafted.

Clause 171 – Supply by Commission of copies of documents open to public inspection

251. The Committee agreed to clause 171 as drafted.

Clause 172 – Fees and other amounts payable to Commission

252. The Committee agreed to clause 172 as drafted.

Clause 173 – Enforcement of requirements by order of Commission

253. The Committee agreed to clause 173 as drafted.

Clause 174 – Enforcement of orders of Commission

254. The Committee agreed to clause 174 as drafted.

Clause 175 – Other provisions as to orders of Commission

255. The Committee agreed to clause 175 as drafted.

Clause 176 – Directions of the Commission

256. The Committee agreed to clause 176 as drafted.

Clause 177 – Miscellaneous provisions as to evidence

257. The Committee agreed to clause 177 as drafted.

Clause 178 – Restriction on institution of proceedings for certain offences

258. The Committee agreed to clause 178 as drafted.

Clause 179 – Orders and regulations

259. The Committee agreed to clause 179 as drafted.

Clause 180 – General interpretation

260. The Department proposed technical amendments to clause 180 to reflect amendments made to the Charities Act 1993 as contained in the Charities Act 2006 (Charitable Companies Audit and Group Account Provisions) Order 2008; and the Companies Act 2006 (Consequential Amendments, etc.) Order 2008 – Schedule 1, paragraphs 1 and 192, and to remove surplus wording. The Committee agreed to the text of the amendments as proposed by the Minister. The text of the amendments can be found at Appendix 4.

Clause 181 – Amendments reflecting changes in company law

261. The Committee agreed to clause 181 as drafted.

Clause 182 – Further provision

262. The Committee agreed to clause 182 as drafted.

Clause 183 – Minor and consequential amendments

263. The Committee agreed to clause 183 as drafted.

Clause 184 – Repeals

264. The Committee agreed to clause 184 as drafted.

Clause 185 – Commencement

265. The Committee agreed to clause 185 as drafted.

Clause 186 – Short title

266. The Committee agreed to clause 186 as drafted.

Schedule 1 – The Charity Commission for Northern Ireland

267. The Committee noted that schedule 1 covered the terms of the appointment of the Commission, its remuneration and staffing. The Committee agreed that the Charity Commission should be adequately resourced to allow it to carry out its functions. The Committee also agreed that, while appointments to the Commission should be based on merit, efforts should be made to ensure that the charity sector is adequately represented and that there is a fair gender balance.

268. The Committee agreed to schedule 1 as drafted.

Schedule 2 – The Charity Tribunal

269. The Committee agreed to schedule 2 as drafted.

Schedule 3 – Appeals and applications to Tribunal

270. The Committee agreed to schedule 3 as drafted.

Schedule 4 – References to the Tribunal

271. The Committee agreed to schedule 4 as drafted.

Schedule 5 – Meaning of “connected persons” for purposes of section 58(2)

272. The Committee agreed to schedule 5 as drafted.

Schedule 6 – Group accounts

273. The Department proposed technical amendments to schedule 6 to reflect amendments made to the Charities Act 1993 as contained in the Charities Act 2006 (Charitable Companies Audit and Group Account Provisions) Order 2008; and the Companies Act 2006 (Consequential Amendments, etc.) Order 2008 – Schedule 1, paragraphs 1 and 192, and to remove surplus wording. The Committee agreed to the text of the amendments as proposed by the Minister. The text of the amendments can be found at Appendix 4.

Schedule 7 – Further provision about charitable incorporated organisations

274. The Committee agreed to schedule 7 as drafted.

Schedule 8 – Minor and consequential amendments

275. The Department proposed a technical amendment to schedule 8. The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Schedule 9 – Repeals

276. The Department proposed a technical amendment to schedule 9. The Committee agreed to the text of the amendment as proposed by the Minister. The text of the amendment can be found at Appendix 4.

Long Title

277. The Committee agreed to the long title as drafted.

Appendix 1

Minutes of Proceedings Relating to the Report

Thursday, 31 May 2007
Room 135, Parliament Buildings

Present:
Mr Gregory Campbell MP MLA (Chairperson)
Mr David Hilditch MLA (Deputy Chairperson)
Mr Mickey Brady MLA
Mr Thomas Burns MLA
Mr Jonathan Craig MLA
Ms Anna Lo MLA
Mr Alban Maginness MLA
Mr Fra McCann MLA
Mrs Claire McGill MLA
Miss Michelle McIlveen MLA

In Attendance:
Ms Marie Austin (Assembly Clerk)
Mr Neil Currie (Assistant Assembly Clerk)
Mrs Joy Hamilton (Clerical Supervisor)
Mrs Sheila Mawhinney (Clerical Supervisor)
Mrs Lorraine McFarland (Clerical Officer)
Ms Jennifer Betts – Assembly Research & Library Services (Item 7 only)
Ms Kate Berry – Assembly Research & Library Services (Item 7 only)

Apologies:
Mr Fred Cobain MLA

7 Briefing on the proposed Charities Bill

The following officials from the Department for Social Development joined the meeting at 11.53am:

John McGrath – Deputy Secretary, Urban Regeneration and Community Development Group

Seamus Murray – Director, Voluntary and Community Unit

Kieran Doyle – Voluntary and Community Unit

Mr McGrath briefed the Committee on the purpose and main provisions of the proposed Charities Bill. This was followed by a question and answer session.

The Chairperson thanked the officials for the briefing.

The officials left the meeting at 12.38pm

[EXTRACT]

Thursday, 10 January 2008
Room 135, Parliament Buildings

Present:
Mr Gregory Campbell MP MLA(Chairperson)
Mr David Hilditch MLA (Deputy Chairperson)
Mr Mickey Brady MLA
Mr Jonathan Craig MLA
Mr Fred Cobain MLA
Mr Alban Maginness MLA
Mr Fra McCann MLA
Mrs Claire McGill MLA
Miss Michelle McIlveen MLA
Ms Anna Lo MLA

Apologies:
Mr Thomas Burns MLA

The meeting opened at 12.37pm in public session.

5 Briefing on Charities Bill by Departmental Officials

The following officials from the Department for Social Development joined the meeting at 12.49pm:

Seamus Murray - Acting Director for the Voluntary & Community Unit (VCU)

Roy McGivern – Voluntary & Community Unit

Kieran Doyle – Voluntary & Community Unit.

The officials briefed the Committee on the Charities Bill. This was followed by a question and answer session.

Departmental officials agreed to provide written clarification on a number of issues raised by Members.

The Chairperson thanked the officials for the briefing.

The officials left the meeting at 1.34pm.

[EXTRACT]

Thursday, 17 January 2008
Room 135, Parliament Buildings

Present:
Mr Gregory Campbell MP MLA(Chairperson)
Mr David Hilditch MLA (Deputy Chairperson)
Mr Mickey Brady MLA
Mr Fred Cobain MLA
Mr Jonathan Craig MLA
Ms Anna Lo MLA
Mr Alban Maginness MLA
Mr Fra McCann MLA
Mrs Claire McGill MLA
Miss Michelle McIlveen MLA

In Attendance:
Ms Marie Austin (Assembly Clerk)
Mrs Judith Murdoch (Assistant Assembly Clerk)
Mrs Joy Hamilton (Clerical Supervisor)
Mrs Sheila Mawhinney (Clerical Supervisor)
Mrs Lorraine McFarland (Clerical Officer)
Ms Jennifer Betts – Assembly Research & Library Services
Miss Roisin Campbell – Work Experience Student

Apologies:
Mr Thomas Burns MLA

7. Committee Stage of the Charities Bill – evidence session

The following representatives from CO3 joined the meeting at 11.23am:

Majella McCloskey – CO3, Director

Dermot Curran – CO3 member and Chief Executive of Belfast Community Housing Association

Wendy Osborne – CO3 member and Chief Executive of the Volunteer Development Agency

Carol O’Bryan – CO3 member and Chief Executive of the Simon Community.

The representatives gave oral evidence on the Charities Bill. This was followed by a question and answer session.

Mr Maginness joined the meeting at 11.54am

The Chairperson thanked the representatives for the oral evidence.

The representatives left the meeting at 11.55am

[EXTRACT]

Thursday, 24 January 2008
Room 135, Parliament Buildings

Present:
Mr Gregory Campbell MP MLA(Chairperson)
Mr David Hilditch MLA (Deputy Chairperson)
Mr Mickey Brady MLA
Mr Thomas Burns MLA
Mr Jonathan Craig MLA
Mr Alban Maginness MLA
Mr Fra McCann MLA
Mrs Claire McGill MLA
Miss Michelle McIlveen MLA

Apologies:
Ms Anna Lo MLA

5. Committee Stage of the Charities Bill – evidence session

The following representatives from NICVA joined the meeting at 11.12am:

Seamus McAleavey - Chief Executive

Denise McCann - Members Services Manager

Paula Reynolds – Member Services Director.

The representatives gave oral evidence on the Charities Bill. This was followed by a question and answer session.

Mr Burns left the meeting at 11.25am.

The Chairperson thanked the representatives for the oral evidence.

The representatives left the meeting at 11.38am.

[EXTRACT]

Thursday, 31 January 2008
Room 135, Parliament Buildings

Present:
Mr Gregory Campbell MP MLA (Chairperson)
Mr David Hilditch MLA (Deputy Chairperson)
Mr Mickey Brady MLA
Mr Fred Cobain MLA
Mr Jonathan Craig MLA
Ms Anna Lo MLA
Mr Alban Maginness MLA
Mr Fra McCann MLA
Mrs Claire McGill MLA
Miss Michelle McIlveen MLA

In Attendance:
Mr Martin Wilson (Principal Clerk)
Ms Marie Austin (Assembly Clerk)
Mrs Judith Murdoch (Assistant Assembly Clerk)
Mrs Joy Hamilton (Clerical Supervisor)
Mrs Sheila Mawhinney (Clerical Supervisor)
Mrs Lorraine McFarland (Clerical Officer)
Ms Jennifer Betts – Assembly Research & Library Services

Apologies:
Mr Thomas Burns MLA

The meeting opened at 11.05am in public session.

5 Committee Stage of the Charities Bill – evidence session

The Committee noted a response from the Department for Social Development on issues it raised in relation to the Charities Bill.

The following representatives from the Volunteer Development Agency joined the meeting at 11.08am:

Wendy Osborne - Director

Denise Hayward - Assistant Director.

The representatives gave oral evidence on the Charities Bill. This was followed by a question and answer session.

Mr Maginness joined the meeting at 11.17am.

The Chairperson thanked the representatives for the oral evidence.

The representatives left the meeting at 11.20pm.

6 Charities Bill – Committee Motion to extend Committee Stage

The Committee considered a paper prepared by the Clerk on the possible extension of the Committee Stage of the Bill; a draft motion requesting an extension; and a draft timetable for Committee Stage. The Clerk and Principal Clerk spoke to the paper.

Mr Maginness left the meeting at 11.24am.

Miss McIlveen joined the meeting at 11.31am.

Agreed: the proposal to extend Committee Stage of the Bill; a motion requesting an extension to the Committee Stage of the Bill; and, the timetable for Committee Stage.

[EXTRACT]

Thursday, 7 February 2008
Room 135, Parliament Buildings

Present:
Mr Gregory Campbell MP MLA(Chairperson)
Mr David Hilditch MLA (Deputy Chairperson)
Mr Mickey Brady MLA
Mr Thomas Burns MLA
Mr Fred Cobain MLA
Mr Jonathan Craig MLA
Mr Alban Maginness MLA
Mr Fra McCann MLA
Mrs Claire McGill MLA
Miss Michelle McIlveen MLA

In Attendance:
Mr Martin Wilson (Principal Clerk)
Ms Marie Austin (Assembly Clerk)
Mr Neil Currie (Assistant Assembly Clerk)
Mrs Joy Hamilton (Clerical Supervisor)
Mrs Sheila Mawhinney (Clerical Supervisor)
Mrs Lorraine McFarland (Clerical Officer)
Mr James Moore – Work Experience Student

Apologies:
Ms Anna Lo MLA

The meeting opened at 10.39am in public session.

5. Committee Stage of the Charities Bill – evidence session

The following representatives from Cleaver Fulton Rankin Solicitors joined the meeting at 10.45am:

Alastair Rankin – Senior Partner

Jennifer Ebbage – Partner

Joy Scott – Partner

The representatives gave oral evidence on the Charities Bill. This was followed by a question and answer session.

Mr Burns joined the meeting at 10.46am.

Mr Maginness joined the meeting at 11.01am.

Mr Cobain joined the meeting at 11.05am.

The Chairperson thanked the representatives for the oral evidence.

The representatives left the meeting at 11.44am.

The Chairperson informed Members that a number of religious groups had written to the Committee with queries in relation to Designated Religious Status.

Agreed: It was agreed that the briefing paper on Designated Religious Status, prepared by Assembly Research and Library Services, should be sent to the religious groups that had written to the Committee specifically on this matter.

11. Forward Work Programme

Charities Bill

Agreed: In view of the queries raised by a number of religious groups in relation to Designated Religious Status, it was agreed to invite representatives from the Human Rights Commission and the Equality Commission to brief the Committee at its meeting on 21 February 2008.

Agreed: At the meeting on 14 February 2008, consideration should be given to hearing oral evidence from some of the religious groups that had written to the Committee in relation to Designated Religious Status.

[EXTRACT]

Thursday, 14 February 2008
Senate Chamber, Parliament Buildings

Present:
Mr David Hilditch MLA (Deputy Chairperson)
Mr Mickey Brady MLA
Mr Thomas Burns MLA
Mr Alban Maginness MLA
Mr Fra McCann MLA
Mrs Claire McGill MLA
Miss Michelle McIlveen MLA

Apologies:
Mr Gregory Campbell (Chairperson)
Mr Jonathan Craig MLA
Ms Anna Lo MLA

The meeting opened at 11.07am in public session.

5 Committee Stage of the Charities Bill – evidence session

The following representatives from the Police Service of Northern Ireland joined the meeting at 11.11am:

Superintendent David Boyd – Operations Policy & Support

John Conner – Head of Social Legislation

Inspector Gary Atkinson – Social Legislation.

The representatives gave oral evidence on the Charities Bill. This was followed by a question and answer session.

The Deputy Chairperson thanked the representatives for the oral evidence.

The representatives left the meeting at 11.23am.

6 Committee Stage of the Charities Bill – possible evidence sessions

The Deputy Chairperson informed Members that the Clerk had spoken to representatives from the Human Rights Commission and the Equality Commission about giving oral evidence to the Committee. The representatives confirmed that they would not be able to add anything to their written submissions at an oral evidence session. The Committee noted that the representatives would not give oral evidence.

Agreed: It was agreed to invite representatives from the Evangelical Alliance Northern Ireland and the Presbyterian Church in Ireland to brief the Committee on the Charities Bill.

Agreed: At the meeting on 21 February 2008, consideration should be given to hearing oral evidence from some of the religious groups that had written to the Committee in relation to Designated Religious Status.

[EXTRACT]

Thursday, 21 February 2008
Room 135, Parliament Buildings

Present:
Mr Gregory Campbell MP MLA(Chairperson)
Mr David Hilditch MLA (Deputy Chairperson)
Mr Mickey Brady MLA
Mr Thomas Burns MLA
Mr Jonathan Craig MLA
Ms Anna Lo MLA
Mr Alban Maginness MLA
Mr Fra McCann MLA
Mrs Claire McGill MLA
Miss Michelle McIlveen MLA

In Attendance:
Mr Martin Wilson (Principal Clerk)
Ms Marie Austin (Assembly Clerk)
Mr Neil Currie (Assistant Assembly Clerk)
Mrs Joy Hamilton (Clerical Supervisor)
Mrs Lorraine McFarland (Clerical Officer)

Apologies:
Mr Fred Cobain MLA

The meeting opened at 10.38am in public session.

7. Committee Stage of the Charities Bill – evidence session

The following representatives from the Evangelical Alliance Northern Ireland joined the meeting at 11.29am:

Karen Jardine – Public Affairs and Development Officer

Rev Norman Hamilton – Evangelical Alliance Northern Ireland Member.

The representatives gave oral evidence on the Charities Bill. This was followed by a question and answer session.

The Chairperson thanked the representatives for the oral evidence.

The representatives left the meeting at 11.49am.

Mr Maginness left the meeting at 11.49am.

8. Committee Stage of the Charities Bill – possible evidence sessions

Agreed: It was agreed to invite representatives from all the religious groups that had submitted written evidence specifically in relation to Designated Religious Charity Status to give oral evidence on the Charities Bill.

[EXTRACT]

Thursday, 28 February 2008
Room 135, Parliament Buildings

Present:
Mr Gregory Campbell MP MLA (Chairperson)
Mr David Hilditch MLA (Deputy Chairperson)
Mr Mickey Brady MLA
Mr Thomas Burns MLA
Mr Fred Cobain MLA
Mr Jonathan Craig MLA
Ms Anna Lo MLA
Mr Fra McCann MLA
Miss Michelle McIlveen MLA

Apologies:
Mr Alban Maginness MLA
Mrs Claire McGill MLA

The meeting opened at 10.35am in closed session.

9 Committee Stage of the Charities Bill – evidence session

The following representatives from the Presbyterian Church in Ireland joined the meeting at 10.54am:

Rev Dr Donald Watts – Clerk of the General Assembly

Mr Clive Knox – Financial Secretary.

The representatives gave oral evidence on the Charities Bill. This was followed by a question and answer session.

The Chairperson thanked the representatives for the oral evidence.

The representatives left the meeting at 11.10am.

Mr Cobain and Miss McIlveen joined the meeting at 11.10am.

10 Committee Stage of the Charities Bill – clause-by-clause scrutiny

Officials from the Department for Social Development briefed Members on the Charities Bill, and the Committee began its clause-by-clause scrutiny of the Bill.

[EXTRACT]

Thursday, 6 March 2008
Room 135, Parliament Buildings

Present:
Mr Mickey Brady MLA
Mr Thomas Burns MLA
Mr Fred Cobain MLA
Ms Anna Lo MLA
Mr Fra McCann MLA
Mrs Claire McGill MLA
Miss Michelle McIlveen MLA

Apologies:
Mr Gregory Campbell MP MLA (Chairperson)
Mr David Hilditch MLA (Deputy Chairperson)
Mr Jonathan Craig MLA
Mr Alban Maginness MLA

The meeting opened at 11.04am in public session.

11. Committee Stage of the Charities Bill – evidence sessions

The following representatives from Magheraknock Mission Hall joined the meeting at 12.05pm:

Mr Ronnie Douglas

Mr Mark Gibson

The representatives gave oral evidence on the Charities Bill. This was followed by a question and answer session.

The Chairperson thanked the representatives for the oral evidence.

The representatives left the meeting at 12.26pm.

As the Chairperson had to leave the meeting, he called for nominations for the position of Chairperson. Mr McCann proposed that Mr Brady do take the chair of the Committee. Mrs McGill seconded this proposal and Mr Brady accepted the nomination.

There being no further nominations, the Chairperson put the question without debate.

Question put and agreed:

That Mr Brady act as Chairperson for the remainder of this meeting.

Mr Cobain left the meeting at 12.27pm and Mr Brady took the chair.

Representatives from the following religious groups joined the meeting at 12.28pm:

Pastor Lewis Smyth – Jordan Victory Church

Mr Brian Agnew – Kingdom Life Faith Centre

Pastor David Goudy – Moira Pentecostal Church

Pastor Nick Serb – Mount Zion Free Methodist Church

The representatives gave oral evidence on the Charities Bill. This was followed by a question and answer session.

The Chairperson thanked the representatives for the oral evidence.

The representatives left the meeting at 1.00pm.

12. Committee Stage of the Charities Bill – clause-by-clause scrutiny

Agreed: To deal with some sections of clauses en-bloc.

Officials from the Department for Social Development briefed Members on the Charities Bill, and the Committee continued its clause-by-clause scrutiny of the Bill.

Mr Burns left the meeting at 1.14pm.

[EXTRACT]

Thursday, 13 March 2008
Room 135, Parliament Buildings

Present:
Mr Gregory Campbell MP MLA (Chairperson)
Mr David Hilditch MLA (Deputy Chairperson)
Mr Mickey Brady MLA
Mr Jonathan Craig MLA
Ms Anna Lo MLA
Mr Alban Maginness MLA
Mr Fra McCann MLA
Miss Michelle McIlveen MLA

In Attendance:
Mr Martin Wilson (Principal Clerk)
Ms Marie Austin (Assembly Clerk)
Mr Neil Currie (Assistant Assembly Clerk)
Mrs Sheila Mawhinney (Clerical Supervisor)
Mrs Lorraine McFarland (Clerical Officer)

Apologies:
Mr Thomas Burns MLA
Mr Fred Cobain MLA
Mrs Claire McGill MLA

The meeting opened at 11.05am in public session.

10. Committee Stage of the Charities Bill – clause-by-clause scrutiny

Officials from the Department for Social Development briefed Members on the

Charities Bill, and the Committee continued its clause-by-clause scrutiny of the Bill.

Mr Maginness joined the meeting at 11.24am.

[EXTRACT]

Thursday, 3 April 2008
Room 135, Parliament Buildings

Apologies:
Mr Fra McCann MLA

The meeting opened at 11.04am in public session.

9. Committee Stage of the Charities Bill – clause-by-clause scrutiny

Officials from the Department for Social Development briefed Members on the Charities Bill. The Committee commenced its formal clause-by-clause scrutiny of the Bill and agreed as follows:

Clause 1

Agreed: “that the Committee is content with Clause 1 as drafted”.

Clauses 2 to 3

Agreed: “that the Committee recommend to the Assembly that Clauses 2 to 3 be amended, subject to the Committee being satisfied with the wording of the proposed amendments”.

Clauses 4 to 12

Agreed: “that the Committee is content with Clauses 4 to 12 as drafted”.

Clause 13

Clause 13 deferred for further consideration.

Clauses 14 to 15

Agreed: “that the Committee is content with Clauses 14 to 15 as drafted”.

Clause 16

Agreed: “that the Committee recommend to the Assembly that Clause 16 be amended, subject to the Committee being satisfied with the wording of the proposed amendment”.

Clauses 17 to 51

Agreed: “that the Committee is content with Clauses 17 to 51 as drafted”.

Clause 52

Agreed: “that the Committee recommend to the Assembly that Clause 52 be removed from the Bill”.

Clauses 53 to 73

Agreed: “that the Committee is content with Clauses 53 to 73 as drafted”.

[EXTRACT]

Thursday, 10 April 2008
Room 135, Parliament Buildings

Present:
Mr David Hilditch MLA (Deputy Chairperson)
Mr Mickey Brady MLA
Mr Thomas Burns MLA
Mr Fred Cobain MLA
Mr Jonathan Craig MLA
Ms Anna Lo MLA
Mr Alban Maginness MLA
Mr Fra McCann MLA
Mrs Claire McGill MLA
Miss Michelle McIlveen MLA

Apologies:
Mr Gregory Campbell MP MLA (Chairperson)

The meeting opened at 11.08am in public session.

8. Committee Stage of the Charities Bill – clause-by-clause scrutiny Officials from the Department for Social Development briefed Members on the Charities Bill.

The Committee considered the wording of the amendments proposed at the meeting on 3 April 2008, and agreed as follows:

Agreed: “that the Committee recommend to the Assembly that Clause 2 be amended as agreed between the Committee and the Department, and the Committee agreed to the text of the amendment”.

Agreed: “that the Committee recommend to the Assembly that Clause 3 be amended as agreed between the Committee and the Department, and the Committee agreed to the text of the amendment”.

Agreed: “that the Committee recommend to the Assembly that Clause 16 be amended as agreed between the Committee and the Department, and the Committee agreed to the text of the amendment”.

The Committee continued its formal clause-by-clause scrutiny of the Bill and agreed as follows:

Clauses 74 to 121

Agreed: “that the Committee is content with Clauses 74 to 121 as drafted”.

Clause 122

Agreed: “that the Committee recommend to the Assembly that Clause 122 be amended as agreed between the Committee and the Department, and the Committee agreed to the text of the amendment”.

Clauses 123 to 129

Agreed: “that the Committee is content with Clauses 123 to 129 as drafted”.

Mr McCann left the meeting at 12.21pm.

Mr Cobain left the meeting at 12.22pm.

Clauses 130 to 149

Agreed: “that the Committee is content with Clauses 130 to 149 as drafted”.

Mr Cobain and Mr McCann rejoined the meeting at 12.25pm.

Clauses 150 to 158

Agreed: “that the Committee is content with Clauses 150 to 158 as drafted”.

Clause 159

Agreed: “that the Committee recommend to the Assembly that Clause 159 be removed from the Bill”.

Clauses 160 to 164

Agreed: “that the Committee is content with Clauses 160 to 164 as drafted”.

Clauses 165 to 166

Agreed: “that the Committee recommend to the Assembly that Clauses 165 to 166 be amended, subject to the Committee being satisfied with the wording of the proposed amendments”.

Clauses 167 to 186

Agreed: “that the Committee is content with Clauses 167 to 186 as drafted”.

Schedules 1 to 9

Agreed: “that the Committee is content with Schedules 1 to 9 as drafted”.

Long Title

Agreed: “that the Committee is content with the long title as drafted”.

The Committee had expressed concern that Part 13 - Chapter 1 of the Bill (Clauses 130 - 148) did not apply to internet fundraising. The Committee considered the Department’s response and was content that, at this stage, regulation in relation to internet fundraising would not be appropriate.

[EXTRACT]

Thursday, 17 April 2008
Room 135, Parliament Buildings

Present:
Mr Gregory Campbell MP MLA (Chairperson)
Mr David Hilditch MLA (Deputy Chairperson)
Mr Mickey Brady MLA
Mr Thomas Burns MLA
Mr Fred Cobain MLA
Mr Fra McCann MLA
Mrs Claire McGill MLA
Miss Michelle McIlveen MLA

In Attendance:
Ms Marie Austin (Assembly Clerk)
Mr Neil Currie (Assistant Assembly Clerk)
Mrs Joy Hamilton (Clerical Supervisor)
Mrs Sheila Mawhinney (Clerical Supervisor)
Mrs Lorraine McFarland (Clerical Officer)
Mr Martin Wilson (Bill Clerk)
Ms Jennifer Betts – Assembly Research and Library Services (Item 5 only)

Apologies:
Mr Jonathan Craig MLA
Ms Anna Lo MLA

The meeting opened at 11.05am in public session.

12. Committee Stage of the Charities Bill – clause-by-clause scrutiny

The Committee concluded its formal clause-by-clause scrutiny of the Charities Bill and agreed as follows:

Mrs McGill rejoined the meeting at 12.11pm.

Clause 13

Agreed: “that the Committee is content with Clause 13 as drafted”.

Clause 122

At the meeting on 10 April 2008, the Committee agreed the wording of amended

Clause 122. Following that meeting, the Department consulted with Legislative Counsel regarding the wording of the amended clause. Legislative Counsel’s advice on the term “very low value” was that it would be unacceptably vague. The Department proposed revised text which stated a value of £90,000, and how it would be determined.

Agreed: “that the Committee recommend to the Assembly that Clause 122 be amended as agreed between the Committee and the Department, and the Committee agreed to the text of the amendment”.

The Committee considered the wording of the amendments proposed at the meeting on 10 April 2008, and agreed as follows:

Agreed: “that the Committee recommend to the Assembly that Clause 165 be amended as agreed between the Committee and the Department, and the Committee agreed to the text of the amendment”.

Agreed: “that the Committee recommend to the Assembly that Clause 166 be amended as agreed between the Committee and the Department, and the Committee agreed to the text of the amendment”.

The meeting moved into closed session at 12.12pm.

The draft report on the Charities Bill was tabled.

Agreed: The Chairperson asked Members to consider the draft report and contact the Clerk by close of play on 25 April 2008 with any amendments.

[EXTRACT]

Thursday, 1 May 2008
Room 135, Parliament Buildings

In Attendance:
Ms Marie Austin (Assembly Clerk)
Mr Neil Currie (Assistant Assembly Clerk)
Mrs Sheila Mawhinney (Clerical Supervisor)
Mrs Lorraine McFarland (Clerical Officer)
Mr Martin Wilson (Bill Clerk)

The meeting opened at 11.04am in public session.

11. Committee Stage of the Charities Bill

The Committee considered a number of proposed technical amendments to the Charities Bill as a result of the introduction of the Companies Act 2006 across the UK. The Committee noted that all of the proposed amendments were of a technical nature and did not impact on policy.

The Committee agreed that it was content with the proposed amendments to the following clauses and schedules:

27, 32, 45, 46, 57, 66, 67, 69, 70, 92, 93, 99, 100, 102, 103, 107,
108, 114, 146, 180, and schedules 6, 8 and 9.

Clause 104

At the meeting on 10 April 2008, the Committee agreed that it was content with Clause 104 as drafted. This clause was now not necessary given the amendments to the Charities Act 1993.

Agreed: “that the Committee recommend to the Assembly that Clause 104 be removed from the Bill”.

The meeting moved into closed session at 1.23pm.

The Committee considered the draft Report on the Committee Stage of the Charities Bill paragraph by paragraph. The Committee agreed the main body of the report:

Introduction, read and agreed

Consideration of the Bill, read and agreed

Clause-by-Clause Scrutiny of the Bill, read and agreed

Executive Summary, read and agreed

The Committee agreed that an extract of today’s Minutes of Proceedings should be included in Appendix 1 of the report and was content that the Chairperson agrees the minutes to allow them to be included in the printed report.

[EXTRACT]

Appendix 2

Minutes of Evidence

31 May 2007

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
Mrs Claire McGill
Miss Michelle McIlveen
Mr Alban Maginness

Witnesses:

Mr Kieran Doyle
Mr John McGrath
Mr Seamus Murray

Department for Social Development

1. The Chairperson (Mr Campbell): Good morning, gentlemen. I welcome you to the Committee. I remind everyone that Hansard is recording the meeting. The normal precautionary note that mobile phones must be switched off applies. If they are not switched off, and they become active, their signal interferes with the Hansard recording equipment.

2. The Committee has met to consider the proposed charities Bill and its numerous clauses, of which the Bill Office has given us a general overview. I will pass over to you, gentlemen. The Committee would be grateful if you would be so kind as to take questions from members after your presentation.

3. Mr John McGrath (Department for Social Development): Thank you, Chairman. We are pleased to be here. My colleagues are Mr Seamus Murray, who is acting director of the Voluntary and Community Unit, and Mr Kieran Doyle, who will cover most of the detail that may come up during the meeting and will certainly come up as the legislation proceeds.

4. The Department for Social Development is the main charity authority for Northern Ireland. It has responsibility for policy and most of the legislation that relates to charities.

5. At the minute we estimate that there are between 9,000 and 12,000 charities operating in Northern Ireland. In recent years we have been monitoring the need to change the legislation to take account of ongoing developments, governance arrangements and legislation in the rest of the United Kingdom and also in the Republic of Ireland. It must be decided which areas of existing legislation could usefully be amended to adopt the best of the new approaches to regulation and governance in the UK and to improve existing procedures.

6. As far back as 1996 an early review took place, but no consensus could be reached at that stage on what would be the most appropriate arrangements for Northern Ireland. The review was reopened in 2002 by the then Minister, Nigel Dodds. The proposals were then held again until the direction and shape of the new legislation, particularly in England, was clear, given the need for consistency across the UK. We are aware now, however, that Northern Ireland has fallen a bit out of step with the rest of the United Kingdom and will be out of step with the Republic of Ireland when the proposed legislation is enacted there.

7. We are also aware from discussions with the PSNI, the Independent Monitoring Commission (IMC) and HM Revenue and Customs (HMRC) that there is some evidence of charities having been established in Northern Ireland precisely to avoid the regulatory framework that exists elsewhere or will be brought in elsewhere. That was very much in the mind of the Northern Ireland Affairs Select Committee last year when carrying out its examination of organised crime. Some of us gave evidence to that Committee at Westminster.

8. Between 11 February and 3 June 2005, we carried out a public consultation on the range of proposals for changes in the legislation and the principles underlying the charity regulation proposals. We received a total of 106 responses from a wide range of bodies and individuals, with the majority being broadly favourable.

9. The key tenets, or the building blocks, of the Bill that will be coming forward largely follow the new definition of charities as set out in the Charities Act 2006, which covers England and Wales, the only addition being the promotion of peace and good community relations. Linked to that will be the Northern Ireland register of charities, with which all Northern Ireland charities should be registered. At present no formal register or record of charities exists in Northern Ireland or is required to exist.

10. A new charities commission for Northern Ireland will be established that will first and foremost seek to ensure compliance with the legislative requirements, monitor charities’ performance and provide public accountability and transparency for the funds given to charities. The charities commissioner will be the key regulator of the charity sector in Northern Ireland.

11. All charities to be registered will need to demonstrate that their objectives and their activities generate public benefit. There will also be requirements to make returns on both their finances and activities, and there will be new arrangements governing public collections involving a system of permits and licences.

12. Full consultation on the draft legislation took place from 17 July to 13 October 2006. Again the responses were overwhelmingly favourable. Two changes were made to the draft legislation subsequently, relating to audit levels and public collections. That legislation, which is largely the same now, was laid at Westminster on 29 January 2007; however, with the restoration of devolution it was not moved. Following Executive approval, which we expect shortly, we hope to bring it to the Assembly for consideration.

13. Throughout the process of work that the Department has been engaged upon in recent years we sought to reassure all the charities, and the charity sector in Northern Ireland, that a new charities commission will aim, as part of its work, to support and assist organisations to ensure that they comply with regulation requirements. The commissioner will be expected to work with other charity regulators across the UK and Ireland on developing guidance and support.

14. In summary, therefore, this legislation is first and foremost about protecting the public who give to bodies purporting to be charities. The governance arrangements and the register will provide a framework within which bona fide charities will be able to receive greater public support and to give reassurance that their activities are appropriate and that they deserve fund-raising and donations.

15. The Chairperson: You have estimated that there are between 9,000 and 12,000 charities in Northern Ireland. There is a considerable variation in those figures. Do you know the scale of each organisation?

16. Mr Seamus Murray (Department for Social Development): The only reliable indicator as to the number of charities in Northern Ireland is the list held by HM Revenue and Customs. Coincidently, the Department had its annual meeting with HMRC yesterday. The list contains an estimated 5,000 charities with a Northern Ireland postcode, and that figure increases by around 300 each year. The list is limited in that it includes only organisations claiming tax benefits.

17. Northern Ireland differs from the rest of the UK in that it has few large charities — most are relatively small. The variation between the figures of 9,000 and 12,000 reflects the fact that many charities may be Church based. Some Northern Ireland-wide bodies, such as scouting organisations, have individual scout troops. Therefore, whether those scout troops register as a group, or as individuals, would impact on the overall number of charities.

18. The Chairperson: HM Revenue and Customs lists 5,000 charities; where does the figure of 9,000 come from?

19. Mr Murray: The Department also uses the Northern Ireland Council for Voluntary Action (NICVA) annual ‘State of the Sector’ report to estimate the number of charities that are operating. The current report puts the number of charities closer to 9,000. The potential addition to that figure due to charities run by Church bodies and the like, as I have mentioned, creates the difference between the figures of 9,000 and 12,000.

20. The Chairperson: To clarify: 9,000 charities are included in the latest NICVA annual report and 5,000 have been listed by HM Revenue and Customs. Is it fair to assume that the remainder have not applied for tax benefits with HMRC, and are they likely to be much smaller charities?

21. Mr Murray: Yes. Charities may not apply to HMRC for tax benefits for a variety of reasons: the benefits gained may not be worthwhile; the charities may not be interested in gift aid; or perhaps there would be a point of principle involved.

22. The Chairperson: In general, is it accurate to say that half of the charities would be large enough to be involved with HM Revenue and Customs in order to gain charitable status and the other half would be too small to benefit from such a status?

23. Mr McGrath: That is a fair reflection of the situation. One of the problems faced in Northern Ireland is that there is no register of charities.

24. Mr Craig: I read with interest that there would be no exemptions from registration in Northern Ireland. In England and Wales some exemptions are being considered.

25. There is also the specific intention that Church-based charities should register. Perhaps that explains the confusion over the number of charities that exist. Some churches are centralised. For example, in the Baptist Church system, every church is an individual entity, therefore hundreds of churches would have to register individually. Could the validity of putting churches on the register be reconsidered, given the complexity that might result?

26. Mr Murray: The view is that there should be a level playing field for all charities regardless of their nature or function. If there is the potential for exemptions as regards certain charities, there may be a grey area created in Northern Ireland, and the Department is seeking to avoid that situation. A record of all charities operating in Northern Ireland is required.

27. The scale is substantially different in England and Wales, where there are approximately 135,000 charities registered. In Scotland, all 23,000 charities, whether Church based or not, are expected to register. The view has been that Northern Ireland should seek to do likewise. The Republic of Ireland is also progressing legislation, and it has no exemptions for any body. The diocesan boundaries of some Church-based organisations mean that they operate across the border, and they could operate on an all-island basis. It is important that our approach is consistent.

28. Throughout the consultation process, the Department reassured the Church bodies that it will work with, and support, them. Church organisations that are structured around a central body must decide whether they wish to register as charities. Those bodies must ask themselves whether they want to do that, whether it is in their interests and whether it is valuable and beneficial. If they choose not to register as charities, they will not be entitled to call themselves charities and seek the benefits that charities may have.

29. The Chairperson: The Electoral Commission examines political parties’ accounting units, which are quite small and equivalent in size to small charities, and deals with them much less rigorously because of their lack of activity. Might the Department insert a similar provision in the Bill so that small charities that have relatively less activity would be subject to a less rigorous registration process?

30. Mr Murray: That issue arose from our first consultation process. Several smaller charities, including the Church-based charities, were concerned about the threshold levels for reporting. The Department took that on board when the draft Bill was being finalised, and the threshold was raised to include organisations with a gross income of less than £100,000. Therefore, the reporting requirement level is much lower.

31. Mr Hilditch: Some people have negative attitudes about quangos. In the light of that, what size will the commission be, and how will it be staffed?

32. Mr McGrath: Depending on the size of the workload, the Department estimates that the commission will have a chairperson, a deputy chairperson and between three and five members. It would be a non-departmental public body (NDBP) and, therefore, a quango. The membership appointments would be treated as public appointments and overseen by the Office of the Commissioner for Public Appointments. It is estimated that the commission would have an initial staff of around 16. The annual running costs would be some £800,000. That was previously tested by at least one of the direct rule Ministers with responsibility for social development, and it was decided that if there were to be a commission, it would have to be effective. A critical mass of activity and expertise was needed. It was expected that the commission would be up and running earlier, so there is a budget provision for it in the Department’s baseline.

33. Mr F McCann: How will the commission be made up, and how many staff will it have? Will there be winners and losers?

34. Mr McGrath: As I said, there will be a chairperson, a deputy chairperson and between three and five members.

35. Mr F McCann: From where will the membership come?

36. Mr McGrath: They will be public appointments. The posts will be treated as significant appointments and will be overseen by the Office of the Commissioner for Public Appointments. All posts will be advertised. I suspect that the Department will want to bring in some expertise from charity commissions elsewhere to advise us on the appointment process.

37. Mr F McCann: Will there be winners and losers? Will some charities lose out?

38. Mr Murray: Some organisations were concerned that they would fall out of the process because of the public benefit test. The Department has reassured those organisations that the vast majority of charities that are currently perceived as being charitable organisations and have sought recognition by HM Revenue and Customs would have no problem in meeting the public benefit test. In many ways, the public-benefit aspect acts as a safeguard against difficult decisions or questions that the charity commission may face.

39. The short answer is that there should not be any losers; it is beneficial if charities publicly demonstrate the value that they give to the community and account for the money that they receive from the general public. That is quite clear. The charity commission is there to provide assurance to the public and to raise the level of confidence in charities so that the public is more likely to make donations — so there is a benefit all round. We cannot see any losers in the equation, but who knows what the future may hold?

40. Mr F McCann: We have all come across major charities of which it is said that 80% of their money goes on administration; they are more like businesses than charities. Will this impact on them?

41. Mr Murray: We propose that all charities will be required to make returns on their financial performance and activities over the financial year. One of the roles of the charity commission will be to carry out checks to see what proportion of the money actually goes on the service. Where the charity commission has a concern about the balance between running costs and the delivery of the service, it has the potential to examine further. In addition, the publication of the charity commission’s reports means members of the public will be able to see the facts and make their own decisions. If they see that 80% of the money that they have given has gone to the charity’s overhead costs, the next time that they want to give, they can raise a question about that, so there is a dual aspect to it.

42. Ms Lo: I presume that the 5,000 charities currently registered with HM Revenue and Customs will register with the new commission. However, as was mentioned earlier, there is a number of organisations here that may not want to register with the commission because they are so small. I am thinking of small residents’ groups. Will they be very disadvantaged in future if they are not registered with the commission?

43. Mr Murray: The only disadvantage will be that those organisations will not be able to call themselves a charity in Northern Ireland terms. Tax is a reserved matter. An organisation could still apply for recognition from HM Revenue and Customs if it desires, and HMRC may consider approving it. However, one would assume that if the charity commission in Northern Ireland did not consider a particular organisation to be a charity, there would be some read across because the Department and HMRC worked very closely on the drafting of the Bill.

44. The only disadvantage to small organisations that chose to opt out, for whatever reason, is simply that they could not call themselves a charity, and that may impact upon their ability to attract funding or grants.

45. Miss McIlveen: With regard to the consultation last year, I note that there were only 97 responses, and yet there are about 9,000 to 12,000 charities. Just how broad was the consultation, and how many of the responses were taken on board?

46. When I looked through the comments on the results of the consultation, I saw a lot of phrases such as “We are not minded to do so”. There is very little there that the comments are actually positive about.

47. The Chairperson: A 1% response rate does not seem very high.

48. Mr McGrath: I have seen worse.

49. Mr Murray: I suppose that we were quite satisfied with our consultations — often the level of response to consultations is quite limited. We went through a process of sending out documentation to as wide a field as possible; importantly not just to the charitable and the voluntary and community sector, but also much more broadly than that. The charitable issue is much broader than simply the charitable or voluntary and community sector organisations, so we spread our consultation as far as possible.

50. We also engaged in a series of workshops across Northern Ireland, which were advertised and allowed people to come along, to raise questions and to talk through both the proposals. We then embarked on the same process of circulating information and running a series of workshops for the original draft Bill that went through to Westminster, addressing issues in the Bill itself. We had a number of meetings with individual organisations, and we were open to requests from any organisation that wished to meet with us. The churches in particular came along, and we met to talk through issues with a number of the senior Church bodies in Dublin and Belfast.

51. The Department tried to be as open and receptive to as many questions and issues as possible. We took on board two major issues. Major concerns were raised about the accounting issue; the other was the Church’s request for the continuation of exempt status. We discussed that and felt that a level playing field should be maintained. Many of the other issues raised were of a minor or technical nature, and some of the technical issues were useful in helping to finalise the original draft, but they were not substantive in the consultation process.

52. Miss McIlveen: Will it cost anything to register?

53. Mr Murray: No.

54. Mr McGrath: The Department regards the Bill as being primarily about protecting the public, so the 9,000 organisations are not the only stakeholders. In certain cases the level of response suggested that, in general, the charity sector was signing up for this and expecting it to come. As Fra McCann said, it is important to remember that we are primarily trying to protect those who give money, and through that to protect the bona fide organisations.

55. The Chairperson: Earlier you made reference to the Northern Ireland Affairs Select Committee’s concerns regarding the protection of the public. Will there be any preclusion of those with criminal or terrorist convictions from registering or being involved in charities?

56. Mr Murray: In the draft Bill there are provisions that outline eligibility and disqualification criteria for trustees. Only those people convicted of financial irregularities are excluded; it does not preclude those who have committed other offences. During the consultation, the point was made that ex-prisoners are already involved in a number of charities, which would make it difficult to exclude them.

57. Mr Brady: Under your proposals, an organisation will be defined as a charity if it: “is established for charitable purposes only [and] is for the public benefit”.

58. Article 4 gives a list of charitable purposes, which presumably includes public benefit. Is that a finite list, or can it be added to? Legislation that has been passed is quite difficult to change.

59. There is also a proposal for a charity tribunal for Northern Ireland to be established to hear appeals against some types of decisions. Would that be an independent appeal system, or would it incorporate members of the commission?

60. Mr Murray: Regarding the list, the Committee and the Assembly will obviously have the opportunity to debate the Bill. The list is an expanded and more detailed version of the original four headings that are in the existing charities legislation. Members will see that there is provision under sub-paragraph 4(2)(l) for “any other purposes within paragraph (4)”, which is a catch-all measure. It is fairly broad in its nature; we have sought to give a sense of types of organisations with which the person on the street can identify.

61. We have had ongoing discussions with the Northern Ireland Court Service about the tribunal. The Court Service is establishing a centralised process for tribunals, and it has given the charity commission the opportunity to work through that process once it has been established.

62. As a first step, the charity commission would consider any appeals of an administrative nature — if the proper administrative process has been applied, if a proper decision has been reached, and so on. Beyond that, it would go to the tribunal for consideration. It would be independent of the charity commission for Northern Ireland.

63. Ms Lo: The smaller organisations may feel that it is not worth their while to register. Do you intend to help them with their constitutions, training, and governance so that they can register with the commission? Will the new commission advise and support staff of non-registered organisations so that they can register?

64. Mr McGrath: Part of the commission’s job will be education facilitation to explain the requirements and perhaps have open discussions about the advantages or disadvantages of registration, so help and advice will be available. It is a watchdog — but a helpful one for small organisations that wish to go through the process.

65. Mr Murray: The commission will have a role in providing guidance and advice. Once the legislation has been passed, the process will be incremental — registration will not be immediate but will work from the largest charities down to get the system up and running. The commission will provide advice, promotion and guidance to enable organisations. NICVA, the volunteer development agency — with which Anna will be familiar — and community change have roles in providing training, advice and guidance on governance and trusteeship to the sector organisations. Those bodies have a key role in helping people to set up organisations.

66. Ms Lo: Insurance is a big problem for many smaller organisations; trustees’ indemnity insurance is very expensive. Will organisations have help with that?

67. Mr McGrath: Not specifically. All organisations, once registered, must have proper governance and appropriate insurance cover. That is a separate issue.

68. Mr Murray: That would be beyond the remit of the new charity commission, although there have been discussions at a senior level in the UK Government about insurance for the voluntary and community sector. We have been feeding into that process, but the commission would have no remit for that.

69. The Chairperson: NICVA has expressed concern about the possibility of conflict between the advisory and regulatory roles. How might that might be resolved or is NICVA mistaken?

70. Mr Murray: It is a matter of how the “friend and policeman” roles rub along together. The first and foremost role of the charity commission will be as a regulator; that is its function and purpose. Its advice and guidance must be in its role as regulator, and it must be careful not to move beyond the role of advising on how to meet the requirements under the legislation or how to improve performance or governance.

71. NICVA is a support organisation, so its remit is much broader than that of the proposed charity commission. NICVA’s role is support rather than legislation, and we have discussed that with it.

72. Mr Burns: It is interesting to talk of the charity commission and the Bill; I am just coming to understand it. My concept of a registered charity was of groups gathering money to give to a good cause, and that there were no tax implications. I believed that to be their main function, but much more is involved than raising money. Will community groups and other organisations be registered as charities for tax purposes? Are we going to close in on those groups? What is the real purpose of the Bill?

73. Mr McGrath: The main purpose of the Bill is to protect the public, as there is no formal register of charities. At the moment, if someone is stopped in the street and asked to donate money to a small organisation, or one that is unknown, there is no “kitemark”, or indication as to whether the organisation is bona fide, or has been validated as doing good work, and entitled to seek public donations.

74. Many charitable organisations, such as Barnardo’s and the NSPCC, are known because they are large and reputable. However, many small organisations do very good work, but are not registered because no registration system is in place. Such a system is necessary, so that those organisations can be validated and given the strength to demonstrate that they are charities, that they are registered, and that they have a reference number that can be checked with a charity commission.

75. The purpose of a registration system is to safeguard the public and enable the smaller, less well-known organisations to raise funds in a more stable and secure way.

76. The Chairperson: It is unfortunate that the vast majority of charities, which are law-abiding and engaged in worthwhile causes, as mentioned by Mr Burns, will be subject to the same regulatory regime as the very small number that, possibly, have abused their charitable status and broken the law.

77. Mr McGrath: There may be bona fide charities that still do not have the right balance between administration costs and giving out money; such charities are worthy and well intentioned, but may need to be regulated.

78. Mr Burns: People must register with their local council if they want to collect money for charity. To gain permission to hold a prize draw, for example, a charitable organisation must register that draw with the local council. Each ticket should state that the draw has been certified by the relevant council. Therefore, some regulations exist.

79. Mr McGrath: That means only that the council has given permission for an organisation to collect money on a given day.

80. Mr Murray: That is a separate legislation matter and relates to raffles. Raffles are governed by gaming and lottery legislation, which also covers tickets, ballots and, for example, the National Lottery. However, public collections, where someone stands in the street rattling a tin can or asking people to sign up for direct debits, fall within the ambit of the proposed legislation. Under the current system, charities apply to the PSNI for approval to collect money in a particular area, or they could apply to the Department for overall exemption.

81. Organisations, such as the British Red Cross, carry out an annual collection and are given overall approval by the Department.

82. The proposed legislation will provide for a system of permits whereby the charity commission will examine the bona fides of an organisation to see if it is fit to carry out a collection. In addition, a system of licences, initially applied for through the charity commission, will allow charities to collect money on particular days. The issue is important, because sometimes two or three charitable organisations may be collecting money in the same area. Therefore, there must be some kind of overarching view of the process.

83. The proposed legislation provides for councils, at a later stage, to issue licences to permit public collections. Importantly, those proposals will additionally cover “black-bag” collections. There has been a high level of media coverage concerning illegal “black-bag” collections. People have been asked for goods that, subsequently, have not been passed on to charities; instead, they have gone to private businesses. There is a genuine concern about that, and the charity commission will address it.

84. Mr F McCann: Many community groups apply for charitable status to gain exemption from VAT. Will the proposed legislation impact on them?

85. Mr Murray: VAT is a separate issue that has no bearing on an organisation’s charitable status. How an organisation is established, and whether it is VAT-exempt or VAT-discounted, is a separate issue. There is no relationship between the two.

86. With regard to community organisations, community development will be covered in the definition of charitable purpose in the Bill. A community group could apply for charitable recognition and could apply to HM Revenue and Customs for tax benefits.

87. Mr F McCann: One usually led to the other. If people had been given a number for charitable status, they would be able to apply for exemption from VAT.

88. Ms Lo: That is not the case.

89. Mr Murray: The guidance on VAT is a minefield, but there is no direct read-across between VAT status and charitable status.

90. Ms Lo: Many charities do not get exemption from VAT. The process is too complicated.

91. Mr Brady: Apparently, professional fund-raisers are not closely regulated. For instance, the hospice in Newry has an in-house, professional, fund-raiser — a person who is employed specifically to raise funds. I have worked in the voluntary sector for several years, and I know that many organisations have wondered about employing people to raise funds. Those organisations constantly chase their tails as they try to raise the funds to keep going. I hope that a distinction will be made between in-house, professional, fund-raisers and external companies that undertake — for a fee, I presume — to raise funds for a particular charity. Such companies must be answerable to the charity for which they work at any given time.

92. Mr Murray: You are correct in your presumption. The legislation seeks to provide regulations to cover individuals who are employed as professional fund-raisers. That is to protect the charities, because sometimes they might have to, or be encouraged to, employ someone to raise funds. At present, the guidance on that may not be clear, so the legislation covers the legal contract between the charity and the professional fund-raiser. In addition, the professional fund-raiser will be required, if asked, to state that he or she is a professional fund-raiser, employed by the charitable organisation, and what percentage of the money he or she will receive, so that the public is aware of that.

93. Mrs McGill: I thank the witnesses for the briefing. As John McGrath said, the issue is about protecting the public. However, we do not want to smother the good work that many charities do. I am concerned, in particular, about smaller organisations that do occasional charity work.

94. John McGrath spoke about fund-raisers who approach people in the street. I take it that they have to wear an identity badge. The legislation may provide for that. However, to return to Fra McCann’s point, will those fund-raisers be required to state clearly that, for example, 80% of what we give them will go to the cause and 20% will go towards costs?

95. Mr McGrath: We have not yet reached that level of detail; however, the proposed commission may give guidance on that point. Obviously, it is good practice for any organisation to reinforce the point that its administrative costs are kept to a minimum.

96. The Chairperson: This concerns transparency. The public should know what percentage of its money will go to the charity.

97. Mrs McGill: There is a gap. Charities are often organised like businesses, and some of us completely misunderstand how much money goes into their organisation. It is important that the public knows how much money goes directly to a charity’s cause.

98. Mr Doyle: The Bill requires professional fund-raisers to indicate in any literature what percentage of the collection, or the funds raised, they will take.

99. That aspect of fund-raising will be reflected in a charity’s annual returns. Under the proposed legislation, those returns will be open to public inspection. When the annual return is published, the public will be able to see how much money goes to professional fund-raisers.

100. Mrs McGill: That is all right. However, when people are approached in the street, they are unlikely to read the literature.

101. Mr McGrath: That is an interesting point, which perhaps should be picked up if the Bill goes through. Fund-raisers for an organisation may be volunteers, rather than professionals.

102. Mr Craig: On the matter of public charitable collections, it is proposed that the charities commission will issue permits, which the PSNI currently grants. I am aware of conflicts that have arisen at major events, because one organisation has been given permission to collect, when the organisation running the event wished to collect for the charity it supported. Those things happen and, when they do, it is very embarrassing. The intention is, in the long term, to transfer that responsibility to the councils, which — nine times out of 10 — are the organisers or sponsors of major events in their areas. Would it not be wiser to do that from day one?

103. Mr Murray: As I outlined, the charity commission will issue the permit, which provides the authority to take up collections. The licence to perform the actual collections will, initially, be issued by the commission; however, there is provision in the legislation for councils to pick that up. We have left that door open, because we are currently engaged in the review of public administration (RPA). Given their local knowledge of what is happening, and of how collections should take place, councils have an important role. The opportunity for them to assume control is there, but how quickly the commission can move to that position will depend upon how it engages with the councils, and their appetite for such engagement. The presumption is that to indicate that councils should have responsibility from day one is to move too quickly.

104. Mr Craig: There is no question that the timescale for the review of public administration will slip. Will the Department rethink its position in the light of that?

105. Mr McGrath: The Bill will come through, and there will be opportunities for debate and discussion, particularly around this table. Given the time frame for the RPA, that is a fair point.

106. The Chairperson: Thank you, Mr McGrath, Mr Murray and Mr Doyle. The Committee Stage of the Bill is likely to begin on 27 June 2007, and you are scheduled to give evidence to the Committee on 5 July. We look forward to seeing you then.

10 January 2008

Members present for all or part of the proceedings:
Mr Gregory Campbell (Chairperson)
Mr David Hilditch (Deputy Chairperson)
Mr Mickey Brady
Mr Fred Cobain
Mr Jonathan Craig
Ms Anna Lo
Mr Fra McCann
Mrs Claire McGill
Miss Michelle McIlveen
Mr Alban Maginness

Witnesses

Mr Kieran Doyle
Mr Roy McGivern
Mr Seamus Murray

Department for Social Development

107. The Chairperson (Mr Campbell): We welcome departmental officials Mr Seamus Murray, Mr Roy McGivern and Mr Kieran Doyle. Gentlemen, thank you for attending the Committee. I am sure that you know the drill and will have switched off your mobile phones. I invite Mr Murray to begin.

108. Mr Seamus Murray (Department for Social Development): I thank the Chairperson and Committee members for this opportunity to provide an update and briefing on the Charities Bill. We last met to discuss the Bill on 31 May 2007, so it is worthwhile to reflect on the reasons why Northern Ireland needs such legislation, on the progress that has been made since last May, on the Bill’s main provisions, and on what has changed in the interim.

109. There is currently no register of charities in Northern Ireland, so there is no such thing here as a registered charity or a charity registered number, other than those charities that are registered in England or Scotland and operate in Northern Ireland.

110. There is no charity commission or regulator of charities in Northern Ireland. There have been reviews in England and Scotland: the Charities Act 2006 has been implemented in England and Wales, and, in Scotland, the Charities and Trustee Investment (Scotland) Act 2005 was passed, out of which the Office of the Scottish Charity Regulator (OSCR) was subsequently established. There has also been a review in the South of Ireland, where the Charities Bill 2007 was referred to the Dáil Select Committee on Arts, Sport, Tourism, Community, Rural and Gaeltacht Affairs in November.

111. For several years, the general public, politicians, the media and the charity sector have expressed concerns about the lack of a regulator in Northern Ireland. A Charities Bill for Northern Ireland will ensure public confidence and provide effective accountability in the charity sector, through the making public of information. The Bill will also ensure that there is consistency across the UK and Ireland in the way in which charities are regulated, it will support and encourage good governance in the charity sector, and, importantly, it will encourage additional donations to be made, which will increase charities’ good work.

112. Committee members will recall that the Department for Social Development (DSD) carried out a public consultation and review, and drafted legislation based on the responses that it received. Legislation went to Westminster in January 2007, in the form of The Charities (Northern Ireland) Order 2007, but that Order fell when devolution was restored.

113. The Charities Bill was redrafted for the purposes of the Northern Ireland Assembly, and it was laid before the House on 10 December 2007, after receiving Executive approval. One of the key provisions in the Bill, as drafted, is a new, clearer definition of “charitable purpose”, and that definition is largely based on the Charities Act 2006. The 12 descriptions of “charitable purpose” are set out in clause 2(2) of the Charities Bill. Clause 3 outlines a public-benefit test for charitable purpose, and is based largely on the Scottish model, which specifies that there is no presumption that any particular purpose is for a charitable purpose.

114. Under clause 6, a charity commission will be established, consisting of a chairperson, a deputy chairperson and up to five members, at least one of whom must be legally qualified. All charities that operate in Northern Ireland will be required to register with the charity commission and to provide it with an annual statement of their accounts and an annual report of their activities. A system will be put in place for the issue of public-collection certificates and licences to ensure that that occurs. A new legal entity, charitable incorporated organisations, of which charities could opt to be part, will be established. The appeals process will be initiated through a charity tribunal for Northern Ireland, which will operate under the auspices of the Northern Ireland Court Service.

115. Key changes have been made to the Bill since it was last before the Committee in May. Those have been the result of discussions that have been held with, principally, some religious bodies in Northern Ireland but also after discussions with some of the other regulators across the UK and Ireland on developments that have been made as a result of their operations.

116. Designated religious charity status is now included in the Bill, under clauses 165 and 166. Those provisions recognise the unique governance arrangements in some of the Church bodies. In fact, some Church bodies are established under separate legislation, which provides for their exemption from certain aspects of the Charities Bill but does not preclude them from registering as a charity or from providing annual reports.

117. We also took cognisance of the fact that, based on their reporting and financial statements, some charities are income-poor but asset-rich. That could mean that they will be obliged to provide full audited accounts, even though their organisation may not have the resources to pay for those to be done. The Bill proposes to separate the triggering of assets for audited accounts, which will be reported separately.

118. We have also adjusted the definition of religious status to reflect more adequately the current situation in broader society. Furthermore, we have included “section 167 institutions”, a category that recognises that there are charities that are registered in England, Scotland or elsewhere but operate across the UK. Those charities will still be required to register under that heading, and the charity commission of Northern Ireland will keep a record of those and provide the Department with an annual return, albeit by a slightly different mechanism.

119. Some minor, technical adjustments have been made to the Bill to take cognisance of the fact that the Finance Act 2006 and the Companies Act 2006 will roll out across the UK.

120. If the Bill receives a fairly smooth passage through the legislative process, we aspire to establish the charity commission for Northern Ireland by late summer 2008. If that happens, the Department will look for the first registrations from the larger charities by the end of 2008.

121. I am happy for myself and my colleagues to take questions from the Chairman or members of the Committee.

122. The Chairperson: Thank you, Mr Murray. Will you briefly outline the advantages and disadvantages for a Church or religious body that qualifies for designated religious charity status? What will be the distinctions between a body that qualifies for that status and one that does not?

123. Mr Murray: First, all bodies will be required to register with the charity commission. Designated religious charity status is not an automatic benefit to religious bodies.

124. The Chairperson: I refer to bodies that cannot register as such because they do not meet the criteria, as opposed to bodies that do meet the criteria. What will be the distinction between those groups?

125. Mr Murray: There are particular clauses in the Charities Bill from which groups that apply and that receive charity commission approval are exempt. Those clauses relate primarily to the appointment or disqualification of trustees. That recognises the fact that some Churches reappoint to positions in the Church body annually.

126. If that exemption were not there, Churches would be required to seek the charity commission’s approval of their appointments annually. Moreover, situations may arise in which the charity commission disqualifies or seeks the removal or suspension of a Church trustee. The exemption recognises the fact that a Church body meets the criteria for designated religious charity status and has particular governance arrangements in place to deal with appointments, investigations or suspensions.

127. Designated religious charity status also allows for constitutional changes, which may occur annually. For example, motions that require changes to a particular Church’s constitution might be proposed at its annual synod or meeting, and, rather than having to seek approval for those changes from the charity commission, if the Church has designated status, the charity commission will recognise its governance arrangements, and the Church will therefore not be required to go through that process.

128. Those are the relevant exemptions; however, Church bodies are still obliged to provide an annual report that outlines their activities and finances.

129. The Chairperson: Does designated religious charity status — whether in or outside of the scheme — have any effect on a body’s eligibility for HM Revenue and Customs schemes?

130. Mr Murray: None whatsoever. As members may be aware, tax is separate from charity registration. Tax is a reserved matter, and HM Revenue and Customs makes its own decisions about qualification as a charity. Clearly, there is some degree of read-across, and HM Revenue and Customs might question why a body that is not registered with the charity commission for Northern Ireland seeks HM Revenue and Customs recognition as a charity, and it might ask the charity commission directly whether there is an issue or a difficulty, and why that is the case. Nevertheless, HM Revenue and Customs will still make its own decision about approval for tax-benefit purposes.

131. The Chairperson: That brings me to my final question on that matter. How was the stipulation that a Church body must have at least 1,000 members arrived at?

132. Mr Murray: In discussions with our colleagues in OSCR, which developed the criteria for the Scottish scheme for designated religious charity status, we found that 3,000 members are required in Scotland for status to be granted. The figure for Northern Ireland was derived from the size of the population, and of the religious population, and we also consulted the main Churches in order to arrive at an appropriate number.

133. The Chairperson: When you say the main Churches, I presume that you mean Churches with more than 1,000 members.

134. Mr Murray: We also held discussions with bodies such as the Quakers, which is perhaps perceived as being one of the smaller Church bodies. The figure of 1,000 members recognises the different situation in Northern Ireland, and is set at a level that we believe will ensure that organisations possess an adequate capacity for governance. If a figure lower than 1,000 members were to be stipulated, the capacity of the organisation’s governance arrangements may not be there.

135. The Chairperson: I understand the difficulties of approving very small organisations; however, I am slightly concerned about your reference to the HM Revenue and Customs read-across. If it were to accept the charity commission’s benchmark figure of 1,000 people in order to qualify for designated religious charity status, and a small Church or denomination comprised 950, or 999, members attempted to apply for the tax-exempt covenant scheme, which can be beneficial to all Churches, that small Church might not qualify.

136. Mr Murray: As I said, the process for an organisation to be recognised as a charity will be first to register with the charity commission. HM Revenue and Custom’s potential question about whether that organisation has achieved designated religious charity status will not then arise, because the body will already have been recognised as a charity. The matter would therefore have no bearing on the tax issue.

137. The Chairperson: Yes, but what would happen if a body was recognised as a charity but failed to achieve designated religious charity status due to its having an inadequate number of members?

138. Mr Murray: Regardless of whether such a body achieved designated religious charity status, its charitable status, or its registration as a charity with the charity commission, would not come into question.

139. That benefit, or clause, relates only to exemption from those particular aspects of the Bill. It does not alter their charitable status one way or the other.

140. The Chairperson: I have a final question, after which we will move on to members’ questions. In the past, police highlighted cases in which bank accounts in the names of charitable organisations appeared to be associated with current or former paramilitary groups. How is that issue being investigated?

141. Mr Murray: DSD officials have held discussions with the PSNI on the proposals in the Bill, and we hope to develop a relationship of information exchange with the police. Once established, the Charity Commission will ensure that there is contact with other regulators and the PSNI about potentially flagging bodies or persons that may give cause for concern. Part of the Bill relates to the disqualification of trustees for previous offences and how that may affect their ability or capacity to serve as trustees of a charitable organisation.

142. The Chairperson: Does that mean that a person with a terrorism-related conviction would be unable to serve as a trustee?

143. Mr Murray: No, it does not preclude that. Many disqualifications will be due to financial impropriety or related convictions, or previous disqualification as company directors, rather than to paramilitary offences. The legislation also covers spent offences.

144. Ms Lo: Hello, Seamus. Does the Bill require an equality impact assessment? For example, the legislation sets out the conditions that the group must have been established in Northern Ireland for at least 10 years and comprise at least 1,000 people to qualify for religious status. That may be perceived as discriminatory to new groups entering Northern Ireland.

145. You have consulted with groups from the majority Christian faith, but there are now several Muslim organisations and, as far as I know, the Belfast Islamic Centre currently has charitable status. If those organisations do not qualify, it means that they do not get tax relief and cannot apply for grants, for example, to the lottery, because they would be refused.

146. Mr Murray: A couple of factors must be taken into consideration. I assume that the Belfast Islamic Centre has tax recognition rather than charitable status. To ensure that this change met equality legislation, we consulted the office of the departmental solicitor, because there was concern that part of the legislation may treat one section of the charitable sector differently to another.

147. We were careful to consult our solicitors to ensure that that part of the legislation does not contravene either European human rights legislation or Northern Ireland legislation, and we were assured that it does not. The clause deals with the recognition of the particular governance arrangements that exist in the Churches. Therefore, there must be criteria to ensure that the groups have been established for some time and have achieved a certain level of stability, and we agreed on a period of 10 years.

148. That ensures that a new Church that has been established for only a year cannot qualify. That could have led to a situation where the bona fides, establishment or confidence in the governance arrangements of that body could have been called into question. As far as I know, a body does not have to be a charity to apply for lottery funding.

149. Mr Craig: Having listened to what you have said, there are good reasons why a body would want to be designated as having religious status.

150. Has it been taken into account that there are tens of thousands of independent Churches in Northern Ireland that, if considered individually, would not meet the criterion of having 1,000 members? A lot of them, for example Baptist Churches, if considered collectively, would meet that criterion. However, as I have said, individual Churches would not meet it, yet they may require the designated religious status, as a lot of them change their congregations annually and biannually. How has that been allowed for?

151. Mr Murray: Perhaps I should have clarified that point. The figure of 1,000 is at a denominational level rather than at an individual Church level.

152. The Chairperson: Mr Craig’s point was that some of the smaller Churches are precisely that — they are individual Churches, as opposed to part of a larger denomination.

153. Mr Murray: We had to agree a figure that was sensible in recognising that Churches have a particular governance structure. If that figure is decreased, the level becomes meaningless, for example, it could decrease to 500, 200 or 300. Our best judgement was partly based on representations that we received from the Irish Council of Churches.

154. The Chairperson: They tend to represent larger Churches that have larger numbers; that is the point that I was making at the start.

155. Mr Murray: They also perhaps represent some of the smaller Churches. Therefore, we did have some degree of discussion with them. Our best judgement from the feedback that we received from the Churches that were represented was that 1,000 was an appropriate figure.

156. A legislative process is clearly ongoing. If representations are made, there is an opportunity for people say that they think that figure should be adjusted.

157. The Chairperson: I think that that will happen.

158. Mr Craig: I have a problem with this. The fact that the smaller Churches frequently require the charity status has been highlighted. Yet, including any figure excludes 90% of independent Churches. Unlike the main Churches, those denominations do not act as a single body. There is a unique structure to those Churches. [Inaudible.]

159. Mr Murray: To emphasise again, the proposal will not affect whether a body is designated as a charity. Any such body has to apply for that status first. Therefore, the criterion is not a deciding factor in whether a group becomes a charity. It is only after a group is recognised as a charity that it can apply for designated religious status.

160. The Chairperson: That is the reason I wanted you to outline at the outset the distinction between those who qualify and those who do not. The Committee wants to ascertain whether the smaller Churches qualify; under the numeric criterion most of them would not. What do they gain or lose by not qualifying? That issue needs to be investigated in some detail.

161. Ms Lo: Churches have to have 1,000 members to qualify for the status. Does the same apply to other charities?

162. Mr Murray: No, it does not apply to other charities. The clause simply recognises the unique governance arrangements, and, in some cases, the unique legislative arrangements, of Church bodies.

163. Ms Lo: Can that be challenged? Other charities are not being asked to quantify their membership, but Churches are.

164. Mr Murray: The clause relates only to those that apply for designated religious status. Again, it is a unique aspect of their particular situation. Other charities do not have the particular governance arrangements that relates to Churches. That is why the clause is included.

165. The Chairperson: Designated religious charity status is the issue, with the term “religious” effectively referring to Churches and religious-type bodies. Are there any other bodies, apart from Churches, that that includes?

166. Mr Murray: One or two charities on a UK level, not simply in Northern Ireland, which were established by Royal Charter, could be included. That is why section 167 was included.

167. The Chairperson: I was thinking of organisations such as the Salvation Army or St Vincent de Paul.

168. Mr Murray: They are religious-based organisations.

169. The Chairperson: So they would come under those criteria?

170. Mr Murray: Potentially, yes. It is, perhaps, worthwhile pointing out that a similar benefit has been available to Scottish charities for the past year. There are roughly a dozen Church bodies.

171. Mr Kieran Doyle (Department for Social Development): There were 11 Church bodies in Scotland when the legislation was introduced, but that number has been reduced to nine. [Inaudible.]

172. Mr Murray: Although those nine Church bodies were given registered status in Scotland, there have been no broader issues for smaller Church bodies.

173. The Chairperson: We may be able to examine that in some detail.

174. Mr F McCann: It would be interesting to learn about the impact of charities legislation in Scotland, and whether any small Churches have been forced out of business. To follow up on Jonathan Craig’s question, has there been any research, as part of the work on the local legislation, on the number of small and independent Churches that might be affected? There would be a concern that in trying to fulfil the set criteria they might go out of business, which would be a loss to the communities that they serve.

175. Mr Murray: There are a couple of responses that can be made to those questions. As members will be aware, we carried out two public consultation processes and consulted extensively with Church bodies. Admittedly, not many of those were small Churches, but they were included in the process. We have had no indication from our discussions with Scottish colleagues that there has been any adverse impact on the smaller Church bodies in Scotland.

176. I must emphasise that the clause under discussion does not restrict, debar or preclude religious or Church bodies from applying to become a charity. The criteria do not impact on that part of the process. Those bodies, like any other organisation, can apply for charitable status. In considering the impact of a charities Bill, I refer members to the changes we propose to the issue of accounts. There are issues around the impact of assets and small charities meeting the accounting requirements. We have tried to make that as simple as possible, by separating out the assets issue, so reducing the burden on small charities.

177. Mr F McCann: Will small Churches still be able to apply for charitable status? I take it that, once the application is received, the criteria are applied. However, if they do not have the congregation of 1,000, would they be refused charitable status?

178. Mr Murray: No. They will have applied for charitable status and been approved. Regardless of that, nothing else changes. Once they are approved and registered as a charity, they can apply to the charities commission for designated religious status, which is an additional benefit.

179. The Chairperson: It is two separate and distinct things. The smallest Church groups can be established as charities without having to meet any criteria.

180. Mr Murray: Beyond what is contained in the legislation.

181. The Chairperson: In addition to that, once the Church group has applied for charitable status, it may, because of its small numbers, be refused designated religious status. The problem that might occur is that in losing that, do they lose anything that could jeopardise them or make life difficult for them?

182. Mr Murray: No.

183. The Chairperson: We need them to tell us that. It is fine that you are telling us that, but we must find out if they think that.

184. Mr Murray: They will not lose out as a result of the legislation. They will not lose their charitable status or registration.

185. They lose nothing by the Bill. Even were they to lose charitable status or lose their charity registration, it would not impact upon them. Tax is a separate issue and is dealt with by the Inland Revenue, but as things stand, it has no impact on that either.

186. Mr Brady: My question pursues the same point. In addition to applying for designated religious status, criteria have to be set down.

187. [Inaudible.]

188. With respect to numbers, the figure of 1,000 seems arbitrary.

189. [Inaudible.]

190. The people who formulated that must have had something in their minds when they drafted it.

191. [Inaudible.]

192. Will things like this become more clearly defined as the Bill progresses? What is meant by “regular worship”? Does it mean once a week, once a month or once every six months? Does it mean formal worship? Does one have to go to a Church? What if people were to worship in their own houses? I know Hindu people who have temples where they worship in their homes. Will all that be tied down?

193. The easiest criterion to satisfy is that for “advancement of religion”. That is the principle purpose. The Bill goes on to mention “regular worship”. Ten years may be an arbitrary figure. Some people may regard it so; certainly, 1,000 is an arbitrary figure. Then there is another issue about regular worship. The witnesses say that if you apply you can be awarded status; but if you apply for a designated religious status it gives even more benefit.

194. Could that set of criteria be tied down?

195. The Chairperson: The witnesses have given us some detail on that. Perhaps they will go over it again and reassure the Committee on that point.

196. Mr Murray: We worked on the figure and consulted at length with our colleagues in Scotland who have established a figure that works in practice. We looked at the population figures in Northern Ireland and calculated a pro rata figure that was initially higher than 1,000. We reduced it to 1,000, in the light of discussions with the main Church bodies who were concerned about it, and following contact with some of the smaller religious bodies, such as the Quakers. Therefore, we had considered that figure carefully.

197. As to worship, the Office of the Scottish Charity Regulator has developed guidance for the application of designated religious status. We can work on that basis. We have not included that detail in the Bill; there is a substantial volume of wording in it already. It will, however, be available once the Commission is operational.

198. Mr Cobain: I return to the issue of Churches. In Northern Ireland there are a lot of small Churches, and any that considers itself an independent Church should be able to apply for designated religious status, irrespective of numbers. I do not see the rationale for discriminating against a Church because of numbers attending.

199. I do not agree either with the 10-year criterion. I know groups that are run proficiently and professionally, but have not been operating for that long. To set 10 years as a criterion for governance gives no guarantees.

200. With regard to ageism — a big issue — I see that once one turns 70, one cannot be appointed a commissioner. Why is that? [Laughter.]

201. The Chairperson: Are you baffled, Mr Murray?

202. Mr Cobain: It is a serious point, Mr Chairman. Ageism is a big issue now. People who reach a certain age are discriminated against. I am unhappy that the Government discriminate against people because of their age.

203. The Chairperson: I was not querying you question, Mr Cobain. I was querying the lack of an answer from Mr Murray. [Laughter.]

204. Mr Murray: Mr Cobain makes two points. As to the first, the Bill needs to be cautious; so does the proposed Commission. If we removed the 10-year and numbers criteria, potentially a body that called itself religious, moved into Northern Ireland, sought designated religious status and, if we had scrapped those criteria, could well meet others that we have laid down.

205. Therefore, some of the governance arrangements and the regulation rulings on the particular charity that has been set up no longer exist. Therefore, there is a particular risk, which is why time is needed to ensure that there is a status, reputation, standing and sufficient figures for any body that is established in Northern Ireland, so that it can be seen as a bona-fide religious body. That is still going through the legislative process, so numbers are open to question.

206. I take the point about the requirement for a body to be established for 10 years, which was not something that struck us. However, I am also aware that a challenge to the age criteria was reported recently in the media, and we will consider that again.

207. Mr Cobain: Why was it there in the first place, Seamus?

208. Mr Murray: I am not able to give an answer to that at the moment, but I will go away and consider it and reply to the member in writing.

209. Mrs McGill: Thank you for the briefing, Seamus.

210. The Assembly researchers’ paper states that the charity commission should consist of a chairman, a deputy chairman and at least three, but no more than five, other members, and it is anticipated that the commission will initially be staffed by approximately 16 people with an estimated set-up cost of £300,000 and an annual running cost of £800,000. Is that the number of people that will be appointed to operate under the finished legislation, and is that the cost?

211. I wonder if, when the commission develops, if there will be a group of people for this and another for that, and if will it snowball so that we end up with a very well-peopled organisation, although we are unsure at this point exactly what work those people will do? The regulation has to be different to that which exists at the moment.

212. Can you tell me a little more about the commission and its funding, and what is its connection with the legal processes that already exist? What role will DSD, the current authority, have? Will it be redundant, or will there be duplication?

213. Mr Murray: Currently, DSD is the sponsoring body. The proposed charity commission will be a non-departmental public body (NDPD), and therefore it will report back to DSD, as NDPBs must have a body to report to.

214. I can provide limited assurance at the moment. Our best judgement, on both the size and scale of the proposed charity commission and the cost involved, is based on the most comparative example, which is the Scottish charity regulator. We have had the benefit of looking at its operation and what it has been through. We have also looked at the structures and scale of some of the other regulatory bodies in Northern Ireland, and their figures are our best judgement of an estimate of the required functions of the proposed charity commission for Northern Ireland.

215. I cannot provide an answer on what may happen in the future, because we can judge only on what we envisage as the requirements and the level of work that the charity commission may have. In our judgement there will be an initial heavy workload to establish the commission, carry out all the registrations and put everything in place.

216. One would anticipate and hope that, as the charity commission becomes established and embedded, it will operate more effectively. Therefore, there should be no growth in staff numbers or requirements for that, other than the usual additional year-to-year cost that any organisation faces regarding the cost of living.

217. Mrs McGill: As a final point, such organisations seldom cost less as they grow and grow. It would be good if the commission could maintain that level.

218. The Chairperson: Is there any guarantee of that, Mr Murray?

219. Mr Murray: I would love to be able to guarantee matters of that nature, but, unfortunately, I am unable to do so.

220. Mr F McCann: I have two small points. First, will there be a specified period between a body’s application for charitable status and the commission’s recognition of it? Secondly, from the notes, I see that, occasionally, one-off charities are set up, for example, to provide an operation for an individual. Some of those charities might have a lifespan of only six months or a year. Will the Charities Bill have an impact on them? Some of them raise huge amounts of money

221. Mr Murray: I suppose that that is more appropriate to the part of the Bill that deals with public collections, rather than with charities. An organisation can choose to register as a charity and be recognised as such, but it must weigh up the pros and cons of doing so. If an organisation becomes a recognised charity it must be aware of what that means. It will be required to produce annual reports and make annual returns. However, under the public collections provisions, any charitable or philanthropic body can make a public collection. The legislation sets out the requirements for that, such as a system of initial licences to say that the organisation is fit to carry out a collection, and the body must request a permit for the actual collection.

222. As regards ad hoc issues, such as a response to a local tragedy or appeal, where people are motivated to raise money, the Bill contains exemptions that allow that to happen. In that case, the body will contact the charity commission a couple of days before it wants to make the collection and ask for a permit or an exemption to do so. There is provision to enable the commission to do that. The charity commission legislation should not, and will not, preclude that type of emotive response to situations.

223. Mr F McCann: Some of those organisations might run for six months or one or two years. How do they fit in?

224. Mr Murray: The only precaution is that if, for example, the organisation starts calling itself a charity and puts that on its posters, once the legislation is enacted, that organisation will not be able, legally, to call itself a charity unless it is registered to do so.

225. The Chairperson: What is the penalty for doing that?

226. Mr Murray: There would be some degree of censure. The charity commission will not be a dogmatic, punitive body that will come down hard on people who wish only to do some good. The commission will probably contact the organisation and explain why it cannot call itself a charity under the legislation and work with it to resolve the situation.

227. The Chairperson: I appreciate that we speak hypothetically; however, in such circumstances, would that dispute be in the public domain, so that people would be aware of the problem?

228. Mr Murray: We can reverse the argument. Part of the reason for the Bill is to protect the public, so that, if people wish to make a donation, they will have some reassurance that they are giving money to a reputable charitable body, and they can check that through the charity commission and the register. On the other hand, we do not wish to preclude the response of people who, over a period of time, wish to make a specific collection. The commission will be there to work with such organisations to see how they might be able to do that.

229. Mrs McGill: Going back to my previous point about DSD and the commission, I would be happy if you could provide some information on what the connection between them will be. At present, DSD acts as the charity authority for Northern Ireland, and deals with disposal of land and so on.

230. I want to know whether DSD will be out of the picture on this matter. My question concerns duplication —

231. Mr Murray: Apologies; I did not pick that up.

232. Mrs McGill: That is OK.

233. Mr Murray: We will respond in writing, if that is OK.

234. Mrs McGill: That will be fine.

235. The Chairperson: On the same issue, the Committee has been contacted by an individual body, Donaghadee Sailing Club, about problems that it feels that it may face as a consequence of the legislation. As Chairperson, and the Committee has been unanimous in supporting me on such matters, I am always cautious that we as a Committee do not get drawn into specific complaints that either an individual or a group of people may make. However, are you aware of the sailing club’s problems? Is it possible that either liaison, or a written confirmation, between the Department and the sailing club could clarify matters to its satisfaction?

236. Mr Murray: We have already responded through the Minister.

237. The Chairperson: Yes, but I am thinking about its —

238. Mr Murray: We can certainly contact the organisation and speak directly to it.

239. The Chairperson: If you could, please. You may have responded, and we might think that that was an end to the matter, but the sailing club may be of a different mind.

240. Mr Murray: I am happy to respond to it. That raises a broader issue, which is perhaps worth noting, about recreational and sporting clubs. Clubs of that nature, which have membership and are therefore restricted by nature, are dealt with by HM Revenue and Customs under separate legislation. Certain types of tax relief are available to them. Clubs that fall under that legislation cannot be both a charity and receive the benefits of those provisions, too; those are two separate issues. However, we will respond directly to Donaghadee Sailing Club on that matter.

241. The Chairperson: Gentlemen, thank you very much for your contribution. Unfortunately, Mr McGivern, you did not get an opportunity to contribute. I am sure that you will on a future occasion.

242. Mr Murray: We shall also respond to Mr Cobain and Mrs McGill on the two issues that they raised. Thank you.

17 January 2008

Members present for all or part of the proceedings:
Gregory Campbell (Chairperson)
Mr David Hilditch (Deputy Chairperson)
Mr Mickey Brady
Mr Fred Cobain
Mr Jonathan Craig
Ms Anna Lo
Mr Fra McCann
Mrs Claire McGill
Miss Michelle McIlveen
Mr Alban Maginness

Witnesses:

Mr Dermot Curran
Ms Majella McCloskey
Ms Carol O’Bryan
Ms Wendy Osborne

CO3 — Chief Officers 3rd Sector

243. The Chairperson (Mr Campbell): We now come to the marathon that will be the Charities Bill. We have officials from CO3 with us. You are very welcome, and thank you for coming along and supplying the Committee with hard copies of your presentation.

244. Majella, do you want to introduce your team? We will start with your presentation, followed by members’ questions.

245. Ms Majella McCloskey (CO3 — Chief Officers 3rd Sector): I thank the Committee for inviting us along to give evidence.

246. I am Majella McCloskey, and I am the director of CO3 — Chief Officers 3rd Sector. I am accompanied by three CO3 members: Wendy Osborne, who is the chief executive of the Volunteer Development Agency; Carol O’Bryan, who is the chief executive of the Simon Community; and Dermot Curran, who is the chief executive of the Belfast Community Housing Association and is also CO3’s treasurer. Wendy and I will make the formal presentation, and Carol and Dermot will help us to answer any questions.

247. CO3 is a membership body for the people who head up charities in Northern Ireland. It has 175 members, and it looks after the professional and personal development needs of those members. CO3 also keeps members well informed by sharing information, and it investigates policy issues from time to time on particular subjects. That is a key point; with charities that have paid staff, it is likely that their chief executives will have the lead role on governance and relations with the new charity commission.

248. We thought that it might be helpful to give members a flavour of the charitable sector in Northern Ireland. It is important to point out that there are some large charities in Northern Ireland, with a turnover of more than £10 million to £20 million. They have large staff numbers, both people who work in Northern Ireland and others who are based here for organisations that operate in other jurisdictions such as the South of Ireland, Britain and internationally. There are also some small community-based organisations — groups that come together because of a shared interest such as local community groups, historical associations, and so forth. It is a broad church, for want of a better word. A wide range of groups is involved, and it is crucial to bear that fact in mind.

249. The sector is made up of not only indigenous and local charities but charities that operate on an all-Ireland or UK basis. Indeed, some charities that are based here operate on a global level — for example, the Mexico Child Link Trust.

250. There is great breadth in the charitable sector. Some charities are schools, universities, playgroups, local community groups and civil liberties organisations. The breadth of the charitable sector in Northern Ireland is tremendous. The sector is vibrant, and I feel proud to be a part of it. The sector has played an important role in Northern Ireland society and should continue to do so.

251. What is CO3’s core message? Why are we here today to give evidence to the Committee? It is important to say at the outset that we welcome the establishment of a charity commission. We have talked extensively to, and carried out consultations with, our members since the idea of a charity commission was first mooted in 2006. It is important that there is regulation, and we believe in the importance of accountability. We are mindful of the fact that we receive public money, both from Government and from donations from the public. We are aware of all those issues, and it is important that organisations are accountable and transparent. There is a need for a charity commission.

252. That being said, there have been very few cases of fraud or mismanagement of money in the charitable sector in Northern Ireland. It is really a matter of having a common charities register so that more information is available — for example, how many charities there are and what they do.

253. That being said, it is important that the commission is properly established and has the resources to do the job that it needs to do and that it is accountable in its operations. The commission must understand and value the work of charities in Northern Ireland in its approach and operation.

254. In our submission, we proposed an amendment to the Bill that focuses on valuing the importance of charities to civil society in Northern Ireland. We are not suggesting that a charity commission should champion the role of charities or that it should represent charities, because bodies already exist in the sector that do that, and do it very well. The charity commission should have a built-in ethos that recognises that charities are important in Northern Ireland. The commission should be mindful of the importance and value of charities. If that ethos existed, it would set the tone for a good relationship with the charitable sector and for the commission being proportionate in the way in which it deals with organisations. Thus, if an organisation is very small, the commission will be conscious of that in its operations. That is a key point.

255. Ms Wendy Osborne (CO3 — Chief Officers 3rd Sector): I will talk about bureaucracy and accountability. We all know that this is a highly technical, complex and wordy Bill. The legislation will not sit in isolation; it will sit alongside other policy initiatives that deal with charities and the voluntary and community sector. It is important that it does not overburden organisations by requiring them to prepare different sets of submissions and annual returns for various Departments and the charity commission. That would not be an effective use of a charity’s resources.

256. Although there must be some bureaucracy and a level of accountability, there is a concern that if the people who run the charity commission do not understand that it must not sit in isolation, it may be ineffective in conducting its business.

257. It is right that charities, particularly when they are in receipt of public funding, should undergo an increased level of auditing and reporting, and the new charity commission must take account of that and ensure that such procedures are as streamlined as possible. Such accountability will help everybody to understand how charities work.

258. The subject of trustees must also be considered, including matters relating to the establishment of the incorporation of trustees and charitable incorporated organisations. Although those new provisions are to be welcomed, the charity commission must understand how they will integrate with existing arrangements, and established charities and organisations will have to consider the implications of the new arrangements and make choices about what they will do, which will depend on understanding the regulations and creating effective bureaucratic systems.

259. When considering trustee eligibility, the nature of Northern Ireland must be taken into account, and issues relating to that must be brought on board and understood to ensure that people who may wish to be trustees are not automatically excluded. One size may not fit all; attempts to legislate for only one size deter people and create difficulties for the very people whom the legislation was intended to encourage and enable. We do not wish to stop charity; we wish to ensure that a charity is as effective as it can be.

260. Proportionality is another key issue. All groups and organisations that wish to attain charitable status will be required to register with the charity commission and, in most instances, provide similar information. I will draw from my own experience; the organisation of which I am the chief executive — the Volunteer Development Agency — has a revenue turnover of around £1 million; however, I also happen to be the chairperson of a local historical society, which has no paid staff and revenue of perhaps only a couple of hundred or a few thousand pounds a year. Auditing requirements for those bodies will be different, which is to be welcomed; however, in all other regards, charity commission registration will be exactly the same. If the legislation is to work, proportionality must be considered in order that such local historical societies and volunteer-led groups will still be eligible for charitable status but will not have the bureaucratic burden that one would wish for a large charitable organisation, which might be responsible for large sums of public funding. The key issue is proportionality, and the legislation does not adequately recognise that and will not enable the charity commission to regulate charities of all sizes effectively.

261. There is a question about whether the charity commission will be adequately resourced. A figure of £800,000 is stated in the legislation. Last year, the new regulatory body in Scotland — with a staff of 45 people — had an operating budget of £1·7 million. The nature of what the new charity commission will be asking organisations to do and its regulatory functions will, over time, create a substantial volume of work to register all charities in Northern Ireland. If the charity commission is to create guidance and be responsible for the accountability of that guidance, those functions must be adequately resourced. Experience tells us that charities will be required to ensure that they conform to the regulations. Therefore, the regulatory body will have to ensure that those procedures are as streamlined as possible, and resources will affect that process. Ultimately, the problems with conforming to regulations will impact on charities’ work, and I do not believe that any one wishes that to be affected.

262. There may also be resource implications for charities. Clearly, my organisation and organisations that are members of CO3 will have to consider, and take advice on, what they do and how they will conform to the new regulations. If that becomes an issue, additional legal advice may have to be sought, which will have resource implications for charities.

263. The legislation allows the new charity commission to request payment for certain things, if that is deemed appropriate. That may never come to pass, but the legislation allows for it. Regulation is good, but it must be undertaken with the aim of allowing the charitable sector in Northern Ireland to flourish. Therefore, the key question for the people agreeing, progressing and implementing the legislation is how to get the balance right.

264. Majella mentioned accountability, and CO3 does not want to stop charitable organisations operating in Northern Ireland; it wants its organisations to be regulated so that they are as effective as possible. If we agree that charities are important, that they operate in all areas and all communities in Northern Ireland, that they attract public participation and many additional financial resources, it cannot be disputed that they add real value to life in Northern Ireland. Therefore, the charity commission must be independent, because it will regulate a substantial amount of civil society in Northern Ireland. For that reason, it is important that the charity commission is seen to be free from interference and is accountable. The scope and powers of the commission will have such an impact on the charitable sector that it should be directly accountable to the Northern Ireland Assembly.

265. CO3 welcomes the establishment of the charity commission, and it wants it to be successful. In order for the commission to succeed, it must take the context of charities into consideration and ensure that it does not hamper charities’ effectiveness by being overly burdensome. It must be properly established and resourced, be accountable and, crucially, be balanced and proportionate. The commission must show that it values the context in which it is working.

266. It is not known how many charitable organisations are recognised, but the establishment of the charity commission will have far-reaching implications for everyone who works in the charitable sector. CO3 is happy to engage further with the Committee for Social Development on any issues that we have raised.

267. The Chairperson: We will now move on to members’ questions. Please be aware that there are time constraints, so I would appreciate it if the questions and responses are concise.

268. You mentioned resources and bureaucracy. Am I right in assuming that some of the larger charities — or those that are part of a larger organisation, either in the UK, the Republic or elsewhere — may be able to draw on resources to help them to cope with increased bureaucracy to which smaller charities may not have access?

269. Ms Osborne: Larger charities may have expertise in their own structures and may also have access to additional resources. Smaller charities will not have those resources, especially if they are led and run by volunteers. Additional bureaucracy will be more complex for such charities and their trustees than it will be for larger organisations.

270. The Chairperson: I assumed that that was the case. There are greater demands for transparency all around. I have read press articles in which charities state how much out of every pound donated — 85p, say — goes directly to the people that that charity was set up to try to help. Is the amount of money that goes to those people likely to fall because of the increased levels of bureaucracy that the charity commission will demand?

271. Mr Dermot Curran (CO3 — Chief Officers 3rd Sector): Housing associations are registered charities, and they receive grant aid for development and for the provision of social housing, so regulations already require accountability. Monitoring and performance management are also considerations. The formulation of common objectives and needs, and the added value of good practice, would be beneficial to the sector, because housing associations are quasi-public authorities and are accountable to the Equality Commission for Northern Ireland and the Northern Ireland Commissioner for Complaints. Therefore, housing associations are already regulated by the Department for Social Development. They are also audited by the Northern Ireland Audit Office. Openness, transparency and accountability are required. The sector does bring added value, which, perhaps, the 85p out of the pound cannot always clearly identify in local communities.

272. The Chairperson: Majella, you mentioned the Mexico Child Link Trust. There are charities in Northern Ireland that have links to places such as the Republic of Ireland, GB, Europe and Africa. Accountability is a clear issue for charities that are based in Northern Ireland. How does accountability work if a charity has international links?

273. Ms McCloskey: Our understanding of the Bill is that, if a charity is based or operates in Northern Ireland, it will have to register with the charity commission. Some CO3 members who are part of wider operations in Ireland or in Britain are concerned that they will be obliged to make multiple registrations. It will be important for charity commissions to work closely together to ensure that there some of the processes are duplicated in order to avoid additional bureaucracy.

274. The Chairperson: If a charity based in Northern Ireland is working in a country that does not have a charity commission — for instance, I do not know whether Mexico has one — how will accountability be affected?

275. Ms Carol O’Bryan (CO3 — Chief Officers 3rd Sector): The key issue for such charities is their local links. Oxfam and Christian Aid disperse moneys in the developing world, and their local relationships, which should have integrity, are of the utmost importance.

276. The Chairperson: I am not suggesting that there is any impropriety or interference; it was simply a query.

277. Mr Hilditch: Thank you for the presentation. Majella, can you elaborate on why you feel that there may be a conflict about the commission’s advice/guidance role, given its regulatory function?

278. Ms McCloskey: If you do not mind, Wendy will answer that question.

279. Ms Osborne: The primary function of the charity commission will be as a regulatory body. It can be difficult for a regulatory body to provide guidance and information, because it may have to step in and make a judgement about how an organisation has carried out its business. Tensions will always exist. The charity commission will have to provide information about its regulations and what charities will have to conform to. It will have to maintain a wall between that role and the regulatory function.

280. The Volunteer Development Agency and the Northern Ireland Council for Voluntary Action (NICVA) are good examples of organisations that already provide information and guidance for the sector, which can tap into their resources. In some ways, it is better to use those resources, because the charity commission can then remain independent, which is important, given its key regulatory function. There are examples in England and Wales of the blurring of the regulatory and the advice, guidance and support functions of such commissions, which were no help to those organisations or the charitable sector in general.

281. Mr Hilditch: What is your assessment of the current level of advice and guidance that is available?

282. Ms Osborne: A range of advice and guidance is available for charities in Northern Ireland. However, it requires quite a bit of changing and tweaking, because it will have to respond to the Bill and to the guidance from the new charity commission on the legislation. The task of informing the charitable sector about the new regulations will be an onerous one.

283. Ms Lo: I understand the concerns of the voluntary sector. However, the Equality Commission, for instance, gives advice and guidance to employers and employees as well as having a regulatory role. Such organisations can operate effectively if those roles are clearly defined. I do not believe that there is a significant conflict of interest. Do you have an opinion about that?

284. Ms Osborne: A conflict of interest could arise. We have already said that we believe that the charity commission will be required to provide support and guidance — but at what level? Having used the resources of the Equality Commission and other regulatory bodies, I know that they are quite specific about the guidance that they offer and how it is given, so that there is no sense in which they could be seen to be acting inappropriately. They may have to account for the guidance that they have given and for the impact that a particular case may have on the organisation. Those organisations are very careful about that, and rightly so. There are boundaries; it is important that the charity commission understands and recognises those boundaries and is able to operate within them.

285. Mrs McGill: Thank you for your presentation, Wendy. You mentioned proportionality, which is a point well made and is something that must be taken into account. How will that work? How will it be decided? Will it be on the basis of numbers? There are large charities and small charities; will that present difficulties? The point has been made that there is a key requirement that must be enshrined in the legislation.

286. Ms Osborne: The requirement that the charity commission consider proportionality as it does its business should be enshrined in the legislation. That is important. In the first consultation document, the audit requirements were far more onerous for smaller charities. We welcome that fact that the legislation will change that situation, so that the audit requirements for charities with smaller revenues will be less onerous than they might have been.

287. They must comply with everything apart from that. Therefore, the charity commission must understand that a small, volunteer-led and volunteer-run organisation that wants to be a charity — for all the right reasons — may require additional guidance about how those returns are to be made. There might be some element of proportionality in relation to the returns that the charity commission demands. That sort of flexibility will be required in order to make the commission work.

288. Mrs McGill: Flexibility is certainly desirable. However, you are talking about enshrining it in legislation, and that will be difficult. The commission must be prescriptive. It must say that, if a charity falls into a certain group, it will be required to do such and such, and, if it is a big charity that belongs to a different group, it will be required to do something else. You have made a good point, but I see a problem with it.

289. Ms Osborne: There is already an element of flexibility about finances. There are benchmarks in the legislation already. Therefore, other reporting mechanisms could be created around those benchmarks. The reporting mechanisms — the reports and their structures — could be different alongside the different audit reports. There are already provisions with which the commission could work.

290. Mr Craig: As someone who has participated in charities over the past 20 years, I would like the CO3 representatives to expand on the issue of proportionality. I can see a huge potential problem, because the legislation will impose a level of bureaucracy on a charity no matter what. That is acceptable for large charities, because some of them are, in all honesty, more like very well-run businesses. Bureaucracy will not be a big issue for them. However, the vast majority of charities are very small and local. They will not have the infrastructure to comply with some of the legislative requests. Can you expand on your points about proportionality?

291. Mr Curran: Finance is one issue, because organisations must produce accounts and have them approved by external auditors. Whether an organisation is small or large, external auditors must sign off the accounts. In that sense, there might be no proportionality in dealing with £100,000 a year compared with £1·3 million a year. However, there might be proportionality in what is expected of an organisation from a procedural point of view. For example, in my organisation — the Belfast Community Housing Association — compared with an organisation that employs two to three people, how can I have clear segregation of duties when I conduct business, if I do not have enough people to do that? How can one get around that? Furthermore, how can one ensure that a charity is governed effectively and is open and transparent about the way in which it is being governed, while, more importantly, ensuring that it can still carry out its business?

292. There are small housing associations with limited numbers of staff, and their management boards have to get involved in day-to-day business issues. As Mr Craig rightly said, larger organisations have a clear separation of duties and hierarchies of personnel and finance. In that sense, the proportionality would be in accepting as a given the fact that small organisations simply cannot do the same thing as larger ones and that, for example, external auditors are happy enough to sign off audited accounts in the context of a small organisation. That might be one measure.

293. Miss McIlveen: Thank you for your presentation. Your written submission, under the heading ‘Trustee Eligibility’, states that CO3: “would wish to ensure that organisations which wish to have trustees who are ex-prisoners, should be able to do so and that the procedures for doing so should not be unduly prohibitive.”

294. Can you expand on that? I am concerned, because that might include people who had been in prison for crimes such as fraud and armed robbery. How do you deal with that?

295. Ms McCloskey: That point came from some of our members. Generally, there is an intention in the charitable sector to involve users of services in the governance of charities as much as possible.

296. In some organisations that work with ex-prisoners, such as the Northern Ireland Association for the Care and Resettlement of Offenders (NIACRO), in cases where convictions could not be spent, there would still be a capacity — if it were appropriate and within the confines of good governance — for someone who might fall into that category to be involved in the governance of that organisation. That is an issue that is particular to Northern Ireland.

297. The Chairperson: Michelle’s concern was about a conviction that related to some form of financial impropriety.

298. Ms McCloskey: That would not be appropriate at all. There is quite a lot of information in the legislation about the categories of convictions that would disqualify someone from ever acting as a trustee. CO3 welcomes that. We have to take account of the particular set of circumstances in Northern Ireland.

299. Miss McIlveen: Your comment was very general.

300. The Chairperson: It is certainly something that the Committee will take up with the Department.

301. Thank you all for attending the meeting. I hope that you found it as helpful as the Committee did.

24 January 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
Mr Fra McCann
Mrs Claire McGill
Miss Michelle McIlveen
Mr Alban Maginness

Witnesses:

Mr Seamus McAleavey
Ms Denise McCann
Ms Paula Reynolds

Northern Ireland Council for Voluntary Action

302. The Chairperson (Mr Campbell): I welcome Mr McAleavey, Ms McCann and Ms Reynolds from the Northern Ireland Council for Voluntary Action (NICVA). They will give evidence on the Charities Bill. The normal format for Committee meetings is that an opening submission is made, which is followed by questions from Committee members.

303. Mr Seamus McAleavey (Northern Ireland Council for Voluntary Action): I thank the Committee for inviting us to give evidence. I am Seamus McAleavey, and I am accompanied by Paula Reynolds, who is the director of NICVA’s member services, and Denise McCann, who is the head of charity advice at NICVA.

304. We have been working on these issues for some time. A charities Bill, the registration of charities, and the creation of a charity commission for Northern Ireland have been raised often during the past five or eight years, only to recede. We are glad that a Bill will now come to fruition.

305. As the Committee will know, NICVA represents the interests of voluntary and community groups in Northern Ireland, many of which are charities. Members will also know that there are approximately 4,500 voluntary and community groups in Northern Ireland; they are a diverse range of organisations that include small and multinational organisations, such as Save the Children, Oxfam and Concern Worldwide.

306. There is no register of voluntary and community organisations in Northern Ireland. NICVA’s database, developed as a result of our research on the state of that sector, perhaps provides the best estimate of the number of voluntary and community organisations in Northern Ireland. We know that, in 2004, income for the sector was approximately £614 million. Money that was donated by the public accounted for 30% of that figure, and Government provided 30% for the purchase of public services. The rest of the money came from various sources, such as earned income and charitable trusts.

307. The voluntary and community sector is extensive and employs approximately 29,000 people — that is more than 4% of Northern Ireland’s workforce. As I have already said, the issue of charity legislation has been raised often. In March 2004, the Department for Social Development (DSD) set up an advisory panel, of which I was a member. The panel examined the issue again and offered recommendations to the Minister for Social Development, which included creating a charity commission and a charities Bill for Northern Ireland.

308. In June 2005, the Department consulted on the main proposals for charity law reform in Northern Ireland. The Northern Ireland Council for Voluntary Action worked in partnership with the Department, hosting seminars across Northern Ireland and consulting on the issue. In July and in October 2006, the Department consulted NICVA again — and the sector at large — on the draft legislation.

309. We fully support the Charities Bill and we are fairly content with everything in it; it is a good piece of work. However, some issues concern us, and I will ask Paula to say something about them.

310. Ms Paula Reynolds (Northern Ireland Council for Voluntary Action): We are concerned about a few important overarching areas in the Bill. There should be clarity in the registration of charities and in the auditing requirements and accounting thresholds. The Bill should contain further information on the duties of the trustees, the auditing and examination requirements of small companies, and on the compulsory consultation on any revision to the public benefit test guidance. Finally, there is the issue of resourcing.

311. As stated in our submission, the Bill has created confusion around the registration of charities. The draft Charities (Northern Ireland) Order 2006 clearly stated that every charity that is established or that operates in Northern Ireland must be listed in the register of charities. We thought that that was very clear: if a charity is formed in Northern Ireland, it must be listed in the register of charities; or if a charity is formed in another jurisdiction and is regulated there, it must still be listed in the register of charities in Northern Ireland; hence it must go through the public benefit test.

312. However, clause 16(2) of the Charities Bill states:

“Every institution which is a charity under the law of Northern Ireland must be registered in the register of charities.”

313. Does that refer only to charities from Northern Ireland or to charities outside Northern Ireland but which operate therein?

314. Furthermore, clauses 167 and 16 deal with broadly the same issues, but that link is not referred to in the Bill. Clause 167 refers to institutions that are not charities under the law of Northern Ireland; we assume that that clause refers to bodies that have been set up elsewhere but which operate here. However, that has not been clarified. Clauses 167 and 16 relate to charities that must be registered, but there is no reference to that in the Bill.

315. One may assume that clause 167 relates to charities that have been set up elsewhere but which operate here. However, it seems that under the provisions of clause 167 the charity commission does not have to set up a register of such charities. Therefore charities could operate in Northern Ireland but not be listed on the register of charities because clause 167(6)(a) states that the charity commission “may” be required to keep a register.

316. There is another issue concerning registration and clarity in English legislation: the thirteenth head of charity or thirteenth other charitable purpose, which relates to the promotion of the efficiency of the armed forces. The charity could have a charitable purpose or status in England and Wales because of that; however, that charitable purpose does not exist in Northern Ireland legislation. Charities could work here, regardless of whether they are registered. More clarity is required in those important areas.

317. The second area that requires more clarity is accounting thresholds and audit requirements. We have no problem with the Bill’s provisions in that regard, as they will help our charities to work well; it will help them with financial governance. We welcome everything there. However, the wording is confusing, and perhaps a rewrite would help.

318. More information needs to be added to some areas. It would be of value to charities if the general duties of the trustees were included in the Bill because that causes some confusion and can cause governance issues. The Bill does not require small companies — those under a threshold of £90,000 — to have any external audit. NICVA believes that it should.

319. Compulsory consultation and the public benefit test are important. The public benefit test is a cornerstone of the legislation, so it is important for the commission to consult on any revision to the test and guidance on it.

320. Finally, there is an issue about the resourcing of the commission. Those are our issues.

321. The Chairperson: Paula, you say that you would like greater clarity in clause 167(6), which states that the commission “may” be required to keep a register. Should the commission have to keep a register? I understand your need for greater clarity, but which do you prefer?

322. Mr McAleavey: We prefer the wording of 18(2) in ‘the Proposal for an Order in Council: The Charities (Northern Ireland) Order 2006’: “Every charity which is established or operates in Northern Ireland must be registered in the register of charities.”

323. That is crystal clear. The new wording leaves us in some doubt: some organisations may find themselves on or off the register. At worst, someone in Northern Ireland could decide, for whatever reason, to seek charitable status in England, return here, and perhaps not have to be on the register or abide by the same regulations.

324. The Chairperson: I have a question about accounting thresholds. Do you see any difficulties for the smaller organisations that you represent? Bureaucracy might follow the implementation of the Bill.

325. Ms Denise McCann (Northern Ireland Council for Voluntary Action): Throughout the consultation periods, smaller organisations were concerned about the accounting requirements that were to be implemented; the Department listened to those concerns and raised the accounting thresholds. For example, a small charity is classified as one whose gross income is less than £100,000. Such a charity will not have to have a full audit; it can opt to have an “independent examination”. That independent examination can be carried out by someone whom the trustees believe to have the requisite ability. More guidance will have to be issued on that, but the independent examination can be carried out by a retired bank official, for example. The person carrying it out does not have to be an accounting professional, but they do have to have the requisite ability. Small charities were content with that. The charities understand that there has to be some scrutiny of accounts, but the Department did not want it to be onerous or burdensome for them; for that reason, small charities were content with an independent examination.

326. Mr McAleavey: The original proposals were for a threshold of £25,000, which we believed to be too low.

327. The Chairperson: I was just coming to that. Are you content with a threshold of £100,000? You would not describe charities that have a gross annual income of more than £100,000 as “small charities”.

328. Mr McAleavey: Most organisations that have an income of more than £100,000 have audited accounts.

329. Mr Hilditch: I thank the witnesses for their presentation. Will the administration of the new legislation be a burden on some charities?

330. Mr McAleavey: Everything is a trade-off. There is almost universal support in voluntary and community organisations in Northern Ireland for the Charities Bill and the creation of a commission. The charities know that that will place a burden on them but that it is important in increasing public confidence. The Chairperson and I have spoken on radio programmes about the threat that bogus charities pose, although there is a danger that bona fide charities will be damaged when people hear about such bogus charities.

331. Charities in Northern Ireland recognise that anything that helps to boost public confidence in them is important. Likewise, the public will have more confidence in charities if their operation is properly and adequately scrutinised; people feel that that is beneficial. Most charitable organisations provide annual reports and accounts, but there is no compulsion on them to place them with a body such as the proposed charity commission. Such an obligation would be beneficial.

332. Mr Brady: Thank you for your presentation. Are you happy with the thrust of the proposed arrangements on accounting and registration? You said that the general duties of trustees should be included in the Bill. I know of charities — particularly small charities — that were formed 20-odd years ago, and nobody knows who the trustees are. It is important to acknowledge that details of the trustees tend to get lost as the years go on.

333. Ms D McCann: We are calling for the general duties of trustees to be included in the legislation because it is difficult to find them in the Trustee Act (Northern Ireland) 2001 and other legislation. One relies on bodies such as the Committee for Social Development and relevant professionals to find out the duties of a charity trustee.

334. The Bill grants the commission the power to act as the custodian of charities when trustees have died or cannot be traced.

335. Miss McIlveen: Although the Bill states that at least one member of the commission should be a barrister or a solicitor of seven years’ standing, you would prefer it were two. Why is that?

336. You also say that you:

“support the broad interpretation of the advancement of religion which will include the belief in more than one god”.

337. Does that sentiment represent all your members?

338. Mr McAleavey: No. Voluntary and community organisations’ views reflect the differences in society.

339. The Chairperson: Miss McIlveen is asking whether NICVA is making a theological point or merely taking a broad approach. The thinking in your brief is not shared by many people in Northern Ireland.

340. Mr McAleavey: Absolutely. We are using that approach for the purposes of charity law.

341. Miss McIlveen: Why should the commission contain more than one legal representative?

342. Mr McAleavey: The first few years following the establishment of the commission will be complex and onerous, so it will need people with a variety of skills. We do not usually say that a commission or body should be made up of experts; non-legal people have much to bring to a commission due to their understanding of charities and their roles in Northern Ireland. Eighteen months after the creation of the Scottish commission, a review is being conducted into the success or otherwise of the public benefit test.

343. The commission will take on a life of its own. Perhaps in the early years it will employ people with legal qualifications or it will have access to good-quality legal advice. It is a difficult and complex area.

344. Mr Craig: Paragraph 2.3 of your submission refers to the public benefit requirement. That is probably one of the more controversial aspects, because any charity that falls outside that requirement would not be registered. It also mentions clause 4(4)(b), which says that the commission would not have to consult before revising the guidance if it decides that it is unnecessary to do so. Do you fear that the commission could become self-serving?

345. Mr McAleavey: Yes. The public benefit test is a cornerstone of the legislation. However, if the commission wanted to review it at some point, it should do so only after adequate consultation. We would not like the commission or any other body to make changes that could have a huge impact.

346. Mrs McGill: Thank you for your presentation. Some of your documents referred to the composition of the commission, and that has already been commented on. I became concerned as soon as I saw that the commission — although no one disputes the need for one — could grow and grow and grow. I am keen to hear your views on that. Some of the research papers from the Department mentioned the commission’s being composed of a chairman, a deputy chairman, three or five members and 16 staff; another document mentioned a chief executive. I am unclear about the commission’s final makeup. What would you consider to be a workable commission?

347. In a previous meeting, I asked for clarification on the connection between the Department for Social Development and the commission. That is still unclear. You referred to the question of who would make appointments to the commission. How should a workable commission be composed?

348. Mr McAleavey: The commission should be a relatively small body. A chief and a deputy chief commissioner and five staff would be more than adequate. The commission will have a particular role in looking after the “commanding heights” of charity regulation. Staffing is the one area where there might be a danger of unchecked growth. To the best of my knowledge, the Charity Commission for England and Wales employs several hundred people. Adequate staffing is necessary because people will expect a certain degree of scrutiny. If thousands of charities in Northern Ireland submit their annual accounts and reports, the commission staff will have to sample and verify some of them. If a member of the public has concerns about an organisation or a charity collection and wishes to check it with the commission, the commission must be able to respond to the person about whether the organisation is bona fide. To the best of my knowledge, the Charity Commission for England and Wales scrutinises only about 5% of all the returns that it gets.

349. The Chairperson: Is that the case in Scotland?

350. Mr McAleavey: I am not sure; I cannot comment on Scotland. I am speaking from our knowledge of the Charity Commission for England and Wales. Drilling down into the accounts of those organisations is a mammoth task.

351. Mrs McGill: Does the Charity Commission examine only 5% of charities’ work?

352. Mr McAleavey: My understanding is that the Charity Commission takes a sample of all the annual reports and accounts that it receives in order to examine and verify them. It does not review every charity every year; that would be an enormous task. I am sure that the cost benefit would be a problem.

353. However, the commission will investigate any concern about a charity. If you or I or any member of the public were to raise an issue, the commission would have all the data that it needs to deal with it. To do that it needs adequate staff. Reasonable scrutiny would have to be carried out in order to answer fairly simple questions from the public.

354. The Chairperson: Are a chief commissioner, a deputy commissioner and five staff adequate?

355. Ms Reynolds: The Bill’s explanatory notes set out three functions, with four staff in each, and a chief executive. Funnily enough, yesterday we looked at earlier papers that proposed about 30 staff. NICVA suggests that clarity is needed on that issue, because the 2005 documentation and the Charities Bill have set the same costs and resource allocation for the commission, even though the Bill requires the commission to carry out new work. That relates to the point that Mrs McGill made about the possible unrestrained growth of the commission’s functions. In the earlier consultation papers the commission was not required to issue fund-raising certificates and permits, which it is under the Bill. NICVA believes that that will be a labour-intensive, onerous task. We cannot say specifically how many staff the commission needs, although we are happy with its roles and functions.

356. The Chairperson: The Committee will certainly take those matters up with the Department in its consideration of the Bill.

357. Mrs McGill: What is your understanding of the function of the official custodian for charities in the North of Ireland?

358. Ms D McCann: The charity commission could act as official custodian for a charity when its trustees have disappeared, died, or when all of trace of them has been lost. The charity commission could either transfer that charity’s assets to another similar charity through a cy-près scheme or disperse them in a reasonable manner.

359. Mrs McGill: Would the official custodian operate outside the charity commission? Will someone else be required to adopt that role?

360. Ms D McCann: My understanding is that the charity commission as a corporate body will assume the role of official custodian.

361. The Chairperson: Folks, thank you very much for your assistance; you have provided the Committee with considerable food for thought. I am sure that you will follow the Bill’s progress. If any other issues emerge, we shall, of course, seek to discus them with you.

31 January 2008

Witnesses:

Mrs Denise Hayward
Mrs Wendy Osborne

Volunteer Development Agency

362. The Chairperson (Mr Campbell): I welcome Wendy Osborne and Denise Hayward from the Volunteer Development Agency. The usual format is that you make a brief submission, followed by questions from members. If you are content, we shall begin.

363. Mrs Wendy Osborne (Volunteer Development Agency): Thank you for the opportunity to give evidence on the Charities Bill. The Volunteer Development Agency’s role is to promote and develop volunteering to build stronger communities. At the heart of that, its role is to encourage people to participate. We base our submission on the fact that the charitable sector in Northern Ireland is made up of small organisations — 78·5% of which have an income of less than £100,000 per annum. The majority of those organisations are wholly dependent on volunteers. In fact, over 27,000 volunteers are involved in voluntary management committees.

364. The Bill is about regulating the organisation of charities. However, people get involved in charity work because they are committed to a cause, and they want to make a difference. The Committee and the Assembly should hold fast to that. We want to keep people’s involvement in, and public participation in, community life. We would like the legislation to say something about the value of the charity sector, understanding that it enables people to get involved. It contributes quite a bit to the quality of life in Northern Ireland, and that is important. That should be the context in which the legislation is set.

365. The Bill is about individuals, particularly about volunteers who sit on voluntary management committees. It says nothing about the responsibilities of paid staff: it is about the responsibility of the trustees, who are voluntary members. It would be useful to have the legislation amended to include a wider definition of the trustee and the trustee’s role. At present, it has only one line; whereas the trustee has a key role.

366. That leads us to an important point about proportionality. The charitable sector is led by and mainly involves volunteers. It is made up, for the most part, of small organisations. Bureaucracy, proportionality and the standards that might be expected of such organisations are important issues. Although we are delighted that, on the issue of financial accountability, the legislation looks at smaller levels of funding in relation to smaller organisations, it must be strong in what it says about proportionality in the provision of annual-accounts information. The bottom line is that the Volunteer Development Agency does not want to see the legislation create barriers to people wanting to get involved. That is where proportionality comes into play.

367. Mrs Hayward (Volunteer Development Agency): I want to say something about resources and accountability in relation to the charity commission. Its work will be varied, and it will have wide-ranging powers. We are concerned that the commission should be well resourced to ensure that things are not slowed up — for example, the issue of permits for collections. Such things must be managed effectively, in order not to create a barrier to charities doing their ordinary, everyday business.

368. Volunteers on management committees need support. They give up their time to serve communities by sitting on voluntary management boards. We want to ensure that those volunteers have sufficient support to be able to adhere to the new legislation and to abide by it. There must be clarity between the role of the charity commission in providing support and guidance and that of the voluntary and community sector in doing that. Both parties must be well resourced in order to do that.

369. With regard to accountability, we consider that the draft legislation that was put out for consultation was clearer. It required all charities to register. There has been a slight change in the wording of that, as we have stated in our submission. It might be better if all charities established in law, and/or operating in Northern Ireland, had to register with the commission.

370. On the public benefit test, the onus should be on the commission to consult with the sector, and more widely. It is one of the most important parts of the legislation. The commission should not just be able to issue guidance without consultation.

371. Scrutiny of the work of the charity commission is a big issue. It is important that this Committee scrutinises the proposed legislation at this stage. Further down the line, however, we need to ensure that the commission’s activities do not have a negative impact on the sector or on volunteering, as outlined in the compact. We would like to see further scrutiny of its activities either by the Executive or by this Committee.

372. The Chairperson: Thank you for that. You seem to have some concerns about the definition of amateur sport in Northern Ireland. Would you care to elaborate?

373. Mrs Osborne: The definition of sport has changed in the new legislation. It is now tied tightly into the promotion of health. There is clearly a connection; however, for a number of sporting organisations that are currently charities, that could present difficulties. Take the example of a small boxing club. Its first action is to establish the club; it is driven by the sport. Many other indirect benefits flow from that. Promotion of health and well-being is one of those, but if the definition is tied entirely to health, it might limit those organisations in getting charitable status. That was the point that we were making.

374. The Chairperson: For clarification, is it your concern that the new definition of amateur sport may be presented in such a way as to preclude groups from getting charitable status that would have previously been included?

375. Mrs Osborne: Yes.

376. The Chairperson: You have given the example of a boxing club.

377. Mrs Osborne: Yes.

378. The Chairperson: Have you considered other groups?

379. Mrs Osborne: There are a number of sporting organisations and groups that have charitable status, including the Northern Ireland Amateur Gymnastics Association. It is important that such groups do not inadvertently get excluded.

380. The Chairperson: It is useful to have that sort of information.

381. Mr Hilditch: My question is perhaps more simplistic. What are your views on the potential burdensome levels of administration that the Charities Bill may cause office workers in those charities?

382. Mrs Hayward: There will clearly be a bigger burden than currently exists. We welcome the legislation in the sense that there is a place for the charity commission in Northern Ireland and there is a need for it. However, there has to be a degree of proportionality. There has to be a difference between the big national charities that have a lot of paid staff and the smaller organisations that are perhaps managed by volunteers. I am not sure that the legislation is sufficiently strong to protect that proportionality.

383. We are glad that the accounts threshold for smaller charities has been changed since the consultation period. However, there is no clarity about what they are going to be expected to provide regarding annual reports and annual returns. For some charities their annual reports are simply the minutes of their annual general meetings. It is unclear as to whether they are going to be expected to do more than that.

384. Mr Hilditch: Do you feel that that may frighten off some people who want to get involved in charities? Obviously, a lot of people do that on a voluntary basis.

385. Mrs Hayward: That is a concern. It is hard enough —

386. Mr Hilditch: It is difficult enough to get people to volunteer.

387. Mrs Hayward: Exactly. The most recent research that we have published shows that volunteering in Northern Ireland is at a tipping point — it is close to falling off. We do not want to do anything that creates a barrier or deters people from getting involved. The essence of delivering the legislation will be about the support that is provided to those people to ensure that they can meet the requirements of the commission.

388. The Chairperson: Your written submission refers to your preference for local authorities — as opposed to a commission — issuing permits for charities to hold collections. Is that a strong view? Why is that your preference?

389. Mrs Hayward: That issue was raised at a public consultation on the initial draft legislation that we hosted for our members last year. The sense was that when the charity commission is set up, it is going to have a lot of work to do on registering charities. There was a fear that applications for permits could get bogged down in that whole melee — for want of a better word — and that the whole system could slow down. That would be off-putting and difficult for charities as many of them depend on that income.

390. The Chairperson: Local councils are perhaps more amenable to whoever will be making the applications. Were some people concerned because their knowledge of who is going to be on the commission is a bit vague and that it could be too bureaucratic? Would those issues have had a bearing on that preference?

391. Mrs Hayward: Yes, absolutely. People feel that the local councils have local knowledge. That had a strong bearing.

392. Mr Brady: I thank the witnesses for the presentation. You talked about the characteristics of voluntary organisations. Do you think that the proposed legislation will have an effect on the make-up of those groups? I was involved with an organisation, and the average age was about 70. Will the Charities Bill affect the diversity of voluntary groups? I am not sure about that.

393. Mrs Osborne: At the moment, governance is an issue for voluntary and community organisations. The charities commission and the legislation will add to that. Therefore, charities are conscious of meeting regulatory requests.

394. That will have a knock-on effect on the diversity of management committee membership. When people come on board they know that they will need skills and what their role will be. It can be difficult to get a diversity of people involved.

395. Mr Brady: On the other hand, the fact that there are clearer parameters means that people who join organisations with charitable status will know what is expected of them.

396. Mrs Osborne: That is correct. They should be aware of that already, but there is a huge task in making 30,000 individual voluntary management committee members aware of their roles and responsibilities. It is to protect them as individuals. There are organisational liabilities in relation to governance, but there are individual liabilities as well.

397. The Chairperson: Thank you very much. That has been helpful and informative.

7 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 Fred Cobain
Mr Jonathan Craig
Mr Fra McCann
Mrs Claire McGill
Miss Michelle McIlveen
Mr Alban Maginness

Witnesses:

Ms Jennifer Ebbage
Mr Alastair Rankin
Ms Joy Scott

Cleaver Fulton Rankin Solicitors

398. The Chairperson of the Committee for Social Development (Mr Campbell): Good morning. I welcome Ms Jennifer Ebbage, Ms Joy Scott, and Mr Alastair Rankin from Cleaver Fulton Rankin Solicitors to the Committee. I think that you were present when I gave my now customary warning to turn off mobile phones because the session is being recorded. Mr Rankin, if you begin, your colleagues can make their contributions after you. At the conclusion of your presentation the Committee will ask questions.

399. Mr Alastair Rankin (Cleaver Fulton Rankin Solicitors): Thank you for inviting us to submit evidence. We are one of the largest firms of solicitors in Northern Ireland, and we act for many national and local charities that come under every category in the Charities Bill. We have a charity unit, which is cross-disciplinary because there are various aspects to charity law; I specialise in trusts, my partner Jenny Ebbage specialises in company work, and Joy Scott specialises in property work. However, we all deal with charities where those disciplines come together. As head of the charity unit, Jenny will take the Committee through our presentation.

400. Ms Jennifer Ebbage (Cleaver Fulton Rankin Solicitors): I thank the Committee for the invitation to give evidence. Since it was established in 1893, our firm has kept an eye on the development of charity law here — some of our clients have been with us for more than100 years.

401. The Chairperson: Good grief — what age are they? [Laughter.]

402. Ms Ebbage: I see one of them at the back of the room. [Laughter.]

403. The Chairperson: He is remarkably fresh for his age. [Laughter.]

404. Ms Ebbage: I will give Bryson Charitable Group a plug.

405. We engaged in the consultation process and have produced a response to the draft Charities (Northern Ireland) Order 2007. We are practitioners of law and have approached the Bill from an operational point of view to understand how the Bill will affect our clients and determine the advice that we give them. I will focus on practical points that we feel must be clarified, and I hope that the Committee finds our evidence useful.

406. In parts 1, 4 and 14 of the Bill the theme is registration of charities. Northern Ireland is unique in aspiring to register every charity that is involved here so that there is clarity and transparency and a good idea of the size and structure of the sector. The definition of a charity is set out in the Bill as a body or institution that is: “established for charitable purposes only” and is subject to the control of our High Court. There is a two-fold test for a purpose to be classed as charitable: it must satisfy one of the 12 purposes set out in clause 2 and pass the “‘public benefit’ test” set out in clause 3. Clause 16 makes it clear that if an organisation meets those requirements it must register as a charity.

407. The draft Order stated that every charity established in Northern Ireland or that operates here must be registered, which is different from the provisions of the Bill. At first, I did not see the difference, but it becomes clear in part 14 and clause 167 of the Bill, which had not been in the draft Order; it deals with charities that are from the Republic of Ireland, England or Wales, for example, but which operate for charitable purposes in Northern Ireland.

408. Mrs McGill: I am sorry to interrupt, but it would be helpful if you indicated the page in your submission that you are referring to.

409. Ms Ebbage: I hope that everyone has a copy of the submissions; I thought that they may help members to keep pace with my presentation.

410. The point that I am making about non-Northern Ireland charities is that clause 167, which refers to “section 167 institutions”, states that the Department “may” require the commission to keep a register. However, there is no requirement for those bodies to register, even though it is essential that we have clarity and transparency about who is carrying out charitable works in Northern Ireland. One of my recommendations is that we have a compulsory register of section 167 institutions.

411. I have also recommended that the term “operates” be clearly defined. Does it mean that one engages in fund-raising? Does it mean, for example, that one comes across from Dundalk to Newry one Saturday a year and raises funds by rattling tins in a shopping centre? Is that what is meant by “operates”; or does it mean that one has premises here, employs staff here and provides services here? It would be useful if the Bill clarified what is meant by “operates”. Many of Cleaver Fulton Rankin’s clients are large national organisations that have a branch, office or base here. We also have clients who are based in Northern Ireland and who operate in the Republic of Ireland, England, Scotland, Wales and elsewhere.

412. Clause 167(3) requires trustees of section 167 institutions to prepare a statement of their Northern Ireland operations and activities and a financial statement. However, it simply requires them to prepare those documents; they could prepare them and put them in a drawer. They should be required to submit such documents to the commission so that they can be made available for public inspection; that way, we would know what those bodies are doing in our jurisdiction.

413. Under company law, if a company that has been registered in England establishes a place of business in Northern Ireland, it has to register with our companies registry. That is a more limited formal registration than that required for English incorporation. Nevertheless, it provides the basic information on accounts, the body’s constitution, what it does, and the names of its directors. Perhaps a similar registration would be appropriate for a body that is recognised and registered as a charity elsewhere. That might provide a practical solution. I hope that I have explained the matter clearly.

414. I will now turn to charitable purposes and tax exemptions, which is not, strictly speaking, in the Bill, although the Bill will have implications for it.

415. At present, if a Northern Ireland charity wants tax exemptions, it makes an application to Her Majesty’s Revenue and Customs in Bootle (HMRC). HMRC considers whether, for tax purposes, a body is a charity — that is, whether a body or trust has been established for charitable purposes only. If a body is eligible, it gets all the tax breaks, which is one of the reasons that people set up charities. We want to ensure that, in considering the definition of charitable purposes when assessing a tax application, HM Revenue and Customs is mindful that there are differences in the charitable purposes definitions in the three main jurisdictions in the UK. For example, the definition “advancement of peace and community relations” is exclusive to Northern Ireland’s legislation. Promotion of the efficiency of the armed forces, and so forth, is not included in our legislation but is in that of Scotland and England. The advancement of religion, including analogous philosophical beliefs, is in Northern Ireland’s and Scotland’s legislation but is not in that of England.

416. We do not want a different test to apply. We recommend that dialogue be started with HM Revenue and Customs, if that has not already been done, to ensure that each jurisdiction is assessed and that each charity — provided that it is a charity in its own jurisdiction — has the tax breaks and that one law does not take precedence over another. I hope that someone will know who the appropriate person is to take that matter forward.

417. Part 2 of the Bill deals with public benefit guidance. The Charity Commission for England and Wales has just produced a very detailed public benefit guidance paper, which includes a practical summary of the law. Under legislation, our commission would be required to produce guidance, but it would not be required to consult when revising the guidance. We suggest that it should be at the discretion of the commission to make minor changes to the guidance, but that it should consult on any major revision rather than being able to make changes that it believes do not require consultation. Because the proposals are so new, we are keen for charities to be involved, particularly given that a change to the public benefit guidance could result in a charity losing its status at some point. That issue must be addressed.

418. Part 6 of the Bill relates to taxation of a solicitor’s costs. I am sure that the Committee did not expect us to let this part slip by unnoticed. For those among us who are not familiar with what this part involves, I shall explain briefly. There is a process under the Solicitors (Northern Ireland) Order 1976 and the High Court’s jurisdiction whereby if a client is not happy with the bill that a solicitor has charged for services, he or she can challenge it. It is a balanced process that allows a solicitor to make representations. A determination is then made as to whether the fee being charged is proper and appropriate. If it is determined that it is, it must be paid.

419. The Chairperson: By whom?

420. Ms Ebbage: Do you mean who makes the assessment?

421. The Chairperson: Yes.

422. Ms Ebbage: The taxing master makes the assessment. Professional costs drawers look through a file, consider the work that has been done, and allocate a value to it. The order for taxation comes at court level. I believe that that is correct.

423. Mr Rankin: The taxing master is a master of the High Court.

424. Ms Ebbage: Our concern about clause 52 is that it mirrors a provision of the Charities Act (Northern Ireland) 1964 (Chapter 33), whereby the Department had the power to make an order for a solicitor’s costs to be taxed by the taxing master. However, we believe that a provision in the Solicitors (Northern Ireland) Order 1976 has superseded that provision. The original provision might have slipped into the Charities Bill when, in fact, it may not be necessary because of that intervening legislation. It is a very complicated area, and we have spoken to a costs drawer about the matter. We are not convinced about the need for clause 52, and we are concerned that it may conflict with the processes under the Solicitors (Northern Ireland) Order 1976, particularly because the Bill does not expressly set out a right for a solicitor to be heard.

425. We do not profess to be experts on this subject, so we recommend that there should be consultation with an appropriate costs drawer or taxing master, if appropriate, to ensure that clause 52 does not cause confusion. I want to make it absolutely clear: there should be taxation of solicitors’ costs, but we are simply not sure whether this is the right way to do it.

426. Part 8 deals with charity accounts, reports and returns. As the Committee knows, this provision will introduce a radical change. To date, only charities that have been companies have had to make their accounts publicly available. We are concerned about the effect that that change will have on many small charities, particularly small family trusts and charitable trusts, which, in many cases, have gross incomes of less than £100,000 a year. We are concerned that the cost of an audit, even a limited one, could be disproportionate to a charity’s income. Therefore the Bill should clarify that trustees can, acting reasonably, pick an appropriate person to scrutinise their accounts. We would simply like the wording to be clarified, and we are happy to submit a suggested wording if that would be helpful.

427. We were also concerned about the effect of a legacy — perhaps a one-off donation — that took a charity up to the next threshold for auditing purposes. Such a donation cannot be planned for and may mean that a full audit is necessary where previously an independent examination was sufficient.

428. People who are involved in auditing charities have told me about the proportionately increased cost of preparing an audit as opposed to an independent examination. Therefore we recommend an exception in the case of a legacy that triggers a movement into the next threshold.

429. We have also been made aware, particularly by our colleagues in the Northern Ireland Council for Voluntary Action (NICVA), of an anomaly relating to small company charities. At the moment, under the Companies (Northern Ireland) Order 1986, a company charity with an income of less than £90,000 a year is exempt from audit. Certain provisions of the Companies Act 2006 — the largest piece of legislation ever to be passed by Parliament — which will come into force in April of this year will remove that exemption. However, there seems to be a gap between company law and charity law as to who will regulate small company charities. We recommend that a small company charity with an income of less than £100,000 should be subject to the same audit requirements that apply to small unincorporated charities. We note that the charity commission for Northern Ireland will be able to order an audit of a charitable company in any event under clause 103, which we welcome. However, that gap must be plugged.

430. I will now move on to the subject of charitable incorporated organisations (CIOs). As Alastair said at the beginning of our presentation, I am a company lawyer and most of my charity clients are companies limited by guarantee. Many of them have been asking me about charitable incorporated organisations and have aspirations to become such an organisation. We examined some practicalities around clauses 119 and 122, which relate to the ability to transfer the property of an unincorporated charity to a charitable incorporated organisation.

431. It seems to be the case that a small unincorporated charity or trust that possesses “designated land” — land set aside for specific purposes, such as a building left by someone who has stipulated that it should be used only as a school or a mission hall or church hall —cannot be converted into a CIO. However, I have not been able to find anything that says that it cannot be converted into a company limited by guarantee. That is strange. I have spoken to the Department about it. By and large, the same provision is in place in the equivalent English legislation, but we felt that an exception should be made or further explanation given as to why designated land has been carved out of the equation, because it stops people from using charitable incorporated organisation status in instances in which it would be more suitable than conversion to a company limited by guarantee. Where the designated land was of very low value we can use cy-pres, but we felt that it would be useful to have an exception where the land was of minimal value and of no great use to anyone.

432. Designated religious status is a new provision of the Bill, which was not in the draft Order. We have spent a great deal of time examining that provision and are mindful that similar provision exists in Scotland and that there are changes afoot in England and Wales in relation to the treatment of religious charities. I wanted to make it clear from the outset that a charity for the advancement of religion — as it will be defined in the Bill — is required to register and to submit appropriate accounts. What is missing from part 14 is that the register should contain a statement if a body has applied for and been granted designated religious charity status. That should be clear from the register. The register should also indicate whether such a designation has been withdrawn for any reason.

433. The Chairperson: Should the register state whether designated religious status has been withdrawn or simply the reason for its withdrawal?

434. Ms Ebbage: It may be sufficient simply to record the withdrawal; however, I was suggesting that one should be able to find out why status was withdrawn.

435. It is not a matter for me to pronounce on. However, at least the withdrawal of such status should be on the register.

436. I picked up on another point, although it may be only a technical, drafting matter. There is provision in clause 165(3) that allows the Department, by order, to modify any provisions of the Bill with regard to designated religious charities. A change to allow a further concession for a designated religious charity, for example, should not just require an order but should be approved by resolution of the Assembly. Perhaps it is just that the technical wording is missing, because those words are used elsewhere in the legislation. However, it is important that the Assembly have the final say on whether a change is made.

437. My final main comment on the substantive part of the Bill relates to mergers of charities, which are referred to at part 14. I have been involved in several charity mergers during the past year or so. In 2007, Ms Scott assisted me with one that was quite large and involved many complicated issues. Mergers of charities are difficult; particularly maintaining the ethos of different organisations, securing the buy-in of staff and volunteers, and ensuring that services are not disrupted. I welcome the Bill’s provisions because they will greatly simplify the merger process, particularly with regard to one particular problem: when, for example, charity A merges with charity B and charity A receives a legacy or bequest. What do we do when a legacy pops up after charity A has disappeared? We have had to keep charity A alive for the purpose of receiving legacies and passing them on under a trust arrangement. The change proposed in clause 164 will mean that any gift that is made will automatically transfer to charity B without our having to keep charity A alive.

438. The only issue that we have with that is one of timing, because clause 164(2)(b) states that a gift that:

439. “takes effect on or after the date of registration of the merger”

440. will pass across. We are concerned that there may be a gap between the date that the charities’ merger takes place and the date that it is registered. A gift could fall through the gap. Therefore we propose an amendment to the clause that will render the gift effective from the date of transfer. I appreciate that there may be a knowledge gap unless mergers are registered quickly or are required to register within a set time — it will be up to the commission’s processes to get the registration on the public register so that people can see that the legacy to charity A now goes to charity B. That is a matter of process. Our recommendation would ensure that such gifts are not lost.

441. Finally, I have some general comments on costs. I am aware that funding is an issue and that the Budget has just been finalised. However, we believe that the commission is so important to Northern Ireland that it must be properly resourced and that compliance with the requirements must always be affordable and proportionate, particularly bearing in mind the range of charities — from small family trusts to multinational and international bodies.

442. We also want to flag up possible conflict, or perception of conflict, in the commission’s role both as advisor and regulator, particularly when, for example, a charity phones the commission for advice and is told that it must do X, Y and Z — which it does — only to have the other branch of the commission come down on it like a ton of bricks because it has not complied. It goes without saying that when a charity relies on advice from the commission, it should not be hauled up for complying with advice that turns out to be incorrect. I hope that that will never be the case; however, the right safeguards must be put in place so that the commission can perform both of its roles.

443. I noticed that in the Bill there is a suggestion that the commission be staffed through secondments from the Civil Service, and I understand the rationale behind that. However, there must also be a balance in that staff should also be independently recruited to get people into the commission who have experience of working in the sector and who understand the issues for charities. A blend of the two would be worthwhile in order to ensure the integrity of the commission in the sector’s eyes.

444. We also want the commission to be directly accountable to the Executive.

445. The commissioners will have a great deal of work to do and will have many responsibilities. Those posts need to be valued; and fully remunerating the commissioners will underline the importance and value of their role in Northern Ireland.

446. Thank you for bearing with me; I know that I raised many points. Despite being lawyers, we hope that our submission was not overly technical. We are happy to take questions.

447. The Chairperson: It was not too technical at all; it was very helpful. Like many others who have given evidence to the Committee, you support the principles of the Bill. Ninety-nine point nine per cent of charities do tremendous work. However, there is a concern that a tiny percentage has, in the past, taken advantage of the total lack of legislation and regulation of the industry and has acquired funds from the general public under the guise of being a charity. One presumes, with the introduction of legislation and regulations, that that will be more difficult.

448. Are you aware of any apparent loopholes in the legislation that will enable people to get away with acquiring money illegally or will the legislation stop them?

449. Ms Ebbage: It is hard to know whether that will be the case. The commission will have wide powers to conduct investigations, and the sanctions that are available to it seem to have teeth. The police will deal with certain criminal matters such as fraud and deception; but the Bill will go some way to addressing those issues, although it is difficult when drafting legislation to predict every circumstance.

450. The media have played an important role in getting the message about unscrupulous charities to the public. Several locally produced, good high-profile television documentaries have exposed people committing fraud under the guise of charity.

451. The legislation will give the commission the power to make the results of its investigations public if it sees fit to do so, and that should be borne in mind.

452. The Chairperson: Are you reasonably content that the Bill will be tight enough to ensure — as much as is possible — that people will be prevented from acting illegally?

453. Ms Ebbage: It will make it much harder for them as there will be more accountability and charities will be required to produce accounts for independent audit or inspection. In producing such accounts, it will become public knowledge as to who is behind an organisation.

454. The Chairperson: You mentioned designated religious status. Are any of your clients — I am not interested in individuals — small religious charities that may fall just outside the criteria that entitles them to designated religious status?

455. Ms Ebbage: Yes.

456. The Chairperson: Have they made representations to you or do you have any concerns about how the Bill will affect them?

457. Ms Joy Scott (Cleaver Fulton Rankin Solicitors): We have had no representations from our clients as such, but we represent several small religious organisations that will be affected; many of them have been established for a long time in Northern Ireland.

458. The criteria that are set out in the Bill will create difficulties for them because some of them have fewer than 1,000 members.

459. We have concerns about those criteria. They do not seem to create a level playing field for the smaller religious charities. The larger charities will come under the criteria and will have the freedom to govern their organisations. There are important criteria, such as the supervision of the charity over its component elements; but the Committee may need to re-examine the criteria relating to numbers and the length of time that a charity has been established. There may be other issues.

460. The Chairperson: The numbers issue has come up, as has the length of time that charities have been established. Will those be an issue?

461. Ms Scott: They will.

462. Mr Rankin: It may be an issue only as a result of ignorance of what is being proposed because the criteria, such as those relating to the 1,000-member designation, will simply mean that the charity commission will not have certain direct powers. The Bill does not mean that small religious charities will be at any disadvantage with regard to the Inland Revenue, for example; it simply means that if they do not operate properly, the commission has the power to investigate them. The commission will not be able to investigate the larger Churches directly, as they have internal structures. That is the difference between the two procedures.

463. The Chairperson: Although the smaller Churches could say that that very difference means that they are being treated differently. If the books of a Church given small religious designation are not audited properly, for instance, any anomaly will be treated in a different manner. That will always be the case whether the benchmark is 1,000 members, 500, or 50.

464. Mr Rankin: That is the case.

465. Mrs McGill: Thank you for your briefing. I am interested in the makeup of the commission. I have concerns, which I articulated earlier, that it could grow and grow. We have received information over time about the number of people that would be employed by the commission, and I note that you are keen to ensure that it would be properly resourced and staffed. How many staff would the commission employ?

466. Ms Ebbage: It is difficult for us to make an assessment. Having spoken to colleagues in the Charity Law Association, I know that the Office of the Scottish Charity Regulator (OSCR) now employs more than 45 staff. We will have to see what will be needed as we go along.

467. The Chairperson: Do you know how many staff OSCR employed at the beginning?

468. Ms Ebbage: No.

469. The Chairperson: You said that it has a staff complement of 45 now.

470. Ms Ebbage: I know that it has grown. Perhaps it would be useful to speak to the charity commissions in England, Wales and Scotland to establish what roles staff play and how many are employed in each function. I am afraid that I do not know what the optimum number would be.

471. Ms Scott: We are entering uncharted territory in this regard because we have never had a commission before. Charities have never previously had to deal with the amount of legislation that is being introduced. The commission can be as big or as small as you wish.

472. If a great deal of regulation follows the introduction of the Bill, charities would need more staff to cope. I urge a little caution: charities, particularly the smaller ones, will find it difficult to cope with too many regulations, and it may cause them to breach regulations unintentionally. There may be an argument for a phased introduction of regulations and for some control over costs for that period; but we cannot say how much will be spent.

473. The Chairperson: I appreciate that.

474. Mrs McGill: You said that civil servants could be seconded. Where is that provided for in the Bill?

475. Ms Ebbage: Paragraph 5 of schedule 1 on page 144 states that: “The Commission may make arrangements with the Department for persons employed in the Northern Ireland civil service to be seconded to the Commission.”

476. The Chairperson: There it is in black and white.

477. Mrs McGill: Who will the official custodian be?

478. Ms Ebbage: Clause 11(1) states that the custodian will act as trustee for charities and that: “the official custodian shall be by that name a corporation sole having perpetual succession and using an official seal which shall be officially and judicially noticed.”

479. An individual may be designated to carry out that role, and the duties are set out in clause 11.

480. Mrs McGill: Could that person be outside the commission? Could they be appointed by the Attorney General?

481. Ms Scott: The official custodian will have a trustee role in that he or she will hold property. Charities have the option to hold property in their own name if they are a charitable company or to put the property in the name of their trustees. This clause provides another alternative by enabling charities to appoint the official custodian to hold their property. It will be for that function alone. The charity commission will have the regulatory functions, but the custodian will look after the property.

482. Mr Craig: I am interested in the comments in your written submission on the designated religious status issues for smaller religious organisations. Paragraph 7.7 outlines your thoughts on that. Clause 34 is entitled “Power to suspend or remove trustees, etc. from membership of charity”. The trustee of many religious charities will be a minister, a priest, an elder or a committee member. When I realised that someone could be suspended or excluded, I pictured a Big Brother scenario whereby a Government organisation could demand the removal of an elder or a minister from a church organisation. Do you have similar fears about that provision?

483. Ms Ebbage: No one who is acting properly as a trustee should have any cause to fear. A balance must be struck. There is always the risk of someone setting up a Church for less than honourable purposes and perhaps influencing vulnerable or young people.

484. It is a comfort to legitimate organisations that anyone who set up a cult within a religious framework would be subject to the scrutiny of a commission that could remove individuals and install interim managers or trustees and exercise sanctions against someone acting improperly. When someone is operating a charity they are a trustee, and those in small organisations who do that job properly have nothing to fear from not being eligible for designated religious status.

485. The Chairperson: Mr Craig’s concern is about a situation when two different Churches are charities and one has designated religious status because of its size and length of time in operation; and the other does not because it is small and relatively new. However, if someone in each group acts improperly, the law will take its course in different ways. Might the smaller Church feel that the person who grievously erred in their Church was treated differently from their counterpart in the larger Church?

486. Ms Ebbage: There could be a difference in how the two groups were treated, but ultimately the commission has the power to withdraw designated religious charity status. If it carried out an investigation and found cause for concern, the commission could remove trustees, install an interim manager and exercise the powers that it has over non-designated religious groups.

487. The Chairperson: The commission cannot do that to the small groups that do not have designated religious status.

488. Ms Ebbage: The commission can already do that to small groups. The only benefit of a charity having designated religious status is that it removes the first challenge for the commission. Designated religious status is not acquired because of a charity’s size or how long it has been established: clause 166 sets out five criteria that must be met, including being able to show that there is already governance in the organisation. The key requirement is 166(3)(e)(i), which stipulates that a charity exercises “supervisory and disciplinary functions” and is already regulated by an established body of good reputation.

489. In Scotland, nine bodies have applied for — and been granted — designated religious status, and Scottish legislation mirrors ours apart from slightly different numbers and a few other small differences. The bodies that have been accepted in Scotland include ones at diocesan level in the Roman Catholic Church; others include the Church of Scotland, the Free Church of Scotland and the United Free Church of Scotland. Those bodies are long-established organisations rather than individual parishes or small organisations and have satisfied the Scottish regulator that they have the required governance and have met the other four criteria. The only benefit of being accorded designated religious status is that the commission cannot directly exercise all its powers. However, it can still withdraw that status and exercise its powers if an investigation shows evidence of wrongdoing. For example, the commission in Scotland can investigate the Church of Scotland and withdraw its designation if there is cause for concern, and the same would apply here. Therefore the benefits of the designation of religious status must be kept in proportion.

490. Mr Craig: The important difference is that designation gives a religious organisation some self-governance. If there is an issue, the commission will contact the organisation, and its internal governance will deal with the problem under due legal process. You are right in not wanting to think that a religious organisation would want to cheat the system; therefore if anything was uncovered, it would be dealt with internally. Under the opt-out clause there would be no reason to remove designated religious status.

491. However, you are right that a safeguard can be used if required.

492. That is OK for large religious organisations; however, smaller organisations will not have the same cover. The legislation means that the internal governance of a small Church or a small religious organisation will not be recognised. That is dangerous territory for any Government to move into; historically, it has been a disaster.

493. Ms Ebbage: I would be concerned if a small religious charity had no governance in place. Perhaps the numbers and the length of time outlined in the legislation need to be considered. However, as I say, the key aspect is the provision in clause 166(2)(e) that a Church can exercise supervisory and disciplinary functions to deal with its own problems. An exemption for bodies that do not have such governance would concern me because that would leave individuals at the mercy of someone who may be unscrupulous, and the commission would be unable to intervene.

494. It is important that the commission can oversee all charities. Church bodies should be granted designated religious status only when the commission is satisfied that they have appropriate governance and can police themselves. That will be a hard test to pass.

495. However, I do not think that a small religious organisation will be at a disadvantage by not attaining designated religious status. Such organisations should have nothing to fear from the commission if they are properly managed. The commission should not need to take those organisations under its notice, apart from making sure that they are registered and that they file their accounts, annual returns and annual reports on time.

496. Mr Rankin: That issue is not really a legal point. A comparison could be made between the RSPCA and the USPCA, both of which operate here. It is a political decision as to whether the RSPCA, which is a large organisation, should get special treatment as opposed to the USPCA, which is a local organisation. Therefore whether the Presbyterian Church in Ireland should be treated differently from a small gospel hall that is a single entity is not really a legal issue.

497. Mr Burns: How does the Bill facilitate small sports groups and community groups that need charitable status in order to survive?

498. Mr Rankin: As charitable incorporated organisations they will be able to have their sports field or their property in what is, in effect, a body corporate. They will not have the problem of having to change or appoint new trustees. Many sports clubs have individual trustees and perhaps half a dozen members. When two or three of those trustees die or leave, the club has to go through the complicated process of appointing new people to those positions. They often forget to do that and suddenly find that they have no trustees left because they have all died. Therefore executors — who may have no connection with the club — have to intervene to appoint new trustees.

499. If such clubs become charitable incorporated organisations, they will carry on in perpetuity and will not have to appoint new trustees every few years.

500. Mr Burns: Would there be any need for trustees if a charity was a corporate body?

501. Mr Rankin: No. There would be no need for individual trustees, but the property would be held in the name of the charitable incorporated organisation.

502. Ms Ebbage: In effect, the trustees would probably become the directors of the company of the charitable incorporated organisation. Individuals would still deal with the running of the sports club, for example, but they would be doing it through the corporate body instead of having personal liability. The personal liability of individuals has always been an issue for unincorporated organisations, particularly when land is held or people are employed or for insurance in sports clubs. Insurance policies could be held in the name of the company of the charitable incorporated organisation; trainers or facilitators could be employees of the organisation rather than be employed by the trustees individually. That puts the trustees at one remove from liability, which is an advantage for them.

503. Mr Burns: The more I hear about the Charities Bill, the more I recognise my ignorance of it. I did not understand it. I was concentrating on community groups. I understand the points that were made about sports clubs, but many small community groups meet the criteria set out in the Bill. How will the Bill affect them?

504. Ms Scott: They will have to comply with the provisions of the legislation in relation to their accounts, and they will have to ensure that they have proper governance structures in place. They must be properly organised; they cannot just get together as a group of well-meaning individuals, which is often what happened in the past. They may have to deal with more regulation, but that applies to all charities and not just to community groups. That is why we must proceed slowly with regulation and not overburden people.

505. Ms Ebbage: I deal with many community groups through a funding body that is a client of mine. The community groups are often organised as companies limited by guarantee. Many of the directors and members of those groups do not really understand what that means. A company limited by guarantee has a legalistic and cumbersome constitution and has to deal with the companies registry. However, converting such bodies into charitable incorporated organisations, which are supposed to be simpler to run, would mean that a body would only have to deal with one regulator — the commission — rather than with the companies registry and the commission.

506. The charitable incorporated organisation will be a key vehicle for community groups and will suit what they are doing. A community group can increase its credibility if it is set up with a proper structure, including reporting structures. The main aim for community groups is to get people with professional expertise on their boards who can give help and guidance. Community groups’ strength is knowing what is needed and taking action — identifying a need, getting funding and addressing the problem — however, they will need help, and it is to be hoped that the commission will be able to help with red tape and paperwork.

507. Mr Burns: Many people involved in community groups see themselves as committee members rather than directors of a charity.

508. Mr A Maginness: I welcome your written submission, which was particularly helpful about the Bill. However, the main concern that arises is the standing of charities outside Northern Ireland that are not registered under the law here. They are referred to in the Bill as section 167 institutions.

509. Under the Bill, there seems to be a danger that rogue charities that are based in Britain or elsewhere would operate in Northern Ireland without being subject to regulation. Would it be practical to register such charities? What are the dangers if that provision is left unamended?

510. Ms Ebbage: You make a very important point. The issue is one of identifying those bodies. As the public become more aware that legitimate charities must have a registration number and be recognised, they can go online and look up the basic details about a charity and see whether it is legitimately recognised by our register, and that will help. However, there is a danger in relation to the sanctions that can be applied to section 167 institutions. That is not absolutely clear. At the moment, it seems that Orders will be made as to which statutory provisions will apply to section 167 institutions and which will not.

511. When I attended the Department’s initial presentations on the draft Order, as it was then, it seemed clear that Northern Ireland would opt for a regime of absolute registration. There would be no exceptions. Under article 18(2) every charity that was established or operated here would have to be registered. That seemed to mean full registration. I am not sure that that is still the case, given the provisions of clause 167. We must have proper scrutiny of such organisations.

512. If a charity that is registered in England was operating here, there would have to be co-operation between our regulator and the English regulator. There is provision in the Charities Act 2006 for the exchange of information if something unscrupulous is going on in another jurisdiction so that an organisation will not get away with dubious activity just because it happens to be registered in one area but not in another. I do not know whether that is of help to the Committee.

513. Mr A Maginness: The drafting of clause 167 suggests that it is not mandatory for a charity that is registered outside Northern Ireland to be registered here.

514. Ms Ebbage: That is right. We recommend compulsory registration.

515. The Chairperson: No other members have indicated their desire to ask questions. Thank you very much for taking time out of your schedules. The meeting has been very informative and helpful to the Committee in developing its approach to the Bill.

516. Ms Ebbage: Thank you, Mr Chairperson.

14 February 2008

Members present for all or part of the proceedings:
Mr David Hilditch (Deputy Chairperson)
Mr Mickey Brady
Mr Thomas Burns
Mr Fra McCann
Mrs Claire McGill
Miss Michelle McIlveen
Mr Alban Maginness

Witnesses:

Superintendent David Boyd
Inspector Gary Atkinson
Mr John Conner

Police Service of Northern Ireland

517. The Deputy Chairperson (Mr Hilditch): Good morning. Representatives of the Police Service of Northern Ireland are present to give evidence on the Charities Bill. They are Superintendent David Boyd of the operations, policy and support service; Mr John Conner, who is head of social legislation; and Inspector Gary Atkinson of the social legislation service. You are welcome, gentlemen. I remind everyone to ensure that mobile phones are switched off so that there is no interference with the session’s recording.

518. Superintendent David Boyd (Police Service of Northern Ireland): Good morning. With your permission, Deputy Chairman, I will read the Police Service’s prepared response and take questions afterwards.

519. First, thank you for giving the PSNI the opportunity to brief the Committee on the draft Charities Bill. The PSNI was included in the advisory panel that was established in 2004 to consider the existing system of charities legislation and administration in Northern Ireland and to make recommendations on how that should be developed.

520. The Police Service welcomes the proposals contained in the draft Bill, particularly those that relate to a charities commission for Northern Ireland and a Northern Ireland register of charities, which will bring Northern Ireland broadly into line with England, Wales and Scotland.

521. From a policing perspective, the main change is that the new charities commission will be responsible for the issue of public-collection certificates, which will allow approved charities to conduct collections. In addition, the commission would be empowered to issue permits authorising specific collections in a public place, without which such collections could not be undertaken. It is more appropriate to have a centralised point for charitable collections than for each police district to issue certificates for collections, as currently happens. Furthermore, the draft Bill provides the necessary powers and provisions needed to ensure proper regulation and registration.

522. It is not clear from the draft Bill whether, when a permit or certificate has been issued, there is a requirement for the charity commissioner to inform the police commander of the local district or area of a collection in his or her area; that is, the date of the collection, times, days, organising body, et cetera. As it may be necessary to police such a collection, it is recommended that the Bill includes a provision that the charities commission should advise the local district or area commander in whose area the collection is to take place.

523. It is noted that persons who are convicted of any offence that involves dishonesty or deception shall be disqualified from being a charity trustee or a trustee for a charity. New controls to prevent criminal exploitation of charities are welcomed, and those will ensure that public confidence in charitable organisations is not undermined.

524. The PSNI welcomes the commission’s powers to institute inquiries, request documents and search records. In addition, the proposed Bill requires every charity to prepare annual returns to the commission for each financial year. The Police Service believes that the opportunity for abuse of charitable benefits or mock charities by criminal elements will be restricted by greater scrutiny and control. The service suggests that a formal memorandum of understanding, which includes an information-sharing agreement, be drawn up between the PSNI and the newly formed charities commission to provide a framework for closer working arrangements on issues of mutual interest, for example, vetting arrangements for applicants, trustees, etc.

525. In conclusion, the Police Service fully supports the proposals that are outlined in the Bill.

526. The Deputy Chairperson: Thank you very much, Superintendent Boyd. You have made useful comments on the Bill. Of course, as the Committee takes the Bill though each of its Stages, its primary focus is to protect the public.

527. In your submission, you mentioned that to have a centralised point for charitable collections is more appropriate than the current system. Other witnesses were not convinced that the commission should issue permits as well as certificates, the main reason being that the commission would have limited local geographical knowledge, and that it would, therefore, be best that local authorities issued permits. What is your view on the matter?

528. Superintendent Boyd: In my opening remarks, I said that the Police Service wants there to be a memorandum of understanding with the new commission. Basically, that would set out the stall for information-sharing. If the commission wished to seek local views before issuing such permits or certificates, it could seek the views of the PSNI area commander. Currently, the Association of Chief Police Officers in England and Wales is looking at drawing up a memorandum of understanding with the Charity Commission for England and Wales. Hopefully, that will include information-sharing.

529. The Deputy Chairperson: You also said that greater scrutiny and control will lessen opportunities for criminals to abuse charitable benefits or set up mock charities. Two of the conditions that must be satisfied to obtain designated religious charitable status are a membership of at least 1,000 and to have been established in Northern Ireland for at least 10 years. Will the need to satisfy those conditions lessen the opportunities for fraud and other criminal activity?

530. Superintendent Boyd: I have examined the draft Bill, and it will reduce the opportunity for criminal elements to use charities for fraudulent purposes, such as laundering money obtained through drug-dealing, etc.

531. Miss McIlveen: Thank you for your presentation. The Bill refers to the disqualification of trustees who have been removed from office in England, Scotland and Wales. As you will be aware, several charities in Northern Ireland also operate in the Republic of Ireland. Moreover, people who live in the Republic of Ireland sit on the boards of charities in Northern Ireland. In the light of that, should the Bill also disqualify those who have been removed from office from acting as trustees in the Irish Republic?

532. Mr John Conner ( Police Service of Northern Ireland): We have not had many dealings with trustees. However, I imagine that we would work with the proposed charity commissioner and the guidelines that will be set up. The commissioner will draw up processes and procedures and decide how the system will operate, and we will feed into that system at that time. We must wait to see how the charity commission will be set up and how it will operate.

533. Miss McIlveen: It seems bizarre that the other regions are included in the Bill and the Republic of Ireland is not, because we have a land border, and it is easy for people to move from one jurisdiction to another.

534. Mr Conner: We have not given much thought to that issue; however, we are aware it. When the charity commission is set up, we will be available to sit down with the commissioners and discuss it with them.

535. Mr F McCann: Michelle touched on an issue that I was going to raise. The Bill, several times, mentions potential fraud. Is fraud a big problem? Do people fraudulently collect money in the names of charities?

536. Superintendent Boyd: Before I came to the Committee, I did some background reading on that subject. I noted that the Organised Crime Task Force report of 2007 refers to an Association of Chief Police Officers of England, Wales and Northern Ireland (ACPO) report of 2007 on the nature, extent and economic impact of fraud in the UK. That report says that fraud takes a wide variety of behaviours, and it lists the main types that operate in the UK, one of which is charity fraud. From PSNI’s perspective, however, charity fraud is rare, and we have not detected many cases of it, although the ACPO report lists it as one of the main types of fraud or scams operating in the UK.

537. Hopefully the draft Bill, or the commission, will put in place safeguards that will protect the public. Hopefully, that will reduce the incidence of fraud, such as the bogus collections that Mr McCann mentioned.

538. In my opening remarks I said that commissioners should contact local area commanders to make them aware of when collections will take place. Thus, police officers on patrol will be briefed on what charities are collecting money and where the collections are taking place. That should have an impact on bogus collections.

539. Mr F McCann: When issuing permits, would it be beneficial to issue collectors with a single piece of identification that stands out clearly and cannot easily be replicated?

540. Superintendent Boyd: It is wise for collectors to have some sort of identification that links them to their charity. However, the majority of identifications can be downloaded from the Internet; therefore, although identifications can help, the system can be abused.

541. The Deputy Chairperson: There being no further questions, that concludes this morning’s Committee session. Thank you, gentlemen, for your attendance.

21 February 2008

Witnesses:

Rev Norman Hamilton
Ms Karen Jardine

Evangelical Alliance Northern Ireland

542. The Chairperson (Mr Campbell): The Committee is delighted to welcome Ms Karen Jardine and Rev Norman Hamilton of Evangelical Alliance Northern Ireland. I ask everyone to switch off their mobile phones, as even on standby they interfere with the Hansard recording.

543. You kindly provided the Committee with a written briefing on the Charities Bill. Karen, do you wish to start with an opening contribution? Members may then wish to ask questions.

544. Ms Karen Jardine (Evangelical Alliance Northern Ireland): Thank you for your invitation, Chairman. I will begin by telling the Committee a little about Evangelical Alliance, as I am not sure how many of you are familiar with it. Evangelical Alliance was formed in 1846, and it is the largest body serving evangelical Christians in the UK. Its membership includes denominations, churches and individuals, ministers and laypeople. Our mission is to unite evangelicals to present Christ credibly as good news for spiritual and social transformation. Our Northern Ireland office opened in 1987, so the organisation has been here for 21 years.

545. As well as providing support and advice to its members, Evangelical Alliance co-ordinates the work of the Missions Agencies Partnership, which is a group of 35 mission agencies that work together to promote the challenge of world mission.

546. I am particularly pleased to be here this morning because my colleagues in London worked closely and effectively with the Cabinet Office and the Charity Commission for England and Wales in the run-up to the Charities Act in 2006 and on the subsequent guidance that the Charity Commission issued. We welcome this opportunity to contribute constructively to the legislation here.

547. We raised several issues in our written submission that we sent to the Committee a couple of week ago, and I will cover those briefly. The first is about clause 2, “meaning of charitable purpose”. We are pleased that “the advancement of religion” is still included in the list of purposes. We would like missionary work at home and overseas to be included or be seen to be an important part of the advancement of religion. The legislation is unclear about whether public benefit must be gained in Northern Ireland or whether it can be gained overseas. Many mission organisations, especially those in the Mission Agencies Partnership, are more concerned with benefit overseas than locally.

548. We have no problem with religious organisations having to face a public benefit test, especially where many charitable organisations have a religious motive or emerged out of religious organisations. We are concerned that the test should not be restricted to tangible outcomes that can be quantified and measured. Religious organisations provide many intangible benefits, one of which is spiritual benefit, and that is very hard to quantify.

549. Rev Norman Hamilton (Evangelical Alliance Northern Ireland): I must point out that if Members see me at a future date, I may be wearing a different hat. For the record, I am here today as a member of the Evangelical Alliance rather than in any other capacity. Members will know — and Alban will certainly now — that there has been a high suicide rate in north Belfast over the past couple of years, not unlike Bridgend. The alliance argues that in the care of families and communities that have suffered a high incidence of suicide, the term “spiritual benefit” has some meaning. Addressing the issue is not simply a matter of creating a suicide prevention strategy; it also involves caring for people in an holistic way. That is an example of spiritual benefit to a community in particular personal circumstances, yet it is very hard to quantify.

550. We do not remotely want to confine the definition of spiritual benefit to cover only Christian activity; it is about caring for people in mind, spirit and soul, just as people can be cared for in more quantifiable ways that involve healthcare, and so on.

551. Ms Jardine: We expressed concern about the term “disbenefit”, as people do not really know what it means. Therefore perhaps the word “harm” would be better in that instance.

552. I now turn to the registration of charities. Clauses 165 and 166 deal with exemptions for designated religious organisations. We appreciate that that recognises the accountability structures of many religious organisations in Northern Ireland, but it leaves out parachurch organisations, mission organisations, smaller churches, newer churches and so on. I appreciate that that exemption is there and we know that one of the roles of the charity commission will be to ensure financial accountability and proper financial management; however, there may be an issue with that definition.

553. The Chairperson: Have your counterparts in England and Wales encountered any difficulties following the introduction of similar legislation there?

554. Ms Jardine: The public-benefit test was introduced in the Charities Act 2006. The idea of “disbenefit” is not part of the Charities Act 2006; it was mooted as part of a consultation with the Charity Commission for England and Wales. “Disbenefit” was changed to “harm” in the guidance in England and Wales. The guidance from the Charity Commission shows that public benefit covers intangible benefits as well as quantifiable and measurable ones. The Charity Commission extended that by saying that one cannot measure the benefits that can be gained from looking at an area of conservation or an area of beauty, but that such views have intangible benefits to society.

555. The Chairperson: What is your view of designated religious status? What do you think about the 10-year rule and the 1,000-member rule?

556. Ms Jardine: We recognise the need to balance investigation into financial mismanagement against respecting the ethos of religious organisations. However, there is no designation of religious charities in the Charities Act 2006, so the issue has not come up. Nevertheless, it excludes many organisations that might be concerned that trustees — who will not understand the ethos of the organisation — will be put in place if an issue arises.

557. There is also a question about how the definition of a designated religious charity might be used in future. Will it be used in other legislation to define what charities or organisations will be exempt from legislation or be affected by it? That does not relate to the Charities Bill, but one must consider how the use of a definition of a designated religious charity in legislation might affect issues in future.

558. The Chairperson: Are you content with that, Rev Hamilton?

559. Rev Norman Hamilton: This may be a sideways point, but it is relevant. There is at times aggravated debate, some of it among academics, on whether the religious sector is part of the community and voluntary sector or constitutes a third sector. That ambivalence has implications for the Charities Bill. There is a distinctive ethos in the faith-based sector that the governance of charities legislation ought to recognise. Some of the major denominations have made representation to the Committee on that issue. If charities legislation treats faith-based and religious organisations in the same way as, for instance, the Northern Ireland Council for Voluntary Action (NICVA) or the big players in the community sector but fails to recognise the different ethos involved, there will be a problem about how the religious sector stands in relation to wider society. Although it may be an abstruse point, the ethos, value base and standing of faith-based organisations in the charities sector must be described carefully so that we do not run into difficulties in future or exacerbate existing problems.

560. Mr Hilditch: Karen, your submission refers to the fact that the commission will not be required to consult before revising guidance. Will you expand on that?

561. Ms Jardine: Our written submission contained our comments on the guidance that the charities commission must issue under clause 4. However, the clause suggests that the commission will not necessarily be under obligation to consult before revising any guidance that it issues.

562. I appreciate that if a minor revision has to be made, 8 to 12 weeks’ consultation may not be the most efficient way to go about it, but I am concerned that it could develop into a loophole whereby major revisions of the guidance would take place without consultation.

563. Mr Brady: Thank you for your presentation. You made the point well that spirituality is not always tangible when discussing mental health and general well-being. Do you regard faith-based organisations as a third sector or in some way separate? Would you like to see that being addressed in the Bill?

564. Rev Norman Hamilton: I am not sure that we would want to argue for a special position or dispensation. There is ambiguity about whether the faith sector is part of the community and voluntary sector, and we are simply saying that that must be consciously acknowledged or addressed in the legislation so that it is not made worse. For example, Ballysillan Presbyterian church cannot be a member of NICVA, but our youth club can.

565. I do not want to overstate this, but why is it that the local expression of the Presbyterian Church in an area, which seeks to involve itself in the community and which is itself a charitable organisation, cannot join an umbrella charitable organisation? I know the history and the reasons for that situation; however, the legislation should strive not to make that ambiguity worse — if anything, could it be clarified a wee bit?

566. Mr Brady: That issue must be addressed.

567. Rev Norman Hamilton: I agree.

568. Ms Jardine: There has never been a quantifiable record of the contribution of the faith sector to the voluntary and community sector in Northern Ireland. Research into formal youth activities in Northern Ireland showed that most volunteers for the formal activities that are registered with the education and library boards came from a faith-based background. However, the contributions of churches, faith-based communities and other organisations to the community and voluntary sector have never been quantified.

569. Miss McIlveen: Thank you for your presentation. Has the legislation in England, Scotland and Wales dealt with missionary work being considered as an integral part of the charitable purpose?

570. Ms Jardine: Not specifically. Some charitable purposes have been expanded on, but overseas missionary work has not been specifically included in legislation covering England, Scotland or Wales, despite representations by the Catholic Bishops’ Conference in Scotland and the Scottish Churches Committee, which sought that protection in the legislation. Its inclusion in the legislation would give greater protection, although even including it in the guidance of the charity commission would be helpful.

571. Mr A Maginness: The public benefit test is an important issue that Evangelical Alliance, the Catholic bishops and the Presbyterian Church in Ireland quite properly raised.

572. Rev Norman Hamilton: That is a relief.

573. Mr A Maginness: You are not alone; you are in good company.

574. Clause 2 states:

“(1) For the purposes of the law of Northern Ireland, a charitable purpose is a purpose which —

falls within subsection (2) and

is for the public benefit”.

575. It is important to emphasise “and is”. It is not enough for a charitable purpose to fall within a description such as the prevention or relief of poverty or the advancement of education or religion: it must show a public benefit. Otherwise, a Church could carry out purely spiritual activity that has no tangible benefit and claim charitable purpose, and that could disadvantage all religious organisations. It is an important point, and it was raised in other submissions.

576. In order to meet the Churches’ legitimate concerns, criteria are required for the public-benefit test. I do not wish to put the witnesses on the spot —I am not asking for draft proposals — but it would be useful if Evangelical Alliance could suggest a formula to address what is a substantive problem in the Bill.

577. Ms Jardine: I will air our concerns about the word “disbenefit”, which is vague and has never been tested in law. The Office of the Scottish Charity Regulator produced a consultation document, ‘Meeting the Charity Test’, in which it stated that: “The concept of ‘disbenefit’ reflects social circumstances and values and at present is primarily a philosophical and ethical concept rather than a conventional legal concept.”

578. The nuances are in whether people construe some of the faith organisations’ activities as “disbenefit”, which is a term that reflects social circumstances and values rather than the more usual and better known word “harm”. Three years on, the Office of the Scottish Charity Regulator still has not produced a final document about meeting the charity test, although the consultation is due to finish in April. However, the regulator’s guidance for applicants and existing charities states that:

“Disbenefit is more than the mere absence of benefit, and our view is that it is equivalent to harm.”

579. In order to avoid ambiguity in our legislation, I wonder whether the concept of “harm” might be introduced at this stage rather than being left to guidance later.

580. Mr A Maginness: That is a useful suggestion.

581. Rev Norman Hamilton: My background is as an economist, and if I may I will introduce an analogy. We are all familiar with the concept of the opportunity/cost relationship: no matter how good something is, it always involves cost. Having to endure talking to us costs you time doing constituency work — everything has a cost. Therefore the concept of “disbenefit” is part and parcel of something good and desirable; the concept of “harm” is quite different. We argue that “disbenefit” is a dangerous and almost meaningless word because one can point to the downside of anything. If there is a cost to everything, one might say instead that there is a disbenefit. However, that is different from saying that there is harm in someone’s activities. The word “disbenefit” is profoundly unhelpful because it can be used in every circumstance, and we argue forcibly for the use of the word “harm”.

582. The Chairperson: You make the point clearly. Thank you both for your informative contributions; the debate will continue as we scrutinise the Charities Bill stage by laborious stage.

583. Rev Norman Hamilton: Your words, not ours.

584. The Chairperson: Thank you.

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

Witnesses:

Rev Dr Donald Watts
Mr Clive Knox

The Presbyterian Church
in Ireland

585. The Chairperson (Mr Campbell): I welcome Rev Dr Donald Watts and Mr Clive Knox from the Presbyterian Church in Ireland. We are pleased that you are here.

586. Rev Dr Donald Watts (The Presbyterian Church in Ireland): Thank you for the opportunity to give evidence to the Committee. The Presbyterian Church in Ireland supports the thrust of the Charities Bill, feels that it is vitally important that appropriate safeguards are in place and wants to see that happen. It also supports the process that we have gone through to date; there was genuine consultation both by the Department and, later, by the Office of the First Minister and deputy First Minister. Some changes appeared during that consultation.

587. One of those changes, and one that is very important to us, is designated religious status. I will explain why that is important to us, as one of the larger denominations. Initially, there was to have been a requirement to ask permission from the charities commissioner if an organisation were to make any change to its constitution. Our constitution has been evolving since 1840, and it is now a book of 200 pages. Changing it is a complex process, especially the basic part of it, which would take two years to change. Most of it is totally irrelevant to anything that the charity commissioners would want to know about. Having to seek permission for any change to the constitution would have been so complex that it would have been almost impossible to operate. It would also have meant asking the charity commissioners about the appointment of new trustees, which is also a fairly complex process in the Church.

588. We are delighted that designated religious status has been brought into the Bill, as it is the only way to work that aspect of it. The Presbyterian Church would clearly have designated religious status, but we are concerned that some smaller denominations and para-church groups would not. Those groups may want to meet the Committee about that.

589. Our major reservation is that the Bill gives no definition of “public benefit”. We appreciate that such a definition would not normally be included on the face of the Bill, and that it will come forward later. We do not imagine that anyone would challenge the view that organised religion is of public benefit in Northern Ireland. However, the legislation will last for some time, and a time may come when people question the spiritual aspect of what we do, as opposed to the social and developmental aspects. As a Church, we can demonstrate public benefit, even if it is a narrow definition of social and developmental benefit. Given our beliefs, we argue firmly for recognition that spiritual nurture and development is also of public benefit. That is recognised in the new Bill that is going through in the Republic of Ireland, but it is not recognised in the Bill in the North.

590. I want to draw attention to another aspect of the Bill, which may be a drafting problem. The definition of “religion” in clause 2(3)(a)(i) includes “belief in more than one god”. The vast majority of people in Northern Ireland believe in one God, and they see that as what religion is. That was under discussion at the time of consultation, and the phrase that was used then was “one or more gods”. Perhaps the “one” has dropped out somewhere.

591. The Chairperson: I certainly hope that that is the case.

592. Rev Dr Donald Watts: I wanted to draw attention to that point.

593. Mr Clive Knox (The Presbyterian Church in Ireland): The legislation provides that the commission should have the power to change a charity’s name. A number of organisations in Northern Ireland use the word “Presbyterian” in their name, including the Presbyterian Mutual Society, the Presbyterian Housing Association, the Presbyterian Historical Society of Ireland and the Presbyterian Orphan and Children’s Society. Some of those have an association with the Presbyterian Church in Ireland, and some have separate legal structures. We are concerned that the public perception might be that the inclusion of the word “Presbyterian” in their titles means that all those organisations are associated with the Presbyterian Church. We would like some reassurance that a change of name will not be enforced, and that we can continue to use the word “Presbyterian”.

594. Turning to the issue of annual statements of accounts, which is in clause 65 of the Bill, we note that the charity trustees are required to:

“prepare in respect of each financial year of the charity a statement of accounts complying with such requirements as to its form and contents as may be prescribed by … the Department.”

595. We are, therefore, unsure at present what form the accounts will take. While we would obviously support a high level of transparency and accountability — and I believe that we have already demonstrated that by preparing accounts for the past three years in accordance with the statement of recommended practice issued by the Charity Commission for England and Wales, and by obtaining a true and fair audit opinion of our accounts — we are concerned about the impact that that might have on some of our congregations and what this prescribed format might be.

596. The Bill also provides for three stages of auditing requirements, with a lower limit of £100,000 for preparing receipts and payments accounts. As a charity, we benefit from bequests from time to time and we are concerned that, if a substantial bequest was received, that might mean a charity moving from one category to another for just that year before having to move back. That might have implications for their reporting requirements.

597. Our intention is to seek to register the central Presbyterian Church in Ireland as one charity and each congregation as a separate, individual charity. At present, each congregation of the Church has a charity number with HM Revenue and Customs, and it is our intention to follow that through with the charities legislation. We are seeking reassurance that the Department for Social Development, through the legislation, will not seek to impose a single registration, because that would have significant practical implications for us in trying to pull everything together. We understand that different denominations may take a different approach to this issue.

598. My penultimate point is to do with the registration of charity trustees, which we think will be required under the legislation. We are unsure what that will mean for the Presbyterian Church in Ireland. Yes, the Church has trustees, but they probably do not have the same roles and responsibilities as trustees in other organisations. They are largely bearer trustees, holding titles to properties and suchlike. The general assembly, the Church’s governing body, has about 1,200 members; we hope that we will not be required to register all 1,200 as trustees. Therefore, it would be helpful to have some indication of what registration of trustees will mean in our case.

599. Registration will also have implications for individual charities as to who will be regarded as trustees in an individual congregational setting. There are two committees that oversee the affairs of a congregation: the kirk session and the congregational committee.

600. My final point concerns the designation of religious charities. We welcome that exemption, which we understood would extend to the annual changes that we would make to our code, the law of the Church. However, according to clause 165, the exemption is from “Sections 33 to 36”, which cover the power to act for a charity, the power to suspend trustees, and the power to appoint interim managers. We do not feel that the assurance that was there is included in the Bill. We hope that we will not be in a position whereby we have to report to the charity commission every single change in our code every single year.

601. The Chairperson: Dr Watts, you referred at the outset to the “one god” issue. We are taking up the matter with the Department. Hopefully, we will get clarification, possibly even later this morning when we are talking to officials, and the matter can be dealt with satisfactorily.

602. As you pointed out, the Presbyterian Church in Ireland is one of the larger bodies. Owing to its tradition and history, it will be above the 1,000-member threshold and the 10-year threshold that are required to get designated religious charity status. However, a number of small religious groups and denominations will not meet those criteria. I know that it does not affect your Church, but do you have a view on those criteria? Is that of any consequence to you?

603. Rev Dr Donald Watts: We are concerned for those smaller groups. There are genuine religious groups that will probably not meet one or both of those criteria. However, somebody has to draw a line somewhere.

604. The Chairperson: Would you have any problems if that threshold were reduced?

605. Rev Dr Donald Watts: No.

606. Mr Brady: It seems reasonable to claim that a church, by definition, provides a benefit to the public. That seems to have been taken into account in the legislation that is going through in the South. Presumably, the reason that is not in the Bill is to bring the legislation into line with that in England, Scotland and Wales. I know that you do not think that the Department will make any changes to that, but what are your views on that rationale? It makes sense that churches, by definition, contribute to the public good.

607. Rev Dr Donald Watts: As you know, in the South, the legislation specifically says that religious purposes are charitable. Our fear is not for today; I do not think that anyone would challenge the notion that churches are of benefit to the public. However, we are increasingly becoming, in an accelerated way, a much more secular society. There may come a day when people will want a more narrow definition of the term “public benefit”. Therefore, it is important that “public benefit” be defined in legislation now, rather than our having to start fighting in future for the right to be deemed to be providing a charitable service.

608. Mr Brady: So you are entering a caveat for the future.

609. Rev Dr Donald Watts: Yes.

610. The Chairperson: Are you saying that, owing to the pace of change towards the secularisation of society, if this Bill were to become law, the problem that you outlined could become a reality in five, six or seven years?

611. Rev Dr Donald Watts: The problem is probably not for us. We have a massive social witness department that runs homes for the elderly, alcohol rehabilitation units and so on. At that level, it is not an issue that affects us. However, the smaller groups that you talked about earlier, which may simply meet on a Sunday to worship, have some meetings during the week and have some outreach programmes for the immediate community, might have difficulties in showing that they have a major social or developmental aspect to their work. We want them to be protected with designated religious charity status. The underlying theology is that developing the spiritual lives of people around us is of public benefit, just as much as developing their physical or mental well-being.

612. The Chairperson: Thank you very much, gentlemen. That has been useful and helpful to us in our deliberations.

28 February 2008

Witnesses:

Mr Kieran Doyle
Mr Seamus Murray

Department for Social Development

613. 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.

614. 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.

615. Mr Seamus Murray (Department for Social Development): What process would you like to follow?

616. 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.

617. 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).

618. 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.

619. 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”.

620. 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.

621. 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.

622. Mr Murray: That would be a technical change and would have no impact on the legality of the Bill.

623. Ms Lo: I am concerned by the reference to a belief in god, because there are religions that do not have a god.

624. Mr Murray: The Bill goes on to say that “religion” includes: “any analogous philosophical belief (whether or not involving a belief in a god)”.

625. 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.

626. The Chairperson: How will “amateur sport” be defined in the Bill?

627. 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.

628. The Chairperson: Is the definition of “sport” the same in England and Wales as it is in Scotland?

629. Mr Murray: Yes, it is.

630. The Chairperson: And we are adopting a similar approach?

631. Mr Murray: Yes, we are.

632. 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”.

633. 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.

634. The Chairperson: So there is a difference between the Scottish legislation and the legislation in England and Wales?

635. 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.

636. The Chairperson: Is there a reason for the Scottish legislation’s being slightly different?

637. 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.

638. The Chairperson: So the general thrust is the same.

639. 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”.

640. 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.

641. 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”.

642. Mr Doyle: The difference is the presentational styles in the different jurisdictions.

643. 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.

644. Mr Murray: It also includes mental exertion — for example, in playing bridge.

645. 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?

646. 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.

647. The Chairperson: Therefore, one of the commission’s tasks will be to offer guidance?

648. Mr Murray: Yes, it will provide definitions.

649. The Chairperson: Are Members content with clauses 1 and 2?

Members indicated assent.

650. 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.

651. 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.

652. 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.

653. 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.

654. 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.

655. 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?

656. 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.

657. 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?

658. Mr Murray: The guidance will have to be issued by the charity commission.

659. Mr Cobain: Will the Committee get to review that guidance?

660. 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.

661. Mr Brady: The word “disbenefit” is not in common usage; where did it come from?

662. Mr Murray: It is probably a legal term.

663. Mr Brady: Probably?

664. Mr Murray: It is also used in Scottish legislation.

665. Mr Brady: Perhaps, it is a legal Scottish term.

666. Mr Cobain: It is a bit of Ulster Scots to keep the balance.

667. Mr Brady: It was just that I had never really —

668. 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.

669. Mr Brady: It is not designed to aid comprehension.

670. The Chairperson: Much legislation is not.

671. 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.”

672. Who or what would be affected by that?

673. 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.

674. Mr Craig: Before we move on, is there any reason under the sun why spiritual benefit cannot be included in the public-benefit test?

675. 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.

676. 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.

677. 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?

678. 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.

679. The Chairperson: Are members content with clause 3? The Department will consider the spiritual element and report back to us.

Members indicated assent.

680. Ms Lo: The categories listed in clause 2(2)(j) —

“youth, age, ill-health, disability, financial hardship or other disadvantage”

681. — 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?

682. Mr Murray: “Other disadvantage” covers all the other section 75 categories.

683. The Chairperson: That is an earlier clause.

684. 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.

685. 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?

686. Mr Murray: Consideration is being given to including that change.

687. The Chairperson: Are members content with clause 4?

Members indicated assent.

688. The Chairperson: We are making good progress, although I hesitate to say that.

689. 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.

690. 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.

691. 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.

692. The Chairperson: Is the club aware of the current drafting of this section?

693. Mr Murray: Yes.

694. The Chairperson: Is it content?

695. Mr Murray: It is content with how we intend to take that issue forward.

696. Mr F McCann: Does this clause only affect or impact clubs with private memberships?

697. 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.

698. 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.

699. 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.

700. The Chairperson: Are members content with clause 5?

Members indicated assent.

701. 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?

702. 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?

703. Mr Murray: It is specified in clause 6(6).

704. The Chairperson: Clause 6(4)(b) states:

“at least 1 member is legally qualified.”

705. 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.

706. The Chairperson: There could be as many as seven appointments.

707. 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.

708. 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.

709. The Chairperson: That is ironic, Fred, but it is a relevant point nonetheless.

710. 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.

711. Mr Cobain: Can nothing be added to ensure that that happens?

712. Mr Murray: To add anything further would simply duplicate the existing equality legislation and section 75.

713. 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?

714. 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.

715. The Chairperson: How many legal professionals are in the Office of the Scottish Charity Regulator?

716. Mr Murray: I am not sure.

717. 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.

718. The Chairperson: Would gender balance normally be stipulated in the Bill?

719. 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.

720. Mr Cobain: The process could be followed correctly and still result in five male commissioners.

721. 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.

722. The Chairperson: I take your point.

723. 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.

724. 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.

725. Mr Cobain: We will wait and see what happens.

726. The Chairperson: Are members content with clause 6?

Members indicated assent.

727. 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.

728. 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?

729. 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.”

730. That reflects its role in encouraging participation in charity work.

731. The Chairperson: Are members content with clause 7?

Members indicated assent.

732. 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.

733. The Chairperson: What about the issue of the commission being both an adviser and a regulator?

734. 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.

735. The Chairperson: What about the situation in Scotland?

736. 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.

737. Ms Lo: Bodies such as the Equality Commission have dual roles too, in that they monitor as well as advise.

738. The Chairperson: Yes; that is right.

739. Are members content with clause 8?

Members indicated assent.

740. 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.

741. The Chairperson: Are members content with clause 9?

Members indicated assent.

742. 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.

743. The Chairperson: Are members content with clause 10?

Members indicated assent.

744. 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.

745. Ms Lo: Are you saying that an existing member of staff will adopt that additional role when necessary?

746. Mr Murray: The person appointed to act on behalf of the charity commission will not be a member of staff.

747. 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?

748. The Chairperson: Is the length of the term that a commissioner will serve specified in the schedule?

749. 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.

750. Mr Murray: The schedule states that the term will be five years.

751. The Chairperson: Is there a limit on the number of terms that a commissioner can serve?

752. Mr Murray: I am not sure whether that is specified; I will confirm that.

753. Mr Hilditch: Equally, how many terms can the chair and deputy chair serve?

754. The Chairperson: And, indeed, is there a limit on the number of terms that office holders can serve?

755. Mr Murray: I will check that also.

756. The Chairperson: Are members content with clause 11?

Members indicated assent.

757. 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.

758. The Chairperson: Are members content with clause 12?

Members indicated assent.

759. 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

760. The Chairperson: Are members content with clause 13?

Members indicated assent.

761. Mr Murray: Clause 14 reflects, as does clause 15, the standard processes of the charity tribunal conducted through the Northern Ireland Court Service.

762. The Chairperson: Are members content with clause 14?

Members indicated assent.

763. Mr Murray: Clause 15 deals, as does the previous clause, with the proceedings of the charity tribunal, specifically intervention by the Attorney General.

764. The Chairperson: Are members content with clause 15?

Members indicated assent

765. 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.

766. The Chairperson: Is there a reference to charities in the register being granted designated religious charity (DRC) status or having DRC after their name?

767. 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.

768. The Chairperson: Will it be compulsory for a passporting regime for mutual recognition of charities?

769. 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.

770. 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.

771. 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.”

772. 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.

773. 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.

774. The Chairperson: Are members content with clause 16?

Members indicated assent.

775. 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.

776. The Chairperson: Are members content with clause 17?

Members indicated assent.

777. 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.

778. The Chairperson: Are members content with clause 18?

Members indicated assent.

779. 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.

780. 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.

781. The Chairperson: Are members content with clause 19?

Members indicated assent.

782. 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.

783. 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.

784. 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.

785. 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.

786. 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?

787. Mr Murray: Yes, it can.

788. Ms Lo: So if the charity does not want to do that, then it will be removed from the register?

789. The Chairperson: Presumably it is not just because the commission does not like the name, but because the name is perceived to be offensive.

790. Mr Doyle: In the Scottish case, the name was described as being very offensive to the general public.

791. The Chairperson: I do not think we will proceed down that route.

792. Are members content with clause 20?

Members indicated assent.

793. 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.

794. The Chairperson: Are members content with clause 21?

Members indicated assent.

795. 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.

796. The Chairperson: Will you explain what is meant in subsection 5, where it mentions a 10-mile radius? What is that about?

797. 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.

798. The Chairperson: Is that something that is in place for most tribunals that are established?

799. 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.

800. The Chairperson: But the individual will be under the jurisdiction of the commission?

801. Mr Murray: Yes, the individual will be appointed by the commission to act on its behalf.

802. The Chairperson: Are members content with clause 22?

Members indicated assent.

803. 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.

804. The Chairperson: Are members content with clause 23?

Members indicated assent.

805. 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.

806. The Chairperson: Are members content with clause 24?

Members indicated assent.

807. 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.

808. The Chairperson: That would be a serious offence. Are members content with clause 25?

Members indicated assent.

809. The Chairperson: That brings us to Part 6 and clause 26.

810. 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.

811. 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?

812. Mr Doyle: Yes, that is correct.

813. 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.

814. The Chairperson: Are members content with clause 26?

Members indicated assent.

815. 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.

816. The Chairperson: Are members content with clause 27?

Members indicated assent.

817. 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.

818. The Chairperson: Are members content with clause 28?

Members indicated assent.

819. The Chairperson: Clause 29; we are still on cy-près schemes.

820. Mr Doyle: Yes, it is quite a big area.

821. The Chairperson: As near as possible.

822. 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.

823. The Chairperson: Are members content with clause 29?

Members indicated assent.

824. 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.

825. 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.

826. 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.

827. The Chairperson: Are members content with clause 31?

Members indicated assent.

828. 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.

829. The Chairperson: Are members content with clause 32?

Members indicated assent.

830. 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.

831. The Chairperson: Are members content with clause 33?

Members indicated assent.

832. 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.

833. The Chairperson: Clause 34(1)(a) refers to a whole series of severe provisions in clause 33(1).

834. Mr Murray: There will be thorough investigations.

835. The Chairperson: Are members content with clause 34?

Members indicated assent.

836. 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.

837. The Chairperson: Are members content with clause 35?

Members indicated assent.

838. 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.

839. 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.

840. 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.

841. 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.

842. 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.

843. 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.

844. The Chairperson: Are members content with clause 36?

Members indicated assent.

845. 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.

846. The Chairperson: Are members content with clause 37?

Members indicated assent.

847. Mr Murray: Clause 38 enables the commission to provide information to the charity about why it is taking various actions under the previous clauses.

848. The Chairperson: Are members content with clause 38?

Members indicated assent.

849. 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.

850. The Chairperson: Are members content with clause 39?

Members indicated assent.

851. 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)”.

852. The Chairperson: Are members content with clause 40?

Members indicated assent.

853. 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.

854. The Chairperson: Are members content with clause 41?

Members indicated assent.

855. Mr Murray: Clause 42 is self-explanatory. These are supplementary provisions that apply to the particular role of the custodian.

856. The Chairperson: Are members content with clause 42?

Members indicated assent.

857. 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.

858. The Chairperson: Are members content with clause 43?

Members indicated assent.

859. Mr Doyle: Clause 44 is the formal procedural guidance for drafting the schemes to establish a common deposit fund.

860. The Chairperson: Are members content with clause 44?

Members indicated assent.

861. Mr Murray: Clause 45 details the Scottish and English legal definitions of “a charity”, because they are referred to in the previous clauses.

862. The Chairperson: I take it that those definitions are lifted directly from the legislation there?

863. Mr Murray: They are legal definitions.

864. The Chairperson: Are members content with clause 45?

Members indicated assent.

865. 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.

866. The Chairperson: Are members content with clause 46?

Members indicated assent.

867. 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.

868. The Chairperson: Are members content with clause 47?

Members indicated assent.

869. 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.

870. Mr Murray: It is important to note that that would follow a proper investigation and attempts to track down the original charity’s trustees.

871. The Chairperson: Is there a defined timescale for reaching such a point?

872. Mr Murray: Clause 48(8)(a)(ii) refers to a period of five years.

873. The Chairperson: Are members content with clause 48?

Members indicated assent.

874. 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.

875. The Chairperson: Are members content with clause 49?

Members indicated assent.

876. 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.

877. 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?

878. 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.

879. 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?

880. 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.

881. The Chairperson: Are members content with clause 50?

Members indicated assent.

882. Mr Doyle: Clause 51 authorises the charity commission to hold any documents that are deposited with it by charities.

883. The Chairperson: Are members content with clause 51?

Members indicated assent.

884. 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.

885. 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.

886. The Chairperson: What happens when a dispute arises?

887. Mr Doyle: It will be dealt with under the 1976 Order. In that, there is provision for scrutiny of a solicitor’s bill.

888. The Chairperson: Does that allow for a hearing to determine the facts of the case?

889. Mr Murray: Yes. Our concern is that we may be including a provision that is covered by other legislation. We do not want duplication.

890. 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?

891. 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.

892. Mr Cobain: It is not a tax.

893. The Chairperson: Are members content with clause 52?

Members indicated assent.

894. 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.

6 March 2008

Members present for all or part of the proceedings:
Mr Mickey Brady
Mr Thomas Burns
Mr Fred Cobain
Ms Anna Lo
Mr Fra McCann
Mrs Claire McGill
Miss Michelle McIlveen

Witnesses:

Mr Ronnie Douglas
Mr Mark Gibson

Magheraknock Mission Hall

Mr Brian Agnew

Kingdom Life Faith Centre

Pastor David Goudy

Moira Pentecostal Church

Pastor Nick Serb

Mount Zion Free Methodist Church

Pastor Lewis Smyth

Jordan Victory Church

895. The Acting Chairperson (Mr Cobain): I welcome Mr Douglas and Mr Gibson from Magheraknock Mission Hall.

896. Mr Ronnie Douglas (Magheraknock Mission Hall): Magheraknock Mission Hall has been in existence for approximately 80 years. Last year we rebuilt the hall. We are small in number, but we intend to reach out into the community and expand. We are a religious organisation and would like to be involved in the religious opt-out clause. We are concerned about the criteria for that — the 10-year rule and membership of at least 1,000 members — and would like to see them removed from the Charities Bill. We have charitable status, and we are dependant on that status to help with the overhead expenses of running the hall.

897. The Acting Chairperson: Is that your only concern?

898. Mr Douglas: Yes.

899. The Acting Chairperson: That is your main concern — like many small Churches.

900. Mr Douglas: Many of the small Churches do not meet the criteria. It would be sad to see some of those Churches losing out as a result. They are doing a fine job in rural areas. Belfast and the other cities would have no bother meeting the criteria. However, in rural areas, small mission halls, Baptist Churches and various other halls are very concerned about the criteria.

901. The Acting Chairperson: Would you be content if that clause were removed from the Bill, rather than amended in any way?

902. Mr Douglas: If possible, yes.

903. Ms Lo: Are you concerned about the membership criterion? Rather than having the clause removed, do you want that criterion taken out?

904. Mr Douglas: Either way.

905. Ms Lo: You are concerned about one of the four criteria.

906. The Acting Chairperson: Your charitable status will remain.

907. Mr Douglas: Our charitable status will remain. However, young Churches or mission halls starting up in rural areas could never meet the criteria. We cannot meet the criteria at the minute.

908. The Acting Chairperson: Is it too much of an inhibiter?

909. Mr Douglas: Yes. In days of old, many rural Churches were run on pennies and with few people. However, keeping rural Churches going today involves a lot of overhead expenses. Everything must be taken into consideration, and everything is a help.

910. Mr Brady: Does your membership fluctuate, or do you have a steady membership that could increase?

911. Mr Douglas: It fluctuates.

912. Mr Brady: Would there be more people if there were functions or a mission?

913. Mr Douglas: Yes. We would have more people when we hold a mission.

914. Mr Mark Gibson (Magheraknock Mission Hall): A single building will never meet the criteria anyway. What size of a building would be needed to hold 1,000 people? Every single mission hall in Northern Ireland will be ruled out, and all the individual Baptist Churches, which are not a conglomeration. Every single independent building and religious outreach will be ruled out.

915. The Acting Chairperson: Yes, because of the rule.

916. Mr Gibson: It is nonsensical. The big four main conglomerations will be the only Churches to hold the status. I do not know how many mission halls there are in Northern Ireland, but a multitude of them will lose out. I do not see the need for it.

917. Miss McIlveen: Is there a misunderstanding about the Charities Bill per se? Your mission hall will not be excluded from charitable status. This provision is to accommodate the governance arrangements of larger groups, so that they will not have to reapply and their governance arrangements will not be examined annually. My understanding is that your group’s application to be recognised as a charity will not be affected; the provision relates only to the governance arrangements of larger Churches. I am concerned that smaller groups may have misunderstood the legislation, and they may think that they will not be eligible for charitable status.

918. Ms Lo: There are four criteria for designated religious status. A Church can still become a charity, but if it wants that special religious status, it must meet the four criteria. When a group becomes a charity, it gets the rate exemptions and the other benefits of being a charity. It may be a matter of principle that your group wishes to have that designated religious charitable status.

919. Mr Gibson: Why is that being removed? Why is it not being left as it is?

920. Ms Lo: It is not a matter of removing it. The special status means that the big Churches will not have to change their constitutions, and it gives them the leeway to appoint their own trustees. It does not mean that a Church will not have charitable status. A Church will get charitable status if it passes the public-benefit test. However, in order to get the special designated religious status, it must fulfil the additional four criteria.

921. The Acting Chairperson: Before we go any further, our researcher can give us more information. There are many misunderstandings of this issue, and many small Churches are concerned about it. Our researcher can give us a definitive view on the position of small Churches.

922. The Committee Researcher: Churches will not lose their charitable status. They will still have that status for the purposes of income tax, and they will be registered as charities with the charity commission. The provision will mainly affect what are referred to as the four main Churches, which have been operating for many years under their own governance arrangements. The charities commission will still be able to remove that designated religious status from them. For example, the commission could ask a Church to deal with a problem and, if it felt that the Church had not dealt with it properly, it would have the power to remove the designated religious status. The commission would then be able to appoint someone to sort out the problem, whatever it may be. The legislation will not make a difference to Churches’ status as charities or to any of the benefits that go with that.

923. Mr Douglas: Our Church is currently registered as a charity. If we remain legal and above board — and, hopefully, that will always be the case with any charity — that charitable status should never be removed from it?

924. The Acting Chairperson: No. That is not an issue.

925. The Committee Researcher: That should not be an issue. In a way, it is protection for you. The commission’s job is to protect the public and to protect you. If you were worried about anything, the commission could help you to sort it out. Removal of charitable status is unlikely to be an issue.

926. Mr F McCann: During the initial presentation on the Charities Bill, I asked a similar question in relation to the charitable status of community groups. I was told that this would not impact on them in any way. That seems to apply across the board.

927. The Acting Chairperson: There are many misunderstandings around that point. It is really about the four main Churches. They are up and running, and they have these governance arrangements in place. It is a governance issue; it has nothing to do with whether a Church can retain, or apply for, charitable status.

928. Mr Brady: You said, initially, that you understood that your establishment will not be affected. The point that we are making is that groups that might want to start up may be put off by the extra bureaucracy involved in trying to get off the ground. That is a valid point.

929. Mr Douglas: New halls or Churches struggle at the beginning, and that is when they need assistance. It is possible that that assistance might not be available.

930. Mr Brady: You said that it might stop new Churches from trying to start up.

931. Mr Douglas: Yes, that is possible.

932. Mr Burns: Many of the smaller Churches know that their buildings would not hold 1,000 people, and they think that that will rule them out of charitable status, but it will not. That message is not getting across to all of those Churches. Is there any way that the Committee could get that information to the Churches?

933. The Committee Clerk: Several weeks ago, the Committee agreed to send each of the religious organisations that had written in specifically about designated religious charity status a copy of the research paper relating to that clause. That is really as far as the Committee can go.

934. The Acting Chairperson: Perhaps that information could be put on the Committee’s website, and people could access it there.

935. The Committee Clerk: The information has been published on the website. Also, we have sent a hard copy to those organisations.

936. Mr Burns: There seems to be a huge breakdown in information, and the Churches seem to have a huge fear that they will be excluded. There has been a misunderstanding.

937. Mr Douglas: Many Baptist Churches that do not meet the criteria have that fear.

938. The Acting Chairperson: Charitable status has nothing to do with having 1,000 members.

939. Mr Douglas: Has it not?

940. The Acting Chairperson: No. Anybody can apply for charitable status.

941. The Committee Researcher: The use of the opt-out clause is causing some confusion, and I know how it originated. There is no such thing as an opt-out clause for any of the Churches. They still have to apply for charitable status — which the Churches already have. It comes from the income tax. They can then go to the charity commission. They will be asked to furnish their accounts and financial activities throughout the year to the charity commission annually. The main problem arises if there is an issue. For example, the Church of Ireland has synod groups and vestries in each of its Churches. If anything goes wrong, that hierarchy should sort out the problem. The commission will offer you, as a smaller organisation, protection if you do not have the wherewithal to sort out the matter.

942. The Acting Chairperson: The Bill does not stop anyone from applying for charitable status. An individual can apply for charitable status. If I fitted the criteria for charitable status — and the criteria are listed in the information that was sent out — I could apply. It has nothing to do with the size of an organisation; that does not matter. There is a lot of misunderstanding around that. Anyone can apply.

943. Mr Gibson: Where did the 1,000 people come from?

944. The Acting Chairperson: That refers to designated religious charities. There are two different issues involved.

945. Ms Lo: It is an additional status.

946. The Acting Chairperson: Anyone can apply for charitable status. I could apply, provided I meet the criteria laid down. However, there is a designated status in the Bill for Churches with 1,000 members or more.

947. Ms Lo: They have a designated religious status.

948. Mr Gibson: Is there any difference between secular and religious organisations in the Charities Bill? Are they all the same?

949. The Acting Chairperson: Anyone who meets the criteria is entitled to form a charity.

950. Mr Douglas: When does the 10-year rule become applicable?

951. The Acting Chairperson: The 10-year rule relates to designated charities. Churches with 1,000 or more members —

952. Mr Douglas: I understood that a Church group has to be in existence for 10 years or more before it can —

953. The Acting Chairperson: No.

954. The Principal Clerk of Bills: Perhaps there is a misunderstanding. I will try to explain the situation as simply as possible. Any Church — or anyone — will be able to apply for charitable status. A Church will have to submit papers to the new commission, and, subject to those being satisfactory, that Church will then become a charity.

955. Large Churches can apply for a special designated status which prevents the commission from taking over their governance arrangements — unless the commission is sufficiently concerned that that has to happen. In order to prevent the commission from becoming involved in the governance arrangements, a Church has to be large enough to demonstrate that its arrangements are satisfactory. In other words, long-established governance arrangements have to be in place.

956. The basic criteria are that a Church must have at least 1,000 members and has to have been in existence for 10 years or more. If a Church meets those criteria, it can be granted special designated religious status, which means that the commission will not automatically become involved in its governance arrangements should any problem arise. However, at the end of the day, should the commission become sufficiently concerned, it can rescind the designated status and get involved.

957. Therefore, designated religious status is not to do with being a charity; it is to do with whether the commission will begin to interfere — for want of a better term — with a Church’s governance arrangements. The Bill is not aimed at stopping groups from becoming charities.

958. The Acting Chairperson: I hope that is a bit clearer, Ronnie.

959. Mr Douglas: Yes, that has cleared the air somewhat.

960. Mr Gibson: Are you saying that it is simply an add-on for the four big Churches?

961. Mr Brady: It is more to do with governance; the four big Churches require more governance.

962. The Acting Chairperson: That is what the 1,000 members and the 10-year rule is about.

963. Mr Douglas: Therefore, it will not affect us at all.

964. Mrs McGill: It is my understanding that the groups that the witnesses represent cannot have designated religious status.

965. The Acting Chairperson: That is correct; they cannot.

966. Mrs McGill: Is that not a problem? Are you content with that?

967. Mr Gibson: The information that we got was that we would lose our charity status because we had fewer than 1,000 members and had existed for less than 10 years.

968. The Acting Chairperson: That is a different thing altogether. Anyone can form a charity, provided they meet the regulations. Only Churches that have 1,000 members or more and have been in existence for 10 years or more can get designated religious status.

969. The Principal Clerk of Bills: All charities are subject to the commission beginning to get involved in their governance arrangements, if the commission is sufficiently concerned about those arrangements. The only charities that have a certain degree of protection against that interference are the four large Churches.

970. That protection will exist only as long as the charity commission is prepared to grant them the designated religious status. It can be withdrawn at any time. The charity commission can say that it is sufficiently concerned and withdraw the special designated status. However, such a scenario would only occur in circumstances in which there is suspicion of criminal activity, fraud or abuse of the charitable status.

971. Mr Douglas: We are pleased to hear that charities will be scrutinised to ensure that they are being legally managed for the benefit of the community, rather than for the benefit of certain individuals.

972. Mr Gibson: We are happy enough.

973. The Acting Chairperson: Thank you for your time.

(The Acting Chairperson [Mr Brady] in the Chair)

974. The Acting Chairperson (Mr Brady): I welcome the representatives from the four religious groups on behalf of the Committee.

975. Pastor Nick Serb (Mount Zion Free Methodist Church): I thank the Committee for taking the time to listen to us. From what I hear, you are willing to listen, which is important, and your time is much appreciated. I apologise for my accent. I am sure that Ms Lo is aware that I am a foreigner, and she knows what that is like. We are grateful to be here.

976. We want to raise a few issues. We represent different Churches and are pretty much independent of each other, but we speak with one voice. Each of us will talk about a part of the Charities Bill that concerns us. Although we are glad to be here, we are, at the same time, slightly disappointed, because someone decided not to issue us with an invitation to the preliminary consultation. Had that been done, we would not be here today.

977. I want to draw the Committee’s attention to clause 22 of the Bill. I welcome the Bill, and the fact that it intends to regulate and control the financial aspect of how charities operate. That is positive: as I understand it, the last charities Act in Northern Ireland was passed in 1964. It is about time that we had something new. Clause 22 provides that:

“The Commission may institute inquiries with regard to charities or a particular charity or class of charities, either generally or for particular purposes.”

978. That is fine: we completely agree with that and it has to happen. The commission and the charity tribunal have to have some means of imposing the law on charities.

979. The witnesses who spoke before us touched a little on clauses 33 and 36, which are my main concern. Under clause 33:

“the Commission may of its own motion do one or more of the following things —

(i) by order suspend any person who is a trustee, charity trustee, officer, agent or employee of the charity …

(vii) by order appoint (in accordance with section 35) an interim manager, who shall act as receiver and manager in respect of the property and affairs of the charity.”

980. Those two items cause me some concern. Every individual is liable for prosecution under the law if he has done something wrong. The law is very clear. If the charity is a religious charity, and something goes wrong — for example, a fraud — clause 33 may be invoked. However, it overlooks something important, namely, Church discipline. It conflicts with what the Bible teaches us about what is to be done when someone in the congregation does something wrong.

981. Furthermore, if a manager is imposed and dictates in the finance or governance of the Church, that also overlooks an important thing: that anyone in any position in the Church needs to meet special spiritual, social, moral and educational requirements. The Good Book says so, not me:

“Likewise deacons”

— that is, trustees, treasurers, anyone who does anything in the Church —

“must be reverent, not double-tongued, not given to much wine, not greedy for money, holding the mystery of the faith with a pure conscience. But let these also first be tested; then let them serve as deacons, being found blameless.”

982. So, what is the guarantee that the manager will fulfil those requirements? As a Church, we obey the law and we want to observe our Church’s book of discipline. It says here that:

“Every church needs to have a good witness in the community. Every person needs to have a good witness.”

983. We have no guarantee that the manager will fulfil the requirements. Therefore, the law contradicts the constitution of the Church and the Church has no other option but to disobey the law. That is a problem.

984. The Acting Chairperson: Presumably, someone will only be appointed by the charity commission if the people of the Church do not fulfil their duties.

985. Pastor Serb: I understand your point. However, as Mr Douglas said, this is direct interference in the governing of that Church. Each Church has a structure, and, whether the Church is large or small, each person is accountable to a board or committee. Large Churches are governed centrally, as well as locally, and in essence each local church has its own government.

986. The Acting Chairperson: That is predicated on what you have quoted. Perhaps Michelle can explain it better than I can.

987. Mr Brian Agnew (Kingdom Life Faith Centre): Ms Lo has mentioned the five criteria that must be met to obtain designated religious charity status. Three of those criteria are a template and have been well constructed by people who understand non-denominational Churches, which, in a sense, are independent Churches.

988. The requirements for a Church to advance religion as its principal purpose, and to regularly hold public worship as its principal activity — there is no problem there. Similarly, every Church that I am connected with satisfies the requirement to have an internal system of governance with supervisory and disciplinary functions and the requirement to audit accounts and keep records thereof.

989. The two criteria that we feel are discriminatory are the requirement for the Church to have at least 1,000 members over the age of 16 who live in Northern Ireland, and the requirement that the Church has been established for 10 years. That discriminates against non-denominational Churches. The 2001 census figures showed that 40·26% of those reporting a religion were Catholic, 20·69% Presbyterian, 15·3% Church of Ireland, 3·51% Methodist and 6·7% non-denominational. Those figures may be different today, and I imagine that non-denominational Churches comprise a larger percentage now, because independent and non-denominational Churches have come to the fore during the past decade.

990. As Pastor Serb has already said, we had no notification of those new criteria and found out almost by default. The establishment of the charity commission might solve that problem, but it should have been within the Assembly’s power to find a list of charities in Northern Ireland, through consultation with the Inland Revenue or whatever. We do not know which groups are absent today, or from subsequent meetings, because they were not informed. That has resulted in our coming to the Committee on a bad footing and with some suspicion.

991. Earlier, someone use the term “misinformation”, and I think that there has been a certain amount of that. A lot of people think that this is going to affect their charitable status, although we understand that that is not the case. However, looking back at communist Russia or some of those other countries — such as Romania, where Pastor Serb comes from — this could be perceived as the thin end of a wedge exercising control over evangelical, religious or Christian organisations. Why is there one rule for the denominational Churches and another for the non-denominational ones?

992. More than 6% of Churches are non-denominational, and that is a high percentage. That 6% is predominantly made up of small independent evangelical Churches whose whole ethos and mandate is based on the word of God. The thrust of their teaching is based upon local autonomous Churches run by local elders. We believe that smaller and local is better than big and older, and the same principle can be applied to the Assembly. If big and older is better, power should be handed back to Westminster. We do not believe that, and that it is why the country has a devolved Government. It is wonderful and awesome to hear local accents discussing local issues that apply to local people.

993. People may have put as many as 40 years of their lives, and their own finances, into particular religious organisations on the basis of belief in Church government, elders, leadership teams — whatever terminology is used in that particular organisation. There are forms of government there.

994. I have brought a copy of my Church’s constitution, and my understanding is that Churches must have an internal constitution — including rules about eldership, leadership and governance — in order to achieve charitable status. Further to Nick Serb’s point, our constitution stipulates that any manager must believe what we believe and have the same ethos. Technically speaking, an agnostic, an atheist or even a Satanist could be placed in governance over our group, which would be totally against our ethos and at variance with our aims and objectives. Those are some of our concerns. Bigger and older is not necessarily better, and that is why we are sitting here.

995. Miss McIlveen: Thank you for attending; I acknowledge that you have genuine concerns. In the event of your worst-case scenario of someone coming into your Church in order to deal with governance, it would be possible at that juncture for you to withdraw your application for charitable status, which would mean that no one could interfere.

996. The Acting Chairperson: The other point worth making here is that it was the Department for Social Development that was involved in the consultation — not the Assembly per se.

997. Mr F McCann: Members of this scrutiny Committee were the first people to point out that small Churches might not have had a say about the matter, and that we should reach out to hear their opinions.

998. Mr Agnew: We very much appreciate that.

999. Pastor Serb: Would it not be easier and more logical for charities with designated religious status to operate under their own governance, which already obeys the Bible in relation to the law of the land? If anyone involved with Church governance were to disobey the law of the land, they would be subject to God’s judgement. Therefore, those Churches should have designated religious status, and, if anything happens, that status can be removed at any time by the charity commission.

1000. The Acting Chairperson: Do you mean all religious organisations, irrespective of size?

1001. Pastor Serb: Yes.

1002. The Acting Chairperson: Earlier, the point was made that awarding designated religious status to organisations with 1,000 or more members was related to governance. By definition, larger and longer-established Churches should have better governance systems than smaller organisations, which may have governance systems but not with as many people involved in governance.

1003. Pastor David Goudy (Moira Pentecostal Church): We fully understand that our Churches’ designations are nothing to do with charity status, but to do with governance. My problem is that the 10-year, 1,000-member rule appears to be arbitrary and discriminatory because it applies to bigger denominations, and I do not understand how those figures were arrived at. It appears that bigger and older is better and that that demonstrates a proven track record, which is not necessarily so. Our Church has had charitable status for 16 years, still has the same trustees and has undergone random checks by HM Revenue and Customs. We consider ourselves to be completely and utterly above board, and I do not understand why we should be treated differently from other denominations simply because we are smaller, which is discriminatory. If we properly govern ourselves, why should that be? If we had not governed ourselves properly, we could have dealt with the problem ourselves or HM Revenue and Customs could have intervened.

1004. For example, our trustees had to buy our church building. We had to sign on the dotted line. If things had gone pear-shaped, apart from anything else, we would have suffered — personally, not as a denomination. That was a belt-and-braces matter for us.

1005. This is also a belt-and-braces approach, because, as a charity, we will still be under the jurisdiction of HM Revenue and Customs, but we will also be under the jurisdiction of the new charity commission. The commission will be able to check us out at any time. Therefore, I do not see why arbitrary rules about having 1,000 members and 10-year existence should even apply. Why not designate all Churches as religious charities, and, if a problem occurs, deal with it then, rather than separate us?

1006. The Acting Chairperson: With respect, the issue of the numbers and the timescale being arbitrary was raised by the Committee. In fairness, that is one of the reasons why representatives of smaller Churches were asked to come along and give their views, which could be relayed to the Department. You have been given the opportunity to state your case, and your views will be passed on. No one is implying that a smaller Church has less governance, or that it is not well governed.

1007. Pastor Goudy: That is what it seems like, though.

1008. The Acting Chairperson: The Committee certainly does not take that view. It seems to be more a matter of the logistics of governance. It is my understanding, from evidence that the Committee has heard from officials and from other Churches, that it is not a question of saying that smaller Churches are less well governed than larger ones.

1009. Pastor Goudy: If you agree that the size of a Church and its having been in existence for less than 10 years does not necessarily mean that it is badly run, what is the purpose of that legislation?

1010. What is the track record of smaller non-denominational groups with regard to the misappropriation or misuse of funds or the abuse of power? Is there a track record of such behaviour? Why is the legislation being brought in? Having a safeguard for the public is fair, but why is it being brought in?

1011. The Acting Chairperson: First, it is a matter of striking a balance. Secondly, there should be an inbuilt element of protection for the public. The points that you make will be taken on board and passed on. You have demonstrated that smaller Churches have genuine fears about being discriminated against.

1012. Pastor Goudy: It looks as though we are being discriminated against in comparison to the four big Churches. That is very unfair.

1013. The Acting Chairperson: The points on designated religious status have been well made, and the Committee will pass them on to the Department. The numbers of members required and the timescale are felt to be arbitrary. A good point was made by Magheraknock Mission Hall that the amount of bureaucracy may prevent smaller groups from starting up.

1014. Pastor Goudy: We would feel happier if those two requirements were removed. If all Churches were on a level footing, we would have no problem with the rest of the Bill.

1015. The Acting Chairperson: Your views on that will certainly be passed on.

1016. Ms Lo: I agree with Pastor Goudy. The whole idea of designated religious status criteria is divisive. It creates a hierarchy of Churches in the eyes of the state.

1017. Mr Agnew: That is right.

1018. Ms Lo: The main Churches were consulted, and they came up with those requirements. What about the other Churches? They were never consulted. We need to look at that issue seriously.

1019. The Acting Chairperson: In fairness, the smaller Churches have been invited here because the Committee felt that their voices were not being heard in the way in which they should have been heard during the consultation. They may all have had fears about the points that have been made today about the possible discrimination. Anna made a good point about a hierarchy of Churches being established.

1020. Mr Agnew: This issue affects over 100,000 people who are non-denominational — it is a large minority.

1021. Pastor Lewis Smyth (Jordan Victory Church): I received the Research Services briefing note on designated religious status. It says:

“To take the example of what are referred to as ‘the four main churches’ in Northern Ireland, all have central governing bodies to regulate their finances, assets and disciplinary procedures. They also have elected governing bodies from within their membership. It is feasible therefore to assume, at least in the first instance, that they can govern themselves and have mechanisms in place that provide accountability to their members.”

1022. Assumptions are an internal and subjective part of how people look at life. On the same assumption, therefore, I can say — because of how that document is worded — that the Committee assumes that Churches with less than 1,000 members cannot govern themselves, and do not have such policies in place. This has not been merely overlooked; it has been written very clearly that the Charities Bill — and the people who formulated it — already assume that the Churches with smaller memberships cannot, and do not, have those mechanisms. If it is felt that smaller Churches are not fulfilling the necessary criteria, and are insufficient in governance, it would be more helpful if the Committee set out principles for us to adhere to in that regard.

1023. There is also an opt-out clause, but we are not necessarily going to opt out like the four main Churches. Clauses 130 and 131 of the Charities Bill concern public collections — door-to-door and business collections — and practices that are not permitted. I remind the Committee that the Church at large, including the small denominations, conduct a lot of youth work and drug programmes without Government support. We fund those schemes ourselves, along with help from local businesses. We received £5,000 to help us to implement procedures in school training for children. This legislation will crush — not might crush, but will crush — a lot of community activity. Small local Churches strive to make a positive impact on their communities, so that is another point that I ask the Committee to consider.

1024. The Acting Chairperson: You have reinforced the issue of public benefit, which is part of the Bill. There is no question of the smaller Churches’ contributing less to public benefit than the larger Churches. However, you have addressed perceptions and fears that the Committee will take on board. We will deal with those concerns to the best of our ability. The information that you have given us will be passed on, and the Committee will attempt to impact on what you have told us. That is why you were invited to give a presentation today. As a scrutiny Committee, we need to be informed by all strands of opinion, and not just by the larger Churches. I accept Pastor Goudy’s point that bigger is not necessarily better; that is just a perception. I thank you for your presentation.

1025. Pastor Goudy: Can we assume that we will be kept in the loop now?

1026. The Acting Chairperson: Yes. You will receive a copy of the report when it is published and will be kept informed of what is happening.

1027. Pastor Smyth: Would it be feasible for the Committee, in co-operation with the Inland Revenue, to establish who the Church charities are? Those Churches could then receive a letter of explanation, rather than learning by default and having to scramble together a presentation at short notice. We met at 9.30 am today to put our minds together and prepare a presentation. We appreciate the Committee’s service but, like you, we are busy people. We would like a system that would set out the strategy or plan more clearly.

1028. The Acting Chairperson: As a Committee, we scrutinise the Bill; contact with other statutory organisations, such as HM Revenue and Customs, is the remit of the Department. We will, however, relate your views on the matter to the Department.

1029. Pastor Serb: The Free Methodist Church, like some of the other Churches, is part of a worldwide denomination. We have churches in England, and when we contacted them and HM Revenue and Customs, we realised that there were no conditions like these in England or Wales. The Charities and Trustee Investment (Scotland) Act 2005 has some restrictions — in Scotland, the number is 3,000. I understand that charities must be protected. However, there are many other things that we must consider and review.

1030. The Acting Chairperson: That is the purpose of the clause-by-clause scrutiny of the Bill. There are 186 clauses, and I am sure that you appreciate that we have to go through every clause in detail. The Committee is aware of your views and thoughts on that issue, and we will address those as we go through the Bill.

1031. Pastor Smyth: With regard to a religious organisation demonstrating that it has a membership of not less than 1,000, how many independent Churches have been excluded? How many have been included in that figure? I think that it must be minimal. Has anyone researched that?

1032. The Acting Chairperson: We are not in a position to answer that question. However, we can ask the Department to get that information for us. The Committee will take on board all the points that have been made today. Thank you for your presentation. We have found it very useful.

1033. Mr Agnew: I should like to add one thing that may not be for this Committee; perhaps you can pass it on to the relevant powers that be. With regard to National Lottery funding, some representatives from Churches and religious organisations have told me recently that they have a conscience issue about accepting money for youth projects or whatever that has come from gambling. Personally, I do not have a problem with it, because when I get funding I put it to good use. However, the majority of Christian people do not want to take the money because they see it as filthy lucre, or whatever you want to call it.

1034. The Assembly will be coming into receipt of funds from dormant bank accounts in the not-too-distant future. That money could be set aside to help fund projects for the Christian charities that have a problem conscience-wise in accepting money from the National Lottery That issue may not be for this Committee, but we would appreciate it if that suggestion were passed on to the appropriate Committee.

1035. The Acting Chairperson: We will certainly take note of your comments and bear that in mind. We are not in a position to make any definitive statement on that at the moment; it will depend on how much money is available and on how it will be designated to particular organisations or bodies.

1036. Mr Agnew: I understand.

1037. Pastor Goudy: I realise that we are running out of time. This is a large Bill, and you mentioned the many clauses that must be considered. When will the Bill be brought before the Assembly?

1038. The Acting Chairperson: We are hoping to complete the clause-by-clause scrutiny by April.

1039. The Committee Clerk: The Committee hopes to publish its report at the beginning of May. However, that is an indicative date; it is not set in stone. If that is the case, it may well be brought before the Assembly before the summer recess. Those are the timings at the moment, but they could change.

1040. Pastor Goudy: Is there still time for other groupings to provide evidence?

1041. The Committee Clerk: We put advertisements in the newspapers and we contacted different religious organisations and invited them to give oral evidence to the Committee. We must draw the line somewhere. However, it would be up to the Committee if it felt that there was a particular issue that it wished to pursue.

1042. Pastor Goudy: It would probably be the same arguments.

1043. The Acting Chairperson: Thank you very much.

6 March 2008

Members present for all or part of the proceedings:
Mr Mickey Brady
Mr Thomas Burns
Ms Anna Lo
Mr Fra McCann
Mrs Claire McGill
Miss Michelle McIlveen

Witnesses:

Mr Kieran Doyle
Mr Roy McGivern

Department for Social Development

1044. The Acting Chairperson (Mr Brady): I welcome you on behalf of the Committee. This Bill has 186 clauses and nine substantial schedules. We dealt with many of the clauses, such as those dealing with cy-près, last week. They were technical clauses that had not caused any witnesses to raise concern, either in written submissions or oral evidence.

1045. To enable members to focus on areas of concern, the Committee could deal with clauses en bloc by asking the departmental officials to explain their overall effect. I will ask members if they have any concerns within any particular group of clauses before proceeding to deal with them en bloc. How do members feel about that approach, as opposed to dealing with each clause individually? If any member is not content to do that, we will proceed on a clause-by-clause basis. If members are content to deal with some clauses en bloc, committee staff will circulate a handling plan for clauses 53 to 129. Members already have a table summarising the consultation responses. If members are happy with that, we can start.

1046. Mr F McCann: The small Churches whose representatives have come here — will what they said be taken on board?

1047. Mr Roy McGivern (Department for Social Development): We will deal with clauses 165 and 166 next Thursday. The evidence sessions today have been extremely helpful in informing our view on how we proceed with those two clauses.

1048. The Acting Chairperson: Are members content to handle clauses en bloc, or do we need to go through them individually?

1049. The Principal Clerk of Bills: Last week, when the Committee was working through the section on cy-près, it was dealing with highly technical clauses. The Department dealt with each clause individually and, by the time members got to the interesting bits, everyone was suffering from a bit of brain fade.

1050. Where it is clear that no issues have been raised on fairly technical clauses, I suggest that you deal with them in blocks of four, five or 10, rather than trawling through every single clause. The Department will explain the overall effect of those clauses, and the Chair will ask members if they have any issues with any individual clause. Sign them off en bloc, rather than dealing with all 186 clauses individually.

1051. Thus, when you reach the interesting bits, such as accounting and accounts procedures, about which you have many concerns, you will be able to focus on those, rather than spending a lot of time on the uninteresting clauses that did not give rise to any issues.

1052. The Acting Chairperson: Are members content to proceed in that way?

1053. Ms Lo: Yes, I am happy to.

1054. The Acting Chairperson: Is there consensus on that?

1055. The Principal Clerk of Bills: If members feel more comfortable going through each clause separately, that is fine. I am just suggesting another way to do things.

1056. Mr McGivern: Some of the clauses have attracted a lot of comments, and we recommend clause-by-clause scrutiny for those, particularly on charity accounts and reporting.

1057. The Principal Clerk of Bills: We know that.

1058. The Acting Chairperson: Members have a table that identifies those clauses.

1059. Miss McIlveen: My only concern is that we could be criticised if we did not do clause-by-clause scrutiny. Other than that, I do not have a problem.

1060. The Principal Clerk of Bills: There will be an explanation of what the overall effect of three, four or five clauses will be. Having had the Bill for a long time, members will have gone through it, so they will be not open to criticism. Grouping clauses for consideration is what is done in the Chamber.

1061. Ms Lo: When similar clauses are grouped, they make more sense.

1062. Mr Kieran Doyle (Department for Social Development): If there is a situation where three or four clauses relate to one area, but are secondary to the provisions of the main clause, we will provide an overview of the purpose of the cluster of clauses — if the Committee is content with that.

1063. The Acting Chairperson: So we can blame you if someone complains?

1064. Mr Doyle: Yes, you can.

1065. We would also like to address the comments that the Committee has received in its consultation when we give an overview of the groups of clauses. We will address the comments that have been made by various organisations, to assist the Committee.

1066. The Acting Chairperson: Again, are members of the Committee content to do that?

1067. The Principal Clerk of Bills: Members should choose what they are most comfortable with.

1068. Mr F McCann: We will start to lose members soon. Does Michelle have any particular clauses that could be put back to next week?

1069. Ms McIlveen: As long everything is defined and explained, I am happy.

1070. Mr Doyle: If there are three or four clauses that relate to the same category, we intend to explain what the category generally covers. We will also address the comments that have been received on those areas, which may be what the Committee wants.

1071. The Acting Chairperson: Are Members content with that?

Members indicated assent.

1072. Mr McGivern: Clauses 53-57 in Part 6 of the Bill, which deal with the application of property cy-près and assistance and supervision of charities by court and commission, were left over from last week’s meeting. In the consultation, no issues were raised on those clauses. Clause 53 relates to the power of the Commission to enter premises, clauses 54-56 deal with legal proceedings, where they are necessary, and clause 57 deals with property held on behalf of English, Welsh and Scottish charities and how it can be transferred in certain circumstances.

1073. The Acting Chairperson: Are members content with clauses 53-57?

Members indicated assent.

1074. Mr McGivern: Clauses 58-60 deal with charity land, restrictions on dispositions of land, and what are termed “charity rentcharges”. Clauses 58 and 59 detail the process to be followed when a charity wishes to dispose of land — a function that is currently discharged by the Department. Those clauses simply provide for the transfer of that function from the Department to the proposed new charity commission. The Northern Ireland Co-Ownership Housing Association has raised some concerns about clause 58, but the restriction will not apply to the regulation of co-ownership housing schemes. There is an exemption for such schemes under clause 58(10)(a). I hope that that addresses the point raised by that group.

1075. The Department sees no benefit in enhancing the provisions of article 39 of the Education (Northern Ireland) Order 1996, as suggested by the Catholic bishops. The issue would apply only in exceptional circumstances, and the purpose could still be served by application of the cy-pres scheme.

1076. Clause 60 relates to a minor exemption for charities concerning “rentcharges” on the sale of property. Those are actually obsolete payments that are tied to land; no charities are creating new “rentcharges” today, but there are still some old arrangements in place. Clause 60 simply provides a way of disposing of those where it is necessary.

1077. The Acting Chairperson: I think that the concern in relation to clause 58 and co-ownership schemes has been sufficiently dealt with. Are members content with clauses 58-60?

Members indicated assent.

1078. Mr McGivern: Clauses 61-63 deal with restrictions on mortgaging. The Department currently receives applications from charities and trustees who want to obtain a mortgage on their property, and again this function will transfer to the new charity commission. The clauses outline circumstances in which trustees may obtain a mortgage on charity land, providing that they obtain proper advice before doing so. The Northern Ireland Co-Ownership Housing Association has again raised a concern regarding that matter. However, clause 61(9) states that the provision does not apply to a mortgage for which “general or special authority” is given in accordance with clause 58(10)(a). That excludes mortgages under legally established schemes, such as house sales by way of equity-sharing lease under the Housing (Northern Ireland) Order 2003. So, we are able to satisfy the concern of the co-ownership lobby.

1079. The Acting Chairperson: Is there, therefore, no requirement for amendments?

1080. Mr McGivern: Not that we envisage; I think that the point has been addressed.

1081. The Acting Chair: Are members content with clauses 61-63?

Members indicated assent.

1082. Mr McGivern: Part 8 deals with charity accounts, reports and returns. It is the Department’s view that this is one of the most important parts of the Bill, as it concerns public assurance in charitable giving. The Department has sought to adopt a consistent approach to accounting and reporting requirements, taking into account thresholds across the rest of the UK and in Ireland. All registered charities will be required to submit annual financial statements and reports to the charity commission, and those will be available for public inspection. An important point to note is that the nature and level of that financial reporting will be proportionate to the income levels of the organisation.

1083. The approach that is being proposed was subject to public consultation by the Department, and, following concerns from the charitable sector, the minimum accounting threshold was increased from £25,000 to £100,000 in the Bill, in line with England, Wales and Scotland. We concede that this is a complex area, and it is recognised that there will be a need for the new charity commission for Northern Ireland to issue detailed advice and guidance on the audit and reporting requirements.

1084. Clause 64 is a general provision requiring charities to observe their duty to keep accounting records. Clause 65 deals with the annual statement of accounts, and empowers the Department to prescribe the form and content of such accounts. Clauses 66 and 67 deal with the annual audit or examination of charity accounts and the supplementary provisions relating to audits. Those clauses specify in detail the audit requirements to be placed on a charity in accordance with its income, which deals with the proportionality issue.

1085. It may be helpful to explain the three distinct bands that will be in operation under the Bill. Where a charity has an income of less than £100,000 a year, the commission will require an annual statement of accounts examined by an independent examiner — that is, any independent person who the trustees believe has the relevant experience and ability to carry out a competent examination of the accounts. That could be a bank manager or a retired accountant, for example.

1086. For charities with an income between £100,000 and £500,000, which is the second band, the commission will require an annual statement of accounts examined by a qualified independent examiner, and that will be a member of a specified professional body. The third band is for charities with an income over £500,000, and that will require a statement of accounts audited by a qualified auditor. That summarises what the three bands will be.

1087. The issue of assets was raised during the consultation. Initially, in the Order that went before Westminster, assets were tied into reporting, as well as income. Indeed, assets of over £2·8 million would have triggered the need for a fully audited account, as in GB, even if the charity’s income was below a certain level. There are examples in Northern Ireland of asset-rich but income-poor charities, and some of the Churches especially had an issue with that as a criterion, so we have now separated assets from the reporting requirements. Charities will still have to report their assets to the commission, but it will not trigger any additional audit requirements, and that is a sensible concession to make.

1088. The issue of charity legacies was also raised during some of the recent evidence sessions, specifically the concern that they might trigger a higher accounting threshold. At this stage, the Department’s view is that it would not be appropriate to disregard certain types of income when considering audit thresholds. We do not feel the need to have an amendment to exclude legacies from income calculations.

1089. The Chairperson: Is there any particular reason for that?

1090. Mr McGivern: We believe that there should be a level playing field for all charities. We did not feel that there is a valid need to exclude regular bequests or legacies from a charity’s overall income.

1091. Mr F McCann: Using the example of Churches again, because they tend to fall into this category, will charities that get bequests be adversely affected if they declare them?

1092. Mr McGivern: I do not believe that there will be a particularly adverse effect. Certainly, there is a culture in Northern Ireland of giving legacies to individual charities. However, there is also an issue of accountability. The public want assurances that moneys left to charities are being used in a proper manner. We believe that excluding elements of income would not, in some circumstances, give proper public assurance.

1093. Mrs McGill: Will you tell me a bit more about the qualifications required for the different kinds of auditor — for want of a better word — who will examine charities’ accounts according to the different bands? Is it the case that the third band requires an auditor with some considerable qualifications?

1094. Mr McGivern: There are three distinct bands. The first band is for charities with an income below £100,000; they will an independent examiner who does not need to have any professional qualifications, but who should be a competent person whom the trustees regard as such.

1095. Mrs McGill: Can you give me an example of who that might be?

1096. Mr McGivern: It could be a retired bank manager, an accountant — someone the charity is familiar with — perhaps someone who has previously volunteered for them. It will be someone whom the trustees, who know their own business, feel is competent to examine the charity’s accounts, but not a professionally qualified person, because that might impose a financial burden. If a charity had to bring in an auditor to do its accounts, there would be a cost attached to that.

1097. The second band requires a qualified independent examiner, and the Bill is quite specific about the qualifications that that person should have. The examiner must be a member of either the Institute of Chartered Accountants in England and Wales; the Institute of Chartered Accountants of Scotland; the Institute of Chartered Accountants in Ireland; the Association of Chartered Certified Accountants; the Association of Authorised Public Accountants; the Institute of Chartered Secretaries and Administrators; the Chartered Institute of Public Finance and Accountancy; or the Association of Charity Independent Examiners. A member of any one of those various professional bodies would be qualified to carry out the examination under the second band.

1098. The third band requires a full independent audit. That requires a qualified auditor, who is eligible for appointment as an auditor, as defined by Part III of the Companies (Northern Ireland) Order 1990, or who:

“is a member of a body for the time being specified in regulations under clause 67, and is … eligible for appointment as auditor of the charity.”

1099. That is quite specific — it must be a qualified auditor as laid out in the regulations. That is for income over £500,000, which is the top band.

1100. The Acting Chairperson: A number of organisations have asked for the wording of clause 66 to be made clearer. The Department says that this is a complex area, and that it might be difficult to make it any clearer. Has any attempt been made by the Department to make that wording clearer?

1101. Mr Doyle: In that area — as in England, Wales and Scotland — detailed advice and guidance will be provided by the charity commission. The Department for Social Development has drafted a simple table regarding the bands for its own use. Perhaps that type of guidance will be issued by the commission once it is in a position to provide guidance on the auditing, accounting and reporting procedures. I imagine that some simple form of guidance to assist and support charities in meeting their regulatory requirements concerning reporting will be produced.

1102. The Acting Chairperson: I have worked in voluntary organisations for a long time. There are some people who have expertise and would be able to understand the terminology of the Bill reasonably well. However, there are also people on management committees who simply would not have the expertise or knowledge required to interpret that terminology. It would be helpful if the charity commission could provide a guide to clarify the terminology for people who do not have that kind of expertise.

1103. Mr McGivern: That is a valid point. It needs to be made easier to understand. It is very difficult to do that in legislation, as you will appreciate, but we will ensure that detailed guidance is issued to charitable organisations.

1104. The Acting Chairperson: Many charities use people who give of their time voluntarily. That time could be better spent than in trying to interpret what could be considered to be legalistic jargon.

1105. Mr McGivern: Absolutely.

1106. The Acting Chairperson: There is also a question about charities that are also small companies, and the anomaly between the charity legislation and company law.

1107. Mr McGivern: There have been some issues raised about clause 66(10), in relation to charities that are also companies. Those are not subject to charity legislation; they are regulated by company law. The Companies Act 2006 is being enacted over a period of time, with amendments being made in order to dovetail company and charity legislation in England and Wales.

1108. The Department is monitoring that situation. Clause 181 of this Bill provides a power to make amendments reflecting changes to company law. Any draft Order containing such amendments would be put before the Assembly and this Committee. We appreciate that there will be a need, at some stage, to make those amendments.

1109. Ms Lo: Is the Companies Act 2006 similar to the Charities Bill in its accounting?

1110. Mr Doyle: The 2006 Act covers the whole of the UK. Parts of the Bill amend company law. Although charitable companies are regulated by charity law, there are instances where there is a crossover between company law and charity law — where a company is a charity. Different commencement Orders are being introduced, and as they come into force the Charities Bill will have to be amended to keep charity law in line with company law.

1111. Ms Lo: A lot of voluntary organisations are companies limited by guarantee with charitable status. Obviously, many of them will change to register as charities. Will they still want to remain as a company limited by guarantee? They probably will.

1112. Mr Doyle: If they wish; I will talk about that later as we go through the clauses. A new legal entity will be introduced, to be known as a charitable incorporated organisation. Charities can convert from a charitable company to a charitable incorporated organisation. They will have the same status as a company, but the charity commission will be the lead regulator. That will do away with the dual burden of regulation by Companies Registry and the charity commission.

1113. Mrs McGill: Is the Co-Ownership Housing Association purely a charity?

1114. Mr Doyle: In England and Wales, some housing associations are charities and some are money-making concerns. It would depend on the nature of the co-ownership organisation itself, whether it is a not-for-profit organisation or a for-profit organisation. That would fall under the charity legislation.

1115. Mrs Gill: Is the Co-Ownership Association here a charity?

1116. Ms Lo: I think so.

1117. Mr Doyle: I am not 100% sure. However, if it is not a profit-making organisation or a for-profit organisation, and it has applied to Revenue and Customs for charitable status for tax purposes, then it is, in effect, a charity and comes under charities legislation.

1118. The Acting Chairperson: Are members content with clauses 64-67?

Members indicated assent.

1119. Mr McGivern: Clause 68 reflects the duty of auditors to report matters of material significance to the commission — as one would expect. Clauses 69 and 70 deal with annual reports and their public inspection. Those clauses set out requirements on charities to prepare annual reports and specify the arrangements for public inspection of those reports. That is an important issue in respect of public confidence in charitable activities. Many charities already meet that requirement, particularly those that access statutory funding.

1120. The Acting Chairperson: Are members content with clauses 68-70?

Members indicated assent.

1121. Mr McGivern: Clause 71 deals with annual returns by charities. The charity commission will be expected to issue advice and guidance on the nature and format of those returns. Every effort will be made to ensure that that does not put a further unnecessary burden on charitable organisations. We have had discussions with the UK and Ireland Charity Regulators’ Forum to ensure that we have some kind of standard format to collect the information from charities.

1122. The Acting Chairperson: One of the concerns raised is the duplication of regulation. Can you explain that?

1123. Mr Doyle: It is envisaged that the charity commission, once established, will work with other regulators to ensure that there is a minimum of dual regulation for charities to meet their regulatory requirements.

1124. Mrs McGill: In clause 71 it says that charities shall make annual returns: “containing such information, as may be prescribed by regulations made by the Department.”

1125. The regulations are not, therefore, made by the charity commission but by the Department for Social Development?

1126. Mr McGivern: The charity commission will not have the power to make regulations.

1127. Mrs McGill: Therefore, the Department for Social Development will still be the overarching authority — is that the case?

1128. Mr McGivern: The charity commission for Northern Ireland will be a non-departmental public body; it will be the charity authority for Northern Ireland. However, the Department has an oversight and accountability role. If further legislation is required, it will be sponsored by the Department, not the charity commission. The Department would, of course, work closely with the commission to ensure that any such legislation was a requirement for the commission as well as for the Department.

1129. The Acting Chairperson: The Committee would obviously be given the opportunity to scrutinise any legislation.

1130. Mr McGivern: Any legislation sponsored by the Department would go through the same route — through the Committee and through the Assembly.

1131. The Acting Chairperson: The Committee would, therefore, have an input.

1132. Mr McGivern: Yes.

1133. Mr Doyle: There is a similar situation in England and Wales with the Charity Commission there. However, the Office of the Third Sector drafts its regulations and Orders. In Scotland, the Office of the Scottish Charity Regulator cannot make legislation. That is done for it by the Scottish Assembly.

1134. Mrs McGill: You mentioned the charity commission and the charity authority.

1135. Mr McGivern: The charity commission will be the charity authority.

1136. Mrs McGill: Regarding financial requirements, however, it will still be the Department that sets down those regulations?

1137. Mr McGivern: We have to make the regulations, lay the regulations, and draft the legislation. Clearly, we will have to consult closely with the charity commission about the contents of that legislation, but the charity commission in itself will not be able to draft legislation.

1138. Mrs McGill: And will that require legislation? It says: “as may be prescribed by regulations made by the Department”

1139. — is that legislation?

1140. Mr McGivern: That is the intention at this stage. Once the commission is established, it may require legislation to prescribe the nature of returns by charities. That is the position in the rest of the UK.

1141. Acting Chairperson: The Committee is about to lose its quorum. If Members are agreed, the Committee will adjourn until next week and continue where we have left off. Some people are leaving. I hope that it is nothing to do with my being in the Chair and not a personal reflection on my ability.

1142. Mr McGivern: Just one point: we can work with the Committee Clerk to look at the schedule of clauses for next week. Clauses 165 and 166 were to be included. Perhaps that can be discussed during the course of the next week.

1143. The Acting Chairperson: Thank you.

13 March 2008

Members present for all or part of the proceedings:
Mr Gregory Campbell (Chairperson)
Mr David Hilditch (Deputy Chairperson)
Mr Mickey Brady
Mr Jonathan Craig
Ms Anna Lo
Miss Michelle McIlveen
Mr Alban Maginness

Witnesses:

Mr Kieran Doyle
Mr Roy McGivern

Department for Social Development)

1144. The Chairperson (Mr Campbell): I welcome Mr Kieran Doyle and Mr Roy McGivern, who will guide us through the clauses of the Charities Bill. Gentlemen, I am pleased to see you, although I might not be saying that at the end of the meeting.

1145. Last week, the Committee had been briefed as far as clause 71, so perhaps you would begin with clause 72.

1146. Mr Roy McGivern (Department for Social Development): Clause 72 comes under part 8 “Charity accounts, Reports and Returns”, and it gives the commission the power to impose financial penalties for non-compliance. The clause is based on standard sections in the charities legislation in England and Wales and in Scotland.

1147. The Chairperson: There seems to be an issue about the duplication of regulations. How has that been addressed?

1148. Mr Kieran Doyle (Department for Social Development): Once established, the charity commission will work with other regulators to ensure that there is no duplication and to ensure that charities meet the regulatory requirements.

1149. The Chairperson: Will the commission be robust in doing that?

1150. Mr Doyle: Yes.

1151. The Chairperson: Are members content with clause 72?

Members indicated assent.

1152. The Chairperson: We shall now move on to clause 73.

1153. Mr McGivern: Clause 73 deals with group accounts. It makes provision for charities with a parent body to submit a group account rather than individual statements from each charity. The Presbyterian Church in Ireland raised some issues about that provision. However, it will be for the charity, rather than the charity commission, to decide whether to submit such accounts. In fact, experience in England and Wales leads us to believe that most large Churches will submit a group account rather than ask individual congregations to submit separate accounts.

1154. The Chairperson: What is the issue with single registrations?

1155. Mr McGivern: Registration is slightly different. It is open to any organisation to register as a charity if it meets the necessary conditions and can demonstrate that it has a charitable purpose. Large denominations can choose to submit a group account to cover several registrations from individual congregations and from the larger parent body. In many cases, it would make sense to submit a group account.

1156. The Chairperson: I imagine that that would make sense for a larger denomination.

1157. Are members content with clause 73?

Members indicated assent.

1158. The Chairperson: We shall now move on to clause 74.

1159. Mr McGivern: Clause 74 is one of several clauses that come under the general heading of “Incorporation of Charity Trustees”. I will hand over to Mr Doyle to expand on that.

1160. Mr Doyle: As we deal with this set of clauses, we will discuss the legal aspects of setting up charities and trustees’ responsibilities.

1161. There are three ways of setting up a charity in Northern Ireland: as a charitable trust; as an unincorporated charity; or as a charitable company. Clause 74 deals with the incorporation of the trustees of a charity; it provides for the trustees of a charity, rather than the whole charity, to become a body corporate. The advantage of the trustees becoming a body corporate is that the property of the charity would be vested in the name of the incorporated body. That avoids the need for execution of deeds, the transfer of land or investments to new names or the appointment of new holding trustees. The trustees enter into contracts and can sue and be sued in the name of the incorporated body. Thus this clause provides for a form of incorporation for trustees if the charity is not a corporate body.

1162. During the public consultation, the Presbyterian Church asked for clarification on the status of its trustees. The Church said that its trustees are a corporate body; in that case, the trustees will benefit from all the advantages of incorporation.

1163. The Chairperson: What about voluntary committee member participation? I think that it was a representative from a group that worked in supporting communities who said that the Bill could deter some people from becoming trustees.

1164. Mr Doyle: Perhaps some people fear that the legislation will put people off wanting to be trustees. From the point of view of the proposed charity commission, there has to be a legal framework to ensure that charities are well managed, well governed and well run. The Charities Bill provides an opportunity to introduce such a legal framework. Many of the provisions of the Bill have been welcomed, and it is good that a formal structure will be put in place for charities.

1165. The Chairperson: Are members content with clause 74?

Members indicated assent.

1166. The Chairperson: We shall now move on to clauses 75 to 86, about which the Committee has received no communication. Mr Doyle, would you like to deal with those as a block?

1167. Mr Doyle: Clauses 75 to 86 provide further details about the application process for incorporation and how a person, charity or organisation applies for it.

1168. The Chairperson: Are members content with clauses 75 to 86?

Members indicated assent.

1169. The Chairperson: We shall now move on to clause 87.

1170. Mr Doyle: Clause 87 provides details of the persons who would be disqualified from being a charity trustee: those convicted of an offence involving dishonesty, deception or bankruptcy; and those who have been disqualified from being a trustee in England and Wales. The Committee heard comments on clause 87 during its evidence sessions. One was received from the Chief Officers 3rd Sector (CO3) regarding ex-prisoners who may be involved in a prisoner welfare group, for instance. It was queried whether they would be disqualified because they had been convicted of a criminal offence. Clause 87(4) permits the charity commission for Northern Ireland to use its discretion to waive a disqualification, and I imagine that it will consider each case individually.

1171. The Chairperson: One would imagine that it would be only in the most exceptional circumstances that the charity commission would waive a disqualification.

1172. Mr Doyle: Yes, but we foresee a situation arising in Northern Ireland where an ex-prisoner may wish to become a trustee of a charity. The facility will exist for the ex-prisoner’s disqualification to be waived.

1173. Clause 87 provides that those who have been disqualified by the Charity Commission for England and Wales or by the Office of the Scottish Charity Regulator will be disqualified from being trustees here. The Volunteer Development Agency asked why that did not extend to people who had been disqualified in the Irish Republic. There are several reasons for that, including the fact that the Southern charities legislation has not yet been enacted. That point is worth exploring, but we cannot do so until the Southern legislation has been enacted. The two Governments would have to enter into an agreement to allow that to happen, and there may also be issues of European legislation.

1174. The Chairperson: When is the Southern legislation likely to be enacted?

1175. Mr Doyle: The Irish charities legislation is going through Parliament, so it should be enacted about the same time as our Charities Bill; there might be only a difference of months.

1176. The Chairperson: Will the Southern legislation cover people who have been disqualified from being trustees in Poland or Lithuania, given the number of migrant workers coming from those countries?

1177. Mr Doyle: I would need to check.

1178. Mr McGivern: It would depend on whether there were charity regulations in the jurisdictions from which they come. In many European countries, I suspect that such regulations are not in place. However, we would need to investigate the matter in more detail.

1179. The Chairperson: I would have thought that this was the appropriate time to do so, as well as checking with the Irish authorities.

1180. Are members content with clause 87?

Members indicated assent.

1181. The Chairperson: We shall now move on to clauses 88 to 95, about which we have not received communication.

1182. Mr Doyle: The clauses relate to persons acting as a trustee while disqualified. In addition, miscellaneous provisions cover other matters such as trustee remuneration for providing services to a charity, the power to relieve trustees from liability for breach of trust or duty, and trustees’ indemnity insurance.

1183. The Chairperson: Are members content with clauses 88 to 95?

Members indicated assent.

1184. The Chairperson: We shall now move on to part 10, clauses 96 to 103, about which we have not received communication.

1185. Mr Doyle: This part of the Bill covers charitable companies. Strictly speaking, charitable companies are regulated under company law; however, there is some crossover between company and charity law, and clauses 96 to 103 cover such instances. For example, if a charity that is a company wishes to wind up, it would have to seek the charity commission’s consent; or if a company wishes to alter its objects clauses, consent would be required from the charity commission. The provision in those clauses is to protect charities.

1186. The Chairperson: Are members content with clauses 96 to 103?

Members indicated assent.

1187. The Chairperson: We shall now move on to clause 104.

1188. Mr Doyle: Clause 104 deals with the annual audit or examination of accounts of charitable companies. The Northern Ireland Council for Voluntary Action (NICVA) asked why the provisions of clause 104 do not apply to company law. Charities that are companies are generally covered by company law; however, there is some crossover. The Companies Act 2006 — which applies to the whole of the UK — is being phased in over a long time, and amendments will be made in order to dovetail company and charity legislation in England and Wales. The Department will closely monitor the situation, and clause 181 will provide a power to make such amendments to the Charities Bill.

1189. The Chairperson: Has NICVA been made aware of that rationale?

1190. Mr Doyle: It was added to the Committee for Social Development’s comments for public consultation. Therefore it has been recorded.

1191. The Chairperson: Are members content with clause 104?

Members indicated assent.

1192. The Chairperson: We shall now move on to clauses 105 to 108, about which we have not received communication.

1193. Mr Doyle: These clauses deal with a new legal entity that will be introduced by the charity commission: a charitable incorporated organisation that will have the same status as a company, but, instead of the Companies Registry being the lead regulator, as is the case for charities that are companies, the charity commission will be the lead regulator. That will cut down on much overburdensome regulation and on dual regulation by the Companies Registry and the charity commission. It is an extra facility for which Northern Ireland charities might apply, and charities that are companies will be able to convert to a charitable incorporated organisation.

1194. The Chairperson: Are members content with clauses105 to 108?

Members indicated assent.

1195. The Chairperson: We shall now move on to clauses 109 and 110, about which we have not received communication.

1196. Mr Doyle: Clauses 109 and 110 cover the process of registering and making an application to be a charitable incorporated organisation to the charity commission for Northern Ireland.

1197. The Chairperson: Are members content with clauses 109 and 110?

1198. Member’s indicated assent.

1199. The Chairperson: We shall now move on to clauses 111 to 117, about which we have received no communication.

1200. Mr Doyle: Clauses 111 to 117 cover conversion, amalgamation and transfer to a charitable incorporated organisation (CIO) from either a charitable company or an industrial provident society. It enables such an organisation to transfer if it wishes.

1201. The Chairperson: Are members content with clauses 111 to 117?

Members indicated assent.

1202. The Chairperson: We shall now move on to clause 118.

1203. Mr Doyle: Clause 118 covers the winding up, insolvency and dissolution of charitable incorporated organisations.

1204. The Chairperson: Are members content with clause 118?

Members indicated assent.

1205. The Chairperson: We shall now move on to clause 119, about which we have received communication.

1206. Mr Doyle: Clause 119 provides a power to transfer all property of an unincorporated charity to one or more charitable incorporated organisations. We received communication from Cleaver Fulton Rankin Solicitors regarding the transfer of designated land in this process. We have taken legal advice and will consider that point. Designated land is land that has been designated to a charity for a specific purpose.

1207. Ms Lo: CO3 also had an issue with clause 119.

1208. Mr Doyle: Where comments have been made in support of a clause, I have either simply stated that there has been no response or I have mentioned the comment; but where there is a salient point that needs to be addressed, I have provided a response.

1209. The Chairperson: Are members content with clause 119?

Members indicated assent.

1210. The Chairperson: We shall now move on to clauses 120 and 121.

1211. Mr Doyle: Clauses 120 and 121 cover miscellaneous provisions relating to charitable incorporated organisations.

1212. The Chairperson: Are members content with clauses 120 and 121?

Members indicated assent.

1213. The Chairperson: We shall now move on to clause 122 of part 12, about which we have received communication similar to that received concerning clause 119.

1214. Mr Doyle: Clause 122 concerns the power to transfer all property of an unincorporated association to another charity with like purposes. It is simply a provision in the Bill to allow that to happen.

1215. The Chairperson: Are members content with clause 122?

Members indicated assent.

1216. The Chairperson: We shall now move on to clauses 123 and 124.

1217. Mr Doyle: Those clauses simply concern general provisions related to clause 122.

1218. The Chairperson: Are members content with clauses 123 and 124?

Members indicated assent.

1219. The Chairperson: We shall now move on to clause 125.

1220. Mr Doyle: Clause 125 provides for the power to replace the purposes of an unincorporated charity. An unincorporated charity is a charity that is not a company.

1221. The Chairperson: Are members content with clause 125?

Members indicated assent.

1222. The Chairperson: We shall now move on to clause 126, about which we have received communication.

1223. Mr Doyle: Clause 126 concerns provision of a power for the charity commission for Northern Ireland to modify the power of procedures of an unincorporated charity.

1224. The Chairperson: The Charity Commission for England and Wales commented on the implications for schemes made for common investment funds, which would have similar implications for our regime.

1225. Mr Doyle: The reason that I have not provided a response to that comment is that we have noted it and will consider it.

1226. The Chairperson: From an initial reading, will it have implications for a charity commission in Northern Ireland, or is that something that you are still considering?

1227. Mr Doyle: We will monitor and consider it. The Charity Commission for England and Wales has not been specific in its comments. If the Charity Commission for England and Wales were to amend the 2006 Act, the Department for Social Development would follow suit.

1228. The Chairperson: Does that mean that you are not sure because they are not sure?

1229. Mr Doyle: Yes. [Laughter.]

[Inaudible due to mobile phone interference.]

1230. The Chairperson: If an amendment were required, will you come back to the Committee?

1231. Mr Doyle: Yes.

1232. The Chairperson: Are members content with clause 126?

Members indicated assent.

1233. The Chairperson: We shall now move on to clause 127, about which we have correspondence.

1234. Mr Doyle: Clause 127 will permit, in certain circumstances, an unincorporated charity to spend a proportion or all of its endowment fund as capital. That might happen is if the charity were to transfer assets to another charity or if it were to wind up. That charity might have an endowment fund that it could not touch; however, if a resolution were passed and the charity commission for Northern Ireland were notified, clause 127 would allow it access to such a fund.

1235. We have consulted our legal advisers on the comment that the Charity Commission for England and Wales made on clause 127, and we will consider it.

1236. The Chairperson: Are members content with clause 127?

Members indicated assent.

1237. The Chairperson: We shall now move on to clauses 128 and 129.

1238. Mr Doyle: Clauses 128 and 129 will permit, in certain circumstances, larger unincorporated charities to spend capital given for a particular purpose or subject to a special trust.

1239. The Chairperson: Are members content with clauses 128 and 129?

Members indicated assent.

1240. The Chairperson: We shall now move on to clause 130 of part 13, about which the Committee has received communication.

1241. Mr Doyle: Chapter 1 of part 13 covers public charitable collections. In Northern Ireland the PSNI regulates street collections and most door-to-door collections and issues the permits that allow those collections. The Bill makes provision for the public charitable collections function to pass to the charity commission for Northern Ireland. The PSNI said that it is content with that, as it would rather have one central body regulating street and door-to-door collections.

1242. The Chairperson: Are you aware that the Association of Charity Shops is concerned that it will have to cross what it regards as a three-fold barrier?

1243. Mr Doyle: Yes, and I will talk about that when we come to the relevant clause. Last week, I discussed the clause in question with the Association of Charity Shops. The association appeared to be content at the time; however, having thought about it, it has decided to write to the Committee to express its concerns.

1244. The Chairperson: What is the position with regard to Internet fundraising?

1245. Mr Doyle: Part 13 will regulate charitable collections in public places and door-to-door collections through a system of licences and permits that will be issued through the charity commission for Northern Ireland. That issue sparked a great deal of comment. Generally, regulation is welcome; however, concerns were raised that local councils would be best placed to issue permits because they have a better knowledge of where collections are carried out. In England and Wales, the Charity Commission is the lead regulator for public collections; the Office of the Scottish Regulator performs that function in Scotland. However, the local councils issue the permits.

1246. Due to the review of public administration, those functions cannot be passed to local councils in Northern Ireland. The present legislative framework places those functions — the regulation of street collections and other public collections — with the charity commission for Northern Ireland. However, the option exists of passing the issuing of permits to local councils in future.

1247. The Chairperson: How does that address Internet fundraising?

1248. Mr Doyle: The question was asked why lotteries and Internet fundraising were excluded from the Bill. Lotteries are governed by separate legislation and are regulated by local councils.

1249. Mr McGivern: They are governed by the Betting, Gaming, Lotteries and Amusements (Northern Ireland) Order 1985.

1250. Mr Doyle: Many organisations find collecting or soliciting on the Internet very difficult to police. The Internet is evolving, so we will have to keep a watchful eye on it.

1251. Mr McGivern: We will have to work with other regulators in the UK and Ireland to monitor their approach, and perhaps introduce further legislation to police Internet fundraising.

1252. Mr A Maginness: What is the position in England and Scotland on charitable fundraising on the Internet? Is charitable fundraising covered in their charities legislation or is it regulated by other legislation?

1253. Mr Doyle: The Charities Bill reflects legislation in England and Wales.

1254. Mr McGivern: The Charities Act 2006 in England and Wales does not cover Internet fundraising. There is separate legislation in Northern Ireland that covers gaming and betting, and I think that the same situation applies in England and Wales.

1255. Mr A Maginness: Surely gaming and betting is a separate category of Internet use. We are talking about specific fundraising by charities here.

1256. The Chairperson: We are talking about Northern Ireland-based charities’ use of the Internet for fundraising purposes and how that would come under the provisions of the Bill.

1257. Mr A Maginness: There seems to be a gap in the Bill. Indeed, Internet fundraising may be too complex a matter for the Charities Bill to deal with. How do other jurisdictions regulate such activity? You are probably unsighted on that — and it is unfair to ask such a question now — but it would be useful if the departmental officials could get back to us on the issue.

1258. Mr McGivern: That is a valid point. We are not aware of legislation in the UK or Ireland that deals specifically with Internet fundraising. We must meet the Committee and decide whether such legislation is required in Northern Ireland; having listened to what has been said today, it might be needed.

1259. The Chairperson: It sounds like an agenda item for a British-Irish Intergovernmental Conference meeting. [Laughter.]

1260. Mr A Maginness: It certainly does.

1261. The Chairperson: Are members content with clause 130?

Members indicated assent.

1262. The Chairperson: We shall now move on to clause 131.

1263. Mr Doyle: Clause 131 covers charitable appeals that are not public charitable collections. The clause clarifies that a charitable appeal is not a public charitable collection if that appeal is made during a public meeting; in a churchyard; on land used for public worship; or on land that is enclosed.

1264. The Chairperson: Are members content with clause 131?

Members indicated assent.

1265. The Chairperson: We shall now move on to clause 132, about which we have received no communication.

1266. Mr Doyle: Clause 132 provides clarification of the terms used in this part of the Bill.

1267. The Chairperson: Are members content with clause 132?

Members indicated assent.

1268. The Chairperson: We shall now move on to clauses 133 and 134, on which the Committee has received correspondence.

1269. Mr Doyle: Clauses 133 and 134 cover restrictions that apply to conducting door-to-door or public collections, such as when a person has not obtained the appropriate permit.

1270. The Chairperson: There are concerns that the charity commission will have limited local knowledge; should local authorities issue permits instead?

1271. Mr Doyle: The Department could not transfer that function to local councils because of the review of public administration (RPA). There is a provision that, at some future stage [inaudible due to mobile phone interference].

1272. Mr McGivern: In line with other RPA announcements, the Department intends to consider the transfer of that function, and if the charity commission for Northern Ireland is established later in 2008, one of its priorities will be to examine that matter.

1273. The Chairperson: I look forward to that. Are members content with clauses 133 and 134?

Members indicated assent.

1274. The Chairperson: We shall now move on to clause 135.

1275. Mr Doyle: Clause 135 covers an exemption for local short-term collections. A public charitable collection is exempt if it is local, short term and the promoter notifies the charity commission for Northern Ireland before the collection.

1276. The Chairperson: Are members content with clause 135?

Members indicated assent.

1277. The Chairperson: We shall now move on to clause 136.

1278. Mr Doyle: Clause 136 covers the method of applying to the charity commission for a public collection certificate. The PSNI feels that it should be notified when a collection takes place in a relevant district. The Department recognises that it is important for the charity commission to liaise effectively with the PSNI, and that relationship will be defined in a proposed memorandum of understanding to be drawn up between those two bodies.

1279. The Chairperson: Are members content with clause 136?

Members indicated assent.

1280. The Chairperson: We shall now move on to clause 137.

1281. Mr Doyle: Clause 137 covers the determination of applications and the issuing of certificates. The clause requires that the charity commission, on receipt of an application for a public collection certificate, must, after enquiries, either grant or refuse that certificate.

1282. The Chairperson: Are members content with clause 137?

Members indicated assent.

1283. The Chairperson: We shall now move on to clauses 138 to 141.

1284. Mr Doyle: Clause 138 covers the grounds for refusing to issue a certificate. Those grounds include instances when the applicant has been convicted of a relevant offence, has failed to demonstrate due care and diligence, and so on.

1285. The Chairperson: Are members content with clauses 138 to 141?

Members indicated assent.

1286. The Chairperson: We shall now move on to clause 142.

1287. Mr Doyle: Clause 142 explains how a person can apply to the charity commission for a permit to conduct a public charitable collection. The Department was informed that the Association of Charity Shops had made some comments to the Committee. I met representatives from the association last week, and I think that the Committee also received correspondence from the association yesterday or this morning.

1288. The Chairperson: In correspondence received by the Committee, the Association of Charity Shops states: “The proposed system will introduce a three-tier system of certification, permitting and notification requirements on charity shops carrying out collections. This would create and additional layer of regulation which is not present elsewhere in the UK.”

1289. Is that accurate?

1290. Mr Doyle: That part is accurate. However, the rest of the sentence states: “nor in Northern Ireland at present”.

1291. The House to House Charitable Collections Act (Northern Ireland) 1952 currently regulates door-to-door collections.

1292. The Chairperson: Is the “three-tier system” present at the moment?

1293. Mr Doyle: No, it is not.

1294. The Chairperson: However, that system will be introduced under the current terms of the Bill.

1295. Mr Doyle: Yes, it will.

1296. The Chairperson: The point is that that is not the case in England and Wales.

1297. Mr Doyle: In England and Wales, the permits are issued by councils. We do not have that facility as yet. That is the difference. There is not the same level of notification to the charity commission.

1298. The Chairperson: Are you saying that, if under the review of public administration there is a transfer to local government — without prejudice to what may or may not happen — the position on charity shops and collections will be identical to that which pertains in England and Wales under the legislation there?

1299. Mr Doyle: It is different in England and Wales, where there is a simple requirement to give councils notice of public collections. Under the system proposed in the Charities Bill, a certificate of fitness will be issued, followed by a permit specifying the duration of the collection and the manner in which it will take place, and the charity commission will be notified.

1300. Clause 143(3) allows the charity commission, when it issues the permit, to decide on the manner and the timescale of the permit. In effect, a permit for a charity shop association or an individual charity shop could be open-ended. However, that provision would be the subject of a discussion between the charity commission and the relevant charities to decide which it would operate.

1301. Mr A Maginness: Do you think that, under the proposed legislation, an open-ended permit could be given? Is there anything that would prevent that?

1302. Mr Doyle: No, there is not. There is a power under clause 143(3), which authorises the charity commission to make a decision on the timescale for the permit, whether it be for a year, five years or open-ended. There is scope in the Bill for the charity commission to do that.

1303. Mr McGivern: It also recognises the difference between someone organising an annual collection or a flag day, and a charity shop that collects 365 days a year.

1304. Mr A Maginness: That seems reasonable, Chairperson, if that power is contained there.

1305. The Chairperson: As a result of last week’s meeting with representatives of the Association of Charity Shops, and the issues that have been raised today, would it be possible for you to have another meeting with them to try to allay their concerns? It is obvious that their concerns have not been allayed; after they met you, they wrote to the Committee, which is an indication that they are not happy.

1306. Mr Doyle: They were not happy with the word of an official. To be honest, however, it is in the Bill. The scope is there, but that did not appear to satisfy the association. The set-up in Northern Ireland is different to the set-up in England, Wales and Scotland. The Northern Ireland legislation is different. England, Wales and Scotland do not have legislation covering street collections or door-to-door collections, including the black bin bag or goods-in-kind collections.

1307. The Chairperson: I got the impression, from their communication, that their concern was not so much that there is a different legislative set-up, but that charity shops in Northern Ireland would have a more complicated set-up to deal with than their counterparts in England, Scotland and Wales. If you can alleviate their concerns on that, I suspect that the issue will be a dead one.

1308. Mr Doyle: Much of this legislation reflects the situation in England and Wales, except where powers are devolved to local councils. There is scope in clause 143(3), but it may be a matter for the Association of Charity Shops, once the legislation is up and running, and advice and guidance are available, to meet the charity commission to decide the best way forward. The Department has certainly noted the association’s concerns. I will meet representatives of the association again and flag the matter up. We cannot prejudge the charity commission’s decision. It will be an independent body.

1309. The Chairperson: Therefore, the Department will meet representatives from the association again. Are Members content with clause 142?

Members indicated assent.

1310. The Chairperson: With shall now move on to clause 143.

1311. Mr Doyle: Under clause 143, the charity commission for Northern Ireland, on receipt of an application for a public collection permit, and after making such enquiries as it sees fit, will either issue a permit or refuse the application.

1312. The Chairperson: Are members content with clause 143?

Members indicated assent.

1313. The Chairperson: We shall now move on to clauses 144 to 146. The Committee has received communication on permits, which are dealt with by those clauses.

1314. Mr Doyle: Clauses 144 to 146 cover the grounds for refusal of a permit; for example, when the charity commission for Northern Ireland is of the opinion that a collection would cause undue inconvenience to members of the public, householders or businesses. It also covers the withdrawal or variation, and so forth, of a permit and explains the circumstances in which the charity commission can withdraw, attach a condition or vary a public collection permit. It also covers the grounds for appeals against the commission’s decision to refuse a permit.

1315. The Chairperson: Are Members content with clauses 144 to 146?

Members indicated assent.

1316. The Chairperson: We shall now move on to clause 147.

1317. Mr Doyle: Clause 147 allows the Department to make regulations that relate to public charitable collections.

1318. The Chairperson: Are Members content with clause 147?

Members indicated assent.

1319. The Chairperson: We shall now move on to clause 148.

1320. Mr Doyle: Clause 148 explains offences that could be connected to any charitable appeals; for example, the improper use of badges or documentation.

1321. The Chairperson: Are members content with clause 148?

Members indicated assent.

1322. The Chairperson: We shall now move on to clauses 149 to 155.

1323. Mr Doyle: This part of the Bill covers the control of fund-raising for charitable institutions. Much of it applies to professional fund-raisers and the regulations under which they engage with charities in Northern Ireland.

1324. The Chairperson: Are members content with clauses 149 to 155?

Members indicated assent.

1325. The Chairperson: We shall now move on to clause 156, which deals with regulations about fund-raising.

1326. Mr Doyle: Clause 156 provides the Department with powers to make regulations for fund-raising.

1327. The Chairperson: What is the difference between the charity commission’s role with regard to fund-raising and that of the Fundraising Standards Board?

1328. Mr Doyle: I have met officials from the Fundraising Standards Board on several occasions. Its role is to promote self-regulation in the charitable sector in England, Wales and Scotland, and it wishes to carry that through into Northern Ireland. It believes that clause 157 will assist it in promoting the opportunity for self-regulation in fund-raising in Northern Ireland. Again, the Department cannot prejudge a decision of the charity commission for Northern Ireland. When the commission is established, it would consider the matter with the Fundraising Standards Board.

1329. The Chairperson: Are members content with clause 156?

Members indicated assent.

1330. The Chairperson: We shall now move on to clause 157.

1331. Mr Doyle: Clause 157 provides the Department with the power to make regulations as necessary to regulate charity fund-raising.

1332. The Chairperson: Are members content with clause 157?

Members indicated assent.

1333. The Chairperson: We shall now move on to clause 158.

1334. Mr Doyle: Clause 158 is an explanation of the terms that are used in this part of the Bill.

1335. The Chairperson: There is nothing controversial in the clause. Are members content with clause 158?

Members indicated assent.

1336. The Chairperson: We shall now move on to clause 159.

1337. Mr Doyle: Clause 159 introduces a new power that has not previously existed in Northern Ireland, whereby, under legislation, the Department can give financial assistance to charitable, benevolent and philanthropic institutions — organisations that are not charities. The qualification is that: “The Department may give financial assistance to any charitable, benevolent or philanthropic institution in respect of any of the institution’s activities which directly or indirectly benefit the whole or any part of Northern Ireland.”

1338. The Chairperson: The Committee has received no communication on that clause. Are members content with clause 159?

Members indicated assent.

1339. The Chairperson: We shall now move on to clause 160.

1340. Mr Doyle: Clause 160 contains a further explanation of the terms that are used in this part of the Bill.

1341. The Chairperson: Are Members content with clause 160?

Members indicated assent.

1342. The Chairperson: We shall now move to clauses 161 to 163.

1343. Mr McGivern: Clauses 161 to 163 deal with the register of charity mergers. The commission will keep a record and maintain a register of any charity mergers that take place.

1344. The Chairperson: The Committee has received no communication on those clauses. Are members content with clauses 161 to 163?

Members indicated assent.

1345. The Chairperson: We shall now move on to clause 164. The Committee has received correspondence on this clause.

1346. Mr McGivern: Clause 164 covers circumstances in which a charity receives a gift during or after a charity merger. The law firm Cleaver Fulton Rankin has raised a technical issue regarding the risk of a gift not transferring because of time delays. We consider that to be a valid point. The possibility exists that a charity could lose the benefit of a gift if that gift is made during the time between the merger and the registration of that merger. Therefore, the charity commission will have to take note of that issue and ensure that any charity does not suffer a loss because of that time delay.

1347. The Chairperson: That issue was also raised by the Charity Commission for England and Wales. Are members content with clause 164?

Members indicated assent.

1348. The Chairperson: We shall now move on to clauses 165 and 166.

1349. Mr McGivern: The Committee is very familiar with clauses 165 and 166. They have caused considerable correspondence and oral submissions. Clause 165 provides an exemption from aspects of the Bill in relation to designated religious charities; it is worth pointing out again that it has no impact whatsoever on charity registration. During last week’s evidence session with some of the smaller faith-based organisations, it became clear that there was a misconception that they would not be able to register as a charity. This matter is completely separate from registration; it is an exemption that was introduced to recognise the unique structure of faith-based charities. Clause 166 lists the various criteria.

1350. The Chairperson: The Committee has received several items of correspondence on this issue, particularly from smaller groups that may fall outside either the time or numerical criteria. Will you tell the Committee where we are on that issue?

1351. Mr McGivern: The Department has considered all the issues that have been raised. There is a clear need to strike a balance between the charity commission being able to go into a charity where there is evidence of mismanagement or misconduct and carry out a proper investigation, set against the need to recognise the unique structures in many faith-based organisations in Northern Ireland.

1352. A membership level needs to be set, because there is a possibility of a faith-based charity being set up with very few members — perhaps a bogus charity — which would then be exempt from clauses 33 to 36. That would mean that the charity commission could not carry out an investigation into that charity, remove or suspend trustees, or appoint an interim manager.

1353. It must be made clear that charities must have been established for a set period of time, have proper governance arrangements in place and have a membership level that would inspire confidence that the charity has a structure in place to deal with any problems internally rather than the charity commission having to deal with them.

1354. The membership level was set at 1,000, based on Scottish legislation, and also taking the different population levels into account. In Scotland, the level was originally set at 10,000 but was reduced to 3,000 during stage 2 of the Bill. The Department has put the figure of 1,000 in the Bill, but it is open to hearing the Committee’s views.

1355. There is no consensus on the number of smaller Churches in Northern Ireland, because there is no register of those Churches. The Department has spoken to representatives of the Irish Council of Churches and the Churches’ Community Work Alliance, but it is very difficult to get an overall picture of the numbers involved.

1356. Mr Craig: You will find that you will never get a register with independent Churches. It is a contradiction in terms: a Church is not independent if it is registered. Should the charity commission not be considering an opt-out clause for independent Churches with regard to the membership level of 1,000? The commission could deal with individual cases; it could make a judgement of whether a charity is a bona fide Church or religious organisation. If the charity meets all the other criteria, it can be exempt from the 1,000 members requirement. That would be a sensible way to deal with the issue.

1357. Mr McGivern: Mr Craig, are you saying that there should be no numerical figure at all?

1358. Mr Craig: No; I am saying that, given the circumstances of independent Churches, the commission should have the power to waiver the 1,000 figure under certain conditions, if the charity meets the rest of the criteria.

1359. Mr McGivern: There is concern that that could leave the system open to abuse. Who would decide whether a small Church or small faith-based organisation is bone fide? The charity commission would have to satisfy itself, which raises concern that there would not be an adequate level of assurance for an organisation with a very few members that does not have sufficient governance arrangements and has not been long established. Do you think that lowering the figure of 1,000 would bring in a number of the Churches to which you refer?

1360. The Chairperson: The problem is that, regardless of what the membership level is, there will be a small number of Churches that are just above or below the threshold. We do not want a situation where Churches are trying to recruit an extra member to get above the threshold or lose one to get under it. If small Churches or religious groups that are going to register as a charity meet the governance requirements, why is it necessary to have a membership threshold and the requirement that the group has been established for a minimum of 10 years?

1361. Mr McGivern: Clauses 33 to 36 protect charities. Therefore, if there is an internal issue of misconduct in a small Church with, say, 50 members, it is beneficial to that Church if the charity commission resolves the issue instead of being left to deal with the matter itself. The commission will have the expertise to resolve the matter for that Church or faith-based organisation. If that small Church were exempt from clauses 33 to 36, would there be public confidence that the matter could be resolved internally and that it would have sufficient structures to do so? Although the Department has total confidence that the large, long-established denominations in Northern Ireland are capable of resolving such matters internally, it is concerned that some small Church organisations would not have the capacity or the skill to resolve those issues. That could lead to a loss of public confidence in the charity or the work of the charity commission.

1362. The Chairperson: That is what happens at present.

1363. Mr McGivern: There are no measures in place at present.

1364. The Chairperson: Therefore, if allegations of inappropriate conduct are made, there is no current resolution.

1365. Mr McGivern: That is correct — there is nothing in place at the moment.

1366. The Chairperson: How would leaving small organisations to deal with problems themselves make matters worse?

1367. Mr McGivern: The purpose of clauses 33 to 36 is to enable the charity commission, when it is established, to resolve matters that arise. At present, there is no mechanism to do that apart from police investigations. If we set a barrier between zero and 1,000 members, what would be the appropriate number?

1368. Mr Brady: You make an inherent assumption that, the larger an organisation is, the better equipped it is to deal with problems. That is not necessarily the case if one considers the statutory organisations with which we deal. The premise on which the membership level is based is not very strong. It is an arbitrary figure that should be examined. Small organisations are as adept at handling internal problems as are larger organisations. I make that judgement from my dealings with statutory organisations.

1369. Mr McGivern: The Department accepts that and is open to suggestions. There is some assurance in the 10-year establishment and criteria under clause 166(3)(e), which deals with internal governance arrangements. Therefore, the charity commission would have to be assured that there were proper governance arrangements in place before charitable status could be granted. That is a potential safeguard.

1370. In Scotland, the feeling was that the membership should not be lower than 3,000. Indeed, only nine or 10 applications have been received.

1371. Mr Brady: My point is that if all the other criteria are fulfilled, the numbers are not really that important.

1372. The Chairperson: That is the point.

1373. Ms Lo: I still think that that criterion is quite divisive and will lead to the creation of a hierarchy of Churches. The implication is that some Churches — the main Churches — are more trustworthy than the smaller Churches and therefore can avoid abiding by the provisions in those clauses.

1374. Mr McGivern: We are not saying that they are more trustworthy. We are simply saying that they have had the structures in place, over a period of time, to deal with those types of issues. A small newly established Church would take some time to find its feet and put governance arrangements in place, and it may, therefore, not have the appropriate structures in place to deal with those issues.

1375. Ms Lo: Some faith groups may have been established for more than 10 years, but they could never achieve a membership of 1,000 people and will, therefore, never attain that religious charity status. People see this as a matter of principle. They do not understand why some Churches should be allowed to attain that religious charity status, while others are not.

1376. The Chairperson: To Committee members and those who have made the effort to communicate with the Committee, the assumption seems to be that Churches that have over 1,000 members and that have been established for at least 10 years have an appropriate level of governance and expertise, while those that have not reached that level and do not meet those specific criteria do not have that expertise.

1377. Mr McGivern: Potentially, yes.

1378. The Chairperson: Potentially, yes. If a line could be inserted in that clause that focuses on expertise and governance, irrespective of the size of the organisation, people would be more prepared to concede on the issue. At the moment, there is concern about this arbitrary level — the idea that 50•1% is in, but 49•9% is out.

1379. Mr McGivern: There is a possibility that the Department will reconsider that criterion. In light of the number of representations that the Committee has received, and the views that members have expressed today, we can perhaps consider reducing the figure of 1,000, or perhaps removing that particular criterion and leaving the others in.

1380. Mr Craig: I can fully understand why the criterion for a Church to be established for a number of years has been included, because the system could be abused in certain circumstances. The figure has been set at 10 years, but even if it were five years, in all honesty, how many criminals do we know who would set up an organisation for five or 10 years simply to defraud the system? It is incredibly unlikely that that would happen — it would probably never happen. We are all making the same argument today — the numbers are not relevant. If an organisation has met all the governance criteria, is a bona fide religious organisation and has been established for a period of five to 10 years, what are the chances of its having been set up to defraud the system? They are practically zero.

1381. Account must also be taken of the fact that clause 166 is an exemption clause. If a Church’s governing body does not initially deal with any untoward behaviour in its organisation, the commission has the authority and right to deal with it, anyway. Therefore, the clause simply allows a Church to deal with a matter under its own strictures first of all. I am mystified as to why a criterion of a membership of 1,000 has been included, because the charity commission can take over in the end in any case.

1382. The Chairperson: Mr McGivern, just before Jonathan Craig spoke, you intimated that, having read the communications and listened to the contributions today from members, the Department would revisit the clause. If members are content to do so, we could leave it at that for now, and you could get back to us about that provision.

1383. On that basis, are members content with clauses 165 and 166?

Members indicated assent.

1384. The Chairperson: We shall now move on to clause 167.

1385. Mr McGivern: Clause 167 deals with institutions that are not charities under the law of Northern Ireland but which are UK-wide charities. It sets up two different forms of registration. Clause 16 deals with the registration of charities that operate under the law of Northern Ireland; clause 167 is a different category. It deals with charities that are registered with the Charity Commission for England and Wales or with the Office of the Scottish Charity Regulator. They will also be required to register their activities in Northern Ireland and report them to the charity commission for Northern Ireland. We were legally advised to change the wording of the Bill to ensure that there was a distinction between clause-16 charities that operate under the law here and which register here with the commission and those that operate on a UK-wide basis.

1386. The Chairperson: Are members content with clause 167?

Members indicated assent.

1387. The Chairperson: We shall now move on to clauses 168 to 178.

1388. Mr McGivern: Clauses 168 to 178 deal with miscellaneous provisions relating to such matters as the manner of giving notice of a charity meeting, the supply by the charity commission of documents, and the public inspection of those documents.

1389. The Chairperson: We have received no communication on clauses 168 to 178. Are members content with clauses 168 to 178?

Members indicated assent.

1390. The Chairperson: We shall now move on to clause 179, which deals with orders and regulations.

1391. Mr McGivern: We have received no comment on clause 179; it is a standard clause.

1392. The Chairperson: Are members content with clause 179?

Members indicated assent.

1393. The Chairperson: We shall now move on to clause 180, about which we have received communication.

1394. Mr McGivern: Clause 180 deals with general interpretation, and it provides an explanation of some of the terms in the Bill. I know that the Committee received some comments about charity trustees.

1395. The Chairperson: The Scottish legislation includes an explanation on the general duties of trustees.

1396. Mr McGivern: The Bill will not cover all the duties and responsibilities of a charity trustee, but it will set out the main duties. We do not want the charity commission to have to change the legislation every time the duties of a trustee change. Following the enactment of the legislation, the charity commission will have to issue advice and guidance to all charities on the roles and responsibilities of a trustee. There is no reason for those roles and responsibilities to appear in the Bill.

1397. The Chairperson: The Scottish authorities thought differently.

1398. Mr McGivern: They did; perhaps they were being overprotective.

1399. The Chairperson: Are members content with clause 180?

Members indicated assent.

1400. The Chairperson: We shall now move on to clauses 181 to 186.

1401. Mr McGivern: Clauses 181 to 186 contain miscellaneous provisions relating to the commencement of the Act.

1402. The Chairperson: No correspondence has been received on those clauses. Are members content with clauses 181 to 186?

Members indicated assent.

1403. The Chairperson: We shall now move on to schedule 1.

1404. Mr Doyle: Schedule 1 covers the terms of the appointment of the charity commission for Northern Ireland, its remuneration and staffing. NICVA said that the charity commission should be overseen by the Office of the Commissioner for Public Appointments for Northern Ireland (OCPANI). The appointment of the deputy chief commissioner and three to five commissioners will be carried out through the public appointments procedure and overseen by the code of practice of OCPANI.

1405. The Chairperson: What about the suggestion that two members of the commission should be from a legal background?

1406. Mr Doyle: We have followed the terms of appointment in England and Wales; they are in the Bill. There is a legal requirement that at least one member of a charity appeal tribunals have a legal background. The Department feels that that is sufficient, and it follows the make-up in other types of organisations.

1407. The Chairperson: What about the suggestion that the commission be fully independent and directly accountable to the Executive?

1408. Mr Doyle: As a non-departmental public body, the charity commission for Northern Ireland will be accountable to the Department for Social Development. The Minister for Social Development will lay an annual report before the Assembly for consideration.

1409. The Chairperson: Therefore it will be directly accountable to the Executive. Are members content?

Members indicated assent.

1410. The Chairperson: We shall now move on to schedule 2.

1411. Mr Doyle: Schedule 2 covers the membership and terms of appointment of the charity tribunal.

1412. The Chairperson: Are members content with schedule 2?

Members indicated assent.

1413. The Chairperson: We shall now move on to schedule 3.

1414. Mr Doyle: Schedule 3 covers the appeals and applications that can be made to the charity tribunal. In effect, it is a list of decisions that the charity commission for Northern Ireland can make and against which people can appeal.

1415. The Chairperson: Are members content with schedule 3?

Members indicated assent.

1416. The Chairperson: We shall now move on to schedule 4.

1417. Mr Doyle: Schedule 4 sets out that the charity commission for Northern Ireland may refer any question it considers appropriate to the charity tribunal for consideration.

1418. The Chairperson: Are members content with schedule 4?

Members indicated assent.

1419. The Chairperson: We shall now move on to schedule 5.

1420. Mr Doyle: Schedule 5 defines connected persons for the purposes of section 58(2), which covers the disposal of charitable property and land.

1421. The Chairperson: Are members content with schedule 5?

Members indicated assent.

1422. The Chairperson: We shall now move on to schedule 6

1423. Mr Doyle: Schedule 6 covers the provisions for group accounts.

1424. The Chairperson: Are members content with schedule 6?

Members indicated assent.

1425. The Chairperson: We shall now move on to schedule 7, about which the Committee received communication.

1426. Mr Doyle: Schedule 7 concerns further provision for charitable and corporate organisations; it covers the miscellaneous provisions relating to charitable organisations. The comment received from NICVA is similar to the point that it made about the charity commissioners: NICVA considers that the duties of the trustees should be incorporated in this schedule. As Mr McGivern said, the Department considers that such guidance should be issued by the charity commission rather than being embedded in the legislation.

1427. The Chairperson: Are members content with schedule 7?

Members indicated assent.

1428. The Chairperson: We shall now move on to schedule 8.

1429. Mr Doyle: Schedule 8 covers minor and consequential amendments to charity-related legislation.

1430. The Chairperson: Are members content with schedule 8?

Members indicated assent.

1431. The Chairperson: We shall now move on to schedule 9.

1432. Mr Doyle: Schedule 9 repeals all previous charity-related legislation.

1433. The Chairperson: Are members content with schedule 9?

Members indicated assent.

1434. The Chairperson: It looks as if the light has gone out completely.

1435. Mr A Maginness: Mr Chairperson, may I ask a question about clause 167? Is it mandatory for charities that have registered elsewhere to register in Northern Ireland?

1436. Mr McGivern: Yes; even those charities that are already registered with the Charity Commission for England and Wales must, under clause 167, register in Northern Ireland.

1437. Mr A Maginness: That is all I wanted to know. Thank you.

1438. The Chairperson: Mr McGivern and Mr Doyle, thank you for your assistance today. The task is arduous, but we are getting there slowly but surely.

3 April 2008

Members present for all or part of the proceedings:
Mr Gregory Campbell (Chairperson)
Mr David Hilditch (Deputy Chairperson)
Mr Thomas Burns
Mr Fred Cobain
Mr Jonathan Craig
Ms Anna Lo
Mrs Claire McGill
Miss Michelle McIlveen
Mr Alban Maginness

Witnesses:

Mr Roy McGivern
Mr Seamus Murray

Department for Social Development

1439. The Chairperson (Mr Campbell): I welcome Mr Seamus Murray and Mr Roy McGivern from the Department for Social Development. This is the formal part of the Committee Stage of the Charities Bill. I will introduce each of the amendments. If elaboration or explanation is required, I will ask the officials to provide that.

Clause 1 agreed to.

Clause 2 (Meaning of “charitable purpose”)

1440. The Chairperson: The Committee sought an amendment to clause 2 to reflect the fact that religion includes a belief in one, or more than one, god. The Department’s response was that the clause was to be amended as suggested.

1441. Mr Seamus Murray (Department for Social Development): The Department has taken the Committee’s views on board. The Minister has considered those views, and she is happy for the clause 2(3)(a)(i) to read as follows: “A religion which involves belief in god or more than one god.”

1442. Ms Lo: Does the Bill also cover religion that does not believe in a god? Some religions believe in a prophet rather than a god.

1443. Mr Murray: Clause 2(3)(a)(ii) refers to “any analogous philosophical belief”.

1444. Question, That the Committee is content with the clause, subject to the Committee being satisfied with the wording of the Department’s proposed amendment, put and agreed to.

Clause 2, subject to the Committee being content with the wording of the Department’s proposed amendment, agreed to.

Clause 3 (The “public benefit” test)

1445. The Chairperson: The Committee sought an amendment to clause 3 to ensure that intangible benefits, such as spiritual benefits, would be recognised as providing public benefit. The Department said that spiritual benefit will be covered by the existing legislation and that it will be a matter for the charity commission to issue guidance and consult.

1446. Mr Murray: The clause has been discussed with the Minister, and the Department’s considered view is that the charity commission will issue guidance. The Charity Commission for England and Wales has recently published guidance on public benefit for religious charities. We will follow suit on that.

1447. The Chairperson: The submission from the Evangelical Alliance indicated that it was satisfied with that approach. The Committee asked the Department to consider using the word “harm” or “detriment” in the legislation instead of “disbenefit”.

1448. Mr Murray: The Minister is content that the wording be changed to read “detriment”.

1449. Question, That the Committee is content with the clause, subject to the Committee being satisfied with the wording of the Department’s proposed amendment, put and agreed to.

Clause 3, subject to the Committee being content with the wording of the Department’s proposed amendment, agreed to.

Clause 4 (Guidance as to operation of public benefit requirement)

1450. The Chairperson: The Committee sought an amendment to clause 4 to require the charity commission to consult on any material changes to its guidance.

1451. Mr Murray: The Department has considered clause 4, and it believes that the Bill as it stands is sufficient to provide that the charity commission should consider where necessary rather than consult on every single change that is required in the future. Public benefit is a significant matter, and it would be consulted on.

1452. The Chairperson: The concern was that the minutiae would have to go out to public consultation.

1453. Mr Murray: That is the danger; if the charity commission were legally required to consult every time it made a change to the Bill, a public consultation process would be required, which would be nugatory.

1454. Question, That the Committee is content with the clause, put and agreed to.

Clause 4 agreed to.

Clauses 5 to 12 agreed to.

Clause 13 (Practice and procedure)

1455. The Chairperson: The Committee sought a possible amendment to clause 13 to allow the charity commission to make provision for applicants to be represented by special advocates at a charity tribunal.

1456. Mr Murray: The Department has discussed the issue with colleagues in England and Wales. There is currently no provision for special advocates in the legislation there. However, that is being considered in England and Wales, given some of the issues that they face. The best approach that we can take is to watch and observe the changes across the water. Subsequently, change would be considered for Northern Ireland as required.

1457. The Chairperson: If a change were to come about in England and Wales, would the Committee be notified?

1458. Mr Murray: A substantive policy change would come back to the Committee, but that will probably happen somewhere down the line, after the legislation is enacted.

1459. The Chairperson: Will the Committee be notified of a change to the legislation in England and Wales?

1460. Mr Murray: Yes; we would bring that back to the Committee.

Clause 13 referred for further consideration.

Clauses 14 and 15 agreed to.

Clause 16 (Register of charities)

1461. The Chairperson: The Committee had sought a possible amendment to clause 16 to ensure that the charities register would include a separate statement if an organisation had been granted designated religious charity status.

1462. Mr Murray: That is a sensible suggestion, and the Department has agreed that clause 16(4)(b) should be amended, subject to instructions from the Office of the Legislative Counsel.

1463. The Chairperson: The Committee had also sought a possible amendment to clause 16 to ensure that Assembly approval was required for any further exemptions for designated religious charities.

1464. Mr Murray: The Department feels that that is not required because it will be covered in the legislation. The provision is included in the amendment of clause 165(3).

1465. Mr Roy McGivern (Department for Social Development): That is one of the proposed amendments.

1466. Question, That the Committee is content with the clause, subject to the Committee being satisfied with the wording of the Department’s proposed amendment, put and agreed to.

Clause 16, subject to the Committee being content with the wording of the Department’s proposed amendment, agreed to.

Clauses 17 to 51 agreed to.

Clause 52 (Power to order taxation of solicitor’s bill)

1467. The Chairperson: Members will remember that issue being discussed at a previous meeting. The Committee had asked the Department to investigate whether the provisions in clause 52 duplicate the provisions that are contained in the Solicitors (Northern Ireland) Order 1976.

1468. Mr Murray: We have checked that out, and the Department agrees that there is duplication in that area. We propose to remove clause 52 from the Bill and rely on the 1976 Order.

1469. Question, That the Committee is content with the clause, put and negatived.

Clause 52 disagreed to.

Clauses 53 to 73 agreed to.

1470. The Chairperson: I thank members and the officials from the Department. That was painless for us as well as for you.

10 April 2008

Members present for all or part of the proceedings:
Mr David Hilditch (Deputy Chairperson)
Mr Mickey Brady
Mr Thomas Burns
Mr Fred Cobain
Ms Anna Lo
Mr Fra McCann
Mrs Claire McGill
Miss Michelle McIlveen

Witnesses:

Mr Kieran Doyle
Mr Seamus Murray

Department for Social Development

1471. The Deputy Chairperson (Mr Hilditch): The Department for Social Development is represented by Seamus Murray and Kieran Doyle; you are very welcome. We will begin the session by going through the amendments that were discussed at last week’s meeting. The Committee is to agree the wording of the proposed amendments. Gentlemen, do you have anything to add on those proposed amendments, or are you happy to proceed?

1472. Mr Seamus Murray (Department for Social Development): We are happy to proceed.

1473. The Deputy Chairperson: The Committee recommends to the Assembly that clause 2 be amended as agreed between the Committee and the Department. Does the Committee agree to the text of the amendment?

Members indicated assent.

1474. The Deputy Chairperson: The Committee recommends to the Assembly that clause 3 be amended as agreed between the Committee and the Department. Does the Committee agree to the text of the amendment?

Members indicated assent.

1475. The Deputy Chairperson: The Committee recommends to the Assembly that clause 16 be amended as agreed between the Committee and the Department. Does the Committee agree to the text of the amendment?

Members indicated assent.

1476. The Deputy Chairperson: We will now continue with the formal clause-by-clause scrutiny of the Charities Bill.

Clauses 74 to 86 agreed to.

Clause 87 (Persons disqualified for being trustees of a charity)

1477. The Deputy Chairperson: The Committee sought a possible amendment to clause 87 to include the disqualification of trustees who had been removed from office in other jurisdictions in which charity legislation exists.

1478. Mr Murray: Under clauses 87(7)(e) and 87(7)(f), trustees who are disqualified in England and Wales, and Scotland, will also be disqualified in Northern Ireland. The Republic of Ireland’s legislation has not yet been enacted, so parity with it could not be included in the Bill until that legislation is in place. However, the Minister for Social Development, Margaret Ritchie, met the Minister for Community, Rural and Gaeltacht Affairs, Éamon Ó Cuív, last month about ensuring consistency in the operation of legislation between North and South. That process will continue; on 2 May, we will meet officials from the South and have further discussions with them. We will seek to ensure that the exchange of information on trustee disqualification will be taken forward in Northern Ireland.

1479. The situation outside the UK and Ireland is perhaps more difficult in that the interpretation of the concept of charity and charity legislation is diverse. Legislation in other countries that defines a charity does not equate with that of European countries so it is difficult to have that arrangement. However, the UK and Ireland forum, and the international charity regulators forum, which shares information on issues to do with trustees, is a possible solution to that.

1480. The Deputy Chairperson: Is the Department content that the legislation can be amended when the legislation in Ireland is enacted?

1481. Mr Murray: A possible amendment would take that on board. The proposed legislation is the best that can currently be done. As we move forward with the Republic of Ireland, we will look for either a change to our legislation or a memorandum of understanding between the two Departments.

1482. Question, That the Committee is content with the clause, put and agreed to.

Clause 87 agreed to.

Clauses 88 to 95 agreed to.

Clause 96 (Winding up)

1483. Mr Murray: Clauses 96 to 104 deal with charitable companies. As was previously flagged up to the Committee, the introduction of the Companies Act 2006 across the UK has implications for the Charities Bill, not only in Northern Ireland but across the UK. In the majority of cases, that part of the Charities Bill will make technical changes to update references in the Companies Act 2006 from the Companies (Northern Ireland) Order 1986. It will bring parity with England, Scotland and Wales on the impact of the 2006 Act on charities legislation.

1484. Question, That the Committee is content with the clause, put and agreed to.

Clause 96 agreed to.

Clauses 97 to 121 agreed to.

Clause 122 (Power to transfer all property of unincorporated charity)

1485. The Deputy Chairperson: The Committee sought an amendment to clause 122 to provide for an exception for a transfer of designated land that has a very low value.

1486. Mr Murray: We have discussed that proposed amendment with the Minister, and we have taken on board the concerns of the Committee. There is a degree of value in the deregulation of that. The Department proposes an amendment to clause 122(1)(b) to include

1487. “or has designated land of a low value, and the Commission has been notified prior to the transfer”.

1488. That would provide for designation to a small charity that holds land to effect a transfer. That amendment is subject to advice from the Office of the Legislative Counsel, for which we are currently waiting.

1489. Question, That the Committee is content with the clause, subject to the Committee being satisfied with the wording of the Department’s proposed amendment, put and agreed to.

Clause 122, subject to the Committee being content with the wording of the Department’s proposed amendment, agreed to.

Clauses 123 to 126 agreed to.

Clause 127 (Power of unincorporated charities to spend capital: general)

1490. The Deputy Chairperson: The Committee sought a possible amendment to clause 127 to consider a point that was made by the Charity Commission for England and Wales in relation to endowment funds.

1491. Mr Murray: The Department discussed the matter with colleagues on the Charity Commission for England and Wales and with the Office of the Legislative Counsel. The recommendation is that we wait for amendments to English legislation to see how those are enacted. After that, we should consider making changes to the legislation rather than making a change now.

1492. Question, That the Committee is content with the clause, put and agreed to.

Clause 127 agreed to.

Clauses 128 and 129 agreed to.

Clause 130 (Regulation of public charitable collections)

1493. The Deputy Chairperson: The Committee expressed concern that clauses 130 to 148 in Chapter 1 of Part 13 do not apply to Internet funding and asked the Department to provide information on how that is regulated in other jurisdictions.

1494. Mr Murray: Work on Internet fund-raising is evolving. It is extremely difficult to regulate, and any regulation of the Internet is difficult in itself. The Department has discussed the matter with other charity regulators and is compiling advice and guidance. The Institute of Fundraising covers Great Britain, and it issued a code of practice on Internet fund-raising that is available to charities in Northern Ireland.

1495. When the charity commission for Northern Ireland is established, the Department intends to consider Internet fund-raising and issue appropriate guidance based on best practice elsewhere. At this stage, it is not possible to create an amendment that would have any impact.

1496. The Deputy Chairperson: The Committee is content that regulations on Internet funding are not appropriate at this stage.

1497. Question, That the Committee is content with the clause, put and agreed to.

Clause 130 agreed to.

Clauses 131 to 133 agreed to.

Clause 134 (Restrictions on conducting door to door collections)

1498. Mr Murray: Fairly late in the day, the Committee received correspondence on permits for public collections from the Association of Charity Shops.

1499. The Deputy Chairperson: Does the correspondence relate to clause 134?

1500. Mr Murray: It also relates to other clauses in Chapter 1. The Association of Charity Shops expressed concern about the permit requirements in Northern Ireland. The Department had further discussions with the association and with the Charity Commission for England and Wales. The flexibility in the current legislation allows the requirements for permits to vary, and such variation can be applied to charity shops that carry out door-to-door collections. Therefore, the Department does not consider that an amendment is required to the legislation.

1501. Question, That the Committee is content with the clause, put and agreed to.

Clause 134 agreed to.

Clauses 135 to 141 agreed to.

Clause 142 (Applications for permits to conduct public charitable collections)

1502. The Deputy Chairperson: The Association of Charity Shops expressed concerns about permit requirements. The association’s proposed amendment to clause 142(1) is to add the words “in a public place” after “public charitable collection”. The association claims that that would allow the proposed amendment to clause 134 to be made, and it would bring the provisions of Part 13 into line with the provisions of the Charities Act 2006 that apply in England and Wales. The new wording would also mirror the wording in clause 143(1). The Committee has already agreed to clause 134.

1503. Question, That the Committee is content with the clause, put and agreed to.

Clause 142 agreed to.

Clauses 143 to 149 agreed to.

Clause 150 (Professional fund-raisers, etc. required to indicate institutions benefiting and arrangements for remuneration)

1504. The Deputy Chairperson: The Department has had sight of the submission from the charity shops that was tabled this morning.

1505. Mr Murray: Clause 150 has a twin purpose. It protects the public by ensuring the accountability of charitable collections, including door-to-door collections, such as those that use black bags. It also protects charities from bogus collections.

1506. The potential abuse of door-to-door collections, or black bag collections as they have become more commonly known, has attracted much media attention and some political interest. Therefore, the clause is targeted at that issue.

1507. The Department noted and considered the concerns of the Association of Charity Shops, having received its submission only today. We studied the submission alongside the legislation as drafted. The association recommends that a leaflet be submitted to the individual householder when a black bag collection is being carried out. The leaflet would outline how the householder could find out more information on the details of the collection from another media: perhaps through a telephone call to the charity or electronically on the organisation’s website.

1508. The Department’s view is that the twin aspects of accountability for the charity and the public are provided for in the legislation. Any leaflet could detail the nature, timing and purpose of the collection and the name of the charity responsible. Therefore, the legislation as drafted is sufficient to provide dual accountability in Northern Ireland.

1509. The Department is aware of ongoing discussions on the matter between the Association of Charity Shops and the Office of the Third Sector in England and briefly discussed the issue with them this morning. We will keep an eye on how the situation develops. However, at present we do not consider that the legislation needs to be amended to ensure that public accountability is maintained.

1510. Mrs McGill: Seamus, you commented on the submission from the Association of Charity Shops. Why did that arrive when the Committee is considering the clauses? Is it a late submission?

1511. The Committee Clerk: Last night, David Moir contacted me to say that the Association of Charity Shops had only realised the implications of clauses 150 and 151. He asked whether he could submit a document. Given that the Committee was due to discuss the clauses today, and that it is important to consider any serious concerns that the association may have, I agreed to accept the submission and circulate it to the Committee.

1512. Mr Murray: None of the charity shops raised the issue during the public consultation process, and the Association of Charity Shops engaged with the Office of the Third Sector within the past three weeks. Only recently, therefore, was the issue also raised in England and Wales.

1513. Mrs McGill: Is the issue important? Are we really discussing the matter as such? It is extremely late to be doing so.

1514. The Committee Clerk: I received the submission only last night. I could not circulate it to members more quickly than I did. The Department also had sight of the submission and has provided an explanation. Therefore, it is for the Committee to decide whether it is content with the Department’s explanation and, for the protection of other charities and the public, with the legislation as drafted.

1515. Question, That the Committee is content with the clause, put and agreed to.

Clause 150 agreed to.

Clauses 151 to 158 agreed to.

Clause 159 (Power of Department to give financial assistance to charitable, benevolent or philanthropic institutions)

1516. Mr Murray: The Department determined that clause 159 is not required, as it is a duplication of existing powers in Northern Ireland, as provided by the Social Need (Northern Ireland) Order 1986. As members know, approximately 90% of the Bill has been taken from the Charities Act 2006 in England. The Act included that particular power because of concern in the House across the water about insufficient coverage of how grants should be provided by the then Active Communities Directorate, which is now the Office of the Third Sector. The Department’s view is that the clause is a duplication and, therefore, surplus to the requirements of the Bill. We sought legal advice from the Departmental Solicitor’s Office to confirm that.

1517. Question, That the Committee is content with the clause, put and negatived.

Clause 159 disagreed to.

Clauses 160 to 163 agreed to.

Clause 164 (Effect of registering charity merger on gifts to transferor)

1518. The Deputy Chairperson: The Committee sought a possible amendment to clause 164 to make provision for any gift that takes effect on, or after, the date of transfer to take effect as a gift to the transferee.

1519. Mr Murray: The Department has taken a strong view and has sought legal advice from the Office of the Legislative Counsel. We believe that the possibility of losing the benefit of a gift between the date of a merger and the date of registration should act as a strong incentive to ensure that registration is proceeded with at haste. Therefore, an amendment is not required.

1520. Question, That the Committee is content with the clause, put and agreed to.

Clause 164 agreed to.

Clause 165 (Application of Act in relation to designated religious charities)

1521. The Deputy Chairperson: The Committee asked the Department to consider how the clause could be amended to reflect that any Order made by the Department to extend exemptions to charities in that area should be approved by resolution of the Assembly.

1522. Mr Murray: The Department agrees that clause 165(3) be amended to reflect provisions in clause 167(7).

1523. Question, That the Committee is content with the clause, subject to the Committee being satisfied with the wording of the Department’s proposed amendment, put and agreed to.

Clause 165, subject to the Committee being content with the wording of the Department’s proposed amendment, agreed to.

Clause 166 (Designation, etc. of religious charities)

1524. The Deputy Chairperson: The Committee asked the Department to consider the criteria applied to applications for designated religious charity status.

1525. Mr Murray: This issue attracted interest in the Committee and among religious, faith-based bodies. We had lengthy discussions with the Minister, and she has agreed to remove clause 166(3)(d), which relates to membership in Northern Ireland, and, secondly, to reduce the requirement in clause 166(3)(c) from 10 years to five years. The charity commission will retain sufficient powers to execute its responsibilities and to ensure that bodies that receive designated religious status exercise proper governance.

1526. Miss McIlveen: I welcome the changes. My colleague Jonathan Craig had to step out and thanks the departmental officials and the Minister for accepting the changes.

1527. Question, That the Committee is content with the clause, subject to the Committee being satisfied with the wording of the Department’s proposed amendments, put and agreed to.

Clause 166, subject to the Committee being content with the wording of the Department’s proposed amendments, agreed to.

Clause 167 (Institutions which are not charities under the law of Northern Ireland)

1528. The Deputy Chairperson: The Committee asked the Department to consider how the clause could be amended to make it clear that there is a link between it and clause 16.

1529. Mr Murray: Only those charities, as defined in clause 1, are registrable under clause 16. It is not appropriate to include clause 167 institutions in the register kept under clause 16 because those institutions are registered elsewhere. Therefore, no amendment is required. Those clause 167 charities will be neither exempt from registering or reporting to the charity commission nor from demonstrating their public accountability regarding operation in Northern Ireland. That reflects regulations that exist in other parts of the UK and that will exist in the Republic of Ireland.

1530. The Deputy Chairperson: Will there be a parallel register?

1531. Mr Murray: Yes, there will be.

1532. Question, That the Committee is content with the clause, put and agreed to.

Clause 167 agreed to.

Clauses 168 to 186 agreed to.

Schedules 1 to 9 agreed to.

Long title agreed to.

1533. The Deputy Chairperson: I thank Mr Murray and Mr Doyle for their co-operation in scrutinising the Committee Stage of the Bill.

1534. Mr Murray: On my behalf and that of my colleagues, I thank the Committee for its time; it is probably the last occasion that we will meet on this subject. It has been a positive, if somewhat laborious, engagement, which has been important for the progress of the legislation. I thank all members, as well as the Committee Clerk and her staff, who have been very supportive during the process.

1535. Mr Cobain: You will go far, Seamus. [Laughter.]

17 April 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
Mrs Claire McGill
Miss Michelle McIlveen

1536. The Chairperson (Mr Campbell): The Committee must agree the wording of the proposed amendments to the Charities Bill that were discussed at last week’s meeting. Officials in the Public Gallery can, if necessary, provide clarification and assistance. There are a number of outstanding clauses.

Clause 13 (Practice and procedure)

1537. The Committee Clerk: On 3 April, the Committee deferred consideration of clause 13 — which makes provision for applicants, in certain circumstances, to be represented by special advocates at a charity tribunal — because there were thought to be developments on the issue in England and Wales. The Department contacted its counterparts and was told that no changes are imminent. Therefore, it was felt that any amendment to clause 13 would not be appropriate at this stage. The Department will consider the matter again should there be developments in England and Wales.

1538. Question, That the Committee is content with the clause, put and agreed to.

Clause 13 agreed to.

1539. The Committee Clerk: Clause 122 deals with the exemption of the transfer of designated land. The Committee had already agreed the text to an amendment, which was an exemption for the transfer of designated land of very low value. The Office of the Legislative Counsel (OLC) has informed the Department that the text of the amendment is unacceptably vague. The OLC has suggested a figure of £90,000 which ties in with the threshold for small charities in the Bill and the Companies Act 2006.

1540. The Chairperson: The amount of money is difficult to define, because one person may have an opinion on what constitutes low value for land, and another person may think otherwise. The Committee accepts that leaving the wording to read “low value land” is vague and difficult to define. In the absence of a more suitable amount on which everybody could agree, I think that the suggested figure is as close as we can get. Relatively speaking, it is quite a low value.

1541. Are members content that the Committee recommends to the Assembly that clause 122 be amended as agreed between the Committee and the Department and that the Committee agree to the text of the amendment?

Members indicated assent.

1542. The Committee Clerk: Clause 165 has been amended to ensure that no Order should be made under that clause in relation to designating religious charities unless a draft of the Order had been laid before, and been approved by, a resolution of the Assembly.

1543. The Chairperson: Are members content that the Committee recommends to the Assembly that clause 165 be amended as agreed between the Committee and the Department and that the Committee agree to the text of the amendment?

Members indicated assent.

1544. The Committee Clerk: Clause 166 refers to the length of time that a charity had to have been established, which has been reduced from 10 years to five years. The requirement that a charity have at least 1,000 members has been removed.

1545. The Chairperson: Are members content that the Committee recommends to the Assembly that clause 166 be amended as agreed between the Committee and the Department and that the Committee agree to the text of the amendment?

Members indicated assent.

1546. The Chairperson: We will now move into private session to consider the draft report on the Charities Bill.

1 May 2008

Members present for all or part of the proceedings:
Mr Gregory Campbell (Chairperson)
Mr David Hilditch (Deputy Chairperson)
Mr Jonathan Craig
Ms Anna Lo
Mrs Claire McGill
Miss Michelle McIlveen
Mr Alban Maginness

1547. The Chairperson (Mr Campbell): As a result of the introduction of the Companies Act 2006 across the UK, a number of technical amendments are required for the Charities Bill in order to dovetail both charity and company law.

1548. Members have a copy of the paper supplied by the Department that also lists proposed amendments, which correct minor, typographical or drafting errors in the Bill. All the proposed amendments are of a technical nature, and do not impact on policy.

1549. The Committee Clerk: The amendments are based on amendments to the Charities Act 1993 contained in the Companies Act 2006.

1550. During some evidence sessions, a number of concerns were raised, for example, about small companies being treated differently to small charities. The technical amendments will address such issues.

1551. The Chairperson: The proposed amendments will affect the following clauses 27, 32, 45, 46, 57, 66, 67, 69, 70, 92, 93, 99, 100, 102, 103, 107, 108, 114, 146, and 180, and schedules 6, 8 and 9.

1552. Question, That the Committee is content with the proposed list of departmental technical amendments, as outlined in the departmental briefing paper, put and agreed to.

Clause 104 (Annual audit or examination of accounts of charitable companies)

1553. The Chairperson: The Minister has also given notice that clause 104, which refers to the annual audit or examination of accounts of charitable companies, is to be dropped from the Bill. The clause is now unnecessary given the amendments to the Charities Act 1993. It would be a duplicate, because provisions for audit or examination are contained in the Companies Act 2006.

1554. Question, That the Committee is content with the clause, put and negatived.

Clause 104 disagreed to.

1555. Given the stage we are now at, do members agree that it would be appropriate to write to the Minister asking her to thank the officials for the comprehensive assistance that they provided during the Committee Stage of the Bill?

Members indicated assent.

1556. On behalf of the Committee, I also extend our thanks to the Committee staff for their hard and intensive work throughout the process.

Appendix 3

Written Submissions

Ards Borough Council

Dear Sir/Madam,

Thank you for your correspondence dated 16 January 2008 about the above.

Ards Borough Council considered the correspondence at a recent meeting and, while it did not wish to give specific written evidence, it was keen to submit an expression of support for the aims of the Charities Bill.

I hope that this is of assistance to you.

Yours faithfully

Amanda Martin
Principal Administrative Officer
Ards Borough Council
Tel: 02891 824190

Association of Charity Shops

Charities Bill: Submission to the Committee for Social Development

Introduction

The Association of Charity Shops welcomes this opportunity to comment on the Bill to regulate charities and their activities in Northern Ireland. We provided substantial responses to the consultation exercises on the draft Order in May 2005 and October 2006. In 2007, the Association represented around 280 charities, which operate 6,800 charity shops throughout the UK.

In 2007, charity shops raised over £110m in vital funds for the charitable work of their parent charities. Charity shops also play an invaluable role in waste prevention by reusing and recycling over 250,000 tonnes of textiles every year, through donations and house to house collections. They deliver a vital social benefit to those on low incomes including the unemployed, pensioners and students.

We generally welcome the Bill which will provide certainty, boost confidence in the sector and encourage best practice. In particular, we welcome the overall consistency between the proposals for Northern Ireland and legislation for England & Wales and Scotland, except – as we note below – in relation to public charitable collections.

Issue for the Committee’s consideration

The Association looks forward to making positive contributions to the development of detailed legislation. However, we are particularly concerned by the specific permitting requirements set out in Clause 142 of the draft Bill.

For charity shops, on average 44% of stock is obtained by collections made house-to-house; for some charities this increases to around 80%. The requirement to notify the precise day or dates and locations of each collection to the Commission in advance takes no account of how these collections are organized and is unworkable. Such a requirement would cost charities very significant sums of money in administration and result in shops running out of stock, suffering reductions in sales and the sums they raise for charity. There is no proportionate benefit from such a detailed notification system.

A change to this requirement in the Bill is therefore vital if charity shops are not to be placed under a disproportionate and potentially threatening permitting regime, the penalties for breaching which would be severe. We seek the Committee’s support for an appropriate amendment to be made to the permitting requirements for the collection of goods. We believe that the provisions of the Charities Act 2006 for England and Wales, which allow for holders of public collections certificates simply to notify the authorities of their intention to collect, represent a more appropriate model.

It is also noteworthy that the Charities and Trustee Investment (Scotland) Act 2005 does not currently regulate collections of goods for charity shops in Scotland, as there is no evidence of public nuisance or confidence issues associated with such collections.

How charity shops collect goods

Charity shops are relatively small in floor-space area. Stock is donated directly to the shop and - in addition - many charities collect house-to-house by the dropping off of collection sacks through letterboxes and subsequently collecting from doorsteps. Donating to charity shops in this way is seen by 90% by the public as a good way to support charities. This activity also contributes significantly to environmental targets for the reuse and recycling of clothing, books etc.

Because the shops are small, the space allocated for the receipt and sorting of stock is restricted. Stock received is sorted, priced, put on the shop floor or removed for recycling on a daily basis. This work is almost entirely carried out by an army of over 120,000 volunteers. Maximizing sales is dependent on maintaining good stock levels and regularly refreshing the stock on sale. The collection of goods house-to-house supports this where necessary. The collection activity is devolved to local level (either to the individual shop or to a small group of shops) and decisions on when and where to collect are based on stock levels, anticipated needs, the availability of collectors and vehicles on a regular and continuing (weekly) basis. Consideration is also given to other management information on stock quality, rates of return and the good practice requirement of the Association’s Code of Charity Retailing to avoid overlapping collections with other charities.

Given the importance of these collection systems, and the checks and balances in the Code of Charity Retailing, we believe that the permitting requirements in the draft Bill for the collection of goods should be amended so that an unworkable and unnecessary level of regulation is not introduced. The system as currently required in the draft Bill would potentially put a large number of charity shops out of business as they could not comply with its requirements.

Fraudulent collections

The permit requirement may have been included in the draft Bill so that the authorities are well placed to deal with the problems of fraudulent collections. The Association has always argued that by far the gravest problems of house-to-house collections arise from the ’bogus’ or fraudulent collections made by commercial bodies purporting to be collecting for some ‘charitable’ or benevolent purpose. We have therefore supported the need for the authorities to know which charities are collecting in their areas so that they can focus their attentions on unauthorized collections. We believe this can be achieved by a simple annual notification by charities collecting goods house-to-house that they will be collecting in the area giving details of the approximate frequency or scale of collections along with details of the purpose of the collections, their general location and the details of the organizer. This would enable local authorities to maintain a register of authorized collections that could be referred to if there was a cause for concern. Fraudulent collections carried out by bogus companies generally blitz an area with collection sacks and then move on to another town or county within days. They mislead the public as to the ‘charitable’ nature of the collection. Catching or stopping them is difficult and certainly would not be helped by knowing on which day or dates charities were collecting. There is therefore no proportionate benefit in a specific date notification system. What is required is for Trading Standards and the police to act swiftly and effectively where such collections take place without the required prior notification or where other aspects of the law have been broken.

Amendment sought

We therefore believe that clause 142 of the draft Bill should be amended so that notification only is required for the collection of goods house-to-house by charities to the Commission on a periodic basis (ie annually) and in general terms as regards timing/frequency and location. A permit should not be required for every individual collection, and notification should not be required in each and every instance. Such a general notification system would continue to provide the authorities with the information necessary to enable them to monitor and control unauthorized collections whilst enabling charity shops to continue to successfully collect stock, raise vital funds for their charities and play their role in maximizing reuse and recycling.

Conclusion

We welcome the introduction of this Bill in Northern Ireland, and support fully the consolidation of charities legislation in this way. We hope that, in due course, the various Charities Acts across the UK will take a fully consistent, but proportionate approach to the regulation of charities’ activities. We believe the amendment we propose will help to achieve that proportionality. We are happy to provide further information in support of our submission if required and are grateful for the Committee’s active consideration of our concerns.

Association of Charity Shops

Submission to the Committee for Social Development –
Supplementary Comments

Introduction

The Association of Charity Shops’ submission to the Committee on 5 February outlined our very real concerns about the consequences for charity shops of the provisions relating to public charitable collections in the Charities Bill. Since that submission, we have met with DSD officials, who noted our concerns. However, we did not feel that the unique nature of charity shop collections was fully appreciated.

Collections of donated goods for sale in charity shops is utterly different from other forms of collection – they are made on a regular, but often unplanned, basis, often weekly, by delivery of collection sacks through letter boxes in a localised area of no more than 200-300 houses, and there is no planned face to face contact with the donor. There are no issues of public trust, confidence or nuisance, which both the Westminster and Scottish administrations have accepted in their parallel legislative provisions.

In brief, the proposed system would be bureaucratic and onerous for charity shops which collect stock via house to house collections, and would be disproportionate to any risk or perceived benefit. Many charities rely for up to 80% of stock in this way, and such onerous restrictions would make these collections impossible to carry out, closing shops and thus depriving charities of vital income-generating activity. The proposed system will introduce a three tier system of certification, permitting and notification requirements on charity shops carrying out collections. This would create an additional layer of regulation which is not present elsewhere in the UK, nor in Northern Ireland at present.

Issues for Committee consideration and conclusion

Collections of goods by charity shops are benevolent and, in addition to securing much-needed stock for fundraising purposes, provide a public service by diverting goods from the waste stream. We welcome the introduction of this Bill in Northern Ireland, but recommend that clauses relating to public charitable collections are amended to bring the proposals into line with provisions in England and Wales, namely that charities collecting goods in house to house collections should be required to gain a public collections certificate only, and have a general duty to notify the relevant authorities of a general intention to carry out collections. This arrangement would also simplify any transfer of functions following the review of local authority structures in Northern Ireland.

Association of Charity Shops

Charities Bill for Northern Ireland

Proposed amendments to Part 13, Chapter 1 – Public charitable collections

In Clause 134 (1), DELETE all of sub-section (b), and re-number subsequent sub-sections

Justification: This will bring the provisions of this part into line with the provisions of the Charities Act 2006 (c50) for England and Wales

In clause 142 (1), after “public charitable collection” ADD “in a public place”

Justification: This will allow the proposed amendment to Clause 134 to be made, and will bring the provisions of this part into line with the provisions of the Charities Act 2006 (c50) for England and Wales. This wording will also mirror the wording in Clause 143 (1)

Association of Charity Shops
2 April 2008

Association of Charity Shops

Charities Bill: Supplementary Submission to the Committee
for Social Development

Introduction

The Association of Charity Shops welcomes this further opportunity to comment on specific clauses in the Charities Bill for Northern Ireland. This submission relates to proposed amendments to Part 13, Chapter 2 on the Control of Fundraising.

Timing

We have only recently become aware of the implications of the requirements of Clause 150 ff (and of similar provisions in England and Wales) for those collecting goods house to house on behalf of charities with shops. Whilst provisions in England and Wales are already enshrined in the 2006 Act, we are keen to influence the Northern Ireland provisions before they become law.

We are very grateful, therefore, to the Committee and to the Committee Clerk for allowing us the opportunity at this very late stage to submit our views and proposed draft amendments.

Consideration

As drafted, Clause 150 ff will require professional fundraisers to make very specific statements about, inter alia, their remuneration when they solicit for money or goods on behalf of charities.

Many charities with shops acquire stock through house to house collections of clothing and other textiles, books and bric a brac. On average, charity shops which collect in this way acquire 40% of their stock from these collections. Generally, a charity or its agent will deliver branded plastic sacks through householders’ doors, for filling and collection at a named future date. There is rarely face to face contact.

There has, to our knowledge, never been an issue with the remuneration of house to house collectors or with the probity of such collections.

These collections are closely governed by the Association’s Code of Charity Retailing, which is mandatory for all Association members from this membership year, 2008/09. However, realistically it will be difficult – if not impossible – for Association members to meet their obligations under Clause 150 ff as drafted:

In the absence of face to face contact, statements will be in writing. It is not feasible for these to be on collection sacks. Collection sacks are ordered months in advance of delivery, and they are ordered in the many thousands, if not millions. However, charities cannot reasonably predict how a particular collection will be carried out – whether by employees, volunteers or by paid external providers. And, charities cannot afford to hold stocks of differently-worded sacks,
Equally, sacks might show multiple statements, which would be highlighted depending on collection method, but these would be confusing and would undermine the intention of clarity in Clause 150 ff,
In any case, information on collection sacks would not be clear and – given space constraints – might be less detailed than would be ideal,
Separate written statements put through doors by external collectors would be liable to be lost or ignored as “junk” mail, thus missing the intention of these Clauses to make information easily available. Their use would also be out of the charity’s control, and it is possible, for example, that some collectors might use the opportunity to peddle other services they provide. This would also undermine the intention of the Bill.

We do not believe, therefore, that the provisions of Clause 150 ff as they stand, or the current provisions in the 2006 Act in England and Wales, are workable for house to house collections of goods. We are currently in discussions with the Office of the Third Sector in Whitehall about how best to resolve these issues in respect of the 2006 Act.

Amendments sought

We believe that charities carrying out house to house collections of goods may be able to meet the intention of Clause 150 ff through minor amendments which;

remove these collections from the provisions of Clause 150(1), but
add provisions to require statements to be made indicating where someone may find the information referred to in this Clause (eg via a phone helpline, or on the charity’s website). The proposed new provisions are drawn relatively widely to allow some flexibility in how this information is made available. This method of disseminating information has the advantage that the fullest possible information can be given, simply and clearly, whilst at the same time not placing obligations on charities that simply could not be met.

Proposed amendments are attached at Annex A, along with a consolidated version of Clauses 150-151, incorporating these amendments (at Annex B).

Conclusion

We are grateful for the opportunity to further represent the charity shops sector to the Committee, and we welcome the introduction of systematic charities legislation in Northern Ireland. Legislation must be, amongst others, proportionate and realistic. We believe the proposed amendments to Clauses 150-150 will help the Bill to achieve these aims.

We are, of course, happy to provide any further information the Committee may wish, and to take part in any constructive fora which will move the Bill forward.

Association of Charity Shops

Annex A – Proposed amendments Charities Bill for Northern Ireland

Proposed amendments to Part 13, Chapter 2 – Control of Fundraising

In Clause 150(1), at the start of the clause, DELETE “Where” and REPLACE with “Except where subsection (12) applies, where”

Justification: This amendment allows for the separate treatment of the information requirements for goods collected through door to door collections in new subsections (below)

In Clause 150(8), DELETE “subsections (1) to (6)” and REPLACE with “this section”

Justification: This amendment allows failures to comply with new subsections to be caught by this subsection

In Clause 150, ADD new subsections (12), (13) and (14)

“(12) Where a professional fundraiser is collecting goods only by way of a door to door collection, the solicitation shall be accompanied by a written statement indicating the means by which the relevant charitable institution has made available the relevant information referred to in subsections (1) (a), (b) and (c)”.

“(13) In subsection (12), “means” includes electronic means, and “door to door collection” has the same meaning as in section 130(2)”.

Justification: Subsections (12) & (13) introduce separate arrangements for information requirements for door to door collections of goods

“(14) Subsection (4) applies in respect of the relevant information referred to in subsection (12)”

Justification: Without this subsection, the requirements relating to “notifiable amounts” would not apply in respect of door to door collections of goods

In Clause 151, in subsection (1), after “(1) and (2)” ADD “or, where appropriate, subsection (12)”

Justification: Applies new requirements for door to door collections to other persons where appropriate

Association of Charity Shops
9 April 2008

Association of Charity Shops

Annex B Charities Bill for Northern Ireland

Consolidated text of (amended) Clauses 150-151(1)

Professional fund-raisers, etc. required to indicate institutions benefiting and arrangements for remuneration

150.— (1) Except where subsection (12) applies, where a professional fund-raiser solicits money or other property for the benefit of one or more particular charitable institutions, the solicitation shall be accompanied by a statement clearly indicating—

(a) the name or names of the institution or institutions concerned;

(b) if there is more than one institution concerned, the proportions in which the institutions are respectively to benefit; and

(c) the method by which the fund-raiser’s remuneration in connection with the appeal is to be determined and the notifiable amount of that remuneration.

(2) Where a professional fund-raiser solicits money or other property for charitable, benevolent or philanthropic purposes of any description (rather than for the benefit of one or more particular charitable institutions), the solicitation shall be accompanied by a statement clearly indicating—

(a) the fact that the professional fund-raiser is soliciting money or other property for those purposes and not for the benefit of any particular charitable institution or institutions;

(b) the method by which it is to be determined how the proceeds of the appeal are to be distributed between different charitable institutions; and

(c) the method by which the professional fund-raiser’s remuneration in connection with the appeal is to be determined and the notifiable amount of that remuneration.

(3) Where any representation is made by a commercial participator to the effect that charitable contributions are to be given to or applied for the benefit of one or more particular charitable institutions, the representation shall be accompanied by a statement clearly indicating—

(a) the name or names of the institution or institutions concerned;

(b) if there is more than one institution concerned, the proportions in which the institutions are respectively to benefit; and

(i) the sum representing so much of the consideration given for goods or services sold or supplied by the commercial participator as is to be given to or applied for the benefit of the institution or institutions concerned,

(ii) the sum representing so much of any other proceeds of a promotional venture undertaken by the commercial participator as is to be so given or applied, or

(iii) the sum of the donations by the commercial participator in connection with the sale or supply of any such goods or services which are to be so given or supplied.

(4) In subsections (1) to (3) a reference to the “notifiable amount” of any remuneration or other sum is a reference—

(a) to the actual amount of the remuneration or sum, if that is known at the time when the statement is made; and

(b) otherwise to the estimated amount of the remuneration or sum, calculated as accurately as is reasonably possible in the circumstances.

(5) If any such solicitation or representation as is mentioned in any of subsections (1) to (3) is made—

(a) in the course of a radio or television programme, and

(b) in association with an announcement to the effect that payment may be made, in response to the solicitation or representation, by means of a credit or debit card, the statement required by virtue of subsection (1), (2) or (3) (as the case may be) shall include full details of the right to have refunded under section 153(1) any payment of £50 or more which is so made.

(6) If any such solicitation or representation as is mentioned in any of subsections (1) to (3) is made orally but is not made—

(a) by speaking directly to the particular person or persons to whom it is addressed and in the presence of that person or those persons, or

(b) in the course of any radio or television programme, the professional fund-raiser or commercial participator concerned shall, within 7 days of any payment of £50 or more being made to the professional fund-raiser or commercial participator in response to the solicitation or representation, give to the person making the payment a written statement—

(i) of the matters specified in paragraphs (a) to (c) of that subsection; and

(ii) including full details of the right to cancel under section 153(2) an agreement made in response to the solicitation or representation, and the right to have refunded under section 153(2) or (3) any payment of £50 or more made in response thereto.

(7) In subsection (6) the reference to the making of a payment is a reference to the making of a payment of whatever nature and by whatever means, including a payment made by means of a credit card or a debit card; and for the purposes of that subsection—

(a) where the person making any such payment makes it in person, it shall be regarded as made at the time when it is so made;

(b) where the person making any such payment sends it by post, it shall be regarded as made at the time when it is posted; and

(c) where the person making any such payment makes it by giving, by telephone or by means of any other electronic communications apparatus, authority for an account to be debited with the payment, it shall be regarded as made at the time when any such authority is given.

(8) Where any requirement of this section is not complied with in relation to any solicitation or representation, the professional fund-raiser or commercial participator concerned is guilty of an offence and liable on summary conviction to a fine not exceeding level 5 on the standard scale.

(9) It shall be a defence for a person charged with any such offence to prove that that person took all reasonable precautions and exercised all due diligence to avoid the commission of the offence.

(10) Where the commission by any person of an offence under subsection (8) is due to the act or default of some other person, that other person is guilty of the offence; and a person may be charged with and convicted of the offence by virtue of this subsection whether or not proceedings are taken against the first-mentioned person.

(11) In this section “the appeal”, in relation to any solicitation by a professional fund-raiser, means the campaign or other fund-raising venture in the course of which the solicitation is made.

(12) Where a professional fundraiser is collecting goods only by way of a door to door collection, the solicitation shall be accompanied by a written statement indicating the means by which the relevant charitable institution has made available the relevant information referred to in subsections (1) (a), (b) and (c).

(13) In subsection (12), “means” includes electronic means, and “door to door collection” has the same meaning as in section 130(2).

(14) Subsection (4) applies in respect of the relevant information referred to in subsection (12).

Other persons making appeals required to indicate institutions benefiting and arrangements for remuneration

151.— (1) Subsections (1) and (2) or, where appropriate, subsection (12) of section 150 apply to a person acting for reward as a collector in respect of a public charitable collection as they apply to a professional fund-raiser.

Ballygowan Mission Hall

c/o 82 Greenogue Road
Dromore
Co Down BT25 1RG

4th February 2008

Dept of Social Development
Room 412, Parliament Buildings
Stormont
Belfast BT4 3XX

Dear Sir

Re: New Charities Bill

Ballygowan Mission Hall is a local independent Gospel Hall and we are extremely concerned about the criteria outlined in the ‘opt out’ clause for religious organisations contained in the above legislation.

As a rural hall, criteria requiring estimated numbers of 1,000 would pose significant difficulties in relation to charitable status.

I hope that in the light of these concerns the ‘opt out’ criteria can better reflect the position of the many smaller gospel halls not affiliated to any of the four main churches.

Yours sincerely

Gordon Martin
Ballygowan Mission Hall

Ballymagarrick Gospel Hall

Ballymagarrick Gospel Hall
373 Comber Road
Lisburn
BT 27 6 YE

4 February 2008

To The Committee
Dept. of Social Development
Room 412
Parliament Buildings
Stormont
Belfast
BT 4 3 XX

Dear Sir or Madam,

As elders of this Church we have a number of concerns regarding the potential change in legislation around the new Charity Bill.

We welcome the opt-out clause for organisations which are deemed religious, however, two of the criteria would cause us some concern:-

a. Having to be established 10 years

b. Having an estimated number of 1000 members.

For smaller church groups such as ourselves, with around 70 members, we would be exposed to all of the rigours of this new Bill, which could lead to interference from outside sources.

We would ask you to consider that groups, with smaller numbers like ourselves, are still able to benefit from charitable status. This would ease the financial burden when money needs spent on buildings and facilities.

Yours on behalf of the elders,
Samuel Glenn.

Ballymena Borough Council

Date: 5th February, 2008
Our Ref: GC/3/ATC/WP

(sent via email)

Ms. M. Austin,
Committee Clerk,
Northern Ireland Assembly,
Committee for Social Development,
Room 412,
Parliament Buildings,
BELFAST,
BT4 3XX.

Dear Madam,

Charities Bill

I refer to your letter dated 16th January, 2008 regarding the above.

I would advise that the issue was raised at the February Monthly Meeting of Council held on Monday 4th February, 2008, whereby Members generally welcomed the proposals.

Yours faithfully,

R. McBride,
Deputy Acting Town Clerk and Chief Executive.

Bishops of the Roman Catholic Church
in Northern Ireland

Monday, 04 February 2008

Dear Sir/Madam,

Charities Bill

I would like to thank you for your letter dated 16 January 2008, inviting us to submit written evidence on behalf of the Bishops of the Roman Catholic Church in Northern Ireland. We would like to state that we welcome the Charities Bill, which will introduce a regulatory system for charities including the establishment of a Charity Commission.

In relation to the Charities Bill we wish to highlight the following areas of concern for the Bishops of the Roman Catholic Church in Northern Ireland:

Part 1 Definition of “charity” and the public benefit test

Articles 2 and 3 - Meaning of ‘charitable purpose’ and the ‘public benefit’ test

Article 3 maintains the ‘public benefit’ test as a qualifying criterion. It refers to the list of purposes in Article 2 (2), which are to be considered when applying that test, including the ‘advancement of religion’ (Art 2 (2) (c)). The Catholic Church, along with other religious organizations, has for many years worked for the greater good of our society. We make the following short comment in regard to the ‘public benefit’ test and its application to the purpose of the ‘advancement of religion’ in the hope of clarifying the application of this test.

The role of organized religion in the life of individuals and society is of considerable importance. Historically there has been no doubt that the contribution of religion is one of great benefit and that good work continues today. We therefore believe that the presumption that the ‘advancement of religion’ is a public benefit should be confirmed by the new legislation. If the decision to require a ‘public benefit test’ is applied to religious bodies, including the historic, long-established churches, it is imperative that the new legislation clearly states that spiritual benefits meet the ‘public benefit’ test. The legislation does not retain positive note given in consultation documentation that public benefit need not be limited to material benefit. There is the danger that the work of religious bodies could be interpreted according to prevailing materialistic criteria. It is true that religions contribute greatly to the good works of society in catering for material needs and that many individuals who contribute to charitable works are motivated by their religious faith. The central purpose of religion is, however, a spiritual one. The measure of the benefit in this area is highly subjective and can only ever be quantified indirectly, such as the ensuing benefit to society by exemplary lifestyles.

The distinctive nature of religious bodies, therefore, needs to be recognised more specifically and while retaining the presumption of public benefit could best achieve this aim, the unqualified recognition of the spiritual dimension of religion as public benefit should be guaranteed. Alternatively, a new sub-clause in Article 2 (3) (a) could be added that recognises the spiritual dimension of religious activity as a contributory factor in its ‘public benefit’.

Part 7 Charity Land

The consolidation of the law may have been an opportunity also to enhance the provisions of Article 39 of the Education (Northern Ireland) Order 1996 which enables the Trustees of a discontinued maintained school to apply “residual proceeds” arising on the discontinuance and sale of the school for general educational purposes in the Diocese in which the school is situate, This provision was introduced at the behest of the Bishops of the Roman Catholic Church in Northern Ireland and largely followed the English legislation. However this provision applies to schools, which cease to be used as such after the 14th April 1996. The residual proceeds cannot currently be used for general church or charitable purposes. The Trustees of a school discontinued prior to 14th April 1996 whether sold before or after that date will require cy-pres approval under this legislation. Perhaps the legislators could be prevailed upon to deal with this to allow a wider use of the residual proceeds than has been hitherto possible.

North – South Issue

Another point that we would like to highlight, which is probably not at the appropriate stage in the legislation, is the North – South issue. We along with other major churches would have Dioceses located in both Northern Ireland and the Republic of Ireland. These Dioceses would consider themselves one organisation and in relation to the new Charity Bills for Northern Ireland and Republic of Ireland, they would be reporting to both jurisdictions, which would be very time consuming and at an increased cost. We would therefore suggest that the Bill take into account the requirements in the Republic of Ireland and endeavour to bring a measure of harmonisation North - South. We see this as a very important issue for these Dioceses and would therefore wish for this matter to be put forward and discussed, if not at this stage, at a later stage.

Once again we thank you for giving us this opportunity to submit our concerns and we look forward to receiving your response to our comments in due course.

Yours sincerely,

On Behalf of the Bishops of the Roman Catholic Church in Northern Ireland

Carrickfergus Borough Council

email: alanc.townclerk@carrickfergus.org

AC/MMCQ

Dear Ms Austin,

Charities Bill Consultation

Thank you for your letter of 16 January 2008 and the opportunity to comment on the above. Members of Carrickfergus Borough Council considered your correspondence at last night’s monthly business meeting and agreed the following comments/ recommendations:

1. The current proposals (which specify a membership threshold of 1000 for charitable status) will impact unfairly on smaller church denominations and on larger denominations where each congregation is administratively independent.

2. Sports clubs are similarly at risk, with a consequent threat to the major contribution that they make to community life and the health of our citizens.

3. Proposals should be reviewed to ensure that they do not discourage volunteer input as voluntary service has been indispensable in the development of all types of charity.

4. Existing charities should be allowed to retain their charitable status without the need for fresh registration.

5. Provision should be made for new applications for charitable status to be processed in the shortest possible timescale, with a minimum of bureaucracy.

6. Administration charges imposed on charities should be the minimum possible, for obvious reasons. They should also be levied in a proportionate manner, reflecting the relative size of the bodies in question.

7. The Administration/governance arrangements required of charities should be commensurate with the size of the bodies in question.

8. The accountability of the proposed Commission and Tribunal should be detailed more clearly and subjected to further consultation.

I would be grateful if the above could be given due consideration by the Committee.

Members of Council do not wish to make any oral submission.

Yours sincerely,

A A C CARDWELL
Town Clerk and Chief Executive
5 February 2008

Charity Commisson

Marie Austin
Committee Clerk
Committee for Social Development
Room 410
Parliament Buildings
Belfast
BT4 3XX

Harmsworth House, 13-15 Bouverie Street
London, EC4Y 8DP
t: 020 7674 2485
f: 020 7674 2302
Date: 5 February 2008

Dear Ms Austin,

Charities Bill (Northern Ireland)

Thank you for your letter of 16 January inviting us to submit written evidence on this Bill.

We are the non-ministerial Government department that regulates and registers charities in England and Wales. Our aim is to provide the best possible regulation of charities in England and Wales in order to increase their effectiveness and public confidence and trust.

The 190,000 charities registered with us have a combined annual income of £40 billion, over 600,000 paid staff and nearly 925,000 trustees.

As requested our evidence is submitted on a section by section basis. References to the 1993 Act mean the Charities Act 1993 as amended by the Charities Act 2006 (the 2006 Act).

Section 2 – Meaning of charitable purpose

Despite the fact that they are listed as separate charitable purposes in section 2 of the 2006 Act we consider that the ‘prevention or relief of poverty’ includes of ‘the relief of those in need by reason of … financial hardship…’, see sections 2(2)(a) and 2(2)(j) of the Bill. You may therefore want to consider whether section 2(2)(j) should be amended to reflect this.

Section 3 – The “public benefit” test

Section 3(3)(a)(ii) In our recent consultation on public benefit there was considerable dislike expressed of the term “disbenefits”. The term “detriment” or “harm” was much preferred and we used these terms in our guidance rather than “disbenefits”. A summary of the responses to our consultation is available on our website at www.charitycommission.gov.uk/enhancingcharities/pbresponse.asp.

Section 3(3)(b) This is consistent with the approach we took in our public benefit guidance and has the added advantage of having statutory effect. Our new guidance on the subject is available at http://www.charitycommission.gov.uk/Library/publicbenefit/pdfs/publicbenefittext.pdf.

Section 13 – The Charity Tribunal – Practice and procedure

It may be useful to include here a power to make provision for applicants in certain circumstances to be represented by special advocates. This arose for us with regard to action taken in reliance on material from Security Services or the Police, which they did not wish to have disclosed to the applicant. The rules permit the Tribunal to exclude documents from disclosure in certain circumstances but it was considered that there was doubt about the ability to make provision for special advocates without a specific power.

Section 126 – Power to modify powers or procedures of unincorporated charity

From our own experience, we believe that there are particular implications for schemes made for Common Investment Funds (CIFs)(section 43) that are subject to this power of amendment. You may wish to consider whether this has similar implications for your own regulatory regime.

Section 127 – Power of unincorporated charities to spend capital: general

One difficulty we are anticipating with the statutory power provided by the 1993 Act (see section 43 of the 2006 Act) in similar terms is that we are clear that available endowment fund does not include property held on trust to be used for a particular purpose or purposes of the charity unless there is a specific power to sell. In such circumstances, it will not be possible for the trustees to be satisfied that the trusts on which it was held could be carried out more effectively by selling. Such a sale will involve a change of purpose which will usually require a cy-près scheme. However, the indications are that because the available endowment fund is defined as potentially the whole of the permanent endowment, this position is not understood.

Section 164 – Effect of registering charity merger on gifts to transferor

One issue that has arisen with regard to our Register of Mergers (see section 44 of the 2006 Act) is that notification of the merger cannot take place until all the property has been transferred. The protection afforded by the Register of Mergers does not apply until the merger is entered in the register. If there is any gap between the disposal of the property and the registration of the merger, any gifts to the transferring charity taking effect during this gap may be lost. We have had to develop a system for provisional notification which becomes full notification on a future date when the property is transferred and the merger is registered on that date.

A further issue on section 164 is that if there is an express gift over in a legacy in the event of the named charity ceasing to exist, this takes effect in spite of the Register of Mergers. This has led to some charities that are on our register saying they will continue the practice of keeping a “shell charity” (a charity kept in existence simply to receive legacies and pass them on to its successor charity) on transfer of the majority of the assets.

Section 167 – Institutions which are not charities under the law of Northern Ireland

We note that charities established in England and Wales which operate in Northern Ireland can be required to register if an order is made under this section and that the Charity Commission for Northern Ireland will be able to decide which provisions should apply to them. It will be useful for us to have some idea of when such an order is likely to be made and to be consulted on plans which sections will be applicable to such charities.

If an order for the registration of ‘section 167 charities’ is made and the provision regarding status of registered charity to appear on official documents (section 19) were to apply to such charities, a question arises as to whether the term a registered charity would be sufficient or whether it would need to specify the place of registration.

There may also be issues over the interaction of our respective change of name provisions (section 20 in the Bill and section 6 of the 1993 Act) if they both apply.

We presume that if ‘section 167 charities’ are to be subject to the Northern Ireland fundraising regime (section 156) as well as our own, there will be consultation to ensure that the dual regulatory burden is as light as it is appropriate to make it.

We hope this is helpful and will be pleased to enlarge on any of these comments.

Yours sincerely

Rosie Chapman
Executive Director, Policy and Effectiveness

rosie.chapman@charitycommission.gsi.gov.uk

Cleaver Fulton Rankin Solicitors

Summary 201

Brief Introduction to Cleaver Fulton Rankin 202

Memorandum and Recommendations for Action 203

Summary

This written submission of evidence from Cleaver Fulton Rankin, Solicitors in Belfast sets out our position in relation to the Charities Bill.

We welcome the introduction of the Charity Commission for Northern Ireland and the new regulatory framework for the charity sector in Northern Ireland. This sector makes a valuable contribution to our economy and makes a greater contribution to society with a significant turnover and skilled workforce. The introduction of the Charities Bill into law and the establishment of the regulatory framework will allow charities to show their value and worth to their supporters and increase the confidence of funders.

We have a number of themes to raise:

1. Registration – it should be clear which organisations are required to register with the need for transparency and openness balanced by proportionate reporting levels. We recommend further requirements for “Section 167 Institutions” which are not Northern Ireland charities but have operations in Northern Ireland.

2. Cost implications, resources and staffing of the Charity Commission for Northern Ireland - this must be well resourced to assist charities to comply at ground level and to give out appropriate guidance but with as little administrative cost to the sector as possible. The Department and the Commission will have a significant task going forward to put in place all the guidance and further regulation referred to in the Charities Bill framework. The credibility and the success of the Commission will be dependent upon sufficient resourcing and investment going forward and continued good communication with the sector in explaining its role and the sector’s obligations.

3. Co-operation – a key element will be co-operation throughout the island of Ireland and the increased involvement of the Regulators Forum in bringing together all the jurisdictions in the United Kingdom and Republic of Ireland to ensure the smooth transition, particularly here in Northern Ireland, from a largely unregulated sector to a regulated sector.

Brief Introduction to
Cleaver Fulton Rankin

Cleaver Fulton Rankin is one of Northern Ireland’s leading law firms and is the only Northern Ireland firm ranked as top tier in Charity Law by Chambers UK, A Clients Guide to the UK Legal Profession 2008. Our commitment to client service and our reputation for providing high quality legal advice is renowned.

We welcome the introduction of the Charities Bill. Charities and other third sector clients in Northern Ireland represent a long established and important part of our core legal advisory services. We participated in the Consultation process and keep a watching brief on legal issues affecting charities in Northern Ireland. Our Charities Unit provides specialised legal advice to local and national charities, social enterprise and not for profit organisations of all sizes, including industrial and provident societies and housing associations. We are members of the Charity Law Association.

The advice we deliver, to clients such as Bryson House Charitable Group, Presbyterian Church in Ireland, RNIB Northern Ireland, Alzheimer’s Society, CO3 Chief Officers 3rd Sector and Trinity Housing, covers a wide spectrum of legal issues.

Jennifer Ebbage, Partner leads our Charities Unit and also specialises in company law. She is noted as a leading individual in Chambers UK, “competent and pleasant to deal with” and The Legal 500, 2007, she “stands out and is highly respected”. Jennifer sits on the Board of Clanmil Housing Association.

Alastair Rankin, Senior Partner. A highly esteemed trusts lawyer, Alastair heads the firm’s Private Client Department. Chambers UK cites him as having “substantial knowledge of the law on the tip of his tongue” and as a consummate “professional” who has “won client trust with a distinctive brand of legal agility and a warm character’’.

Joy Scott is an experienced Partner specialising in property law matters with particular expertise in charitable land issues. Clients have described her as professional, efficient and friendly and also have commented that “the service we received was excellent” and “we were dealt with in a very professional manner”.

Memorandum and
Recommendations for Action

Parts 1, 4 and 14

1. Meaning of Charity, Registration and Reporting requirements for Institutions which are not charities (clause 167)

1.1. The Charities Bill clause 1(1) says:

“For the purposes of the laws of Northern Ireland, “charity” means an institution which-

(a) is established for charitable purposes only, and

(b) falls to be subject to the control of the Court in the exercise of its jurisdiction with respect to charities.”

1.2. The meaning of charitable purpose in the Bill comprises a twofold test: any of the 12 purposes listed in clause 2(2) and public benefit as set out in clause 3.

1.3. Clause 16(2) provides that every institution which is a charity under the law of Northern Ireland must be registered in the register of charities. By way of comparison the former wording in the draft Order at article 18(2) said every charity which is established or operates in Northern Ireland must be registered in the register of charities. It is our view that the wording of the draft Order was clearer in that it provided a wider remit for registration.

1.4. In our response to the Consultation we called for a “passporting” regime for mutual recognition of charities registered under different jurisdictional regimes by the United Kingdom charity regulators and the Irish regulator (when established) to reduce the burden of dual registration.

1.5. This seems to be partially addressed in the new clause 167 which applies to any institution:-

(a) which is not a charity under the law of Northern Ireland, but

(b) which operates for charitable purposes in or from Northern Ireland.

1.6. It seems that it is not intended that a section 167 institution would be required to register under clause 16(2) in the same way as a “Northern Ireland charity” but that the Department may order that the Commission keep a register of section 167 institutions.

1.7. We recommend that there is a cross reference added to clause 16 (2) specifically referring to section 167 institutions and that they may be required to register, and would go further to recommend that all section 167 institutions must be required to register.

1.8. At present the word “operates” mentioned at clause 167(1), is not defined in the Bill.

1.9. We recommend that the Commission be required to provide guidance on what is meant by “operates” so as to clearly understand when an obligation to register as a section 167 institution arises.

1.10. These “passporting” arrangements should be made with other jurisdictions with similar regimes without over burdening national charities or cross-jurisdictional charities with unduly complicated or duplicitous reporting and accounting requirements. This is particularly important for Northern Ireland charities which may also operate in the Republic of Ireland.

1.11. The overseas companies regulations and regime under the companies’ legislation provide a good analogy whereby a company which has established a place of business in Northern Ireland, but is incorporated in another jurisdiction, is required to register in Northern Ireland. It submits brief particulars including a copy of its constitution, details of those involved in the company, an address for services of process or notices in Northern Ireland and copies of the accounts which it files in the country in which it is incorporated and updates this information from time to time. The test for whether it has “established a place of business” is determined by principles arising from case law.

1.12. Trustees of a section 167 institution are required (clause 167(3)) to prepare in respect of each financial year, a financial statement and a statement of activities relating to its operations for charitable purposes in or from Northern Ireland but there seems to be no requirement to submit these to the Commission at present. We welcome the requirement for a statement of activities in relation to each institution’s operations in Northern Ireland but guidance will be needed so that an institution knows when it needs to register. The content of the statement of activities should not be disproportionate to the costs of producing same as this may discourage charities from operating in Northern Ireland.

1.13. We recommend that the financial statement and statement of activities relating to its operations for charitable purposes in or from Northern Ireland should be proportionate and must be submitted to the Commission within a reasonable period and be made available for inspection by the public.

2. Part 1: Meaning of Charitable Purpose and application for tax exemptions

2.1. Some practical and potentially conflicting issues arise as to how an institution which is a charity under Northern Ireland law avails of tax exemptions under the Income and Corporation Taxes Act 1988. This is of some concern because we understand that HMRC (Bootle) may apply the law of England and Wales in determining charitable purposes when a Northern Ireland registered charity applies for the tax exemption application.

2.2. When one looks at the meaning of charitable purposes under clause 2(2) of the Bill these are not identical to the charitable purposes stated in the Charities Act 2006 which relates to England and Wales nor the Charities and Trustee Investment (Scotland) Act 2005 which applies to charities under Scots law.

2.3. There are three particular differences between the Bill’s charitable purposes definition and that within the English Charities Act 2006 s.2 (not yet implemented):

The Bill does not have express charitable purposes for the promotion of the efficiency of the armed forces or the Crown, police, fire rescue services or ambulance services (nor does Scotland).
Paragraph (h) relating to human rights and resolution of conflict also include the advancement of peace and community relations under the Northern Ireland meaning of charitable purpose only
The advancement of religion in Northern Ireland includes any analogous philosophical belief whether or not involving a belief in god but this is not included in the English equivalent, (however it is in the Scots law version).

2.4. We would be concerned that Northern Ireland should be treated on its own merits and that the tax must be applied according to the relevant jurisdiction. Conacre is an example where HMRC acknowledged that the United Kingdom tax legislation meant that conacre was treated more favourably in Northern Ireland than agricultural lettings in England and Wales.

2.5. We recommend that discussions are undertaken to attain certainty and clarity as to how HMRC will treat Northern Ireland charity applications for tax exemptions and that specific Northern Ireland charitable purposes will be taken into account and that guidance is produced.

3. Part 2 Public Benefit

3.1. Guidance on the public benefit test has been produced by the English Charity Commission in January 2008. The Commission for Northern Ireland must issue guidance under the Charities Bill. We have a concern at clause 4(4)(b) that the Commission may not carry out public and other consultation in the revision of its guidance on public benefit where it considers that it is unnecessary to do so.

3.2. We recommend that it would be preferable to allow some discretion for the Commission to make only minor changes with no material impact to the guidance otherwise consultation on any revision should be required.

4. Part 6 Taxation of a solicitor’s costs

4.1. Clause 52 provides a power for the Commission to order that a solicitor’s bill of costs for business done for a charity or for charity trustees or for trustees of a charity shall be taxed by the Master (Taxing office). This is a power of the Department in the existing charities legislation (1964 Act, as amended). We have made enquiry and it appears that his power has not been used by the Department.

4.2. There is already an established process for taxation of solicitors’ costs and it is well established that a solicitor’s costs should be fair and reasonable and that a client has a right to refer the charges to taxation if he believes that his is not the case. The solicitor also has rights in this regard and the Solicitors Remuneration legislation and High Court’s inherent jurisdiction provide for a taxation process balancing the rights of the client and the solicitor.

4.3. One point of particular importance is that a solicitor should have a right to be heard before any order for taxation is made.

4.4. We recommend that the Department consults further with a professional costs drawer on the need for clause 52; to ensure that clause 52 does not conflict with the provisions of the Solicitors Order; and that a solicitor has a right to be heard on an application for taxation under clause 52.

5. Part 8 Charity accounts, reports and returns

5.1. We welcome the provisions in Part 8 to bring the thresholds in line with the rest of the United Kingdom and the provisions for different levels of scrutiny for different incomes.

5.2. We recommend that Clause 66(3) be more clearly worded to state that it also applies to charities with gross incomes of less than £100,000.00 per annum as this was not immediately apparent on first reading.

5.3. It may be more proportionate for trustees or volunteers of a charity with an income of less than £100,000.00 to have the charity’s accounts scrutinised on a less formal and less costly basis than retaining an independent examiner, for example by a solicitor, experienced bookkeeper or retired accountant whom the trustees determine as suitable. This could keep a proportionate degree of formality and keep administrative costs down. The Commission always retains the safeguard in that it has the power to order an audit of the charity’s accounts under clause 66(5).

5.4. We recommend that the audit requirements for charities with less than £100,000.00 per annum be made less stringent.

5.5. By contrast the accounting and audit requirements for charities which are companies are set out in companies’ legislation. Presently Article 257A of the Companies (Northern Ireland) Order 1986 as amended, gives a total exemption from an audit or independent examination where a charity is a small company has a gross income of less than £90,000.00 and meets a balance sheet test. It cannot be right that a small charitable company is exempt whereas a small charity which is not a company has to follow the accounting and audit regime set out in the Charities Bill.

5.6. Company law is undergoing reform but no special provision appears to be included in the Companies Act 2006 as yet for small charitable companies so the current exemption seems to fall away when that part of the Companies Act comes into force. However, the provisions of Part 8 of the Charities Bill do not apply to companies and it seems that there will be a gap in the accounting and audit regime for small charitable companies.

5.7. We recommend that this apparent anomaly between charity law and company law is addressed so that regardless of structure, a small charity is subject to a similar accounting and audit regime.

5.8. It is good accounting practice to recognise a legacy in the accounts for the accounting period for which it is received. However, such a legacy may put a charity over the relevant threshold in one year. This would then have the consequence of that charity having to incur further expenditure and having its accounts audited under a different regime.

5.9. We recommend that an exception is created in relation to legacies received during an accounting period so that the charity may be treated as remaining under the threshold where it is only the legacy that would take it over that threshold.

6. Part 11 Charitable Incorporated Organisations

6.1. The company limited by guarantee, which is commonly used as a vehicle for a charity in Northern Ireland, can be cumbersome and little understood by charities.

6.2. We welcome the proposed CIO and that there will not be dual registration requirements for this type of body to register with the Commission and the Companies Registrar.

6.3. However, there appear to be a significant number of further regulations to be made by the Department in relation to CIOs and in order for there to be a prompt uptake of this new corporate vehicle it would be important that these regulations are put in place promptly.

6.4. Until the regulations are put in place and we can see how the CIOs would operate in practice and see the detail of the constitution we would be reluctant to abandon the company limited by guarantee as a suitable vehicle for a charity in the short term.

6.5. We would like to see an extension of the power to transfer property of an unincorporated charity to one or more CIOs. As clause 119 modifies clause 122 but only applies it to a charity if it does not hold any “designated land”, i.e. land held on trusts which stipulate that it is to be used for the purposes, or any particular purposes, of the charity.

6.6. This power to transfer should also apply to designated land, particularly bearing in mind clause 122(10) where the charity trustees of the transferee must ensure so far as is reasonably practicable that the property is applied for such of its purposes as is substantially similar to those of the transferor charity. A charity should not be precluded from transferring designated land. A provision could be made for the consent of the Commission to such transfers where the value of the land is of a de minimis amount. This avoids expensive and time consuming cy-près proceedings.

6.7. We recommend an exception for a transfer of designated land which has a very low value.

7. Part 14 Designated religious status

7.1. These new provisions in clauses 165 and 166 of the Charities Bill have been introduced and mirror very closely the Scottish provisions. Clause 166 contains conditions which need to be met before the Commission would consider an application from trustees of a charity to make a designation in relation to that religious charity.

7.2. It is appropriate as is set out in clause 166(5)(b) that the Commission may still carry out its investigative powers under clause 22 and can withdraw the designation where it considers that it is no longer appropriate for the charity concerned to be designated under clause166.

7.3. We agree that all religious charities should have to register (whether this is, for example, through their central body or separate parish or congregation or church or fellowship or local group) and to keep and file accounts.

7.4. We recommend that the register should contain a statement setting out if that body is a designated religious charity and the date of the designation and of any subsequent withdrawal of the designation. This should be added at clause 16(4). This is the position in Scotland and would provide greater transparency and certainty.

7.5. Whilst the Department may order that other provisions under the Charities Bill would not apply to a designated religious charity or may modify such provisions, any such order could only be made once a draft has been laid before the Assembly.

7.6. We recommend an addition to clause 165(3) that such an order would have to be approved by a resolution of the Assembly.

7.7. The consequence of designated religious status removes the Commission’s powers under clause 33 (Power to act for protection of charities), clause 34 (Power to suspend or remove trustees, etc. from membership of charity), clause 35 (Supplementary provisions relating to interim manager appointed for a charity) and clause 36 (Power to give specific directions for protection of charity). We assume that the Commission does not require these powers and is reliant upon the safeguards in clause166(3) to allow established charities who advance religion and have a substantial support and membership within Northern Ireland and sufficient internal organisation to allow them to exercise their own supervisory and disciplinary functions. This could have a benefit in that the resources of the Commission would not be seen to be duplicating or interfering in the running of established organisations which already have a primary regulator, thus avoiding a potential duplication of work for the Commission and a potential saving of cost.

8. Part 14 Mergers of charities

8.1. We welcome the introduction of provisions providing for the register of relevant charity mergers. Cleaver Fulton Rankin has been involved in a transfer of undertakings under the Industrial and Provident Societies process and acted in a merger between a national charity and a local Northern Ireland charity in the same sector. Whilst there are many considerations in a charity merger, not least ensuring that the objects and charitable purposes of the two or more charities involved are achieved and good relations with employees and volunteers and boards enshrined in the merged entity, we are in favour of the new provisions in Part 14 believing this to enhance and simplify the process involved.

8.2. We particularly welcome the provisions in relation to gifts in clause164 which will allow the appropriate dissolution of some bodies which have been kept alive only for the purposes of receiving and passing over legacies/bequests. However we query the wording in that only gifts which take effect on or after the date of registration of the merger would take effect as a gift to the transferee as the registration of the merger could take place some time after the actual date of the merger and there may be a risk that a gift might not transfer.

8.3. We recommend that the wording of clause 164 is amended to add to clause 164 (2) (b) the words “or takes effect on or after the date of the transfer”.

9. Schedule 1 The Commission: Cost Implications, Resources and Staff

9.1. It is important to the charity sector that compliance with the Bill would be straightforward and at a minimum cost to the charities, in particular where charities are already under some scrutiny in relation to administrative overheads and costs and are dependent on the time and goodwill of volunteers.

9.2. We would particularly welcome online submissions of documents such as the annual return and would encourage the Commission to ensure that the annual accounts, annual return and annual report are all to be submitted for the same period end.

9.3. The Commission will play a vital role in the regulation of the sector and must be fully resourced both financially and with suitable staff to meet its significant obligations. Whilst we note that it is intended to second some members of the civil service there should be a balance of staff including a vital component from the charities sector with experience of operating and administering a charity in the local environment and with experience of charity legislation.

9.4. We recommend that the Commission staff be balanced with a component from the charity sector.

9.5. We have some concern over the possible conflict between the Commission’s role as an advisory body and as a regulator. There are already some independent bodies providing advice which have the confidence of the sector and who could continue to provide an advisory role. The Commission could perhaps focus its advice on compliance with the regulatory requirements only.

9.6. We recommend that the Commission as an independent body is directly accountable to the Executive of the Northern Ireland Assembly.

9.7. We recommend that the role of the Commissioners is so important that these should be a fully remunerated posts open to competition thus adding value and appreciated worth to the role.

Acknowledgements

Cleaver Fulton Rankin’s Charity Unit would like to acknowledge the valuable contribution to many of the issues we raise in this Submission made by colleagues in the Charity Law Association, CO3 (Chief Officers Third Sector), NICVA, Paul Kerr (Legal Costs Consultant), and the Voluntary & Community Unit of the Department for Social Development.

Cleaver Fulton Rankin Solicitors

Addendum To Evidence - 14 February 2008

Part 8 Accounts& Audit- Legacies are mostly unexpected (albeit welcome) income but a charity may not have budgeted for it and it is possible that a legacy could tip the charity into a higher level of auditing scrutiny and to incur an unexpected cost. We would suggest that the legislation could recognise the averaging of income for small companies over two years to reduce the impact of a legacy received in one year.

Part 14 - Mergers and gifts _ Administering an estate can take quite some time. There may be a period of a year or more between the date of death and the date of payment of a legacy especially if there is a dispute concerning the validity of the will. We consider the wording of clause 164 (2) (b) refers to the date of death. Accordingly a bequest in a will of a person dying before the effective date but not paid until after the effective date will not automatically pass to the merged charity.

5, Locksley Park,
Belfast, BT10 0AR
02890 619755
paul.holdsworth@moravian.org.uk

Cliftonville & University Road
Moravian Churches

Dear Sir/Madam,

Re: Charitable Status of Small and Young Denominations in N. Ireland

I write as I am concerned about the new rules in Northern Ireland concerning charitable status of small and young churches and denominations. It seems that there will be more scrutiny for denominations that are less than ten years old or with less than 1,000 members, as they will not qualify for church charity status. This does not affect the Moravian Church in Northern Ireland because, although we have five congregations here, we are based in England and are run from Moravian Church House in London. This puts us in the bracket of ‘outsider charities’ according to Emilie Filou in her newspaper article of 23rd January this year

Jonathan Craig MLA brought this matter to our attention, as he is concerned about the Baptist Church in Northern Ireland. I trust that established denominations such as the Baptist Union will also receive full church charity status, despite the fact that they are run on a congregational basis and have less than the 1,000 member limit. They may be small units and all based individually in Northern Ireland but it would make sense to treat them as an overall denomination that should not be subject to the harsher scrutiny.

Thank you for taking the time to read this letter and I send it in hope that it stands in support of a sensible approach to church charities, as I do.

Yours in Christ,

Rev Paul M. Holdsworth B.A. LL.B.
Minister of Cliftonville and University Road Moravian Churches.

CO3 Chief Officers 3rd Sector

Introduction

CO3 members welcome the establishment of the Charity Commission as recognition of the ongoing modernisation and development of the third sector. We look forward to the development of clearer standards and greater transparency in the operation of the charitable sector in Northern Ireland. The establishment of the Charity Commission will allow charities to demonstrate their legitimacy and effectiveness as well as providing assurances about the effective administration and stewardship of such organisations.

Summary

CO3 wishes to ensure that with the establishment of the Charity Commission, Goverment and the third sector will work together to maximise the positive aspects including the promotion of transparency and public confidence, while minimising the creation of additional bureaucracy or requirement of resources. CO3’s four key points in relation to this legislation are;

Valuing the third sector
The legislation should have an amendment which clearly states that the purpose of the Charity Commission includes valuing the importance of charities to civil society in Northern Ireland
Bureaucracy
In meeting the demands of the charity commission, there is concern that there will be a disproportionate amount of additional bureaucracy, which may hamper smaller organisations and deter trustees.
Resource Implications
Charities will undoubtedly have additional administrative requirements and will need additional expert and professional advice. How will organisations be resourced to meet the additional requirements outlined in the legislation? Given the breadth of tasks to be undertaken by will the Charity Commission, there is concern that it may not be sufficiently resourced. There is also concern to ensure that the resourcing for the commission does not detract from funding to the voluntary and community sector.
Accountability
CO3 proposes that the Charity Commission report directly to the NI Executive, in order to provide a sufficient level of accountability of the commission, given the importance of its remit.

CO3 is the membership organisation for third sector leaders in Northern Ireland, which comprises almost 180 leaders in the community and voluntary sector in Northern Ireland. CO3 is pleased to provide evidence to the Social Development Committee. CO3 has a remit to consider governance issues, as they impact on the chief officers of charities in Northern Ireland, and on chairs of Boards of Trustees and Management Committees. CO3 considered and responded to the consultation on the draft legislation in 2006, which included organising an event for members, which considered the legislation, and also organised a strategic event on governance for Chairpersons and Chief Officers, which included a contribution on the governance implications of the establishment of the Commission.

Main points.

1. Valuing the third sector

CO3 believes that the proposed new charity legislation and its’ implementation should move forward within the ethos of the government policy ‘Building real Partnership: Compact between Government and the Voluntary & Community Sector in Northern Ireland’; acknowledging the principles and commitments set out in this document. The legislation and in particular the work of the new Charity Commission should recognise the value, importance and diversity of the sector and seek to mitigate any unintended negative impact. This work will be informed by a strong commitment to ongoing dialogue and consultation with the sector. Accordingly, the legislation should have the following amendment inserted into PART 2, Section 7 of the Bill, which clearly states that the purpose of the Charity Commission includes valuing the importance of charities to civil society in Northern Ireland. The wording proposed by CO3 has been formed with reference to wording used in the legislation for the establishment of the Children’s Commissioner.

In exercising its objectives under this Act, the Charity Commission shall value and safeguard the importance and contribution of charities in Northern Ireland.

2. Bureaucracy

The draft legislation is a highly complex, technical document that undoubtedly is completely inaccessible to a wide range of individuals currently involved as trustees and chief officers of charities in Northern Ireland. The document is considerably longer than legislation to establish other commissions in Northern Ireland. The bill proposes a range of new requirements including

Annual submission of documentation to the commission
Annual completion and submission of a return to the commission
Consideration of Commission Guidelines on a range of charity activities.
New guidelines and regulations on the operation of charities and trustees

Accordingly CO3 is concerned that there may be a danger that implementation of the new regulations will increase the burden of accountability unnecessarily, given that the format of annual returns is to be prescribed by regulation. CO3 members have already reported concerns about multiple auditing and assessment by different government departments auditing the same organisation, and Housing Association members indicate that stringent Government and management standards have already been stipulated by DSD. CO3 would therefore ask the Social Development Committee to be mindful that the legislation will apply to a broad range of organisations from very small organisations without paid staff, through to very large organisations. Proportionality is a key requirement that needs to be enshrined in the legislation. . It will be important that the operational requirements and reporting arrangements required by the Charity Commission are commensurate with a wide range and size of organisations thus valuing the diversity of the sector. It would be helpful if such commitment could be endorsed within the legislation.

Streamlining Auditing

The Social Development Committee may be aware that the third sector already faces considerable levels of audit and reporting requirements. CO3 members welcome the opportunity to demonstrate their efficiency. However it is detracting to a charity’s work and wasteful of charity funding to have to provide multiple returns and multiple audits. CO3 would ask that the opportunity be taken to streamline the audit functions across government, so that the Charity Commission requirements are consistent.

The Social Development Committee should be aware that the bureaucracy involved in this could deter trustees and volunteers from becoming involved in the vital work of the third sector.

Given the range of functions required to be undertaken by the Charity Commission, there is a danger that the organisation could be silted up by bureaucracy, which could slow down operating functions and delay responding to charity requests for information.

3. Resource Implications

As previously indicated, charities will have additional administrative requirements as a result of the Charity Commission and will need considerable additional expert and professional advice in order to interpret and respond to the requirements of the Charity Commission. Many chief officers, already mindful of the declining funding to the third sector, are concerned about how their organisations be resourced to meet the additional requirements outlined in the legislation. In recent years, the general public have been very reluctant to see their donations to charities being spent on administration, so care is required to ensure that the public support the development of the Charity Commission and do not see it a drain on their donations.

Given the breadth of tasks to be undertaken by the Charity Commission, there is concern that it may not be sufficiently resourced to undertake these roles. At a recent conference organised by CO3, the Chief executive of the Office for Scottish Charity Regulator reported that OSCR has a staff of 45 persons to administer the Commission for Scotland. It is reasonable to ask whether running costs of £800k per annum will be sufficient to meet the staffing requirement for Northern Ireland. A recent issue of Governance journal reported concern about the diminishing budget of the English Charity Commission and the impact this may have on effectively regulating charities. There is also concern to ensure that the resourcing for the Charity Commission does not detract from funding organisations in the voluntary and community sector and should be seen as an additional development.

4. Accountability

Charities in Northern Ireland have a remit, which involves all government departments and areas of life. Accordingly, CO3 proposes that the Charity Commission report directly to the NI Executive, in order to provide a sufficient level of accountability of the commission, given the importance of its remit.

Other Points.

Designation of Religious Charities

CO3 has noted a number of changes to the draft legislation. One of the most substantial is the capacity to designate religious organisations and the fact that sections 33-36 of the Bill do not apply to designated religious organisations. There has been no public consultation on these proposals and no explanation of the reasons or benefits of the designation and exclusions. In the absence of such consultation, CO3 would be concerned that the public trust (which the Charity Commission was established to build) may be damaged even more by these proposals.

Charitable Status and Public Benefit

CO3 welcomes the greater flexibility afforded by the creation of new charitable purposes, which reflects the breadth of the modern third sector and also provides scope for further development of additional criteria. CO3 welcomes the potential for greater accountability for charities provided through the concept of a public benefit test. While we recognise that this is a fundamental establishing principle we would endorse the imperative of further consultation on the specific plans for implementation of the public benefit test to ensure that there is an appropriate balance between stringency in registering as a charity and the breadth of purpose, which could be considered to be in the public benefit.

Trustee Eligibility

CO3 recognises the importance of eligibility for trustees and the formalising of recruitment of trustees. CO3 supports the need for restrictions to be placed on those who have mismanaged a charitable organisation in the past, in being accepted as trustees in the future. However CO3 is also concerned to ensure that trustee eligibility reflects Northern Ireland society and would wish to ensure that organisations which wish to have trustees who are ex-prisoners, should be able to do so and that the procedures for doing so should not be unduly prohibitive.

Incorporation of Trustees and CIOs

CO3 welcomes the opportunities afforded to the sector by the Incorporation of Trustees and the new criteria of Charitable Incorporated Organisations that will provide new choices for charitable organisations. However, we recognise that there will be a need for organisations to consider a model which is ‘fit for purpose’. Leaders in the third sector will need to be sure of the effectiveness of governance structures and practice and consider what is most appropriate for their organisations.

UK and Ireland wide Charities

CO3 advocates that the legislation recognise that many charities work across jurisdictions, particularly within England, Wales, Scotland and Ireland. CO3 welcomes the proposal that UK wide charities should not be exempt from the legislation and that activity in Northern Ireland requires registration. CO3 would strongly welcome cooperation between Charity Commission of England and Wales, the Office of the Scottish Regulator (OSCR), the Charity Commissioner for NI and the Irish Charity Commission in streamlining registration and information requirements, to ensure effective administration processes for Charities that may be registered in two or more jurisdictions.

Fundraising

CO3 welcomes new procedures for administration of fundraising activity and the greater levels of accountability. It is important that the proposed procedures are clear, easily accessed and free from unnecessary bureaucracy. Members noted the recent establishment of the Fundraising Standards Board and would welcome clarification on the connections between the Charity Commission’s role in relation to fundraising and the role of the Fundraising Standards Board.

The Scope and Powers of the Charity Commission

Many aspects of the Charity Commission’s role are still to be determined. CO3 feels that care should be taken to establish appropriate working parameters for the Charity Commission’s powers. The association feels that the advice and guidance role of the Charity Commission should be carefully considered, given the remit of a number of organisations such as NICVA and the VDA to provide advice in the sector. There is also a potential conflict in relation to guidance/advice role for the Charity Commission given its regulatory function within the sector. CO3 is keen to ensure that any lessons from the establishment of the Charity Commission of England and Wales, the Office of the Scottish Regulator (OSCR) and the Irish Charity Commission in getting the relationship between charities and the charity regulator is framed appropriately.

Implications for Third Sector Leaders

The Charity Commission has the power to impose sanctions, fines, dis-qualification, as well as powers of enforcement, investigation and legal redress. It will be important for all organisations in the third sector to understand the consequences of non- compliance and inappropriate or bad practice. Given the breadth and reach of the sector, and the range of organisations within the scope of the Commission, CO3 believes there will be important awareness raising and support requirements. This includes potential resource implications such as staff time, trustee training, external advice, establishment of new systems and possible legal costs through tribunal appeals. Recognition as a charity means compliance with requirements is essential and trustees and Chief Officers will need to understand what this entails.

Conclusion

CO3 believes that a modernisation agenda is important, and that regulation can recognise and support the independence of charities without unnecessarily being restrictive or limiting flexibility and diversity. The Association is concerned to ensure that the Commission gets the balance right between enhancing credibility, providing protection and establishing appropriate accountability measures.

Committee for Finance and Personnel

Committee Office, Room 419
Parliament Buildings
BELFAST
BT4 3XX
Tel No: 028 9052 1843
Fax No: 028 9052 0360
E-mail: committee.finance&personnel@niassembly.gov.uk

To: Marie Austin
Clerk, Committee for Social Development

Date: 17 January 2008

Dear Marie

At its meeting yesterday, the Committee for Finance and Personnel agreed to forward the letter from the Chairperson of the Committee for Social Development to the Minister of Finance and Personnel, inviting written evidence from the Department regarding the Committee Stage of the Charities Bill.

The Committee also agreed that it will not make a submission to the Committee for Social Development but will scrutinise any submission received from the Department of Finance and Personnel.

Yours sincerely

Shane McAteer
Clerk of Committee of Finance and Personnel

Committee for Regional Development

Room 402
Parliament Buildings

Tel: +44 (0)28 9052 1970
Fax: +44 (0)28 9052 5917

To: Marie Austin

Clerk to the Committee for Social Development

From: Roisin Kelly

Clerk to the Committee for Regional Development

Date: 8 February 2008

Subject: Charities Bill – Committee Stage

The Committee for Regional Development considered your recent correspondence regarding the Committee Stage of the Charities Bill at its meeting on 6 February 2008.

At this meeting, Members decided they did not wish to submit formal evidence to your Committee in relation to the Bill.

The Committee on the Administration
of Justice (CAJ)

The Committee on the Administration of Justice (CAJ) is unfortunately unable to make a comprehensive submission to the Assembly Committee regarding its current study of charities legislation. However, we did follow earlier discussions of the draft legislation. Our primary concern is that the eventual legislation, and the procedures flowing from it, must strike the right balance between proper administrative and financial “oversight” and improper strategic or policy “control”.

CAJ is totally supportive of endeavours to ensure that voluntary organisations comply with effective financial controls – that they carry out audits, that their accounts are publicly available, and that their activities are such as are compatible with the aims set out in charities legislation. No individual or group should be able to mislead the public who assume that they are making a donation to a genuine charity, and there need to be proper safeguards to avoid any such situation. Moreover, the criminal law needs to ensure that it can detect and penalise the misuse of voluntary organisations for illegal activities. We understand that these arguments will have been made very forcefully (and rightly so) to policy makers.

At the same time, CAJ would want to urge proper caution. The community and voluntary sector should not be seen as an extension of the government sector, and there must be an arms-length relationship between the public sector and the voluntary sector. Such an arms-length relationship is to the benefit of both, since government does not want to have to render account for actions other than those for which it is responsible, and the voluntary sector can only thrive if it is seen by service-users or those for whom it advocates, to be genuinely independent.

We enclose for the Committee’s attention the submissions we made in October 2006 and previously in May 2005. We have not had an opportunity to review the draft legislation in the intervening period, so we are not aware if changes have been made to impose some limitations on the calling for inquiries (formerly article 24), or clarity between the roles of the Department and the Charity Commissions (articles 68-159?), or less ambiguity around definitional questions (article 88?). If the Committee believes that there would be some value in CAJ testifying before it on the appropriate balance to be struck, we would be happy to give more consideration to how to assist the Committee in its work. If you believe that you have received sufficient testimony on this point, we see little need in asking to appear before the Committee.

Also attached is a paper developed in Britain by Baroness Helena Kennedy QC about the need for legislators (she is herself a member of the House of Lords) to recognise the importance of independent advocacy when considering charities legislation.

Appendices

Consultation on Draft Primary
Legislation Proposal for an Order in Council:
The Charities (NI) Order 2006 (October 2006)

The Committee on the Administration of Justice (CAJ) commented on the Review of Charities Administration and Legislation in Northern Ireland in May 2005. Most of the issues and concerns raised at that time bear reiterating in response to the specific draft legislation and we enclose herewith our earlier comments. All the following comments on the draft legislation should be read within that context:

1. CAJ welcomes the fact that charities legislation is being streamlined and modernised. We welcome in particular the fact that issues such as “human rights” and “equality” are explicitly included within the norm of charitable objectives.

2. We note, however, that sometimes there is an impression given in the course of the discussion (in the earlier consultation process, and in comments by the IMC and, more recently, by the Northern Ireland Affairs Committee, and even – indirectly - the Chancellor), that the proposed changes are necessitated by wide-scale impropriety or financial irregularities in the charitable sector. CAJ is not aware that there is any basis for such an assumption. CAJ urges the authorities, as they bring the debate forward, to take every opportunity to emphasise that these changes are ‘technical’ in nature, aimed at making the charity sector ever more efficient, and that the sector in Northern Ireland is (with very few exceptions) highly professional and effective. It would be deeply unfortunate if government’s attempts to strengthen the sector resulted in its weakening, by somehow implying that criminality was the norm - rather than the exception.

3. In this regard, we note that the DSD’s Advisory Group determined (page 12) to depart from the English & Welsh model in three “significant” areas. It is not clear if these departures are thought to be necessary because of some presumed laxity in the Northern Irish charitable sector? In particular, no explanation is given about the introduction of an extra “public benefit” test (para 5). All charitable activities have to meet the test of public benefit as well as complying with one or more of the detailed purposes laid down in para 4.2. Why is such an over-riding criterion said to be necessary? What meaning is going to be accorded to “public benefit”? Perhaps most importantly who will determine what constitutes “public benefit”? While many would argue that charities, by definition, are working for the public good, it would be very worrying if overly narrow definitions were to be used. At its most simple, could a fundraising effort for a particular individual fall outside of the public benefit test? Could effective advocacy for unpopular issues be countered on “public benefit” grounds? This test needs to be dropped, properly defined on the face of the legislation, or codified in statute prior to its application in practice.

4. Very important for the long term health of the sector, is the need for the authorities to resist any temptation towards over regulation. It is appropriate to ensure that any charity registered as such is complying with its legal obligations, and is in no sense misleading its donors as to its use of their monies. It is obviously appropriate to ensure that charities do not benefit from a positive tax regime without just cause. It is however quite inappropriate to oversee the operations of charities in such a way that – deliberately or inadvertently – charities lose their autonomy and independent status. When individuals make donations to charities, they clearly do not want those donations to be mis-appropriated or criminally mis-applied. Equally, however, nor do they intend those donations to be subject to governmental controls or necessarily applied to government ‘approved’ purposes. Accordingly, it is vital that the new legislation regulate to the extent necessary, but no further.

CAJ believes that in at least two key areas, the legislation goes too far and risks seriously damaging the proper arms-length relationship that should exist between the statutory sector and the charitable sector.

i. Article 24 etc. Power to institute inquiries: this provision seems to apply no restrictions whatsoever to the grounds on which the Commission may institute inquiries.

One can well imagine situations in which the Charity Commissioners ought to mount an inquiry into the financial dealings of a particular group, where – for example – there has been a serious allegation of mis-use of funds. But can the Commission require that detailed membership records be made available to scrutiny; insist that board minutes be studied to determine exactly who and how operational or policy decisions were arrived at; or respond to concerns by disgruntled members of the public who query the factual accuracy, or motivation, of an organisation’s publicity material? Article 24 seems to give very broad discretion to the Charity Commissioners. They are to be accorded extremely wide-ranging powers to call for documents, search records, remove trustees or staff, and disclose information to other parties. Whilst the Tribunal can review the use of some of these powers, the authority to call for documents falls out-with the Tribunal’s review authority (Schedule 3, para 2).

While the Commission has some authority to penalise persons who “knowingly or recklessly” provide the Commission with false or misleading information, it is not at all clear that this would deter those who simply have a (misplaced?) grievance against the charity concerned, and seek to engage the Charity Commissioners in their cause.

It is interesting that when the Northern Ireland Human Rights Commission sought similar kinds of powers to uphold and protect human rights, they were denied them – as being too wide-ranging. At a public meeting, a previous Presbyterian Moderator poured scorn on the request of the NIHRC to have the power to enter premises (provided in this draft in article 54 to the Charity Commissioners), given that his private home and personal records would then be ‘fair game’. The NIHRC was roundly derided at the session for proposing such an all-encompassing power, but it seems to be being offered to the Charity Commissioners with no obvious safeguards.

The legislation does not spell out in which ways the Commission might properly exercise any of these extraordinary powers, nor indeed how they might properly resist pressure placed on them by irate individuals to exercise these powers. CAJ believes that these provisions need to be radically overhauled.

ii. Article 68, 159, and elsewhere: It is not clear why at several places throughout the text it is the Department, rather than the Charity Commissioners, that is given authority to make regulations. Nor is there any explanation as to why it was determined that Northern Ireland not follow the English & Wales model of the Non-Ministerial Government Department option. According to page 227, at least one of the consultees was aware of the difference, and appeared to think that greater accountability, and independence, was assured by the English and Welsh model than the one proposed for Northern Ireland.

CAJ has not had the opportunity to explore the differences between British models and the one proposed for here, and whether there are acceptable and even welcome modifications to reflect the different jurisdictions. However, given that we are concerned about the extent of independence between the charitable sector and the statutory sector, we believe that there would have been great merit in a fuller exploration of the various institutional options. There should be clear lines of demarcation (in terms of staffing, resourcing and powers) between the sponsor Department and the Charity Commissioners, and we are unconvinced that this is provided in the current model.

Finally, some concern has been brought to CAJ’s attention regarding the significance to accord to Article 88. Obviously, it is quite appropriate to ensure that charity trustees pose no serious risk of financial mis-management or even criminal fraud, and therefore the legislation needs to establish grounds which would lead to the disqualification of certain kinds of persons. Some have queried however whether the current formulation might be interpreted by some to mean a blanket exclusion of people who have previously served prison sentences.

CAJ assumes that reference to “offences involving dishonesty and deception” is intended to refer by and large to financial dealings and cannot therefore be interpreted broadly to include many if any of the offences relating to the conflict in Northern Ireland. However, it is important to avoid ambiguity in this area.

Given the very high proportion of individuals who have served prison time for activities directly related to the conflict, but who otherwise would have no criminal record, any overly broad interpretation of article 88.1(a) could exclude a large number of people who pose no financial or criminal risk to a charity. The equality screening exercise, which says that there are no equality implications, indicate that government shares CAJ’s perspective in this regard, since clearly if there had been any intention of providing some blanket exception for ex-prisoner involvement as trustees, there would have been major equality implications.

CAJ believes that it is necessary to clarify this point for the avoidance of doubt.

Attached below is CAJ’s submission to the 2005 consultation paper.

Consultation on the Review of Charities Administration
and Legislation in Northern Ireland in 2005
(May 2005)

Charity Registration

In principle, the Committee on the Administration of Justice (CAJ) sees no problem with a formal registration system for all charities, subject to this not entailing any excessive administrative burden, nor any political screening of charities by government. A registration system that merely formalises the current less formal registration system by way of the Inland Revenue, would be entirely acceptable. Any system however that, deliberately or otherwise, increased government controls on the work of charities would be much more problematic and we comment on this below.

Background to Review

Reference is made to a Northern Ireland review of the charities’ legislation being undertaken by the Department of Social Development alongside the review of English and Welsh practices. CAJ was unaware of anything other than the latter review, and our attention was drawn to this exercise last year by the NI Human Rights Commission (NIHRC). The NIHRC had made a formal submission to the Charity Commissioners on the grounds that previous developments in English law have been routinely followed in Northern Ireland; presumably, the DSD is in contact with the NIHRC and will have been made aware of their submission? To avoid any doubt, the CAJ is presuming that the Northern Ireland Review has to date been a purely internal DSD one, which has now resulted in the consultation document, upon which views are being sought? If we are mistaken in this regard, we would appreciate some clarification. Regarding the other two reviews alluded to – the Taskforce on Resourcing the Community and Voluntary Sector and the Review of Rating Policy – CAJ has already engaged with both of these processes.

Policy Aims

CAJ accepts the seven principles laid out as policy aims but recognises that the challenge will lie in interpreting these aims into practice. We noted earlier, for example, that it is vital that principles such as “transparency” and “accountability” not be interpreted in an overly legalistic, proceduralist, or cumbersome manner. Charities are sometimes extremely small groups, with little or no staff, and with very small budgets. Accordingly, we welcome principles such as “proportionality” and “simplicity” which should be pursued alongside the principles of transparency and accountability.

With regard to the specific principles outlined, we would like to make the following comments:

Clarity

CAJ welcomes the various points included within the definitions of charity. Given that we work in the area of human rights, we are pleased to see this theme explicitly listed as one of the themes that can qualify for charitable purposes. The NIHRC submission to the English/Welsh review addressed the interpretation to be accorded to “human rights”, but it is not clear from this consultation document whether you are seeking comments of an interpretative nature? Human rights work, by definition, is about challenging those in authority and holding them to account, and might well be described by some as “political” in nature, though it should never be politically partisan, or advance the cause of any particular political party or ideology.

CAJ also welcomes the inclusion in the Northern Ireland definition of ‘charity’, work which is aimed at the “promotion of peace” (item 12).

We also in principle welcome the addition of item 13 (the promotion of good community relations) but believe that there might be some confusion about the terminology used. The Policy and Strategic Framework for Good Relations in NI (issued by OFM/DFM in March 2005) notes that “’community relations’ refers specifically to division between the Protestant and Catholic communities in Northern Ireland and that ‘good relations’ refers to Section 75.2 of the NI Act 1998, which includes people of different religious belief, political opinion or racial group” (para 5.5.1). In item 13 of the Charities Administration and Legislation definitions, both ideas seem to be conflated - what remit is intended to be include in the term “good community relations?

CAJ would argue for the widest possible interpretation and believes that no narrow interpretation of item 13 – for example one that excluded the promotion of anti-racism - should be accepted. We note that the Northern Ireland Council for Voluntary Action (NICVA) in its comments endorsed the changes being proposed to the English legislation, and suggested that it might be better to transpose these in their entirety to Northern Ireland. We have some doubts about this approach. In the English formulation, one definition would include “the advancement of human rights, conflict resolution or reconciliation, or the promotion of religious or racial harmony or equality and diversity”. The underlined section here was instituted at the proposal of the Joint Steering Committee and NICVA prefers this formulation, and would integrate the concepts of “peace” and good community relations” into the revised English legal wording. CAJ would instead recommend retaining the “Northern Ireland specific amendments” proposed in the consultation document, and add a free-standing charitable definition of the “promotion of equality”.

Our reservation about the English wording as proposed is that it might be narrowly interpreted to relate to “equality” and “diversity” in terms only of racial or religious harmony. If this were to be so – what about groups working to promote the rights of people with disabilities, to counter homophobia, to promote equal treatment of women? It would be better to recognise as a free-standing charitable objective the “promotion of equality”. Of course, most equality work could simply be incorporated within the rubric of “human rights”, but this could allow for some ambiguity. In the Northern Ireland context, there are two distinct statutory bodies and two distinct bodies of legislation dealing separately with “human rights” and “equality”, so CAJ believes it would be preferable to list ‘equality’ explicitly within the definitions of charitable activities. The English formulation is not an adequate alternative in this regard.

Transparency

Point 1 – reference is made to the footnote about exemptions in England and Wales, though it is not clear if these exemptions are being ruled out, or being considered for NI. While CAJ would have no objection in principle to the exclusion of very small groups (income under £1000 and no endowment or land), we see no reason why churches, places of worship or voluntary schools would be automatically exempted from registration.

Point 3 – regarding the reference to “exemption from oversight” – CAJ has no problem with this terminology if it is intended to refer only to the oversight of the raising and disbursement of funds for charitable purposes. Any wider oversight is presumably a matter for the body’s executive or management group, membership, or as otherwise specified in its constitution (see on for more on this issue). We would be very hesitant about the Charity Commissioners (still more the Department) taking on any responsible for the general oversight of a charity’s work.

Point 8 – again, CAJ has no problem in principle with the need for some organisational details to be treated in confidence, but this begs the question about what material will be routinely placed in the public domain by way of the register? In principle, we see no reason why anything other than basic facts and figures should be available to the general public. Transparency is owed to an organisation’s membership, its funders and potential funders, and all of these constituencies should be able to access financial information, an organisation’s statute or constitution, and a record of activities confirming that the group concerned is carrying out its agreed objectives (by way of an annual report or whatever). The granting of charitable status should not give carte blanche to the authorities to require that extensive information about the organisation be placed in the public domain. It would be helpful if the authorities would clarify what information they expect to be held in the public register.

Point 10 – is this reference to the Department a typo? A registered charity should presumably be required to prepare annual reports and accounts for the Charity Commissioners (not the Department), and maybe this is what was intended? What significance should be read into the obligation on the charity to provide material on request to “the public”? Small charities could be easily bankrupted if they were inundated with perhaps malicious requests for information and were not allowed to refuse such requests, or could not comply with this obligation by referring inquirers to the register of charities.

Accountability

There are two distinct issues relating to accountability that need to be addressed in this debate. One, which is not addressed explicitly at all in the document, is what level of accountability is owed by the individual registered charities, and to whom. CAJ would argue that charities owe accountability only to those bodies laid down in their statute or constitution – normally a membership, an executive committee, or both. A charity, by being registered as a charity, and gaining thereby certain tax benefits, has a duty to account to the Charity Commissioners, but this duty is, however, not entirely open-ended. The charity must provide information to assure the Commissioners that the charity (a) is undertaking the activities laid down in its statute, and which secured it authority to act as a ‘charity’; and (b) is spending its monies for the purposes agreed to be charitable. We see no justification for the Charity Commissioners engaging in discussions with charities about their recruitment policy, their media profile, their strategic plans etc. etc. The accountability for overseeing such issues lies solely with the authorities laid down in the organisation’s statute. Arguably, according wide-ranging oversight authority to the Charity Commissioners will undermine rather than underpin the accountability that should be required of the organisation’s executive committee or other governing organs.

The second issue around accountability relates to the authority of the Charity Commission itself. It is vital for many charities that they not be seen to be dependent in any way on government, and accordingly CAJ would agree that a completely independent NI Charity Commission is preferable to any body linked directly or indirectly with the Department. We have no objection to the Charity Commissions having a status as a Non Departmental Public Body, as long as the protocol governing its relationship with the sponsoring department is clear and the department cannot interfere in policy decisions of the Charity Commission.

It is difficult for CAJ to comment on the size and appropriate staffing for the new body, but we assume that the proposed model has been drawn up on the basis of similar activities carried out by bodies in the Republic of Ireland & England and Wales.

The consultation document asks about the ideal appeals mechanism and it would have been helpful to learn what the other jurisdictions in these islands do regarding appeals. CAJ wonders if there would be any value in the various Commissions working collaboratively for the purposes of appeals – so that Commissioners from other jurisdictions would hear appeals, but this would depend on a certain commonality of legislative approaches across the various jurisdictions. If this were to prove possible, it would be a cost-effective way of ensuring that all the Commissions routinely exchange information about best practice. Whatever appeal mechanism is decided, CAJ believes that the appeal mechanism cannot lie with any government department.

Compliance

The language here is somewhat worrying. In point 1, reference is made to “regulation”, and the need for a charity to be “well run” and “deserving of public support”. As noted earlier, CAJ believes that organisations should be adjudged by those governance bodies laid down in the organisation’s statute. Whereas the Charity Commissioners can assess certain aspects of a charity’s functions, they should not be attempting to judge overall whether a body is “well run” or “deserving of public support”. An alternative formulation, which would meet the presumed objectives of the Department, and CAJ’s concerns about independence would be “All NI Registered Charities should be financially regulated to ensure that they comply with their constitutional aims and objectives, and as such can be considered to be well-run and deserving of public support”. Underlining indicates the proposed areas of change.

All other principles should flow from this first one. Accordingly, the Charity Commissioners should only have powers relating to instituting inquiries, accessing documents etc. with a view to allowing them to reassure themselves that monies are being properly spent on the purposes laid down in the organisation’s statute. CAJ finds no justification in the document, and in principle would be totally opposed to a trend whereby Charity Commissioners were in any sense to replace the oversight provided by an organisation’s elected and appointed officers.

In the section entitled “Powers to Control Abuses”, there is presumably a typo again, in that it would surely be the Charity Commissioners, not the Department, which could require a charity to change its name?

On the question of auditing: we assume that all charities with an income of over £100,000 currently are audited - or is the Department proposing something that will bring a whole range of new organisations within the ambit of auditors?

Governance - Charitable Collections

In this section (and elsewhere, as already noted) reference is sometimes made to the Department when it might more appropriately be made to the Charity Commissioners? For example, why would exemption orders (relating to PSNI notification for door-to-door collections) in future be awarded by the Department rather than the Charity Commissioners?

On the specifics of PSNI involvement, CAJ can understand that someone must regulate door-to-door collections, but we are not clear why there is a need for “all public charitable collections to be approved by the PSNI”. Nor do we understand why the promoters of collections will be required “to account to the PSNI for the proceeds”. Surely, once the Charity Commissioners have been established, they should be the body approached for authorisation for a NI-wide door-to-door collection? While the Commissioners would be well advised to consult with the PSNI to ascertain any counter-indicators (other non-charitable events occurring at the same time for example), the decision should surely lie with the Commissioners.

Certainly, any oversight regarding the proper collection and disbursement of monies should be a matter for the Commission, not the PSNI. CAJ believes that the use of PSNI for such work is unnecessary and an improper use of resources.

For future use – when issuing consultation documents, page numbers are useful for reference purposes.

Culcavey Hall

Department of Culture, Arts and Leisure

Department of Education

Department for Employment and Learning

Department of Finance and Personnel

Department of the Environment

Dogs Trust

Dogs Trust is the largest dog welfare charity in the United Kingdom. We currently have seventeen rehoming centres including one at Ballymena and look after around 16,000 dogs every year.

Following the enactment of the Charities and Trustee Investment (Scotland) Act 2005, despite already being registered with the Charity Commission for England and Wales (RCN227523) we have had to register separately with the Office of the Scottish Charity Regulator (SC037843) as a charity in Scotland and are now obliged to comply with the differing requirements of two separate regulatory bodies. Not only has this placed an additional and unnecessary administrative burden on the charity but wastes vital resources and manpower we could otherwise use to further our charitable work.

Previously, we were concerned that the provisions of the Northern Ireland Assembly Charity Bill would require Dogs Trust to be fully registered as a charity in Northern Ireland and place yet a further administrative burden upon us. However, we are most encouraged by the united and common sense approach demonstrated in the drafting of the Bill. Dogs Trust wishes to express our full support to the provisions contained in the Bill and in particular, to the proposal that UK-wide charities will not have to be fully registered as charities in Northern Ireland.

Clive Austin – Solicitor for Dogs Trust
Dogs Trust - A Dog is For Life
clive.austin@dogstrust.org.uk
Visit our website at http://www.dogstrust.org.uk
r call us on: 020-7837 0006

Donaghadee Sailing Club

From Donaghadee Sailing Club:

We are members of Donaghadee Sailing Club. Currently we are involved in a club redevelopment project that includes the construction of a new Clubhouse. We are writing in relation to the Charities Order which, we understand, is to come before the Assembly this week. While the Club generally welcomes the new legislation, it is particularly concerned by the implications of Paragraph 7 (3&4) of the Introduction which appears to preclude a registered Community Amateur Sports Club (CASC), such as Donaghadee SC, from becoming a charity. Our Club, which is currently recognised by the Inland Revenue as a CASC, is considering applying for charitable status in order to maximise funding from grants and donations and to further our existing charitable objects. However, the proposed legislation would appear to prevent the Club from applying for charitable status should that be the decision of the membership.

Obviously this would have significant implications for our sailing club and any other sports club presently designated as a CASC. For example, Donaghadee Sailing Club has won, after two years of hard effort, a grant of £460,000 from Sport NI towards the construction of a new Club House estimated to cost in excess of £700,000. Should the club not be able to seek charitable status it will face a vat bill of over £100,000. This is a major impediment to our sailing club in realising its redevelopment objectives and could jeopardise the project to the detriment of the whole community. Should the proposed legislation go through un-amended in this regard it would probably be to the serious detriment of a large number of sports clubs in the Province wishing to provide modern buildings compliant with present laws and regulations.

We hope you will seriously consider this matter in your consideration of the proposed Charities legislation.

Yours sincerely

Noel Johnston and Ivan Heaney

Dunmurry Gospel Hall

Letter

To the Committee for Social Development

New Charities Bill

Councillor Jonathan Craig MLA has kindly drawn our attention to the proposed legislation which would restrict us in having charity status as the number in fellowship in our assembly (church) in Dunmurry is below the estimated number of 1000. While the overall membership in Northern Ireland would greatly exceed this number, we feel there could be a clause permitting us to exercise our right to charity status.

Yours Faithfully

Eddie Deyermond
Secretary

Edentrillick Mission Hall

Equality Commission for Northern Ireland

Our ref: DSD/109/01

6 February 2008

Ms Marie Austin
Clerk
Committee for Social Development
Northern Ireland Assembly
Room 412
Parliament Buildings
BELFAST
BT4 3XX

Dear Ms Austin

Charities Bill

The Commission refers to Article 166 of the Bill, which refers to the designation of religious charities. Article 166 outlines the conditions which a charity must satisfy in order to become designated. In particular, it states that a charity must be ‘established in Northern Ireland for at least 10 years’ and have ‘a membership of at least 1000 persons who are both resident in Northern Ireland and at least 16 years of age’.

The Commission is of the view that this is likely to have a adverse impact on applications from religious charities connected with minority ethnic groups who have recently settled in Northern Ireland (and therefore will not have been resident for 10 years), and who, in turn, will have a small population size (and therefore will have less than 1000 members).

The Commission is seeking clarification from the Department as to what, if any, evidence was adduced during the screening process to assess the impact of these conditions on religious charities connected with recently settled minority ethnic groups, and what consideration was given to opportunities to better promote equality of opportunity or good relations.

The Commission is also seeking clarification from the Department as regards the justification for these conditions and whether the conditions imposed are proportionate to the aim in question.

Yours sincerely

PAUL NOONAN
Policy Manager (Statutory Duty)

Direct Line: 028 9050 0570
E-mail: pnoonan@equalityni.org

Cc Marie Austin (Clerk, Committee for Social Development)

Evangelical Alliance
Northern Ireland

Summary

Section A

1. Introduction 246

2. General Comments 246

Section B: Commentary on Legislation 247

3. Part 1: Section 2: Meaning of Charitable Purpose 247

4. Part 1: Section 3: The Public Benefit Test 247

5. Part 1: Section 3: The ‘Public Benefit’ Test & ‘disbenefit’ 248

6: Part 1: Section 4: Guidance as to operation of public benefit requirement 248

7: Part 2: The Charity Commission for Northern Ireland 248

8: Part 4: Registration of Charities and Charitable Names 249

9: Part 8: Charity Account, Reports and Returns 249

10: Part 14: Miscellaneous and Supplementary 249

Section C: Recommendations 249

Annex: Evidence to support view that the Christian community is a vital part of the charity sector 250

Contact:

Karen Jardine
Public Affairs & Development Officer
Evangelical Alliance Northern Ireland
Downview House
440 Shore Road
Newtownabbey
BT37 9RU

k.jardine@eauk
028 9029 2266

5 February 2008

Summary

1. The Evangelical Alliance[1], formed in 1846, is the largest body serving evangelical Christians in the UK and has a membership which includes denominations, churches, organisations and individuals. The office in Northern Ireland opened in 1987.

2. Evangelical Alliance welcomes the purpose behind this Bill to regulate the Charities sector and introduce a Charities Commission for Northern Ireland. Our comments are framed primarily to ensure that the proposed legislation is not detrimental to the good work already being undertaken by religious charities nor indeed create any unintentional difficulties which may prevent such work flourishing in the future. The majority of our comments relate to the public benefit test.

3. We are pleased to see the retention of ‘advancement of religion’ as one of the charitable purposes within the legislation. We believe that ‘missionary work both at home and overseas’ should be an integral part of this charitable purpose.

4. Evangelical Alliance agrees that the ‘public benefit’ test is a useful and helpful move. However, without proper safeguards in place there is a danger that the important religious voluntary sector could unintentionally suffer severe damage should ‘public benefit’ be framed in such a way as to leave its definition prey to political control or manipulation – for example, from secularist or politically correct agendas which might seek to interfere with an organisation’s motivating ethos.

5. It is important not to limit public benefit to tangible outworkings of faith. We are concerned to retain the still widely acknowledged presumption of broader societal value and benefit in the purely spiritual aspects of faith which directly address the spiritual and moral dimensions to human life and existence.

6. We consider use of the term ‘disbenefits’ unhelpful and believe it adds to general confusion, is much more subjective in nature and could lead to a lesser standard or test than that suggested by the use of the existing language of ‘harm’. We prefer that the clear, accepted and understood traditional language of ‘harm’ continues to be employed exclusively in association with established case law that suggests a high threshold for what might constitute societal harm.

7. The new Charity Commission should be required to consult when making any revisions to guidance already issued.

8. Regarding the registration of charities it is unclear what the requirement will be for those charities, religious or otherwise, which operate in Northern Ireland but which have headquarters elsewhere in the United Kingdom or Ireland.

9. We welcome the exemption for religious charities expressed at section 165.

10. Recommendations:

(i) The significant contribution made by churches and faith based organisations to the charitable sector in Northern Ireland should be acknowledged.

(ii) The public benefit test should take into account the particular needs of religious organisations and recognise the positive impact of spiritual benefit as well as more tangible outcomes.

(iii) The term ‘disbenefit’ should be replaced and the existing language of ‘harm’ reintroduced.

(iv) The new Charity Commission should be required to consult on any proposed revision to guidance which has already been issued.

(v) Clarity should be given regarding the registration requirements of charitable organisations which operate within Northern Ireland but which have headquarters outside Northern Ireland.

Section A

1. Introduction

1.1 The Evangelical Alliance[2], formed in 1846, is the largest body serving evangelical Christians in the UK and has a membership which includes denominations, churches, organisations and individuals. The mission of the Evangelical Alliance is to unite evangelicals to present Christ credibly as good news for spiritual and social transformation. There are around two million evangelical Christians in the UK.[3] The office in Northern Ireland was established in 1987 four full time and two part time members of staff who work alongside others who volunteer.

1.2 As well as providing support and advice to its members Evangelical Alliance Northern Ireland (EANI) co-ordinates the Mission Agencies Partnership (MAP), a group of about 35 mission agencies who work together to promote the challenge of World Mission.[4]

1.3 EANI is accountable to a Council of around 20 local Evangelical leaders (from within churches, para-church organisations and wider civic society) while the National Director reports regularly to a smaller Executive and to the EAUK Directorate.

1.4 Evangelical Alliance UK has worked closely and effectively with both the Government and the Charity Commission for England Wales regarding the introduction and subsequent implementation of the Charities Act 2006. EANI therefore welcomes this opportunity to submit written evidence to the Social Development Committee in relation to the proposed Charities Bill for Northern Ireland. Should any of the Committee require further clarification on the issues raised within the submission we would be willing to meet with them or indeed present further evidence if necessary.

2. General Comments

2.1 Evangelical Alliance welcomes the purpose behind this Bill to regulate the Charities sector and introduce a Charities Commission for Northern Ireland.

2.2 Although it has never been quantified there is clear evidence to suggest that faith based organisations comprise a significant proportion of the Charities Sector in Northern Ireland. Social Development Minister Margaret Ritchie acknowledged this when she recently addressed the Churches Community Work Alliance Forum.[5] Other research recently completed demonstrates the breadth of contribution from Christian organisations to the registered youth sector in Northern Ireland[6]. This research has evidenced that more than two-thirds of groups and almost three-quarters of youth work leaders registered in Northern Ireland are faith/church based.

2.3 Religion does not claim exclusivity in positive contribution to society, but it does claim to make a disproportionate contribution. Indeed, most major charitable institutions owe their origins to religious motivation.

2.4 Consequently our comments are framed primarily to ensure that the proposed legislation is not detrimental to the good work already being undertaken; nor indeed create any unintentional difficulties, which may prevent such work flourishing in the future. The majority of our comments relate to the issue of public benefit.

Section B: Commentary on Legislation

3. Part 1: Section 2: Meaning of Charitable Purpose

3.1 Given the clear contribution that faith groups make to society in Northern Ireland today we are pleased to see the retention of ‘advancement of religion’ as a charitable purpose within the Bill.

3.2 Within this it is important to recognise the obvious need for religious organisations to be able to sustain themselves into the future, which has always been done through the medium of evangelism (the non-coercive communication of the Christian faith to those not yet committed to the gospel of Christ). We would therefore urge that “missionary work at home or overseas” should be included under the advancement of religion in any final guidance coming out of the new Charity Commission.

4. Part 1: Section 3: The ‘Public Benefit’ Test

4.1 EANI supports in principle the concept of a universal public benefit test and does not believe there should be special exemption for religious organisations. Christian groups by definition should not fear such a test given the societal focus of their faith. Archbishop William Temple is often quoted as saying: ‘The Church is the only society that exists for the benefit of those who are not its members.’

4.2 However, without proper safeguards in place there is a danger that the important religious voluntary sector could unintentionally suffer severe damage should ‘public benefit’ be framed in such a way as to leave its definition prey to political control or manipulation – for example, from secularist or politically correct agendas which might seek to interfere with the motivating ethos of an organisation.

4.3 If a universal public benefit test is to be introduced we consider it is important, therefore, not to limit its definition to the many obvious and tangible activist outworkings of Christian faith. We are concerned to retain the still widely acknowledged presumption of broader societal value and benefit in the purely spiritual aspects of faith which directly address the spiritual and moral dimensions to human life and existence. We would suggest that spiritual and holistic approaches to human well-being which involve personal responsibility for our own and one another’s welfare are presumed to be of significant benefit to society as a whole.

4.4 However, though not easily capable of scientific measurement, Christian belief and practice, for example, provides a crucial beneficial spiritual role in promoting responsibility, mutual respect and sacrificial care in society, whilst helping to restrain those darker aspects of human nature. It provides, often imperceptibley, a vital communal glue in holding together our increasingly fragmented society. The recent Bamford Review of Mental Health recognises that spiritual well-being is an important factor in Mental Health.[7] The challenge of understanding and recognising the validity, nature and language of religion and belief in terms of its particular character relating to public benefits must be taken on board.

4.5 It is important to recognise the danger, when defining public benefit, of inadvertently cutting off the religious impetus which motivates so much charitable voluntary activity, e.g., by forcing unnecessary political agendas on faith groups. Statistics confirm Christians offer substantially more in terms of financial support and time to charities than the population as a whole – and this is not restricted to specifically religious charities[8]. The Christian gospel provides within itself the powerful motivation to care for the needs of others. Hence, churches must continue to appeal to and work at the heart of society. Here their contribution is most effective, exemplifying and inspiring values of caring, giving, and neighbourliness in civic and community settings. There is a direct correlation between religious faith in society and the levels of care for others which drive a successful charitable sector.

4.6 Accordingly, we are in favour of a public benefit test. But how that test is interpreted requires the most careful consideration if the voluntary sector is to be encouraged to continue its good work, and indeed to be free to prosper.

5. Part 1: Section 3: The ‘Public Benefit’ Test & ‘disbenefit’

5.1 However, we consider that the introduction of the term ‘disbenefits’ from the Scottish charitable context is unhelpful. This terminology was not employed in the parliamentary debates on the Charities Act 2006 and is not included in the guidance from the Charity Commission relating to public benefit.[9]

5.2 We consider that the term ‘disbenefit’ adds to general confusion, is much more subjective in nature and could lead to a lesser standard or test than that suggested by the use of the existing language of ‘harm’ which has already been tested in the Courts. We also believe that the language and concept of ‘disbenefits’ is particularly vulnerable to political exploitation. For example, we would be concerned if ‘disbenefit’ became a watchword for any kind of idea that community is damaged by so-called exclusivity, ‘discrimination’ or social divisiveness. The term also lends itself to political attempts to measure the extent to which the perceived ‘good’ might outweigh the ‘bad’ of religion.

5.3 We prefer that the clear, accepted and understood traditional language of ‘harm’ continues to be employed exclusively in association with established case law that suggests a high threshold for what might constitute societal harm. In relation to religious charities we accept there may be small, fringe religious groups whose teachings and coercive practices can generally be agreed to be harmful and we support the idea that these should not be granted the benefits of charitable status. At the same time, it is vital that legitimate, non-coercive, evangelical Christian groups and movements as well as others are not brought into this category. There has been a trend in other parts of Europe in recent times to penalise such groups by unfairly bracketing them with religious cults or to place limitations on proselytising. Such approaches should not be repeated here in Northern Ireland which enjoys a rich Christian heritage in relation to charitable work by religious organisations.

5.4 Charitable status for religious organisations should not on the one hand be permitted to those practising the faith but then on the other taken away from those propagating it. It has recently been suggested that people are free to have a religious faith but are not necessarily free to act upon it. This is obviously not acceptable to religious believers where action naturally follows faith, and we have strong concerns that charities in the future may be allowed to hold religious beliefs but not necessarily be able to act upon them without risking loss of public benefit status.

6: Part 1: Section 4: Guidance as to operation of public benefit requirement

6.1 While EANI welcomes the stipulation in 4.4 (a) that the Commission must carry out public and other consultation as it considers appropriate before issuing any guidance in relation to Section 4 we do however express concern that the Commission will not necessarily be under obligation to consult before revising such guidance. This leaves the Commission in a very powerful position regarding any revision or amendment to guidance which is produced.

7: Part 2: The Charity Commission for Northern Ireland

7.1 EANI welcomes the establishment of a Charity Commission for Northern Ireland.

8: Part 4: Registration of Charities and Charitable Names

8.1 Section 16 (2) is ambiguous and it is unclear if this refers to Northern Ireland offices of charities with headquarters elsewhere in the UK, Ireland or indeed elsewhere in the world. Many members of EANI and the Mission Agencies Partnership, which it co-ordinates, are Northern Ireland operations of charities which will already be registered with the Charity Commission for England and Wales. EANI would welcome clarity on this point so that organisations can properly comply with legislation.

8.2 It also remains unclear whether whole denominations should register or if congregations must do so individually. EANI would welcome the clarity on this issue also.

9: Part 8: Charity Account, Reports and Returns

9.1 EANI welcomes the revised threshold limits within this part of the Bill which have been increased following the previous consultation on the draft legislation. The accounting requirements appear more reasonable than had been previously suggested.

10: Part 14: Miscellaneous and Supplementary

11.1 EANI agrees with the provision at Section 165 (1) to exempt designated religious charities from Sections 33 to 36 of the proposed Bill and welcomes this protection.

Section C: Recommendations

12.1 In light of the comments made above Evangelical Alliance Northern Ireland makes the following recommendations to the Committee in relation to the Charities Bill:

(i) That the significant contribution made by churches and faith based organisations to the work of the charitable sector in Northern Ireland be specifically acknowledged by the Committee.

(ii) Any public benefit test which will be introduced should take into account the particular needs of religious organisations and recognise the positive impact of spiritual benefit as well as more tangible outcomes.

(iii) We would strongly urge against the use of the term ‘disbenefit’ which is both ambiguous and ill-defined and re-introduce the existing language of ‘harm’ which is accepted both in the Charities Act 2006 and in the new guidance from the Charity Commission in relation to public benefit[10].

(iv) That the Committee strongly recommends that the Charity Commission be under obligation to consult on any proposed revision to guidance which has already been issued.

(v) That clarity is given regarding the registration requirements of charitable organisations with headquarters outside Northern Ireland.

Annex

Evidence to support view that the Christian community is a vital part of the charity sector

We are very aware of the value contributed to society by the Christian community in particular and religion and belief in general and seek to highlight and articulate the case for charitable status to be retained for all forms of legitimate Christian religious activity, including proclamation of the Christian gospel.

There is value in restating some of the features that make the Christian community a vital part of the charity sector:

‘Opaque’ benefits which nevertheless are generally accepted as important for mental and physical wellbeing, such as instilling a sense of belonging, meaning and purpose, community identity, spiritual development, life skills, pastoral guidance, encouraging practice of ethical values, mental and moral improvement and good citizenship and healthy lifestyle. The role of religion and belief when acting as the national conscience has been demonstrated time and time again, for example in time of war, national tragedy and mourning, and in the aftermath of high profile events.
The strong values base approach involving altruism and concern for the underprivileged that galvanises people together around core principles of love for neighbour - seeking beyond self-satisfaction to serving the needs of others, especially those disadvantaged and marginalized.
Effective grassroots networks through churches and others - a real and active presence in our communities. The widely read report by the Joseph Rowntree Foundation in March 2006[11] confirms the vital contributory importance of faith as social capital, e.g., in the promotion of peace and tolerance through religious and racial harmony and the importance of helping people through ‘rites of passage’.
High levels of voluntary action compared to the population as a whole, together with increasing evidence that Christians give proportionately more to charitable causes of all kinds than the average. For example, a 2006 survey by Christian Research entitled ‘How Christian Use Their Money and Why’[12] found that amongst various interesting statistics evangelical Christians give nine times as much to charity as the average householder. They also are more responsible about money and have significantly fewer debts than the average. Many Christian organisations are historically linked to social care and justice initiatives and they are today often the only bodies working on the front line with contemporary social problems such as alcohol and drug addiction, homelessness, domestic violence, gang culture, parenting challenges, and they visit hospitals, hospices and prisons. They are also at the forefront of support for the two thirds world.
The values of selfless love and care for those in need that drive Christians in actively living out their faith have been major historical and current drivers to the very existence and continued vibrancy of the charitable sector. There is value and benefit in the purely spiritual aspects of practicing the Christian faith in worship, prayer and teaching that promote and enhance the spiritual dimension to human life and existence.
Christian religious belief and practice plays a vital role in helping to restrain the darker side of human nature, promotes responsibility, respect and mutual care in society, and provides an essential ‘glue’ in holding our increasingly fragmented society together. One cannot separate faith communities’ actions to help others from the very faith that drives and inspires them to selfless acts of love.

[1] www.eauk.org

[2]2 www.eauk.org

[3] Statististics from Tearfund’s Churchgoing in the UK, April 2007

[4] Mission Agencies Partnership (MAP) is a group of about 30 Mission agencies who work together to promote the challenge of world mission and the opportunities for people to become involved in the mission mandate to the church.

[5] Extract from speech delivered by DSD Minister Margaret Ritchie to the Churches Community Work Alliance Forum meeting on 14 November 2007: ‘It would be appropriate for me to recognise the vital part that churches have collectively played in helping communities all through the long dark years of our recent history… In short our churches have very much remained at the heart of many of our most disadvantaged communities. Indeed it is this sense of mission to serve the community that I and my Executive colleagues wish to encourage and harness in our efforts to make Northern Ireland a better place for all our people… by and large the churches and its faith based groups represent a highly under utilized resource in addressing the needs in some of our most deprived communities’.

[6] Faith Based Youth Work in Northern Ireland: Youthnet Faith Based Interest Group, (Macaulay Associates, June 2006)
http://www.youthnetni.org.uk/Site/29/Documents/Faith%20brochure.pdf

[7] The Bamford Review of Mental Health and Learning Disability (NI): Mental Health Improvement and well-being – a personal, public and political issues; May 2006 pp.38 -39

[8] http://www.christian-research.org.uk/pr040106pr1.htm

[9] Charities and Public Benefit: The Charity Commission’s General Guidance on Public Benefit, January 2008: Section E

[10] Charities and Public Benefit: The Charity Commission’s General Guidance on Public Benefit, January 2008: Section E

[11] http://www.jrf.org.uk/knowledge/findings/socialpolicy/0136.asp

[12] http://www.christian-research.org.uk/pr040106pr1.htm

Evangelical Alliance Northern Ireland
Addendum to Submission

Charities Bill
Social Development Committee

27 February 2008

Further input from Evangelical Alliance Northern Ireland

We were grateful to have the opportunity to meet with the Social Development Committee last week (21 Feb) and discuss some issues relating to the Charities Bill.

In particular we spoke about the proposed public benefit test and the need to ensure that this term encompasses benefits which are intangible, such as spiritual benefits, alongside those benefits which are measurable and quantifiable. Indeed religion has historically been shown to have many intangible benefits not least those of belonging, comfort and pastoral care, and building community.

Mr Maginness has asked if Evangelical Alliance might give some further thought as to how this might be achieved.

The public benefit test has not been defined in either the Charities Act 2006 or the Charities and Trustee Investment (Scotland) Act 2005. Rather it has been the guidance emerging from the Charity Commission for England and Wales and the consultations from the Office of the Scottish Charity Regulator which have been setting the benchmark for the public benefit test.

While the Scottish guidance has yet to be finalised, the information from the Charity Commission for England and Wales states that:

‘The benefits to the public should be capable of being recognised, identified, defined or described but that does not mean that they have also to be capable of being quantified or measured’.[1]

There are two options before the Committee.

1. Advocate the introduction of an additional clause within Section 3 (3) of the Bill which highlights that regard must be paid to both tangible and/or intangible benefits.

However caution would need to be taken as this approach may have the unintended consequence of limiting or circumscribing the public benefit test or on the other hand creating problems by including organisations which would not ordinarily meet a public benefit test.

2. Agree in principle that intangible benefits are part and parcel of public benefit. The Committee could then through, careful scrutiny of the proposed guidelines on public benefit, ensure that such benefits are accepted and included by the new Charity Commission.

[1] Charities & Public Benefit: The Charity Commission’s general guidance on public benefit; Jan 2008, p.13

Exclusive Brethren

Brethren Christian Fellowship submission 12.03.08_Page 1.psd

Brethren Christian Fellowship submission 12.03.08_Page 2.psd

Brethren Christian Fellowship submission 12.03.08_Page 3.psd

Brethren Christian Fellowship submission 12.03.08_Page 4.psd

Brethren Christian Fellowship submission 12.03.08_Page 5.psd

Fundraising Standards Board

The Fundraising Standards Board (FRSB) was established in February 2006 to develop, implement and administer the scheme for the self-regulation of fundraising in the UK. The FRSB strives to encourage the highest standards of fundraising practice by all fundraising organisations, regardless of their size and status. Our aim is to enable people to give with confidence to good causes. The FRSB’s “tick” logo, displayed by all members, is a mark of reassurance to the public that they are committed to being open and fair, honest and legal in their fundraising activities. This is underpinned with a complaints process which members of the public can use to have concerns about fundraising activity addressed.

An Office for Scotland and Northern Ireland with a full time Manager has been set up by the Fundraising Standards Board to ensure that members operating solely within these areas have their own point of contact and to enable issues that arise in relation to Scottish and Northern Irish members to be resolved within the context of their own charity legislative frameworks. At the same time, complaints from the public arising from fundraising activity in Scotland and Northern Ireland are dealt with by this devolved FRSB office. This enables the FRSB to consider local context and trends as well as provide the public with reassurance that self-regulation is not a remote activity. Given the higher levels of giving by the general public to charitable causes in Scotland and Northern Ireland compared to the rest of the UK and indeed, to the high proportion of charities and voluntary sector organisations operating in the two jurisdictions relative to their UK population share, it is entirely appropriate for there to be such a focal point that will ensure that self-regulation can be developed and sustained in the long term.

Currently, there are four scheme members from Northern Ireland: Northern Ireland Cancer Fund for Children (NICFC), BCM (Belfast Central Mission), Youth for Christ Northern Ireland and Positive Futures. An active recruitment programme is underway and we are keen to secure the support of the Northern Ireland Assembly and the Department for Social Development to implement the scheme further across the province. The scheme is currently receiving start up financial support from the Office of the Third Sector in the UK Government and the Scottish Government.

An information pack about the Fundraising Standards Board has been sent to all MLAs on the Social Development Committee: we would be happy to provide further information on the scheme or indeed meet with committee members to answer any queries relating to self regulation.

The FRSB Scotland and Northern Ireland Manager is Kate Higgins. She can be contacted at 22A/1 Calton Road, Edinburgh, EH8 8DP or at kateh@frsb.org.uk or on 0845 688 9894.

Our comments on the Charities bill are confined to those areas relating to fundraising activity.

Reserve power to control fund-raising by charitable institutions Section 157

The FRSB welcomes the fact that the bill is creating a reserve power to control fundraising activity, as has happened with the Charities Act 2006 and the Charities and Trustee Investment (Scotland) Act 2005. This means that there is a UK wide opportunity to develop and implement the scheme for self-regulation of fundraising fully and effectively. This opportunity will undoubtedly benefit charities operating solely in Northern Ireland by enabling them to practise the highest standards in their fundraising and voluntarily sign up to best practice and to providing reassurance to their donors and funders. The features of FRSB membership also allow for peer and other support in raising standards in fundraising practice. At the same time, UK wide and Ireland wide charities that have a significant presence in Northern Ireland will also have a level playing field to operate under. Finally and perhaps most importantly, the opportunity to implement a UK wide self regulation scheme means that members of the public that give to good causes in Northern Ireland will have recourse to the same complaints mechanisms as elsewhere in the UK: the ability to treat everyone in the UK who gives to good causes equally can only help the FRSB and the self regulation scheme to maintain and build public trust and confidence in fundraising.

Although not provided for, we would hope that if the Department does consider making regulations under this section, it would consult fully with appropriate bodies (as is provided for in section 83 of the Charities and Trustee Investment (Scotland) Act 2005).

The reserve power outlines what constitutes a “good practice requirement” at s157 (4) and (5). One of the conditions of FRSB membership is that charities and other fundraising organisations that join the scheme adhere to the Institute of Fundraising’s Codes of Fundraising Practice and also our own Fundraising Promise.

The Codes of Fundraising Practice cover a wide range of fundraising methods and provide a guide to the law and best practice in relation to fundraising activity throughout the United Kingdom. The Codes are developed by the Institute of Fundraising, are updated regularly and new Codes are produced where and when a need is identified.

The Fundraising Promise sets out the core values that apply to best practice fundraising. It is a promise made by FRSB members to all donors and funders and comprises six commitments: to commit to high standards; to be honest and open; to be clear; to be respectful; to be fair and reasonable; and to be accountable. Each commitment details how members are expected to meet these requirements. The Fundraising Promise is laid out in full in the information pack sent to committee members. It can also be found on the FRSB’s website – www.frsb.org.uk/scotlandnorthernireland. Effectively, its six commitments encapsulate the “good practice” sought by the provisions in s157(4) and (5).

Institute of Fundraising

Marie Austin
Committee Clerk
Committee for Social Development
Room 410
Parliament Buildings
Belfast
BT4 3XX

4th February 2008

Dear Marie

Invitation to submit written evidence to Committee for Social Development Northern Ireland Assembly

Further to your letter to the Institute of Fundraising dated the 16th January 2008, inviting the Institute of Fundraising to submit written evidence to the Committee for Social Development, I write to acknowledge receipt of the invitation.

The Institute of Fundraising is the professional body for fundraisers, working to promote the highest standards in fundraising practice and management. We represent fundraisers in England, Wales, Scotland and Northern Ireland.

Following consultation with our membership in Northern Ireland, I am writing to inform the Committee, that we will not be submitting formal written evidence that addresses specific clauses at this stage of the legislative process.

The Institute of Fundraising would however urge the Committee to ensure wherever possible that any changes or recommendations made at this stage of the legislative process, are consistent and complimentary with charity law that is currently exist in England & Wales and in Scotland.

Yours sincerely

Megan Pacey
Director of Policy and Campaigns

Jordan Victory Church

Dear Ms Austin

I am writing to you regards the new “Charities Bill” that is being proposed. We have concerns about certain elements the of the “Opt Out Clause” regarding religious organisations and are asking that you reconsider these due to the detrimental effect, if imposed, they will have across our province.

1. The 10-year rule, which, while not directly effects us, but does affect many well organised and fruitful churches.

2. 1,000 member congregation, which rules out ourselves and most of the independent churches that are the fabric in our province. These actions will open us and many more to undue government interference.

We have been registered under charitable status from 19th April 1997. Our Ref XR19810

We have set up refuge homes in Kenya Africa, Russia and from 06 funded 40 orphans in India for clothes, food, schooling, provided clean drinking water in 10 villages.

As a church we also operate “synergy@JVC” in one of the largest housing estates in Europe (Rathcoole). At this location we run several community projects and have a volunteer staff of 7 plus people. This centre is supported by the local Police, EHSSB, DSD and many other government and non government bodies.

Again as a concerned Church leader I respectively request that the committee look at these issues and have them removed or modified.

Yours truly,

Lewis Smyth
Jordan Victory Church
Synergy@JVC

Kinallen Mission Hall

Kingdom Life Faith Centre and
Polish Mission Church

Dear Ms Austin

It has recently been brought to our attention that a new “Charities Bill” is being proposed. We take careful note of the religious organisations “Opt Out Clause” and are deeply concerned by two of the criteria.

1. The 10-year rule, which is much too stringent

2. 1,000 member congregation, which would rule out ourselves and most of the independent churches in the province and leave us open to undue government interference.

Our own church Kingdom Life Faith Centre began 9 years ago this month and has had charitable status since then.

We also host the “Polish Mission Church” which began in September 06. They very shortly will be seeking charitable status.

On behalf of Kingdom Life Faith Centre and Polish Mission Church we would respectively request that the committee look at these criteria and have them removed or modified.

Yours truly,

Brian Agnew
Szczepan Cackowski

Lisburn City Council

Our ref: DRB/CM
Your ref:

13 February, 2008

Dear Ms Austin

Charities Bill

I refer to your letter of 16 January, 2008 seeking the Council’s written evidence in relation to the Charities Bill, which is currently under consideration by the Assembly’s Committee for Social Development. You had initially sought a response by 5 February, but agreed to accept the Council’s submission following consideration of this matter by the Corporate Services Committee at its meeting on 12 February.

I can now advise that this matter was discussed by the Corporate Services Committee at its meeting last night, when it was agreed that the Charities Bill in its current form be welcomed as an attempt to regularise and protect existing charities.

Yours sincerely

D R BRIGGS
Director of Corporate Services

Ms Marie Austin (Committee Clerk)
Committee for Social Development
Room 410
Parliament Buildings
Belfast
BT4 3XX

Magheraknock Mission Hall

8 Magheraknock Road
Ballynahinch
BT24 8TJ

1st February 2008

Dear Sir/ Madam

Re Magheraknock Mission Hall
2 Laurel Road
Ballynahinch
Co Down
BT24 8TR

This is a small Mission Hall at Magheraknock, in the heart of Co Down, which has been in existence for approximately eighty (80) years.

We are a Religious Organisation and we would like to be included in the Religious ‘opt-out’ clause.

We are very concerned about the two criteria for meeting the ‘opt-out’ clause, and would like to see them removed, ie, the 10 year rule and the membership of 1000 members.

We currently have a charitable status and will be very dependant on this status to help us keep the hall running.

Yours faithfully

RONNIE DOUGLAS

Moira Pentecostal Church

Mount Zion Free Methodist Church

Secretary
Mr. R. Nesbitt
Ashgrove, 219 Moira Road,
Lisburn. Co. Antrim.
BT28 2ST
028 9262 1366

Minister
Pastor Nick Serb
101 Gregg Street
Lisburn. Co. Antrim
BT27 5AW
028 9266 5647
E-mail: juniorserb@yahoo.com

Treasurer
Mr. N. Wright
Hebron, 37 Plantation Road,
Lisburn. Co. Antrim
BT27 5BW
028 9267 8464
E-Mail: n.wright@tinyworld.co.uk

The Clerk
Room 412, Parliament Buildings
Stormont, Belfast,
BT4 3XX

January 28th, 2008

Dear members of the Committee for Social Development,

I am writing to you concerning the proposed charities bill especially the restrictions regarding religious charities mentioned in the so called “religious clause”.

First of all allow me to mention the positive character of the bill regulating the financial oversight and the stability desired in all charities.

However, there are certain contradictions within the religious clause that I would like to point out to you.

Although the bill defines the term: religious purpose; by which it reflects the right of each individual to worship freely having a positive and beneficial input within a community; the religious organization becomes restricted in accomplishing that very purpose by the requirements added in paragraph 3 under designation of religious charities.

There are certain denominations or churches that have been established for a lot longer than 10 years but in the main land of Europe or even America, which are viewed in their particular country of residence as religious charities, and yet here in Northern Ireland face the danger of being excluded from that status and therefore not being able to fulfil their religious purpose within their communities.

Other denominations, like the Free Methodist Church, are part of a wider international community in the world, having direct oversight within UK and yet under the proposed restrictions they would not be able to function as religious charities because somehow they do not have 1000 members, over 16 years old and residents in Northern Ireland.

I completely understand and accept the need of financial control with the purpose to counterattack fraud and economic crime but any other interference between state and church is not justified in what the proposed bill defines as religious purpose.

In conclusion allow me to add a personal note. Reading the present proposal, especially the restrictions of the religious clause, it brought back painful memories of the communist era in Romania, where I grew up. The evangelical church in Romania knows very well the pain of religious discrimination when very similar conditions operated restricting churches to exercise their basic right of religious charity.

I do not think this is the path the Northern Ireland Assembly wishes to follow. Allow me to suggest that these restrictions would be dropped and other healthy ways of assessment be developed entirely based on community feed-back and evaluation of their religious purpose.

There are also other Free Methodist Churches subscribing to my letter, being in complete agreement with its content.

Yours sincerely,

Pastor Nick Serb

“…and the name of the city from that day shall be: YHWH SHAMMAH – THE LORD IS THERE.”
Ezekiel 48: 35b

Bangor – John Wesley Free Methodist Church Rev. Jeremy Forsyth

Dundonald – Light’n’Life Tabernacle Rev. Patricia Herron

Dungannon – Emmanuel Free Methodist Church Rev. William MackKay

Glengormley – Free Methodist Church Rev. Chris Wilkinson

Belfast – Park Avenue Free Methodist Church Rev. Norman Morrell

North Down Borough Council

290052
4 February 2008
Ms Marie Austin
Committee Clerk
Committee for Social Development
Northern Ireland Assembly
Room 412
Parliament Buildings
BELFAST
BT4 3XX

Dear Ms Austin

Charities Bill
Invitation to Submit Written Evidence

I refer to your letter, dated 16 January 2008, regarding the above Bill.

At a full meeting of North Down Borough Council, held on Tuesday, 29 January 2008, it was resolved that the undernoted comments be submitted to the Committee for Social Development, in response to the Charities Bill:

Members referred to the designation of Religious Charities and the conditions 3(c) and 3(d) in the Bill which stated that the charity had to have been established in Northern Ireland for at least 10 years and had to have a membership of at least 1,000 persons. It was the view that those conditions would exclude a large number of Religious charitable groups and concern was expressed that the Minister would proceed with those conditions.

I trust that you will find these comments helpful.

Yours sincerely

Trevor Polley
Chief Executive and Town Clerk

Northern Ireland Co-Ownership
Housing Association

DMc/CON
Clerk to the Social Development Committee
Room 412
Parliament Buildings
Stormont
Belfast
BT4 3XX

Dear Sirs

Re Comments on Charities Bill

Northern Ireland Co-Ownership Housing Association Limited (Co Ownership) is a registered Housing Association regulated by the Department for Social Development (DSD) and an Industrial and Provident Society under registration No IP200. It is further recognised as a Charity by HMRC under reference No XR62384.

Our aim, as the provider of shared equity ownership in the province, is to retain our charitable status and therefore to register with the proposed Charity Commission as required.

There are some aspects to the draft Charities Bill upon which we would seek clarification, namely

1. Sections 58-60 – Restrictions on Dispositions

2. Sections 61-63 – Restrictions on Mortgaging

3. Sections 64-73 – Accounts and Reporting

1. Restrictions on dispositions of land by a Charity

Section 58(1) of the Bill states that no land held by or in trust for a Charity shall be disposed of without an Order of the Court or of the Commission. There are exceptions to this as thereinafter contained.

It may be appreciated that the scheme which Co-Ownership operates involves the purchase of a property and the simultaneous granting of an equity sharing lease to its participant for a period not exceeding 99 years. In the normal course of its day to day activities Co-Ownership is therefore involved in a number of disposals of property, namely:

(i) the granting of the 99 year equity sharing lease on a property;

(ii) releases of further equity where the participant may at any stage buyout (in whole or in part) the interest of Co-Ownership under the terms of the equity sharing lease. This is known as staircasing; and

(iv) and where the matter ends in forfeiture of the lease by Co-Ownership or repossession and sale by a participant’s lender under the arrangements between Co-Ownership and the lender.

As you may be aware Co-Ownership is regulated by DSD and is subject to the provisions contained in Article 13 of Housing (NI) Order 1992 which states that a registered housing association may not dispose of any land without the consent of DSD. In view of the substantial volume of transactions each year for which DSD consent would be required, for administrative convenience the DSD has issued a form of global consent to the disposal of land, the effect of which is that Co-Ownership is not required to seek formal DSD consent every time a disposal occurs. This arrangement has worked successfully for many years, not least because the Land Registry accepts and recognises the global consents thereby facilitating the registration process.

It would appear from the draft Bill that by Section 58(10)(a) the restriction on disposition in s58 does not apply to any disposition for which general or special authority is expressly given by or under any statutory provision or by any scheme legally established. We would be obliged for confirmation that any global consent then in existence issued by DSD under Article 13 of the Housing (NI) Order 1992 falls within the remit of s58(10)(a) of the Charities Bill and consequently nothing in s58 applies to the activities carried on under the global consent.

If s58(10)(a) is not intended to apply to such situations as DSD global consent under Article 13 of the Housing (NI) Order 1992 we would request that consideration be given to making our equity sharing scheme exempt from the provisions of this section. Given the large volume of disposals which occur as part of our day to day operations the requirements of s58(3) would impose prohibitive constraints on its operations.

2. Restriction on mortgaging by a Charity

As you may be aware, to enable a participant to join the Co-Ownership Scheme he usually will take out a mortgage on the property with a lender. Such a mortgage is not created by Co-Ownership (i.e., the Charity) but by the participant. Section 61(1) purports to prohibit the mortgage of any land held by a charity save under an Order of Court or with Commission approval. We would be grateful if you would confirm that the creation by a participant of a mortgage on his interest in the lease is not subject to the provisions of s61 of the Charities Bill.

A requirement particular to our equity sharing scheme is the lender’s requirement to have certain rights over our interest in a property. This is done by way of a Side Agreement which is in a standard form agreed with the Council of Mortgage Lenders. In each case Co-Ownership enters into such a Side Agreement with a participant’s lender in order to give that lender acceptable security for its loan. Again, the requirements of s 61(3), should it apply, would impose prohibitive constraints on our day to day operations.

The wording of s61(6)(b) […the mortgage has effect to secure the repayment of sums paid by way of loan….after the date of execution…] , would also impose impractical restrains on another aspect of our day to day operations. It is common for participants to seek the consent of Co-Ownership to make further borrowings against their lease to acquire further equity in the property. Due to the arrangement with the lender under the Side Agreement Co-Ownership would, unless exempted from this provision, have to comply with the constraints of s61(7).

In relation to section 62, it appears from the wording that, since Co-Ownership holds an interest in a particular property a mortgage taken out over the property by a participant will be subject to certain formal requirements. It is submitted that, since Co-Ownership is not a party to the participant’s mortgage, it is not feasible for it to comply with this section.

3. Accounts and Reporting

Registered housing associations, such as Co-Ownership Housing, are already regulated by DSD. We would be grateful if you would confirm that appropriate arrangements are to be put in place to avoid duplicate regulation of housing associations such as ourselves. Housing associations are already governed by other legislation in this field such as the Industrial and Provident Societies legislation, the Housing (Northern Ireland) Order 1992, the Registered Housing Associations (Accounting Requirements) Order (NI) 1993 and all accounts are prepared in accordance with UK generally accepted accounting practice.

We would be grateful if account could be taken of the above issues in your consideration of the legislation. If there are any queries please do not hesitate to contact us.

Yours faithfully

David McCallum
Director of Operations

Northern Ireland Federation of
Housing Associations

Background Information on the Federation and Its Members

The Northern Ireland Federation of Housing Associations (NIFHA) represents 43 housing associations which provide 30,000 decent, affordable homes for people in housing need.

The great majority of these associations, including all 36 registered by the Department for Social Development (DSD), are recognised by the Revenue and Customs as having the legal status of charities.

The DSD exercises comprehensive regulation and monitoring of registered housing associations. It has considerable powers to investigate them and intervene when necessary.

By law, all DSD-registered housing associations must also be registered as Industrial and Provident Societies. These associations are subject to a degree of regulation by, and accountability to, the Registrar of Industrial and Provident Societies.

Our Recommendation about the Charities Bill

The Federation warmly welcomes the draft legislation but wishes to ensure that the further regulation of its charitable members by the proposed Charity Commission for Northern Ireland does not duplicate the existing regulation by the DSD (under the housing legislation) and the Registrar (under the Industrial and Provident Societies legislation).

We are aware that the same issue has been addressed in Scotland by section 38 of the Charities and Investment (Scotland) Act 2005. To avoid unnecessary duplication, the Office of the Scottish Charity Regulator has signed a Memorandum of Understanding with the regulator of registered housing associations.

NIFHA recommends that Article 11(2) 4 of Northern Ireland’s Bill should be amended slightly by including in the bracketed clause “and avoiding duplication with other statutory regulators”.

Northern Ireland Human Rights Commission

Thank you for your letter inviting a response from the Northern Ireland Human Rights Commission in regard to this Bill. In general we are content with the majority of the proposed clauses of the Charities Bill however the Commission has very serious concerns in relation to clause 166. The conditions outlined in clause 166 (3) would appear to disadvantage smaller religious communities in Northern Ireland. While the Commission of course recognizes that smaller and newer religious groups in NI would still be eligible for designation as a charity, they would not be designated as a ‘religious charity’ and therefore would continue to be subject to the regulatory provisions of clauses 33 – 36 of the Bill. The Commission is concerned that there is an underlying assumption here that larger and longer established religious groups in NI can be trusted to conduct their affairs with propriety while smaller, newer ones cannot. The provisions therefore engage Article 9 (the right to freedom of thought, conscience and religion) of the European Convention on Human Rights particularly when taken with Article 14 (the non-discrimination clause).

If you require any further information in regard to this brief comment, please don’t hesitate to contact me.

Peter O’Neill
Chief Executive
Northern Ireland Human Rights Commission
Temple Court
39, North Street
Belfast
BT1 1NA

Telephone: +44 (0)28 9024 3987
Textphone: +44 (0)28 9024 9066
Fax: +44 (0)28 9024 7844
Email: peter.oneill@nihrc.org
Web: www.nihrc.org

Office of the First Minister
and Deputy First Minister

Omagh District Council

Misc/1
5 February 2008
Ms Sonya McAnulla
sonya.mcanulla@omagh.gov.uk

Marie Austin (Committee Clerk)
Committee for Social Development
Room 410
Parliament Buildings
BELFAST
BT4 3XX

Dear Ms Austin

RE: Charities Bill

I am writing on behalf of Omagh District Council in response to the consultation on the Charities Bill.

The Council notes the overall aim of the Bill and wishes to register its support for its introduction. The Bill will certainly assist in the regulation of charities as well as provide a support mechanism for the establishment of new charities, the retention and governance of existing charities and reassurance for the public of the status of the charities registered and that the contributions made to them are appropriately administered and distributed.

On behalf of the Council, I wish to thank you for the opportunity to respond to this consultation.

Yours sincerely

D McSORLEY
Chief Executive

Police Service of Northern Ireland

Charities Bill – Briefing Document

I would like to thank you for giving the PSNI the opportunity to brief the Committee on the new Charities Bill.

The PSNI were included in the Advisory Panel that was established in 2004 to consider the existing system of charity legislation and administration in Northern Ireland and to make recommendations as to how it should be developed.

The Police Service welcomes the proposals contained in the Bill, bringing Northern Ireland broadly into line with England, Wales and Scotland with a Charity Commission for Northern Ireland and a NI Register of Charities.

From a policing perspective, the main change is that the new Charity Commission will be responsible for the issue of public collections certificates, which would allow approved charities to be able to conduct collections. In addition, the Commission would be empowered to issue permits authorising specific actual collections in a public place without, which such a collection could not be undertaken. To have a centralised point for charitable collections is more appropriate than each police district issuing certificates for street collections as currently happens. It also provides the necessary powers and provisions needed to ensure proper regulation and registration.

It is not clear from the Draft Bill if there is a requirement for the Charity Commissioner to inform the local District/Area Commander of a collection taking place in their area, i.e. date, time, days, organising body etc when a permit or certificate has been issued. As it may be necessary to police such a collection, it is recommended that a provision be included in the Bill that the Charity Commissioner should advise the local District/Area Commander in whose area the collection is taking place.

It is noted that persons convicted of any offence involving dishonesty or deception shall be disqualified from being a trustee of a charity. New controls to ensure Charities are not subject to criminal exploitation are welcomed to ensure public confidence in charitable organisations is not undermined. The PSNI welcomes powers of the Commission to institute inquiries, request documents and search records. In addition the proposed Bill requires every charity to prepare in respect of each of its financial years an annual return to the Commission. The Service believes that the opportunity for abuse by criminal elements of charitable benefits or mock charities will be restricted by greater scrutiny and controls.

It is suggested a formal Memorandum of Understanding (MOU) including an Information Sharing Agreement be drawn up between the PSNI and the newly formed Charity Commission to provide a framework for closer working arrangements on issues of mutual interest e.g. vetting arrangements of applicants/trustees etc.

The Police Service fully supports the proposals outlined in the Bill.

Royal National Lifeboat Institution

R RNLI submission 07.02.psd

Marie Austin
Northern Ireland Assembly
Parliament Buildings
Belfast
BT4 3XX

from the Corporate Services Director
Direct Tel 01202 663151
Direct Fax 01202 663306
E-mail iventham@rnli.org.uk

Our Ref: CSD/lchp/0213

07 February 2008

Dear Ms Austin,

Response to Consultation on the Northern Ireland Assembly Charities Bill

The Royal National Lifeboat Institution, a charity registered in England and Wales, Charity registration no: 209603, provides a lifeboat and lifeguard service in the United Kingdom and the Republic of Ireland.

The RNLI wishes to make the following comments about the Charities Bill (“the Bill”).

1. Broadly, the RNLI has no major issues with the Bill. As a charity which, although registered in England and Wales, operates under the different charity legislative requirements of England and Wales, Scotland, the Republic of Ireland, and shortly, Northern Ireland, we would welcome as much commonality and lightness of touch as possible to enable us to carry out our lifesaving mission with as little bureaucratic burden as possible.

2. We welcome the fact that the defined charitable purposes are very similar to those in the Charity Act 2006, but are surprised by the omission of “the promotion of the efficiency of the armed forces of the crown, or of the efficiency of the police, fire and rescue services or ambulance services”, which, if included, would bring the purposes in line with those in England and Wales.

3. Article 12 establishes the Charity Tribunal for Northern Ireland, which we welcome.

We would query what the relationship will be between the Charity Tribunal for Northern Ireland and the English Charities Tribunal, as well as between the Charity Commission and the Charity Commission Northern Ireland ?

4. We welcome the provision under article 167 for registration by charities that are not charities under the law of Northern Ireland, but operate in Northern Ireland. We presume that this would include charities such as the RNLI?

We would welcome clarification as to how section 16 registration and the section 167 registration will relate to each other. Does section 167 registration amount to a separate register for “foreign” charities?

5. Under section 167 registration we note the requirement to submit to CCNI a financial statement and a statement of activities each year.

We would hope that the requirement as to form and content of the report and accounts would be the same as that required of charities registered with the CC.

We would not welcome any requirement to separately account for income generated from or expenditure incurred in, Northern Ireland, as we run an integrated service both within the island of Ireland and throughout the United Kingdom and the Republic of Ireland.

6. We note the new requirements for collecting funds in public in Northern Ireland, and welcome the fact that the system proposed is very similar to that which applies in England and Wales.

Yours sincerely,

Original signed and in the external mail
Emailed 07 February 2008 to: committee.socialdevelopment@niassembly.gov.uk

Ian Ventham

Sport Northern Ireland

Contents Page

1 Introduction

2 Background to Sport Northern Ireland

3. General Comments

4. Definition of Charity and Charitable Purpose

5. Establishing a Charity Commission for Northern Ireland

6. Charity Tribunal and Registration Of Charities

7. Control of Fundraising

1. Introduction

1.1 This paper provides Sport Northern Ireland’s (SNI) response on the draft Charities Bill 2007 currently under consultation by the Department of Social Development.

1.2 Sport Northern Ireland welcomes the opportunity to comment on the draft Charities Bill (hereafter, ‘the Bill’) particularly as it will provide a stronger framework for charities in Northern Ireland to meet both social and legal responsibilities in a modern context.

1.3 This response provides general comment on the Bill and focuses mainly on provisions within the Bill that are of particular relevance to the sport and physical recreation.

2. Background to Sport Northern Ireland

2.1 Sport Northern Ireland is a Non-Departmental Public Body (NDPB) of the Department for Culture, Arts and Leisure (DCAL) and is charged with the development of sport in Northern Ireland. DCAL’s vision is of: “a confident, creative, informed and vibrant community”.

2.2 DCAL intend to realise this vision through the development of policies and resources to: “Protect, nurture and grow our Cultural Capital for today and tomorrow” (DCAL Mission).

For DCAL, Cultural Capital is manifested in three ways:

People – the creators and consumers of Cultural Capital, including sportswomen and sportsmen;
Infrastructure – the physical spaces within which culture is created and enjoyed, including sports grounds; and
Products and Services – our cultural output, including sporting success.

2.3 Sport Northern Ireland’s vision is embedded in DCAL’s vision: “Through sport, to contribute to an inclusive, creative, competent, informed and vibrant community”.

In practice this means Sport Northern Ireland designing and implementing programmes and partnerships that will contribute to the following strategic objectives:

increased participation in sport and physical activity;
improved sporting performances; and
improved efficiency and effectiveness in the administration of sport.

2.4 Sport Northern Ireland’s business is designed to provide people, especially young people and under represented groups, with pathways and options for lifelong sporting and personal development.

3. General Comments

3.1 Sport Northern Ireland welcomes the provisions of the Charities Bill which provides statutory definitions of charity and charitable purpose; establishes a Charity Commission for Northern Ireland and a Charity Tribunal; creates a Register of Charities for Northern Ireland; introduces the Charitable Incorporated Organisation (a new form of charitable body); and sets out new rules with regard to fundraising and collections.

4. Definition of Charity and Charitable Purpose

4.1 SNI supports the proposals in the ‘Bill’ to offer a more specific definition of a charity and would endorse the 13 charitable purposes listed. The expansion of the definition of charity helps to reflect the wide range of charitable organisations and helps to modernise charity legislation. The new additions should help to recognise the great work of many Northern Ireland groups in the areas of peace and reconciliation and/or addressing sectarianism and racism, many of which use ‘sport’ as a catalyst for carrying out their work.

4.2 Support is also offered to the notion of “public benefit” as one of the main criteria used in the definition of a charity. In particular, SNI welcome the fact that all charities will have to ‘pass’ the “public benefit” test; and that the new Charity Commission must issue guidance on the “public benefit” requirement. In relation to the latter, SNI strongly recommend that the new Charity Commission carry out meaningful consultation with the charity sector before issuing guidance on what constitutes “public benefit” and also ensure that mechanisms are in place to regularly review the guidance to ensure it is still at any time fit for purpose and relevant to current circumstances.

4.3 Definition of Sport

4.3.1 With reference to sport, SNI has some concerns relating to the definition of sport under the purpose “the advancement of amateur sport” which now includes games which promote health by involving mental skill or exertion. In the draft Order (2006) which was consulted on, it was games which promote health by involving physical skill only. Sport Northern Ireland recommend that the definition of sport be revised to take cognisnance of the European Charter’s definition – “Sport means all forms of physical activity which through casual or organized participation aim at expressing or improving physical fitness and mental well being forming social relationships or obtaining results in competition at all levels”. However, it is acknowledged that this definition may not include enough references to what is seen as, for instance, “recreation” and that another mechanism may be required to consider and deal with this issue. For example, the new Charity Commission may wish to engage relevant organisations such as Sport Northern Ireland and/or the Northern Ireland Sports Forum to act as advisors on applications which may not sit comfortably within the widely recognised definition.

4.3.1 The term ‘amateur’ is vague and may lead to confusion with sports bodies and/or clubs that promote amateur sport activity along with commercial interests. For example, a local soccer club may have amateur status; however, it may also run a commercial business (i.e. social club) as means of generating income to sustain its sport and community development related activities. Therefore, SNI recommends that the efforts are made to consider this issue, particularly in relation Tax and VAT liabilities.

4.4 The Charitable Purposes listed in the Bill reflect the definition within the Charities Bill for England and Wales thereby ensuring consistency with UK tax relief matters and that Northern Ireland charities receive comparable financial assistance.

5. Establishing a Charity Commission for Northern Ireland

5.1 SNI welcomes the establishment of the independent Charity Commission for Northern Ireland (hereafter, ‘the Commission’) as it brings many different agencies within one, which will make it easier for charities and potential charities to deal with. As a new regulator of charities, with powers of investigation and enforcement, it should enhance public trust and confidence in charities. However, it must be acknowledged, as indicated in the NICVA Charity Bill - Briefing Paper (2007), that the Commission is going to have a considerable task of carrying out its everyday functions such as registering charities, maintaining the register, applying the public benefit test etc. and that it must be adequately resourced in order to carry out these functions otherwise the Commission could end up impeding the good administration of charities rather than helping them.

5.2 The members of the Commission are to be appointed by the Department of Social Development; however the Bill does not provide detail about how the board members are to be appointed and what type of person is not eligible to be appointed, namely elected representatives. SNI would suggest that these details should be incorporated into the Bill to ensure the independence of the new Commission.

6. Charity Tribunal and Registration of Charities

6.1 SNI welcomes the creation of a Charity Tribunal to allow for charities, or a body seeking charitable status, to question and appeal decisions, orders or directions of the Commission. Furthermore, the establishment of a Register of Charities, which is to be maintained by the Commission, will have a positive impact given that the register will be open for consideration and scrutiny by the public, thus promoting openess, transparency and public confidence in charities.

7. Control of Fundraising

7.1 SNI support the call for the ‘Bill’ to introduce new controls of fundraising for charities that use professional fundraisers and commercial participators. The Bill states that there must be agreements in place with prescribed requirements. The existence of a written agreement may protect a charity or allow redress in rare cases where a professional fundraiser or commercial participator seeks to exploit a charity or charitable beneficiaries.

7.2 In particular, professional fundraisers will be required to indicate which institution(s) will benefit, how the fundraiser’s remuneration in connection with the appeal is to be determined and the amount of that remuneration. Commercial participators will also have to indicate the institution(s) to benefit as well as the notifiable amount that will be given to the institution(s). This will be of great benefit to the public, enabling them to be more discerning about where and to whom they make donations.

For further information contact:

Paul Donnelly
Policy, Planning & Research Manager
Sport Northern Ireland
02890383870
07774695145
pauldonnelly@sportni.net

Strabane District Council

Ms Marie Austin
Northern Ireland Assembly
Room 412, Parliament Buildings,
Belfast
BT4 3XX

15th February 2008

Acknowledgement of Consultation

Dear Ms Austin

I write to thank you for consulting Strabane District Council on Charities Bill. Strabane District Council has developed an assessment matrix to review the practical implications of responding to each consultation due to the large volume of consultation documents that we receive.

Following assessment, Strabane District Council has decided to note this consultation at this time.

We trust that you will continue to consult Strabane District Council on any further issues arising and wish you every success in this consultation.

Yours Faithfully,

Rachelle Craig
Corporate Policy Officer

Supporting Communities NI

The Charities (Northern Ireland) Order 2007

I refer to the above and am pleased to enclose the observations and comments from Supporting Communities NI, (formerly NI Tenants Action Project) staff team and representatives from community groups involved in the Housing Community Network.

Supporting Communities NI is an independent charitable organisation which champions community participation by developing groups, supporting active citizenship and building cohesive communities; the Housing Community Network is a unique structure which was formed in response to the need for housing related policies to be developed both with and on behalf of community groups working in partnership with service providers, NI Housing Executive and Supporting Communities NI. The most significant part of the workload of Supporting Communities NI involves working with and developing small community based organisations with charitable purposes; the current Bill will have a significant impact on the work of these groups and how they are viewed. These observations and comments in response to the proposed legislation are supported by extensive experience in working with community groups by Supporting Communities NI staff over many years and, where it has been possible, following discussion with voluntary committee members.

I hope you find these comments useful and a constructive contribution to the consultation. If you require any further information or explanation, please do not hesitate to contact me at the above.

Yours faithfully,

For Supporting Communities NI
Murray Watt
Liaison Officer
Encs.

Charities Bill

Introduction

Supporting Communities NI welcomes the proposed legislation which provides a statutory definition of charity and charitable purpose for Northern Ireland. We also broadly welcome the establishment of a Charity Commission and a Register of Charities and Appeals Tribunal. Given the experience of Supporting Communities NI in working with small community groups, we welcome the accounting thresholds and auditing requirements contained in the Bill.

Meaning of Charitable Purpose

Supporting Communities NI welcomes the proposed expansion of the definition of charity as this will more adequately cover the broad range of activities and purposes of those groups and organisations which make up the community and voluntary sector, most of which would regard themselves as being charitable in purpose. We also welcome the definition of charity being applied to purposes which address sectarianism and racism and supports work in the area of peace and reconciliation.

There are a number of issues, however, that we feel the Social Development Committee should consider before the Bill is presented to the Assembly. With regard to the advancement of amateur sport, we feel that there needs to be clear guidelines as to what is meant by this term and which sporting activity or on what basis a sport ceases to be amateur and therefore not charitable. We would also broadly support the inclusion of sports which require mental skill as being of equal importance as those that are essentially physical.

We would also take the view that greater clarification be given to those rural and urban regeneration activities which may be taken to be charitable as many such activities are indeed commercial or profitable in intent; the guidelines and the Public Benefit Test should be sufficiently rigorous and robust to ensure the integrity of charitable purposes under this heading.

The Public Benefit Test

Supporting Communities NI welcomes this important qualification to the definition of charity and agrees that in order to register as a charity in Northern Ireland an organisation must have one or more of the listed charitable purposes and must also be able to demonstrate the provision of a public benefit in the province or elsewhere. We broadly support the Public Benefit Test proposed in the Bill. It is essential that proper guidelines for the public benefit test are agreed and that these are rigorous, robust and transparent. It is therefore essential that the proposed Charity Commission for Northern Ireland undertakes adequate consultation on the relevant guidance when it is being drafted and also when it is subsequently revised. This proposal has some concern among groups across the voluntary and community sector as the application of this test may be used to impose limits or boundaries on the work of groups and the

interests they represent. We would urge to Committee to consider the widest implications of this proposal prior to progressing.

The Charity Commission for Northern Ireland

Supporting Communities NI welcomes the proposal to establish Charity Commission for Northern Ireland and believes it would have broad public support as it would be a strong factor in ensuring public confidence in the charity sector.

Given that it is proposed that the Commission will have both a regulatory function and an advisory role, it is felt that there should be a clear distinction between these two functions. There should also be a clear distinction as to what constitutes general advice and that regulatory guidance which the Commission will provide. There will clearly be a considerable amount of information and guidance which all charitable groups will have to come to terms with; there will also be a considerable strain placed on the advisory organisations and networks which support community and voluntary groups. Many local groups will be dependent on the provision of information and support with respect to the new legislation and we would urge the Committee to ensure that this is adequately resourced and supported across the charitable sector.

Further, we would support the inclusion into the Schedule of membership criteria both to the Commission and the recruitment of staff to ensure that the widest experience and expertise is brought into the work of the Commission. We would urge the Committee to ensure that the charity sector is represented on the Commission and that a portion of the staff team is similarly recruited.

Charity Tribunal

Supporting Communities NI welcomes the creation of a Charity Tribunal to allow bodies to appeal and question decisions of the Charity Commission.

Registration of Charities

Supporting Communities NI welcomes the establishment of a Register of Charities for Northern Ireland. It is acknowledged that there is some debate around the new wording in the Bill currently being considered. We note that it is suggested that the new wording, “every institution which is a charity under the law of Northern Ireland must be registered in the register of charities”, may not be sufficiently robust to ensure that every charity which operates in Northern Ireland will be required to be included in the register. To ensure public confidence in the register, the committee is urged to return to the former wording of the Draft Order which requires that, “every charity which is established or operates in Northern Ireland must be registered in the register of charities”.

Charity Accounts, Reporting and Returns

Supporting Communities NI broadly welcomes the consideration being given to smaller organisations in terms of what is required by way of independent examination of annual accounts. It is hoped that the guidelines will demonstrate sufficient flexibility and sensitivity to the needs and limits of smaller organisations in terms of reporting and return; it is hoped that nothing in the legislation will act as a barrier or a deterrent to the volunteer committee member, on whom so much charitable work depends. At the same time, all charities must be in a position to ensure that they are accountable to their members and to the wider public and they should be properly supported to ensure that this is the case.

Charity Trustees

Whilst there is no definition of the roles of the charity trustee, or the voluntary committee member, Supporting Communities NI would draw the attention of the Committee to the work being facilitated by NICVA on the promotion of Good Governance in the community and voluntary sector. In all, the participation of the volunteer committee member should be encouraged and it is important that this legislation does not become either a barrier or a deterrent to that involvement and active citizenship.

Public Charitable Collections and Fundraising

The matter of fundraising is crucial to the work of all groups, whether through public or other grant funding or through local fundraising opportunities. Smaller local groups who undertake local fundraising may find the proposals in this Bill as applying a brake to some of their fundraising and collection, particularly if a certificate and a permit will be required. It is understood that the proposed legislation provides for local short term collections exempt from certificate and permit; it is difficult to see how the commission would be able to control and monitor such a diverse range of activities and this responsibility might be better placed with local councils with greater local knowledge.

The Methodist Church in Ireland

Meaning of “charitable purpose”
The “public benefit” test

Para 3(2) In determining whether that requirement is satisfied in relation to any such purpose, it is not to be presumed that a purpose of a particular description is for the public benefit.

Comment

We continue to be concerned that with regard to religion there is to be no presumption of public benefit. We recognise that this is the situation in both Scottish and English/Welsh legislation. We also recognise that in RoI draft legislation there is such presumption. In the interest of N/S harmonisation we would respectfully suggest that it would be more appropriate for N Ireland legislation to follow RoI in this area rather than Scotland or England/Wales.

Meaning of “charitable purpose”

Para (3) (2) In subsection (2) -

(a) in paragraph (c) “religion” includes –

(i) a religion which involves belief in more than one god, and

(ii) any analogous philosophical belief (whether or not involving belief in a god)

Comment

We appreciate that as written this sub-paragraph implicitly recognises Christianity as a religion; we believe that this recognition ought to be explicit.

We also recognise that analogous philosophical beliefs are provided for in this Bill. We believe that this position is correct in that while, as Christians, we do not subscribe to such a view nevertheless others clearly do and it would be quite iniquitous for Christianity and other religions to claim benefits for themselves while denying others those benefits. We would suggests however that analogous philosophical beliefs ought to be provided for as a separate entity rather than, as suggested, under the “umbrella” of religion. For these reasons we would suggest a re-wording of sub-para (3) to include a new sub-para (4) as outlined below together with the necessary consequential paragraph number changes.

Para (3) (2) In subsection (2) -

(b) in paragraph (c) “religion” shall be understood as –

(i) a belief in one, or more than one, god.

Para (4) The provisions of this Bill shall extend to any analogous philosophical belief (whether or not involving belief in a god).

Annual statements of accounts

Para 65 (1)

We welcome this para and understand that a Schedule/Regulations regarding this will be developed at any early stage. We would suggest that in the process of this development churches, and indeed other charities, ought to be consulted.

Para 65 (3)

In the normal course of events a figure of income not exceeding £100,000 would seem to be appropriate. There will however almost certainly be occasions when e.g. even a modest legacy will take a church over this limit. We would suggest that in such an event rather than “triggering” a more rigorous form of accounting that a mechanism be developed to take account of an unusual and not representative year for accounting purposes. It might be that e.g. the cumulative income for say 5 years should not exceed £500,000 (or £600,000) would ameliorate this situation.

Religious Charities

Paras 165, 166

We warmly welcome these paragraphs and would believe that this inclusion accurately reflects the nature of society in N Ireland.

S Wesley Blair (Revd Dr)
Revd Dr S Wesley Blair, Chairman
12 Ardenlee Avenue, Belfast BT6 0AA
Telephone: 028 9028 8303
E Mail: wesleyblair@hotmail.com

The Northern Ireland Council
for Ethnic Minorities

Introduction

NICEM is an umbrella organisation representing the interests of black and minority ethnic groups in Northern Ireland. Currently we have 25 affiliated black and minority ethnic groups as our full member, which represents most of the black and ethnic minority communities in Northern Ireland. Our vision is of a society where differences are recognised, respected and valued, a society free from all forms of racism and discrimination, where human rights are guaranteed. NICEM works in partnership, to bring about social change, by achieving equality of outcome and full participation in society.

We welcome the Department of Social Development published the Charities Bill, which is long overdue and provides statutory definitions of charity and charitable purpose; establishes a Charity Commission for Northern Ireland and a Charity Tribunal; creates a Register of Charities for Northern Ireland; and introduces a new form of charitable body, namely the Charitable Incorporation Organisation; set out new rules with regard to fundraising and collections.

NICEM has reservations about charities outside of Northern Ireland not having to register in the same way as charities established in Northern Ireland. We welcomes the accounting thresholds and auditing requirements and the provisions for the use of independent examinations but questions what the requirements are for small charitable companies, in particular black and minority ethnic (BME) sector.

We have a specific reservation about the creation of a new category of Religious Charities which is not compile with both the Human Rights Act and section 75 requirements.

Meaning of Charitable Purpose (Clause 2)

We welcome to extend the current four heads of charity (relief of poverty, advancement of education, advancement of religion and advancement of arts and culture) will be replaced by 12 charitable purposes. The expansion of the definition of charity helps to reflect the wide range of charitable organisations in our society and will modernised the current charity law. The new additions should help to recognise and deem charitable the work of many Northern Ireland groups in the areas of peace and reconciliation, as well as addressing racism, sexism, sectarianism, homophobic, ageism, diabolism, etc. in our society. For example NICEM is under the Inland Revenue Charitable Status with the purpose to promote racial equality in Northern Ireland.

The Charitable Purpose Clause also reflects the definition within the Charities Bill for England and Wales in which ensure consistency with UK tax relief matters and that Northern Ireland charities receive comparable financial assistance.

We support the broad interpretation of the advancement of religion which will include the belief in more than one god and any analogous philosophical belief which does not have to involve belief in a god. This interpretation is in line with the Human Rights Act 1998.

We also note that the advancement of amateur sport now includes games which promote health by involving mental skill or exertion. In the draft Order that was consulted on, it was games which promote health by involving physical skill only.

We also welcome the twelfth purpose which provides for the ongoing development and flexibility of charitable purpose over time. This save guard clause will give both the Commission and the Tribunal to interpret widely on any new charitable purpose over time.

The Public Benefit Test (Clause 3)

NICEM agrees that in order to register as a charity in Northern Ireland, an organisation must have one or more of the charitable purposes as listed in the Order and it must provide public benefit in Northern Ireland or elsewhere. We also agrees that the public benefit test should be set out in legislation and supports the public benefit test which is outlined in the Bill. NICEM agrees that the public benefit test will take into account any benefit to individuals who are not legitimate beneficiaries and consider if their activities would be detrimental to the public. The test will also consider whether any conditions on obtaining that benefit are unduly restrictive such as any charge or fee for the benefit. We firmly believes that this will help ensure that charities which levy a high charge or fee, such as a private school, will have to demonstrate charitable activity.

NICEM also welcomes that the Commission must issue guidance on the public benefit requirement and consult on this before the relevant guidance is issued. However NICEM is concerned at the inclusion of the Clause 4(4)(b) which permits the Commission not to consult before revising any such guidance if it considers that it is unnecessary to do so. This clause will not compile with section 75 requirements.

As the public benefit test will be applied in line with the guidance, it is extremely important that the Commission be required to consult on this guidance. The latter is essential as some of our members are concerned about the application of this test and the implications that it may have on their future work. It would be in the interests of the charity sector to have assurances from the new Commission, for example, that charities which are pursuing their charitable purposes have the right to advocate on behalf of their beneficiaries.

Perhaps the wording in the Scottish Bill would make this much clearer which states that “OSCR must, after consulting representatives of the charitable sector and such other persons as it thinks fit, issue guidance on how it determines whether a body meets the charity test.” We urge the Committee to adopt the Scottish text in Clause 4(4)(b) and to make designation of the Commission under section 75.

The Charity Commission for Northern Ireland (Clause 6)

NICEM supports the establishment of the Charity Commission for Northern Ireland both from within BME sector, the voluntary and community sector and from the wider public.

We welcome this new regulator of charities which will have powers of investigation and enforcement. Effective regulation of all charities operating in Northern Ireland should enhance public trust and confidence in charities.

The Commission will have both a regulatory and an advisory function. NICEM has concerns that there needs to be a clear distinction between regulation and more general guidance. It was agreed that the Commission should give clear focus on regulatory advice. Independent umbrella bodies in the sector, such as NICEM, should deliver the more general advice giving. NICEM firmly believes that if the Commission is going to give out advice on best practice and regulation, then it should communicate clearly that the advice is on best practice and not instruction on mandatory requirements. It is envisaged that the capacity of those organisations with an advice role on charity and governance matters will be stretched when the new Commission comes into being and the Department needs to resource these organisations accordingly.

The members of the Commission are to be appointed by the Department however the Bill does not provide detail about how the board members are to be appointed and what type of person is not eligible to be appointed, namely elected representatives. NICEM suggests that these details should be incorporated into Schedule 1 of the Bill to ensure the independence of the new Commission. We also urge the Committee to recommend that the appointments to the board of the Commission should be overseen by the Office of the Commissioner for Public Appointments (OCPA) to ensure that the appointments are made on merit and in a fair and open way.

The Bill states that at least one member of the Commission is to be a barrister or solicitor of seven years standing. NICEM would question whether this requirement for at least one member to be legally qualified is sufficient or would it not be more prudent to require one member of the Commission to be drawn from both the Northern Ireland Bar Council and the Northern Ireland Law Society?

NICEM has reservations about the independence of the new Commission. We would question if the new Commission would be able to make truly impartial decisions as the provisions in the Bill with regard to staffing, for example, require the Commission to get approval from the Department. Schedule 1 of the Bill provides that the Commission may make arrangements for secondments from the civil service. Whilst NICEM does not disagree that this should be possible, we are concerned that the staff of the new Commission should not be made up entirely of people seconded from government departments.

The Commission is going to have a huge task of carrying out its everyday functions such as registering charities, maintaining the register, applying the public benefit test, drawing up guidance, carrying out investigations, issuing public collection certificates and permits. NICEM stresses the need for the Commission to be adequately resourced in order to fulfil all of these functions otherwise the Commission could end up hindering the good administration of charities rather than helping them.

It is recognised that this Commission must build on and maintain strong links to other charity regulators in the UK and the Republic of Ireland. The continuation and strengthening of existing relationships with such bodies will be essential for the provision of and access to information for charities that operate across the different jurisdictions, especially with regard to registration and reporting.

Charity Tribunal (Clause 12)

NICEM welcomes the creation of a Charity Tribunal to allow for charities, or a body seeking charitable status, to question and appeal decisions, orders or directions of the Commission.

Registration of Charities (Clause 16)

NICEM welcomes the establishment of a Register of Charities which is to be maintained by the Commission. But we question, however, the change of wording from the draft Order which was consulted on. The draft Order stated that:

“Every charity which is established or operates in Northern Ireland must be registered in the register of charities.”

but the wording in the Bill states that:

“Every institution which is a charity under the law of Northern Ireland must be registered in the register of charities.”

NICEM questions if this new form of words is sufficient to ensure that every charity which operates in Northern Ireland will be required to go on the register. We have concerns that from UK wide and all Ireland bodies about the accounting and reporting requirements of all the regulators in different jurisdictions, however there was an understanding of the need for all charities which operate in Northern Ireland to be on the register. Clause 167 of the Bill is concerned with institutions which are not charities under the law of Northern Ireland. We question whether this article creates a separate non-compulsory register for those charities that fall under this category. Whilst NICEM agrees that the reporting requirements for UK wide and all-Ireland charities should not be too onerous, NICEM has reservations about the registration process of these institutions. There is no cross reference to Clause 167 at Clause 16 under the Register of Charities. Also under Clause 16(4) there is no requirement to indicate if the charity is a designated religious charity.

We welcomes the positive outcomes that will arise from having a register that is open to public inspection which should help promote transparency and public confidence. When the register is fully up and running, the public will be able to check the legitimacy of a charity which should help to increase public confidence in charities. For example, if a member of the public had concerns about door to door collections they could contact the Commission and find out whether the organisation is a legitimate charity or not.

NICEM looks forward to the publication of a schedule setting out a timetable for the registration process of charities as currently it is unclear what the process will look like and when this is going to happen. This should help to alleviate the concerns of charities about the registration process.

Charity Accounts, Reports and Returns (Clause 64 – 73)

Clause 66(10) in the Bill (as well as in other parts) states that “Nothing in this section applies to a charity which is a company”. Clause 104 under the Charitable Companies part of the Bill outlines the new upper accounting thresholds but there is no mention of those charitable companies that fall under the £90,000 threshold. This indicates that charitable companies with an income under £90,000 are neither required to have an audit nor an independent examination but unincorporated organisations with the same income are required to carry out an independent examination.

NICEM understands that the new Companies Act 2006 (UK-wide legislation) will permit charitable companies which qualify as small under company law to be scrutinised under the provisions of charity law but there is no reference to this in the Bill.

Genearl Interpretation: Charity Trustees (Clause 180)

The Bill defines a charity trustee as:

“the persons having the general control and management of the administration of a charity”

it does not define what the general duties of charity trustees are to be although it defines the duties of a trustee of a Charitable Incorporated Organisation in Schedule 7.

Public Charitable Collections (Clause 130 – 147)

NICEM welcome the present system for licensing street and house-to-house collections is to be replaced with new legislation covering all public charitable, philanthropic and benevolent collections. It is long overdue to regulate the street and house-to-house collection.

The new legislation provides for local short-term collections which will be considered exempt from the requirement to obtain a public collections certificate and a permit to collect. This will help the public confidence on the public charitable collections.

NICEM understands that the provisions laid out in the draft Order do not cover lotteries or internet fundraising. We would urge the Committee to consider cover both, in particular internet fundraising.

Control of Fundraising (Clause 149-158)

NICEM welcome the Bill will bring in new controls of fundraising for charities that use professional fundraisers and commercial participators. The Bill states that there must be agreements in place with prescribed requirements. The existence of a written agreement may protect a charity or allow redress in rare cases where a professional fundraiser or commercial participator seeks to exploit a charity or charitable beneficiaries.

Professional fundraisers will be required to indicate which institutions will benefit, how the fundraiser’s remuneration in connection with the appeal is to be determined and the amount of that remuneration. Commercial participators will also have to indicate the institution(s) to benefit as well as the notifiable amount that will be given to the institution(s). This will be of great benefit to the public, enabling them to be more discerning about where and to whom they make donations.

Religious Charities (Clause 166)

There will be a new category of “Religious Charities” created by the Bill. In order to qualify as a “Religious Charities” sub-section (3) sets out the conditions which are as follows:

(a) has the advancement of religion as its principle purposes;

(b) has the regular holding of public workshop as its principal activity;

(d) has a membership of at least 1000 persons who are –

(i) resident in Northern Ireland, and

(ii) at least 16 years of age; and

(e) has an internal organisation such that –

(i) one or more authorities in Northern Ireland exercise supervisory and disciplinary functions in respect of the component elements of the charity, and

(ii) those elements are subject to such requirements regarding the keeping of accounting records and auditing of accounts as appear to the Commission to correspond to those required by Part 8.

NICEM has strong reservation on Clause 166 for two main reasons. Firstly sub-section (3) will have detrimental impacts on other minority religions, either they cannot qualify as the result of both the numerical requirements and duration to establish such religion in Northern Ireland. Secondly the proposed clause will not compatible to both Article 9 and 14 of the European Convention of Human Rights and Fundamental Freedom [ECHR] (the rights for religion and belief and non-discrimination). Both the numerical and duration test will not compile with the proportionality test which is the cornerstone of the jurisprudence of the ECHR.

If the whole purpose of Clause 166 is to give out pubic fund, through government core funding programme, to the new Religious Charities category, the Committee should take more robust approach to scrutinise the process. Public fund must be public accountable and how the new Commission and the Department to police at what point activities are deemed charitable and what point activities are deemed to be religion.

For further information and/or queries about this submission, please contact the following:

Patrick Yu
Executive Director
NICEM
Ascot House, 3/F
24-31 Shaftesbury Square
Belfast
BT2 7DB
Tel: 028 9023 8645
Fax: 028 9031 9485
Email: patrickyu.nicem@btconnect.com

The Northern Ireland Council
for Voluntary Action

Executive Summary

1.0 Introduction

1.1 NICVA is the umbrella representative organisation for the voluntary and community sector in Northern Ireland with a membership of over 1,000 organisations.

1.2 NICVA welcomes the publication of the Charities Bill and commends the Assembly’s commitment to reforming charity law. The updating and modernisation of charity legislation including the introduction of a regulatory system should help ensure that charities are properly run and enhance public support and confidence in charities. Our full response to the Bill is set out in an accompanying document.

2.0 Key issues

2.1 NICVA welcomes the definition of charity as well as the extended list of charitable purposes which outlines the 12 heads of charity – see paragraph 2.1 of our full response.

2.4 NICVA supports the need for the Commission to give advice on matters of regulation but believes there needs to be a clear distinction between regulation and more general guidance. The Commission should give clear focus on regulatory advice and the more general advice giving should be delivered by independent umbrella bodies in the sector – see paragraph 2.5.

2.5 We are concerned that the staff of the new Commission should not be made up entirely of people seconded from government departments – see paragraph 2.7.

2.6 NICVA stresses the need for the Commission to be adequately resourced in order to fulfil all of its functions – see paragraph 2.8.

2.7 NICVA welcomes the establishment of a Register of Charities. NICVA questions, however, the new wording at Article 16(2) of the Bill and asks if it is sufficient to ensure that every charity which operates in Northern Ireland will be required to go on the register – see paragraph 2.11.

2.8 NICVA questions whether Article 167 (institutions which are not charities under the law of Northern Ireland) creates a separate non-compulsory register for those charities that fall under this category – see paragraph 2.11.

2.9 The wording in subsection (3) of Article 66 should make reference directly to the fact that it is referring to charities with an income under £100,000 – see paragraph 2.14.

2.10 NICVA particularly welcomes the provisions for the use of independent examinations for smaller charities and the provisions for the type of person who can carry them out.

2.11 There does not appear to be any auditing or examination requirements for those charitable companies that fall under the £90,000 threshold but unincorporated organisations with the same income are required to carry out an independent examination – see paragraph 2.16.

3.0 General issues

3.1 NICVA makes comment on numerous other issues including: charity trustee duties; appointment of Commission board members; fundraising and collections; auditing and accounting requirements.

1.0 Introduction

1.1 NICVA is the umbrella representative organisation for the voluntary and community sector (the sector) in Northern Ireland with a membership of over 1,000 organisations – 936 full members (independent voluntary and community organisations) and 87 subscribers (including statutory bodies which have an interest in or a relationship with the sector). NICVA offers comprehensive advice to members and other organisations in the voluntary and community sector on governance, charity law, funding, finance, personnel and policy matters. NICVA also works to ensure that the view of the sector is represented to government and policy makers.

1.2 NICVA has long recognised the need for the modernisation of charity law and as such has been working continuously over the years to communicate the key proposals from previous charity law consultations to the sector and in turn represent the views and concerns of the sector to the Department for Social Development (the Department). The most recent of which was the draft Charities (NI) Order in 2006 when NICVA co-hosted consultation seminars with the Department’s Charity Branch.

1.3 NICVA welcomes the publication of the Charities Bill and commends the Assembly’s commitment to reforming charity law. The updating and modernisation of charity legislation including the introduction of a regulatory system should help ensure that charities are properly run and enhance public support and confidence in charities.

2.0 Specific Comments on the Charities Bill

Part 1:
Meaning of Charitable Purpose

2.1 NICVA welcomes the definition of charity as well as the extended list of charitable purposes which outlines the 12 heads of charity. The expansion of the definition of charity helps to reflect the wide range of charitable organisations. The new additions should help to recognise and deem charitable the work of many Northern Ireland groups in the areas of peace and reconciliation and/or addressing sectarianism and racism. We support the broad interpretation of the advancement of religion which will include the belief in more than one god and any analogous philosophical belief which does not have to involve belief in a god. We particularly welcome the fifth new purpose “the advancement of citizenship or community development” which includes the promotion of civic responsibility, volunteering, the voluntary sector or the effectiveness or efficiency of charities – which should make it easier for support networks and infrastructure bodies within the sector to achieve charitable status. We also welcome the twelfth purpose which provides for the ongoing development and flexibility of charitable purpose over time.

The public benefit test

2.2 NICVA agrees that in order to register as a charity in Northern Ireland, an organisation must have one or more of the charitable purposes as listed in the Bill and it must provide public benefit in Northern Ireland or elsewhere. We agree with the wording of the public benefit test as set out in the Bill which will take into account if any conditions on obtaining that benefit are unduly restrictive such as any charge or fee for the benefit.

2.3 NICVA welcomes the provision that the Charity Commission must issue guidance on the public benefit requirement and consult on this before the relevant guidance is issued. However we have concerns with the inclusion of the clause in Article 4(4)(b) which permits the Commission not to consult before revising any such guidance if it considers that it is unnecessary to do so. As the public benefit test will be applied in line with the guidance, it is extremely important that the Commission be required to consult on this guidance. The latter is essential as some of our members are concerned about the application of the public benefit test and the implications that it may have on their future work. We suggest that the wording should be similar to that in the Scottish Act which reads that:

“OSCR must, after consulting representatives of the charitable sector and such other persons as it thinks fit, issue guidance on how it determines whether a body meets the charity test.”

Part 2:
The Charity Commission for Northern Ireland

2.4 NICVA welcomes the establishment of the Charity Commission (the Commission) for Northern Ireland and believes that there is overwhelming support for it from both within the voluntary and community sector and from the wider public. NICVA endorses the Commission’s objectives and general functions. In particular, we welcome its investigative and enforcement powers. We believe that effective regulation of all charities operating in Northern Ireland should enhance public trust and confidence in charities.

2.5 The Commission will have both a regulatory and an advisory function. Whilst NICVA supports the need for the Commission to give advice on matters of regulation, there needs to be a clear distinction between regulation and more general guidance. The Commission should give clear focus on regulatory advice and the more general advice giving should be delivered by independent umbrella bodies in the sector. NICVA believes that if the Commission is going to give out advice on best practice and regulation, then it should communicate clearly that the advice is on best practice and not instruction on mandatory requirements. It is envisaged that the capacity of those organisations with an advice role on charity and governance matters will be stretched when the new Commission comes into being and the Department needs to resource these organisations accordingly.

2.6 The members of the Commission are to be appointed by the Department however the Bill does not provide detail about how the board members are to be appointed and what type of person is not eligible to be appointed, namely elected representatives. NICVA suggests that these details should be incorporated into Schedule 1 of the Bill as is the case in the Scottish Act (see Appendix 1) to ensure the independence of the new Commission. We also urge the Committee to recommend that the appointments to the board of the Commission should be overseen by the Office of the Commissioner for Public Appointments (OCPA) to ensure that the appointments are made on merit and in a fair and open way. The Bill states that at least one member of the Commission is to be a barrister or solicitor of seven years standing. NICVA would question whether this requirement for at least one member to be legally qualified is sufficient or would it not be more prudent to require at least two members of the Commission to be legally qualified?

2.7 Schedule 1 of the Bill provides that the Commission may make arrangements for secondments from the civil service. Whilst NICVA does not disagree that this should be possible, we are concerned that the staff of the new Commission should not be made up entirely of people seconded from government departments. NICVA would urge the Committee to recommend a limit to the number of secondments from the civil service so that the Commission is truly independent and to help ensure that Commission staff are recruited on merit so that there are staff members who have a good working knowledge of charities and the relevant legislation.

2.8 The Commission is going to have a huge task of carrying out its everyday functions such as registering charities, maintaining the register, applying the public benefit test, drawing up guidance, carrying out investigations, issuing public collection certificates and permits. NICVA stresses the need for the Commission to be adequately resourced in order to fulfil all of these functions otherwise the Commission could end up hindering the good administration of charities rather than helping them.

2.9 It is recognised that this Commission must build on and maintain strong links to other charity regulators in the UK and the Republic of Ireland. The continuation and strengthening of existing relationships with such bodies will be essential for the provision of and access to information for charities that operate across the different jurisdictions, especially with regard to registration and reporting.

Part 3:
Charity Tribunal

2.10 NICVA welcomes the creation of a Charity Tribunal to allow for charities, or a body seeking charitable status, to question and appeal decisions, orders or directions of the Commission.

Part 4:
Registration of Charities

2.11 NICVA welcomes the establishment of a Register of Charities which is to be maintained by the Commission. NICVA questions, however, the change of wording from the draft Order which was consulted on. The draft Order stated that:

“Every charity which is established or operates in Northern Ireland must be registered in the register of charities”

but the wording in the Bill states that:

“Every institution which is a charity under the law of Northern Ireland must be registered in the register of charities.”

We would ask the Committee to consider if this new form of words is sufficient to ensure that every charity which operates in Northern Ireland will be required to go on the register. At the time of the consultation on the draft Order, whilst there were concerns from UK wide and all Ireland bodies about the accounting and reporting requirements of all the regulators in different jurisdictions, there was an understanding of the need for all charities which operate in Northern Ireland to be on the register. Article 167 of the Bill is concerned with institutions which are not charities under the law of Northern Ireland. NICVA questions whether this article creates a separate non-compulsory register for those charities that fall under this category. We would also recommend that a reference to Article 167 be made at Article 16 under the Register of Charities. NICVA also recommends that under 16(4) the register should indicate if the charity is a designated religious charity.

2.12 NICVA welcomes the positive outcomes that will arise from having a register that is open to public inspection which should help promote transparency and public confidence. When the register is fully up and running, the public will be able to check the legitimacy of a charity which should help to increase public confidence in charities. For example, if a member of the public had concerns about door to door collections they could contact the Commission and find out whether the organisation is a legitimate charity. To alleviate the concerns of charities there should be a schedule setting out a timetable for the registration process as currently it is unclear what the process will look like and when this is going to happen.

Part 8: Charity accounts, reports and returns

2.13 NICVA agrees with the requirement that all charities will be required to keep proper accounting records and we welcome the Department’s decision to bring the accounting thresholds and audit requirements in line with the rest of the UK. However, NICVA questions why the asset test has not been included in the Bill. In the draft Order 2007 Article 68(1)(b) would have required a charity to carry out a full audit if their gross income in that year exceeded £100,000 and at the end of the year the aggregate value of its assets (before deduction of liabilities) exceeded £2.8 million. We recommend that this is included in the Bill.

2.14 Article 66 and its subsections set out the audit and examination requirements for a charity’s accounts. We find this section quite confusing. The first two subsections refer to a full audit of accounts and this is clear. The next subsection 66(3) sets out the requirements (we believe) for those charities under the £100,000 threshold however it doesn’t say this clear enough. Then subsection 66(4) states the auditing and examination requirements for charities of an income of between £100,000–£500,000. We would strongly recommend that these subsections are made clearer. The wording in subsection (3) should make reference directly to the fact that it is referring to charities with an income under £100,000. Also, would it not make more sense for subsection 66(4) to be moved to 66(3) as this band follows on directly after subsection 66(1)and (2) and then have subsection 66(3) moved to 66(4)? This would then mean that the auditing and examination requirements would read more easily in a hierarchy of requirements from the strictest requirements coming first and the least onerous for the small charities coming last.

2.15 NICVA particularly welcomes the provisions for the use of independent examinations for smaller charities and the provisions for the type of person who can carry them out. We recommend that the Commission consults with the Association of Charity Independent Examiners (ACIE) to explore what constitutes an independent examination and issue guidance to the sector.

2.16 Article 66(10) in the Bill (as well as in other parts) states that “Nothing in this section applies to a charity which is a company”. We find this somewhat confusing. Whilst we appreciate that Article 104 under the Charitable Companies part of the Bill outlines the new upper accounting thresholds, there is no mention of those charitable companies that fall under the £90,000 threshold. This indicates that charitable companies with an income under £90,000 are neither required to have an audit nor an independent examination but unincorporated organisations with the same income are required to carry out an independent examination. NICVA is under the understanding that the new Companies Act 2006 (UK-wide legislation) will permit charitable companies which qualify as small under company law to be scrutinised under the provisions of charity law but there is no reference to this in the Bill. According to guidance issued by the Charity Commission of England and Wales:

“Charitable companies which qualify as a small company under company law will become subject to the scrutiny regime of the Charities Act 2006. This will mean that, in due course, company charities will be subject to the same independent examination and audit regime, depending upon their gross income and gross assets, as all other charities. Once these changes take effect, only those charitable companies that do not qualify as small companies will remain subject to the audit regime of the Companies Acts.”

We recommend that appropriate wording is incorporated into the Bill to cover either the auditing or examination of the accounts of small charitable companies.

2.17 UK wide charities and those that operate throughout the island of Ireland are concerned that they may be required to draw up Northern Ireland specific accounts and believe that this would result in an unnecessary expense for them. NICVA seeks clarification on whether Article 167(3)(a) means that a charity established outside the jurisdiction of Northern Ireland will now not have to submit accounts as required under Part 8 of the Bill and if so will the “financial statement” that is required from said charities mean that disaggregated accounts will not be required if they have met the requirements of Part 8 with the charities regulator in a different jurisdiction.

Part 9: Charity Trustees

2.18 Whilst the Bill defines a charity trustee at Article 180 as:

“the persons having the general control and management of the administration of a charity”

it does not define what the general duties of charity trustees are to be although it defines the duties of a trustee of a Charitable Incorporated Organisation in Schedule 7. We appreciate that a charity trustee’s duty of care is defined in the Trustee Act (2001) but believe it would be helpful to have it stated in the Charities Bill as a lack of understanding of charity trustees’ duties can cause problems and conflicts for charities. We suggest incorporating the wording from the Scottish Bill as outlined in Appendix 2.

Part 11: Charitable Incorporated Organisations (CIO)

2.19 NICVA welcomes the introduction of the new Charitable Incorporated Organisation as a specific legal structure for charities. This additional structure for charities offers protection of trustees from personal liability. NICVA supports the provision that the CIO will be regulated by the new Commission and believes that this is a positive development for the charities.

Part 13 Chapter 1 Public Charitable Collections

2.20 NICVA welcomes the provisions laid out in the Bill to cover all public charitable, philanthropic and benevolent collections. NICVA agrees with the definitions of collections in the Bill and the definition of public place. NICVA also welcomes the inclusion of direct debit solicitation in the charitable appeal definition. We are in agreement with the requirement that an organisation must have a public collections certificate and a permit to carry out a collection in a public place however we are not convinced that the Commission should issue the permit as well as the certificate for two reasons. The first being concerns over adequate resourcing of the Commission as outlined above in clause 3.7. If the Commission is to issue the permits for the whole of Northern Ireland will it be given sufficient resources to fulfil this function? Secondly, from the previous consultation seminars, charities expressed concern that the Commission would have limited local geographical knowledge and it would therefore be best if the new local authorities issued the permits.

2.21 NICVA also welcomes the provision for local short-term collections which will be considered exempt from the requirement to obtain a public collections certificate and a permit to collect.

Part 13: Chapter 2 Control of fundraising

2.22 NICVA welcomes the requirement that charities must draw up written contracts or agreements with professional fundraisers and commercial participators. This is not only good practice but should also assist charities to better plan and monitor their interaction with such bodies or individuals. The existence of a written agreement may protect a charity or allow redress in rare cases where a professional fundraiser or commercial participator seeks to exploit a charity or charitable beneficiaries.

2.23 NICVA also welcomes the provision in the Bill that professional fundraisers will be required to indicate which institutions will benefit from the collection, how the fundraiser’s remuneration in connection with the appeal is to be determined and the amount of that remuneration. Commercial participators will also have to indicate the institution(s) to benefit as well as the notifiable amount that will be given to the institution(s). This will be of great benefit to the public, enabling them to be more discerning about where and to whom they make donations.

Appendix 1
Charities and Trustee Investment (Scotland) Act 2005

Schedule 1 The Scottish Charity Regulator (introduced by section 1)

Membership

1 (1) The Scottish Charity Regulator (in this schedule referred to as “the Regulator”) is to consist of such number of members (but not fewer than 4) as the Scottish Ministers think fit.

(2) It is for the Scottish Ministers to appoint those members from amongst those persons appearing to them to have knowledge and skills relevant to the functions of OSCR.

(3) An individual is disqualified from appointment as, and from being, a member of the Regulator if the individual is—

(a) a member of the Scottish Parliament,

(b) a member of the House of Commons,

(d) an office-holder in the Scottish Administration,

(e) an individual of such other description as may be prescribed by order by the Scottish Ministers.

Tenure and removal from office

2 (1) Each member of the Regulator—

(a) is to be appointed for such period as is specified in the appointment,

(b) may, by notice to the Scottish Ministers, resign as a member,

(c) in other respects, holds and vacates office on such terms and conditions (including remuneration and allowances) as the Scottish Ministers may determine,

(d) after ceasing to hold office, may be reappointed as a member.

(2) The Scottish Ministers may remove a member from office if satisfied—

(a) that the member’s estate has been sequestrated or the member has been adjudged bankrupt, has made an arrangement with creditors or has granted a trust deed for creditors or a composition contract,

(b) that the member—

(i) has been absent from meetings of the Regulator for a period longer than 6 consecutive months without the permission of the Regulator, or

(ii) is unable to discharge the member’s functions as a member or is unsuitable to continue as a member, or

Appendix 2
Charities and Trustee Investment (Scotland) Act 2005

66 Charity trustees: general duties

(1) A charity trustee must, in exercising functions in that capacity, act in the interests of the charity and must, in particular—

(a) seek, in good faith, to ensure that the charity acts in a manner which is consistent with its purposes,

(b) act with the care and diligence that it is reasonable to expect of a person who is managing the affairs of another person, and

(c) in circumstances capable of giving rise to a conflict of interest between the charity and any person responsible for the appointment of the charity trustee—

(i) put the interests of the charity before those of the other person, or

(ii) where any other duty prevents the charity trustee from doing so, disclose the conflicting interest to the charity and refrain from participating in any deliberation or decision of the other charity trustees with respect to the matter in question.

(2) The charity trustees of a charity must ensure that the charity complies with any direction, requirement, notice or duty imposed on it by virtue of this Act.

(3) Subsections (1) and (2) are without prejudice to any other duty imposed by enactment or otherwise on a charity trustee in relation to the exercise of functions in that capacity.

(4) Any breach of the duty under subsection (1) or (2) is to be treated as being misconduct in the administration of the charity.

(5) All charity trustees must take such steps as are reasonably practicable for the purposes of ensuring—

(a) that any breach of a duty under subsection (1) or (2) is corrected by the trustee concerned and not repeated, and

(b) that any trustee who has been in serious or persistent breach of either or both of those duties is removed as a trustee.

The Presbyterian Church In Ireland

Our Ref. CK/JJ/

4 February 2008

Marie Austin
Committee Clerk
Committee for Social Development
Room 412
Parliament Buildings
BELFAST
BT4 3XX

Dear Ms Austin

Charities Bill

I refer to your letter of 16 January.

At the outset we would like to acknowledge our appreciation to the Department for Social Development for the time given by its representatives to listen to our concerns and comments on the proposals for increased regulation of the Charity Sector in Northern Ireland. We have found the discussions helpful and recognise that the Department has taken account of some of our concerns in the drafting the Charities Bill. We would again express our support for the proposals.

Referring to the relevant sections of the legislation we would make the following comments. Some of these comments are based on the assumption that the Presbyterian Church in Ireland intends to register the central activities of the Church as one charity and that each individual congregation will also seek its own registration. We understand this will be permitted under the regulations and that as a consequence different denominations may seek to register on different basis.

1. Part 1. Introductory - Section 2 - Meaning of “Charitable Purpose”

While subsection 3 has been changed from the original draft it would still be our desire to see the words “a religion which involves belief in God” being included. Subsection (3)(a)(i) includes “a religion which involves belief in more than one god”. We recognize that subsection (3)(a) states “in paragraph (c) “religion “ includes” and therefore what follows in subsection (3)(a)(i) and (ii) is not an exhaustive list. We would however prefer the definition of religion to be more definitive and recognize our fundamental belief in one true God. As a minimum we would reluctantly agree to “a religion which involves belief in one or more god” With regard to subsection (3)(a)(ii) we are not sure those who follow an “analogous belief” would regard that as a religion but it is maybe for them to comment on that point.

2. Part 1 Introductory - Section 3 - The “Public benefit” Test

We have previously expressed our view that “the advancement of religion” should be sufficient to confirm charitable status and churches should not also have to satisfy a public benefit test. Our discussions to date would suggest that we are unlikely to convince the Department to make such a change as there appears to be a desire to have a common approach with that adopted in England and Wales and in Scotland. We understand the rationale for this approach. We would however refer you to the position adopted in the draft legislation in the Republic of Ireland where such an assumption is made. We wish to record that we have been assured in our discussion with the Department that in seeking to determine whether the requirement of a public benefit test is satisfied that the activities undertaken by the Church centrally, to which individual congregations contribute, will be taken into account in assessing whether an individual congregation satisfies the public benefit test. We have also been given a similar assurance regarding Designate Religious Charities status (Section 166) and understand that in assessing the conditions in Subsection 3 that regard will be had to e.g. the total membership of the denomination.

3. Part 4. Registration of Charities and Charities Names, Section 20 – Power of the Commission to require charity’s name to be changed

There are a number of organisation in Northern Ireland which use “Presbyterian” in their name including the Presbyterian Mutual Society, The Presbyterian Housing Association, The Presbyterian Historical Society, The Presbyterian Orphans and Children’s Society to mention a few. These organisations are separately constituted having their own legal status and are not part of the Presbyterian Church in Ireland although there is an association. The public are unlikely to be familiar with the legal position of these organisations and could interpret that the use of “Presbyterian” implies some formal or indeed legal connection. We however, would seek your assurance that the Commission will not seek to imposed any restriction on the use of “Presbyterian” in connection with existing organisations and that the use of Presbyterian would remain the preserve of the Presbyterian Church in Ireland.

4. Part 8. Charity Accounts, Reports and Returns – Section 65 Annual Statement of Accounts

We note that “the charity trustees…..shall prepare in respect of each financial year a statement of accounts complying with such requirements as to its form and contents as may be prescribed by regulations made by the Department”. While supporting a high level of transparency and accountability regarding our financial activities we are concerned about the impact over-regulation could have on those who at present give voluntarily of their services. We trust detailed consideration will be given to the “prescribed” format, that there will be full consultation with interested parties and that sufficient time for implementation will be allowed.

The finacial limit of £100,000 for preparing receipts and payments accounts is based on each financial year. As a result a charity could find in a particular year that it is unable to avail of this option e.g. if it received a large bequest. Would it therefore not be advisable to state that “providing gross income does not exceed £100,000 in the current and preceding year” trustees may elect to prepare receipts and payments accounts.

5. Part 8. Charity Accounts, Reports and Returns - Section 73 Group Accounts.

The Presbyterian Church in Ireland structures provides significant autonomy to individual congregations and presently each congregation has it own charity number. As mentioned at the start of this letter it would be our intention to register each congregation. We would therefore seek assurance that the Department would not seek to enforce a single registration for the Presbyterian Church in Ireland.

6. Part 9. Charity Trustees,

We assume that the registration process will required a list of Trustees to be provided. We seek clarification as to how this will apply in our circumstances given our governance structures which can be summarised as follows

The Presbyterian Church does have Trustees, The Trustees of the Presbyterian Church in Ireland, and they operate under the Irish Presbyterian Church Acts 1871 and 1901. They are a corporate body with perpetual succession. While having separate legal status individual Trustees are appointed by the General Assembly of the Presbyterian Church in Ireland. One of the Trustees primary roles is to hold title to church property. They do not have responsibly for the individual activities falling under the General Assembly of the Church and therefore should not be seen as in the same position as Trustees of other Charitable organisation.
The governing body of the Church is the General Assembly of the Presbyterian Church which in broad terms is constituted for 1 week during the year and is attended by ministers and a representative elder from each congregation. Approximately 1,200 members attend the General Assembly and the membership, or in particular the representative elders, will change from year to year.
At local congregational level the main governing bodies are the “Kirk Session” and “Congregational Committee”. Individual congregations will have Trustees but they have no involvement in the governance of the congregation and are mainly in place to hold legal title to congregational assets.

7. Part 14. Miscellaneous and Supplementary, Section 166- Designation etc of religious charities

We welcome the exemptions included within this section. Our understanding however was that the exemption would extend to annual changes which are made to the law of the Church. However this does not seem to be covered within the exempted sections 33 to 36.

We trust your will find our comments helpful and constructive and would be please to discuss further. Indeed we would suggest that further discussions involving the other denominations might be worthwhile.

Yours sincerely

Clive Knox
Financial Secretary
For the Board of Finance and Personnel.

Volunteer Development Agency

1. Introduction

1.1 Background to the Volunteer Development Agency

The Volunteer Development Agency welcomes the opportunity to comment on the proposed legislation the Charities (Northern Ireland) Bill 2007. The Volunteer Development Agency (the Agency) was initiated in 1991 and formally established in 1993 and is the leading organisation in Northern Ireland for the promotion and development of volunteering. The Agency provides training, information and support to volunteer-involving organisations across all sectors on issues of good practice and policy regarding volunteering, volunteer management, child protection and voluntary management committees/governance. It also plays a key role in administering grants related to volunteering for the Department for Social Development and the Department of Education.

1.2 The characteristics of management committees in the voluntary and community sector in Northern Ireland.

This information is largely based on the research Committee Matters, published by the Volunteer Development Agency in 2003. Although a number of years old, it is the only research of its kind into the structure of voluntary management committees in Northern Ireland.

“Voluntary management committees are at the heart of both the community and voluntary sectors in Northern Ireland. Anything we do to support and develop them must not only lead to more people feeling more confident and capable of working on a committee, but increase their passion, commitment and motivation”. Kevin Ford, Rural College April 1997

There are estimated to be between 42,000 and 45,000[1] places on voluntary management committees and 33,519 individuals serving in these places. 81% of these people do this as volunteers which equates to 27,150 volunteers involved in governance.
66% of individuals serving on management committees are aged 45 and over and only 3% are aged under 25 years old.
The main reason for becoming a committee member is an individuals ‘commitment to the cause of the organisation’ followed by ‘wanting to be more involved in their community’
Research findings indicate that management committees of larger organisations tend to be more structured, making more use of sub-committees and tend to have greater numbers serving on their committees. They also appear to hold on to their management committee members for much longer than smaller groups. Larger organisations are more likely to provide a formal induction process and have a budget for committee member training and development. The management committees of smaller organisations tend to have more formalised processes in terms of the election of new committee members but are more inclined to have difficulties recruiting new committee members. In addition the formal support available to committee members tends to increase with the size of the organisation.

1.3 Profile of the voluntary and community sector in Northern Ireland

This information is taken from State of the Sector IV published by NICVA in 2005.

There are estimated to be 4,500 organisations in the voluntary and community sector in Northern Ireland. The majority of these organisations will be affected by the Charities Bill.
78.5% of organisations in the sector have an income level less than £100,000. These organisations employ only 6.2% of the workforce of the sector; the vast majority of these small organisations are wholly reliant on volunteers for all aspects of their work. Over 87,000 volunteers are involved in the voluntary and community sector.[2]
The income of the sector in 2003/4 was £614.56 million, 50% of which was generated by 5% of the sector.

1.4 Definition of Governance

“Governance is about leadership and ensuring that an organisation is effectively and properly run. It has been defined as “the systems and processes concerned with ensuring the overall direction, effectiveness, supervision and accountability of an organisation”

Code of Governance for Northern Ireland, 2008

2. Memorandum in relation to specific parts of the Bill

2.1 The meaning of Charitable Purpose and the Public Benefit Test

The Agency welcomes the inclusion of volunteering within the charitable purpose “the advancement of citizenship or community development.” The Agency also welcomes the broadening of the definition of charity and the greater flexibility this gives to organisations in the voluntary and community sector. However we are concerned about the new definition used in relation to amateur sport (part 1 subsection 3 d) and note that the definition referred to in the Northern Ireland Draft Strategy for Sport and Physical Recreation 2007 -2017 is that used by the Council of Europe, which could be adapted to refer only to amateur sport, e.g.

All forms of physical activity which through casual or organised participation, aim at expressing or improving physical fitness and mental wellbeing, forming social relationships or obtaining results in amateur competition.

We would be concerned that there is discretion in relation to consultation by the Commission about the public benefit test (Article 4, 4). We feel that there should be a greater compulsion on the Commission to consult before issuing guidance on this matter.

2.2 The Commission’s general functions

We welcome the provision for the Commission to provide information in connection with it’s functions or objectives. However the Agency recommends that in view of the nature of the sector in Northern Ireland careful thought needs to be given to the support/information role of the Commission and how that relates to the role of the sector in providing support/information. The provision of support around the introduction of the new legislation needs to be resourced appropriately both within the Commission and within the Sector. This legislation has the potential to effect very positive change on the sector in Northern Ireland however this must not be at the expense of individual volunteers involved in governance. It is tempting to see the sector in terms of organizations, but the reality is that in fact, it is made up of management committees of individuals who will need support to implement this change effectively, if we are not to see a huge decrease in the number of people prepared to serve on Boards.

2.3 The Commission’s general duties

The Agency welcomes the inclusion of the general duties of the commission outlined in Part 2 Article 9 of the legislation in particular the duty to encourage the voluntary participation in charity work. This is of particular concern as the majority of individuals on management committees are volunteers and there is a need to ensure that the new Commission does not place an unreasonable administrative burden on individuals that are giving their time freely. There is a concern that disproportionate demands could make it more difficult to recruit volunteers to this important role.

In relation to the Commissions general duties we would like to suggest the following change in wording in Part 2 Article 9 .2.2

So far as is reasonably practicable the Commission must, in performing its functions, act in a way which values and safeguards the contribution of charities and is compatible with the encouragement of…

We feel that this should underpin the Commission’s work in order to make certain that in performing its functions the Commission has a role in ensuring that there is a value for the work of charities in Northern Ireland.

2.4 Part 4 Register of Charities and Charitable Names

The wording in relation to the requirement to register has changed between the consultation on the draft order and the publishing of the Bill. It is now slightly less clear in Article 16,2 whether absolutely all of the charities operating in Northern Ireland will be required to register. There needs to be greater clarity in relation to the charities register as it relates to Article 167 of the Bill, institutions which are not charities under the law of Northern Ireland. The Agency would like to support the view expressed during the consultation that it should be a requirement that all charities established in law and/or operating in Northern Ireland register with the Commission.

2.5 Part 8 Charity Accounts, Reports and Returns

The Agency welcomes the changes in the Bill in relation to thresholds in terms of arrangements for accounts which gives a degree of proportionality to the information required to be produced by charities in relation to finance. However we are concerned that the same rules of proportionality need to be provided in relation to the Annual Reports and Returns. The information required from organisations needs to be commensurate with the size of the charity concerned.

2.6 Persons Disqualified for being trustees of a charity

In relation to persons disqualified for being trustees of a charity we would like to note that in addition to the considerations outlined in Chapter 2, Article 87, 1 e in relation to removal from office by the regulators in other parts of the UK we feel that consideration ought to also be given to people removed from acting as a Trustee in the Republic of Ireland. A number of charities which operate in Northern Ireland also operate on an all Ireland basis and in border areas people may act on boards in Northern Ireland but live in Southern Ireland.

2.7 Regulation of public charitable collections

There was a strong sense among trustees when we spoke to them in relation to this part of the Bill that the Commission needs to be adequately resourced to issue the permits in relation to collections. There was a feeling that this could be better done at a more local level and the role of councils in issuing permits should be considered in order to ensure that the system reflects local circumstances. There was a concern that this new system could give rise to delay and needs to be managed efficiently in order to ensure that groups are able to get a timely response to their applications.

2.8 Application of Act in relation to designated religious charities

The Agency is concerned that this section of the Act did not form part of the wider public consultation process. Given the requirement on the Commission to be transparent in the operation of its regulatory function we feel that this sets an unhelpful precedent.

2.9 General Interpretation – Charity Trustees

The Agency welcomes the definition included in the Bill of charity trustees; however we feel that it does not go far enough in clarifying what is the expected role of these individuals. A lack of clarity about the trustees’ role can often lead to difficulties in relation to the operation of charities and it would be helpful to expand the definitions. In relation to this the Charities and Trustee Investment (Scotland) Act 2005, section 66, Charity trustees: general duties, gives a helpful basis.

2.10 Schedule 1 The Charity Commission - Annual Report

While the Commission has to provide an annual report to the Department, it would be useful for the report also to be scrutinised by the the NI Executive. This would provide the means for a greater degree of public accountability in the working of this organisation which will have wide ranging powers as laid out in this Bill.

3. Conclusion

The advent of the Charity Commission for Northern Ireland provides for greater accountability; it also represents an opportunity to increase awareness and credibility for the work of charities. However there is the potential that the regulations will create a greater and unnecessary bureaucracy. This, while not the intention of the legislation, could have the negative impact of stifling the sector. Therefore care needs to be taken in the implementation of the legislation and in the provision of support in order to ensure that it has a beneficial impact. Volunteers involved in governance will need to have support provided at a time and in a manner which is appropriate to them. Clear guidance needs to be in the public domain well in advance of change, giving people information about how the new legislation will affect them and where they can get support if they need it.

[1] It’s All About Time, Volunteer Development Agency, 2007

[2] It’s All About Time, Volunteer Development Agency, 2007

Appendix 4

Other Papers

Other Papers Submitted to the Committee

Assembly Research Paper on the proposed Charities Bill – May 2007

Assembly Research Paper on the Charities Bill – January 2008

Assembly Research Briefing Note on Designated Religious Status – January 2008

Correspondence from DSD – 10 January 2008

Correspondence from DSD – 25 January 2008

Correspondence from DSD to Equality Commission - 3 March 2008

Correspondence from DSD – 3 March 2008

Correspondence from DSD – 28 March 2008

Correspondence from DSD – 1 April 2008

Correspondence from DSD – 7 April 2008

Correspondence from DSD – 9 April 2008

Correspondence from DSD – 10 April 2008

Correspondence from DSD – 16 April 2008

Correspondence from DSD – 23 April 2008

Reasearch and Library Services

NIA Logo (Black).ai

Charity Law Reform

This briefing note identifies a number of issues which members may wish to explore in relation to the reform of charity law. Issues are identified under the following headings:

Development of Proposals and Future Timescales
Definition of Charity
The Charity Commission for Northern Ireland (CCNI)
The Charity Tribunal
Registration of Charities
Public Charitable Collections
Fund Raising

Development of Proposals and Future Timescales

In 2000, the Minister for Social Development gave a commitment to review charities legislation in Northern Ireland. An Advisory Panel to consider the issue in more detail was established in 2004. This was followed by a Department of Social Development (DSD) consultation paper in 2005[1] and further consultation on a draft Charities Order in October 2006[2] The DSD has produced short summaries of both these consultations.[3] On the whole the proposals for reform have been uncontroversial.

The Charities (Northern Ireland) Order 2007[4] (made under the Northern Ireland Act 2000) was laid before the UK parliament in January 2007. With the restoration of devolution the legislation will be considered by the Northern Ireland Assembly.

According to the 2005 consultation paper the overall policy aim is to “introduce an integrated system of registration and regulation as well as supervision and support of registered charities” In particular the proposals:

provide a definition of “charity” and “charitable purpose”
establish the Charity Commission for Northern Ireland (CCNI) and the Charity Tribunal for Northern Ireland
create a register of charities
provide for a new form of charitable body (a charitable incorporated organisation)
deal with the regulation of charities and public charitable collections.

The proposals have been heavily influenced by the outcomes of reviews of charity law, particularly in the rest of the UK, and also in the Republic of Ireland. Reform in these countries has led to the passing of the Charities Act 2003 and the Charities Act 2006 covering England and Wales and the Charities and Trustee Investment (Scotland) Act 2005. These Acts are at different stages of implementation. The Charities Bill 2007[5] was presented to the Dáil on 24 April 2007. Following dissolution of the Dáil on 29 April, it will be a matter for the incoming Government to decide when the Bill can be progressed through the Oireachtas.

Members may wish to seek clarification on the timescale and process for the introduction of legislation, and the likely timeframe for implementing the proposals if the legislation is passed.

Members may wish to seek further information from the Department on the nature of the consultation process that was carried out and what main changes have been made as a result of the consultation.

Members may wish to determine how the approach in Northern Ireland has been influenced by the review of charity legislation in other parts of the UK and the Republic of Ireland and what are the key differences.

Definition of a Charity

At present there is no statutory definition of a charity. The legal concept has been developed through case law. This has led to the grouping of charitable purposes under four main divisions: of relief of poverty; the advancement of religion; the advancement of education; and other purposes beneficial to the public. These are the categories used by the Inland Revenue to determine whether an organisation has charitable status for tax purposes.

Under the proposals, for an organisation to be considered a charity it must be established for charitable purposes only and pass a test of “public benefit” (there is no assumption that a charitable purpose is necessarily for the public benefit). The draft Order defined charitable purposes and “public benefit” (see appendix 1).

In the main the charitable purposes listed are similar to those in England and Wales, Scotland and the Republic of Ireland although there are some differences. For example, in Northern Ireland it is made explicit that the advancement of peace and community relations is a charitable purpose. The proposals regarding public benefit mirror that in Scottish legislation but are slightly different to that in England and Wales whereby public benefit does not have a statutory definition and will continue to be interpreted in accordance with existing case law.[6]

The DSD’s summary of consultation responses on the draft 2006 Order listed various specific comments made on the definitions of charitable purpose. For example, there were various comments about the definition of religion. Some of these suggested that the definition of religion should refer only to “belief in God” rather than the proposed definition of “a religion which involves belief in more than one god”, and “a religion which does not involve belief in a god” as outlined in Article 3 A.

One of the key issues arising from charity reform in other parts of the UK, which the response from the Northern Ireland Council for Voluntary Action (NICVA) referred to, has been whether certain bodies, in particular independent schools, may not meet the required criteria.[7]

Members may wish to explore how the definition of charitable purposes and the public benefit test compares with other parts of the UK and the Republic of Ireland and what are the implications of any differences for charities that operate on UK wide basis or Ireland wide basis.

Members may wish to determine the range and nature of any other specific comments made about the definition of charitable purposes arising from the consultation process, and how these comments have been addressed.

Members may wish to discuss whether there is potential for some organisations that are currently considered charities to lose their status under the proposals, and what the implications for their existing assets may be.

The Charity Commission for Northern Ireland (CCNI)

It was proposed to establish a Charity Commission for Northern Ireland (CCNI) as a non-departmental public body. The CCNI would operate the Register of Charities and perform regulatory and advisory functions. Overall responses to the consultation were supportive of the proposals relating to the CCNI. NICVA had reservations about the independence of the CCNI and suggested that there may be a conflict of interest between the proposed advisory and regulatory roles.

Members may wish to gain further information on the likely size of the Commission and how it will be staffed. In addition Members may wish to discuss why the structure of a non-departmental body was chosen, and what advantages this particular model has.

Given some of the concerns raised in the consultation members may wish to discuss with the Department how the Commission can minimise any potential conflict between its advisory and regulatory functions.

Another key point arising from the consultation was the need to ensure consistency among the other regulatory bodies in the UK and the Republic of Ireland. A Regulators Forum has been set up to encourage consistency and co-ordination in regulatory approaches in the UK.

Members may wish to obtain more detail from the Department about how consistency and co-ordination can be achieved with UK and Ireland charity commissioners, and in particular how the Regulators Forum operates.

The Charity Tribunal

Under the proposals a Charity Tribunal for Northern Ireland will be established to hear appeals against some types of decisions made by the Commission. As the 2005 consultation only sought general views on the best way to ensure appeals could be heard there was relatively little information provided about the detail of the charity tribunal. Consultation responses were however supportive in principle of an appeals mechanism.

The Institute of Fundraising Northern Ireland’s response[8] to the consultation was “concerned that issues such as the cost and length of the appeal process should be established. It has been suggested that even a local approach could be onerous and inflexible for small charities and that an additional arbitration process should be considered”.

Members may find it useful to gain further information about how the Charity Tribunal will be established and the types of powers it will have. Members may also wish to determine how “user-friendly” the tribunal will be to ensure charities, in particular smaller charities, are not put off using it.

Registration of Charities

There is currently no register of charities in Northern Ireland. It is proposed that a register of charities will be established which will be publicly accessible. It was previously envisaged that the register would be established over a phased basis with larger charities registering first.

It has been proposed that all charities will have to be registered, as is the case in Scotland. In England and Wales there are certain categories that do not have to register such as organisations with an income of less than £5,000, universities or national museums.

Members may find it useful to obtain more information about the process of establishing and phasing in of the register of charities.

Members may wish to clarify the reasons why there will not be exemptions from registration in Northern Ireland for certain charities as there is in England and Wales and what the advantages and disadvantages of the proposed approach are.

The process of registering as a charity will require charities to provide a number of “required documents and information” to the Commission, including copies of the charity’s trusts and other documents that will be determined in regulations. Consultation responses highlighted the need to ensure the regulatory burden on charities was minimised, particularly where charities have to meet requirements from other regulators in Northern Ireland.

It is also proposed that charities based outside of Northern Ireland but ‘operating’ in Northern Ireland should have to register. Again issues were raised in the consultation about the need for systems to be as straightforward as possible. The Charity Law Association’s response[9] to the consultation questioned the necessity for this provision as it “could operate as a deterrent to some organisations, which would be to Northern Ireland’s detriment.”

Members may wish to discuss how the proposals relating to registration achieve an adequate balance between the need for accountability and transparency and the need to reduce the “regulatory burden,” that charities sometimes complain of.

It may be worthwhile for Members to seek information on how many charities are estimated to operate in Northern Ireland, but are not based in Northern Ireland, and to obtain further specific information on how the registration of these charities will work in practice.

Public Charitable Collections

The present system of licensing street and house to house collections is to be replaced with the aim of ensuring public confidence in the system. Research by NICVA has revealed that individuals tend to most commonly give through donations through these types of collections.[10] Currently all street and local house collections must be licensed by the PSNI. The draft Order defines public charitable collections as either a) collections in a public place or b) door to door collections.

Those conducting public charitable collections will need to obtain a public collections certificate (which shows they are fit to collect) and a permit (for particular collections) both of which will issued by the CCNI. There are proposed exemptions for short- term local collections. Initially it was proposed that door to door collections would only require a certificate but not a permit, however this was changed for both to be required following consultation responses. Some organisations though, such as the Institute of Fundraising Northern Ireland[11], argued that “regulation should be proportionate to the scale and nature of activity” and that as door to door collections “do not raise capacity issues like street collections” they should not require to obtain a permit.

Members may wish to discuss in what specific ways the proposals governing public charitable collections will add to the current system and how the proposals will ensure a greater level of public confidence in the system of public collecting.

Members may wish to explore whether the decision to require organisations carrying out door to door collections to require a permit is a proportionate response and what potential impact this may have on those organisations that conduct such collections.

Fund Raising

Professional fund-raisers’ activities are not closely regulated in Northern Ireland. It is proposed to introduce new controls of fundraising for charities that use professional fund-raisers and commercial participators, with the aim of making professional fundraisers more accountable to the charities on behalf of whom they are collecting. Included in the new framework is the proposal that there must be agreements in place with prescribed requirements and that professional fundraisers will be required to indicate which institutions will benefit.

These provisions are similar to the rest of the UK. Further regulation in the rest of the UK is being carried out through a self-regulatory approach (the relevant legislation has reserve powers to regulate further if required). The Fundraising Standards Board[12] (FSB) is a new self-regulatory body funded by the Cabinet Office and the Scottish Executive (for the first five years). It encourages charities and other fundraising organisations to become members and deals with public complaints about fundraising activity. Memorandums of Understanding have been established with the charity commissioners to cover potential areas of overlap and eliminate any areas of duplication.

Members may wish to discuss in more detail they types of problems that have arisen to date with the lack of regulation in this area and to what extent the proposals will help raise public confidence in the system. Members may also wish to explore how the general public can be made more aware of the requirements that professional fundraisers will be under.

Members may also wish to explore the balance between statutory regulation and self-regulation in relation to fundraising and discuss how the Fundraising Standards Board links into developments in Northern Ireland.

Appendix 1: Extract from The Charities (Northern Ireland) Order 2007

Meaning of “charitable purpose”

Article 4. For the purposes of the law of Northern Ireland, a charitable purpose is a purpose which

(a) falls within paragraph (2), and

(b) is for the public benefit (see Article 5).

(2) A purpose falls within this paragraph if it falls within any of the following

(a) the prevention or relief of poverty;

(b) the advancement of education;

(d) the advancement of health or the saving of lives;

(e) the advancement of citizenship or community development;

(f) the advancement of the arts, culture, heritage or science;

(g) the advancement of amateur sport;

(h) the advancement of human rights, conflict resolution or reconciliation or the promotion of religious or racial harmony or equality and diversity;

(i) the advancement of environmental protection or improvement;

(j) the relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantage;

(k) the advancement of animal welfare;

(l) any other purposes within paragraph (4).

(3) In paragraph (2)

(a) in sub-paragraph (c) “religion” includes

(i) a religion which involves belief in more than one god, and

(ii) a religion which does not involve belief in a god;

(b) in sub-paragraph (d) “the advancement of health” includes the prevention or relief of sickness, disease or human suffering;

(i) rural or urban regeneration, and

(ii) the promotion of civic responsibility, volunteering, the voluntary sector or the effectiveness or efficiency of charities;

(d) in sub-paragraph (g) “sport” means sports or games which promote health

by involving physical or mental skill or exertion;

(e) sub-paragraph (h) includes the advancement of peace and good community relations; and

(f) sub-paragraph (j) includes relief given by the provision of accommodation or care to the persons mentioned in that sub-paragraph.

The “public benefit” test

5. —(1) This Article applies in connection with the requirement in Article 4(1)(b) that a purpose falling within Article 4(2) must be for the public benefit if it is to be a charitable purpose.

(2) In determining whether that requirement is satisfied in relation to any such purpose, it is not to be presumed that a purpose of a particular description is for the public benefit.

(3) In determining whether an institution provides or intends to provide public benefit, regard must be had to—

a) how any—

(i) benefit gained or likely to be gained by members of the institution or any other persons (other than as members of the public), and

(ii) disbenefit incurred or likely to be incurred by the public, in consequence of the institution exercising its functions compares with the benefit gained or likely to be gained by the public in that consequence, and

(b) where benefit is, or is likely to be, provided to a section of the public only, whether any condition on obtaining that benefit (including any charge or fee) is unduly restrictive.

[1]Department of Social Development (2005) Consultation on the Review of Charities Administration and Legislation in Northern Ireland in 2005.

[2] http://www.dsdni.gov.uk/dsd_charities_review.pdf

[3] Summary of 2005 consultation responses: http://www.dsdni.gov.uk/index/consultations/archived)_consultations2/consultations-dsd_charities_review.htm. Summary of 2006 Order consultation responses: www.dsdni.gov.uk/responses_summary.doc

[4] www.opsi.gov.uk/si/si2007/ draft/em/uksidem_9780337968150_en.pdf

[5] www.oireachtas.ie/viewdoc. asp?DocID=7535&&CatID=59 - 60k

[6] The Act does remove the presumption that currently exists in charity law that organisations with charitable purposes provide benefit the public. The Charity Commission is consulting on what are the principles of public benefit and the approach to assessing the public benefit: http://www.charity-commission.gov.uk/news/pbnewsindex.asp

[7] In England and Wales the new definition of charity and public benefit requirement is not expected to come into force until early 2008. The Office of the Scottish Charity Regulator is currently piloting the test for existing bodies who are regarded as charities one of which is an independent school.

[8] Institute of Fundraising Response to the Review of Charity Law in Northern Ireland: http://www.institute-of-fundraising.org.uk/current_intro.html#4. Review of Charity Law in Northern Ireland

[9] Charity Law Association Response to the DSD in Northern Ireland Consultation Paper: http://www.charitylawassociation.org.uk/wpartyjune05.html

[10] http://www.communityni.org/index.cfm/section/Publications/key/smallchange

[11] Institute of Fundraising Response to the Review of Charity Law in Northern Ireland: http://www.institute-of-fundraising.org.uk/current_intro.html#4. Review of Charity Law in Northern Ireland

[12] http://www.fsboard.org.uk/what-are-we.aspx

Reasearch and Library Services

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The Charities Bill

The Charities Bill 2007 proposes to introduce an integrated system of registration and regulation (including control of charitable fund-raising) as well as supervision and support of registered charities.

This paper seeks to assist Members in considering the Bill by providing;

Background and Context information;
Commentary on the main provisions in the Bill and issues arising from the consultation process; and
Comparisons with charity legislation in the rest of the UK and the Republic of Ireland where appropriate.

Research Papers are compiled for the benefit of Members of The Assembly and their personal staff. Authors are available to discuss the contents of these papers with Members and their staff but cannot advise members of the general public.

Summary of Key Points

An outdated legal framework, the changing nature of charities, concerns about the lack of effective regulation and developments in the rest of the UK have been key drivers in the review of charity law in Northern Ireland.

The Charities Bill (the Bill) is the outcome of an extensive development and consultation exercise. The Bill passed its First Stage on 10 December 2007 and is due to be considered at Second (Committee) Stage on 15 January 2008.

The overall policy aim of the proposals is to “introduce an integrated system of registration and regulation (including control of charitable fund-raising) as well as supervision and support of registered charities.”[1] In particular the Bill’s proposals:

provide a definition of “charity” and “charitable purpose”;
establish the Charity Commission for Northern Ireland (CCNI) and the Charity Tribunal for Northern Ireland;
create a register of charities;
provide for a new form of charitable body (a charitable incorporated organisation); and
deal with the regulation of charities and public charitable collections.

Generally the proposals have received broad support from those responding to the Department of Social Development’s consultations.

One of the key issues arising from the consultation process has been the need for a consistent and proportionate approach to regulation to avoid any adverse impact on smaller, UK or all Ireland wide charities.

The Bill provides a broad framework and further detail will be specified in regulations and guidance. The specific detail of the regulations and guidance will influence how the proposals will actually operate in practice.

Current legislative framework 322

Charities in Northern Ireland 323

GB and Republic of Ireland Developments 324

Review of Charity Law in Northern Ireland 324

Establishing the CNNI 325

Objectives and Functions 325

Views on the proposed CNNI 325

Issues Arising - Policeman or Friend? 326

Issues arising – A Proportionate and Consistent Approach 326

The Register of Charities 326

Who should register 327

Issues Arising – impact on smaller and uk wide / all ireland charities 328

The Definition of charitable purposes and the ‘public benefit’ test 329

Charitable Purposes 329

Issues Arising 329

The public benefit test 330

Issues arising - Applying the public benefit test in practice 330

approach in the Rest of the UK 330

Issues Arising 332

Incorporation of trustees 333

Disqualification and Remuneration 333

Indemnity insurance 334

Issues arising 334

Public Charitable Collections 334

Issues Arising 335

Professional Fundraisers 335

Issues Arising 336

Application of property Cy-Pres 337

Charity Land 337

Charities Bill

Introduction

The Charities (Northern Ireland) Bill[2] was introduced to the Northern Ireland Assembly and passed its First Stage on 10 December 2007. The overall policy aim of the proposals is to “introduce an integrated system of registration and regulation (including control of charitable fund-raising) as well as supervision and support of registered charities.”[3] In particular the Bill’s proposals:

provide a definition of “charity” and “charitable purpose”;
establish the Charity Commission for Northern Ireland (CCNI) and the Charity Tribunal for Northern Ireland;
create a register of charities;
provide for a new form of charitable body (a charitable incorporated organisation); and
deal with the regulation of charities and public charitable collections.

Generally the proposals have received broad support. Much will depend on how the system works in practice and further regulations and guidance will be important in this respect.

The remainder of this briefing considers the context for reform of charity law in Northern Ireland, details of the Bill’s main proposals and key issues arising from the consultation process. Experience in other parts of the UK and the Republic of Ireland is also considered. Given the Bill has186 clauses, this paper does not attempt to provide a detailed explanation of each clause. Further information on the detail of particular clauses is given in the Explanatory Notes which accompany the Bill.

Context

An outdated legal framework, the changing nature of charities, concerns about the lack of effective regulation and developments in the rest of the UK have been the key drivers in the review of charity law in Northern Ireland.

Current Legislative Framework

The current legislative framework is fragmented and it has been argued that:

Charity law has developed in a piecemeal and at times illogical and incoherent way over the centuries, many of the governing principles finding their origins in bygone times with very different values and norms.[4]

At present there is no statutory definition of a charity in Northern Ireland. The legal concept however has been developed through case law over the years, based to a large extent on the preamble to the Statute of Charitable Uses 1601. To be charitable, an organisation must have purposes that are exclusively charitable and it must be established for public benefit. In 1891, Lord McNaughten grouped charitable purposes into four divisions: the relief of poverty; the advancement of religion; the advancement of education; and other purposes beneficial to the public.[5] Statute law in Northern Ireland has, in effect, added recreation as a fifth purpose.[6] These are the broad categories used by the Inland Revenue to determine whether an organisation is deemed to be charitable for tax relief purposes.

There is no legislation specifically governing the administrative framework for charities in Northern Ireland. In practice, the majority of charities take one of three common forms: company limited by guarantee, trusts, or unincorporated associations. Charities therefore must abide by the relevant legislation in these areas.

Under the Charities Act (Northern Ireland) 1964 and the Charities (Northern Ireland) Order l987 the Department for Social Development (the Department) acts as the charity authority for Northern Ireland. Its main functions concern giving consent to the disposal of land or buildings by charity trustees who usually cannot sell, or otherwise dispose of, such property without specific consent, and making Schemes to change the objects of charities whose original functions can no longer be carried out effectively. While the Department does have some interventionist powers they are “exercised in a reactive rather than a proactive fashion”.[7]

Although some charities will be subject to regulation from other bodies there is no one regulatory system specifically for charities in Northern Ireland. Thus, it has been argued that this fragmented framework is unsuitable given the nature and role of charities today

Charities in Northern Ireland

Charities operating in Northern Ireland are part of a larger voluntary and community sector. This is a diverse sector comprising an assortment of organisations including large national charities such as Oxfam and many smaller groups. Nowadays many of these groups are closely linked with the provision of public services. Overall, the voluntary and community sector makes an important contribution to the economy of Northern Ireland as the facts from NICVA[8] illustrate:

£614 million was the estimated total income for 2003-04.
50% of all income is generated by 5% of the sector
35% of the sector’s funding comes from government.
29,000 paid employees work in the sector
4.4% of Northern Ireland’s workforce is employed in the sector
75,000 volunteers are engaged in formal volunteering
£12.72 is the average donated to charity per person per month.

Within the voluntary and community sector it is estimated that there are around 5,000 charities (as determined by the Inland Revenue) in Northern Ireland. However, there will be organisations who do not seek tax exemptions from the Inland Revenue, so the actual number of bodies who may be considered charities under the proposals could be in the region of 9-12,000.[9]

One of the issues to arise in recent years has been concern from the public about the use of charitable funds in certain instances. A particular concern in Northern Ireland has been that the lack of regulation has facilitated the activities of paramilitary groups by making possible the illicit use of money and the diversion of funds obtained from crime.[10]

GB and Republic of Ireland Developments

The proposals in the Bill have been heavily influenced by developments in charity law in GB and the Republic of Ireland. Reforms have resulted in the passing of the ‘Charities Act 2003’ and the ‘Charities Act 2006’ covering England and Wales and the ‘Charities and Trustee Investment (Scotland) Act 2005’. These latter two acts are being implemented on a staged basis. In the Republic of Ireland the ‘Charities Bill 2007’ was presented to the Dail on 24 April 2007, just prior to the elections on 29 April 2007. It has passed its Second Stage reading and was referred to the Select Committee on 15 November 2007.[11]

The Charity Commission has been in operation in England and Wales since 1993 and maintains a register of around 135,000 charities while the Office of the Scottish Charity (OSCR) has been in operation since 2006.

A key theme arising from the consultation process has been the need for co-ordination with the rest of the UK and the Republic of Ireland and the need for the regulatory framework for UK wide and all Ireland charities to be proportionate.

Review Of Charity Law In Northern Ireland

There has been extensive consultation on charity law reform in Northern Ireland. A previous review and consultation exercise took place during 1994-1996, although there were areas of disagreement on a way forward.

In 2000 the Minister for Social Development made a commitment to undertake a review of charity legislation. In March 2004 the Department established an Advisory Panel to look at various options for reform. Following the Advisory Panel’s work the Department issued a consultation paper in 2005[12] and consulted on a draft Charities Order in October 2006.[13] The Department has produced short summaries of responses received to both these consultations.[14] Responses came from a wide range of bodies and individuals and were largely favourable.

The Charities (Northern Ireland) Order 2007[15] (made under the Northern Ireland Act 2000) was laid before the UK parliament in January 2007 but with the restoration of devolution the legislation will be considered by the Northern Ireland Assembly.

The Bill

The Bill contains 14 Parts, 186 clauses and 9 Schedules. The following provides an overview of the key provisions along with comment about the effect of the proposals and issues raised during the consultation process.

The Charity Commission

As discussed earlier there is no one overall body in Northern Ireland responsible for the regulation of charities. The Bill proposes, under Part 2, to establish a new Charity Commission for Northern Ireland (CCNI).

Establishing the CNNI

Clauses 6 to 11 and Schedule 1 relate to the establishment of the CNNI. It is proposed that the CCNI will be a non-departmental public body (NDPB). The Department, through the public appointment process, will appoint members of the Commission. It will consist of a chairman, a deputy chairman and at least 3, but no more than 5 other members. It is anticipated that the Commission will initially be staffed by approximately 16 people with an estimated set up cost of £300,000 and £800,000 annual running cost.

Objectives and Functions

The CCNI’s key objectives, under Clause 7, can generally be described as:

increasing public confidence and trust in charities
promoting awareness and understanding of the operation of the public benefit requirement
promoting compliance by charity trustees with their legal obligations
promoting the effective use of charitable resources
enhancing the accountability of charities
Clauses 8 and 9 deal with the CCNI’s functions and general duties, while Part 5 deals with its information powers. Part 6 also contains provisions that cover the power of the CCNI to make schemes and act for the protection of charities. Key points are that the CCNI will:
operate the register of charities and determine access to the register;
encourage and facilitate the better administration of charities;
determine whether public permits or collection certificates should be issued in respect of charitable collections; and
investigate misconduct or mismanagement in charities (the Commission is given powers to address failings in these areas including suspending trustees or freezing charities assets)

Views on the Proposed CNNI

Overall responses to the Department’s consultations were supportive of the proposals relating to the establishment of the CCNI. For example, the Rural Development Council responded that, “These actions will lead to greater transparency and accountability and signal a commitment to the work and progression of charities in Northern Ireland.”[16]

Issues Arising - Policeman or Friend?

There were some comments made in consultation responses about a potential conflict in the dual role of the CCNI ‘regulating and advising’ the sector. Many who attended NICVA’s[17] consultation seminars felt that the Commission should be responsible for regulatory advice, while umbrella groups within the sector should be responsible for giving general advice to make clear the regulatory role of the Commission. The need for a distinction between general advice and advice on legal requirements has been recognised by the Better Regulation Task Force for Civil Society. Their 2005 report stated, in relation to the Charity Commission in England and Wales, that “it is important that the Charity Commission avoid the risk of regulatory creep that occurs when advice is not clearly separated from legally binding obligations.”[18]

The Department’s response to the consultation stated that:

We feel that the regulator is best placed to offer advice on meeting the requirements of the legislation and the regulator. However, there is much to be said for the idea of clearly labelling advice as ‘mandatory’ or ‘best practice’, and we expect the proposed CCNI to follow this approach.[19]

The Department has also confirmed that they expect umbrella organisations within the voluntary sector to continue to have an important advisory role in more general areas related to the operation of charities.[20]

Issues Arising – A Proportionate and Consistent Approach

A general theme arising from the consultation processes has been the need for the Commission’s regulatory regime to be proportionate, particularly in relation to smaller charities. The Bill under Clause 9 (2) point 4 states that in carrying out its duties the Commission must ‘have regard to the principles of best regulatory practice’. This includes only using their powers proportionately and targeting only cases where action is needed. These actions must also be transparent and consistent.

Comments from the consultation also suggested the need for consistency with the approach taken by other UK regulators and that proposed for the Republic of Ireland. A Regulators Forum has been set up to encourage consistency and co-ordination in regulatory approaches in the UK and Republic of Ireland.

The Register of Charities

A key aspect of the CCNI’s work will be maintaining the register of charities. The aim of a register of charities is to promote transparency, public confidence, and accountability.[21]

It is proposed that the registration system should have the following features:

All Northern Ireland charities should be registered
Institutions from outside Northern Ireland, but which operate for charitable purposes in or from Northern Ireland should be registered.
Details of charities should be updated annually to ensure information is current.
All charities registered would be required to prepare annual accounts and reports to be available on request by the Department or the public.

It is anticipated that the register will be compiled on a phased basis, probably on the basis of the largest charities first, to allow staff to build up experience and to give smaller charities more time to prepare.[22] It is estimated that around 9-12,000 charities will be eligible to register.

Who Should Register

All bodies wishing formal recognition as a charity in Northern Ireland will need to register with the CCNI. This will apply regardless of the type of body or their annual income. This is the case in Scotland and that proposed in the Republic of Ireland. In England and Wales there are limited exceptions and exemptions, for example, charities with less than £5,000 annual income are exempt from registration.

Respondents to the Department’s consultation generally welcomed the provisions requiring all charities to register. The Charity Law Association considered that it would avoid the complexities involved in having excepted or exempt charities.[23] However, some consultation responses suggested that churches in particular should be exempt from registration requirements. The Department’s response to the consultation stated,

We do not feel that churches should necessarily be regulated differently from other charities, or exempted from requirements which are felt to be appropriate for all other types of charity. … Churches and similar multi-part charities will register at the level at which control is exercised, normally at the level at which accounts are prepared and overall management exercised.

In evidence to the Social Development Committee Department officials stated that ultimately it was for an organisation to consider whether it wished to register or not. Registration would bring benefits. Charities registering with the Commission will able to refer to themselves as ‘registered charities’ and as such may benefit from greater public confidence and access to funding and support that is aimed specifically at charities. Organisations would need to consider on balance whether these benefits outweighed any problems they may have with registering. In theory it would be possible for an organisation to still try and obtain charitable tax relief from the Inland Revenue without having to register as a charity. However, in practice it is likely that organisations would do both.[24]

The Bill as introduced contains a section on religious charities. Religious charities are to be designated under Section 166 and are to include ‘any component element of such a charity which is itself a charity (whether or not having as its principal purpose the advancement of religion).’ Some of the conditions which must be satisfied under Section 166 for an institution to be designated a religious charity include:

The advancement of religion as its principal purpose and regular worship as its principal activity.
Having been established for at least 10 years and has a membership of at least 1,000 persons who are aged over 16 years and normally resident in Northern Ireland.
Internal organisation that includes an authority or authorities in Northern Ireland to exercise a supervisory and disciplinary function with requirements for auditing and recording that conform to the requirements of CCNI.

Clause 166 (5) allows CCNI to withdraw designated religious status where any of the conditions above cease to apply or where CCNI (under Section 22) has conducted an inquiry and no longer feels the designation is appropriate.

Under Clause 165, sections 33 to 36 relating to the protection of property owned by a charity do not apply to designated religious charities. Therefore CCNI, on having conducted an inquiry under Section 22, cannot suspend or remove trustees etc. from membership, appoint an interim manager or give specific directions for the protection of the charity.

Issues Arising – Impact on Smaller and UK Wide / All Ireland Charities

There has also been some concern that the process of registering should be made easy, particularly for smaller charities. For example, the Law Centre (NI) consultation response stated that, “It is important that adequate support systems are available to ensure that smaller charities can obtain the advice and support they will need to complete the registration process and to comply with any subsequent reporting requirements.”[25]

A number of reporting and auditing requirements arise from being a registered charity. The proposed accounting and reporting regime for registered charities is dependent on a charities income band. Those with higher incomes will be subject to greater requirements. Originally it was proposed that the minimum threshold was set at an income level of £25,000. However, this was the one issue that caused most concern during the consultation process. Many respondents argued that the thresholds were set too low and would have a particularly onerous impact on smaller charities. Following the consultation process changes have been made so that the accounting / audit threshold levels have been raised to £100,000 which is consistent with that of the rest of the UK. As noted earlier the Commission will be under a duty to ensure that it follows best regulatory practice in carrying out its functions.

During consultation there were concerns that registration and reporting requirements should not cause charities already regulated by other bodies in Northern Ireland, or UK and all Ireland wide charities operating in Northern Ireland, additional unnecessary work.

Section 167 institutions

Part 14, Chapter 4 of the Bill includes a separate section on institutions which are not a charity under the law of Northern Ireland, but operate for charitable purposes in or from Northern Ireland. They are to be referred to as ‘a Section 167 institution’ and their trustees will be expected to produce an annual financial statement and statement of activities relating to its work in or from Northern Ireland.

The Department will have discretion to make an order for the CCNI to keep a separate register of charities that are not subject to Northern Ireland law, but wish to operate in or from Northern Ireland. The Department cannot make any draft order relating to charities from outside Northern Ireland without submitting it to the Assembly for approval.

This discretionary part of the Bill was added to avoid the situation in GB where charities registered in Wales did not meet the criteria for charitable status in Scotland when OSCR was established.

Approach in the rest of the UK

In Scotland it is a requirement that all charities with significant operations in Scotland must register with OSCR. There are no comparable requirements for Scottish charities which operate in England and Wales to register with the Charity Commission. OSCR has issued guidance on the registration of cross-border charities.[26] Monitoring for cross border charities has been suspended for the moment to enable OSCR and the Charity Commission to work on aligning monitoring processes. It is likely that consistency in monitoring processes for cross border charities will be important in Northern Ireland too.

The Definition of Charitable Purposes and the ‘Public Benefit’ Test

Part 1 of the Bill under clauses 1 to 5, deals with the definition of “charity,” “charitable purpose” and the “public benefit” test. There is currently no statutory definition of a charity in Northern Ireland. The Bill proposes to ensure greater clarity by providing a definition of charity which reflects the nature of charities today.

It will be the responsibility of the CCNI to register charities and assess whether individual charities meet the necessary criteria. Essentially, it is proposed that to be considered a charity a body:

1. must be established for charitable purposes only and

2. pass a test of “public benefit”

Charitable Purposes

Clause 2 (2) of the Bill sets out 12 different specific charitable purposes, which generally reflect existing case law. One of these purposes is a general category and should cover any purpose currently considered charitable which is not specifically defined. Clause 2 (3) provides more detail on what is meant by particular charitable purposes.

Issues Arising

Responses to the Department’s consultations were generally favourable to the proposed definition of charitable purposes. A number of specific and fairly technical comments were made about some of the definitions. In particular, there were a few comments made about the definition of religion. The proposed definition of religion as outlined in Clause 2 (3) (a) is “a religion which involves belief in more than one god”, and “any analogous philosophical belief (whether or not involving belief in a god)”. Some responses suggested that the definition of religion should refer only to a “belief in God”. The Department’s response was that they were “not minded” to “restrict it to a more limited definition of the advancement of religion than the rest of the UK.”[27] In the ‘Commentary on the Descriptions of Charitable Purposes’[28] in relation to the Charities Act for England and Wales includes the explanation that

A Supreme Being does not necessarily have to be in the form of a personal creator god; it may be in the form of one god or many gods or no god at all in the accepted understanding of the term. This is reflected in the Charities Act which states that the term “religion” includes a religion which involves belief in more than one god, and a religion which does not involve belief in a god.

The charitable purposes at a broad level are consistent with those of other UK legislation and that proposed in the Republic of Ireland. In detail they most closely resemble the English and Welsh legislation although there are some minor differences. For example, in Northern Ireland it is made explicit that the advancement of peace and community relations is a charitable purpose. In England and Wales “the promotion of the efficiency of the armed forces of the Crown, or of the efficiency of the police, fire and rescue services or ambulance services” is a defined purpose.

The specific definitions in the legislation may influence how charities’ governing documents are drafted. The slightly different definitions in England and Wales and Scotland has led to some issues being raised about GB wide charities meeting the registration requirements in Scotland and England/Wales and is one issue which the Charity Commission and OSCR are currently working through.

However, as the proposed definition in Northern Ireland is most similar to that in England and Wales it may be expected that this would be less of an issue where charities based in England and Wales that operate in Northern Ireland need to register with the CCNI. It may have more of an impact where charities based in Scotland operate in Northern Ireland.

The Public Benefit Test

The current position presumes that charities working under the heads of relief of poverty, religion and education automatically benefit the public, while all other charities have to demonstrate a public benefit arising from their work. Under the proposals for charities to be registered they will all have to prove that they meet the public benefit test. This approach is consistent with the rest of the UK and the approach proposed in the Republic of Ireland.

The majority of respondents to the Department’s consultations welcomed this change. For example, the Law Centre (NI) referred to the current “inequitable divide in the expectations placed upon charities”.[29] On the other hand there have been concerns from some religious organisations about the need to prove that they meet the public benefit test. For example, the Presbyterian Church has been reported as saying that they do not agree that churches should have to meet the test.[30]

Clause 3 (3) of the Bill sets out the broad conditions that the CCNI must “have regard to” when assessing whether the test can be met. The CCNI will also be under an obligation to provide guidance on the test with the aim of providing greater clarity to those wishing to register. The proposed definition of public benefit in the Bill mirrors that in Scottish legislation. A slightly different approach is taken in the English and Welsh legislation whereby public benefit does not have a statutory definition but will continue to be interpreted in accordance with existing case law

Issues Arising - Applying the Public Benefit Test in Practice

The proposal to remove the presumption of public benefit may have implications for bodies currently considered charitable. The Christian Institute has expressed concern that the Commission “will interpret ‘public benefit’ in line with the latest fads in political correctness.” In response to these concerns the Department has sought to reassure churches that there is “nothing to fear” from the legislation and that the Charities Commission would work with these organisations to support and meet them in their requirements.[31] It is anticipated that the vast majority of those organisations who have charitable status for tax purposes will meet the public benefit criteria.[32]

Given the broad definition of public benefit proposed in the Bill a key issue will be the detail in the guidance the Charity Commission produces[33] and in this respect it may be useful to consider the approach taken by other UK regulators.

Approach in the Rest of the Uk

In the rest of the UK there has been particular controversy over whether independent schools will be able to meet the test of public benefit. The main problem identified is how such organisations can demonstrate adequate public benefit when access to their services is limited to those who can afford to pay the fees charged. These concerns do not appear to have been so significant in Northern Ireland, perhaps reflecting the relatively small number of independent schools. Debate in the rest of the UK has also focused on other types of charities that may potentially have more difficulty in meeting the test such as private hospitals, religious bodies, universities and other charities (e.g. artistic or conservation) that charge fees or have exclusive membership.

The definition of public benefit proposed in the Bill mirrors that in Scottish legislation. OSCR’s guidance Meeting the Charity Test[34] provides further detail on each aspect and consulted[35] on how it would undertake a “rolling review” of those organisations automatically placed on the register when it was first established (i.e. those deemed as charitable by the Inland Revenue) to ensure they meet the test. Results of the pilot exercise with 16 charities already on the register found that Further Education Colleges did not meet the charity test.[36] Ministers are currently reviewing the situation and colleges have been assured that the situation will be resolved.[37] The pilot study has led to OSCR’s original proposals for the internal review being refined. In order to reduce the regulatory burden on charities, OSCR proposes to use the Charity Trustees’ Annual Report as the starting point for review. Only where this is insufficient to satisfy the charity test will the charity have to be contacted. This is expected to work for small and medium sized charities, but ‘restrictive conditions’ will most likely make it unworkable for larger and complex charities which will need to submit documentation.

In England and Wales the Charity Commission’s consultation on public benefit guidance ended in June 2007.[38] It is expected that final guidance will be issued in January 2008, prior to the relevant clauses coming into force in March 2008. Further guidance on specific sub-sectors will also be issued. Charities will include public benefit in their annual reports to the Commission from March 2009.

Both regulators have stressed that in the majority of cases organisations seeking charitable status should be able to meet the public benefit test. Furthermore, both regulators are also taking a risk-based approach to the public benefit test focusing resources on organisations which may have more difficulty in meeting the requirements. Where an organisation has difficulty in meeting the requirements the regulators will work with them to help them meet the requirements.

The need for consistency between the regulators in assessing public benefit has been recognised. The Memorandum of Understanding between OSCR and the Charity Commission states that, “the expectation is that organisations qualifying as charities in one jurisdiction but not in the other will be exceptional and few in number.”[39]

The Charity Tribunal

The Bill, under Part 3 clauses 12 to 15 (and Schedules 2 to 4) provides for the creation of a Charity Tribunal for Northern Ireland. The Department’s consultation paper highlighted the need for “clear rules of accountability in place for the work of the proposed Charity Commission” and sought views on a suitable appeals mechanism.

Establishment and Operation of the Tribunal

The Tribunal will consist of a President, legal members and ordinary members. The First Minister and Deputy First minister will jointly appoint the members of the tribunal. Further details are set out in Schedule 2

The Bill will allow Ministers to make further rules about the practice and procedure of the Tribunal, for example, in relation to the steps that must be taken before an appeal is heard and the timescales that are involved. The Tribunal will be able to award costs in certain circumstances, for example, if the tribunal considers that a decision or direction of the Commission is unreasonable

Decisions that can be appealed

The types of Commission decisions that can be appealed are set out in Schedule 3. This includes, for example, a decision by the Commission not to register an institution or to remove an institution from the register and an order requiring the accounts of a charity to be audited. If the appellant or the Commission is still dissatisfied they may appeal to the courts, but only on a point of law

Issues Arising

While there was general support from the consultation for an appeal mechanism, there was relatively little specific comment about the proposals. This perhaps reflects the broad nature of the original consultation document. There was a view expressed that the Tribunal should be easy to access.

Again the proposals are similar to legislation in the rest of the UK. In England and Wales the Tribunal is not established yet and it is likely to be at least 2008 before it is in operation. Currently appeals against the Commission’s decisions have to be made to the High Court and can be prohibitively expensive.[40] In Scotland the Scottish Charity Appeals Panel[41] was set up under the 2005 legislation and has been in operation since late 2006. No appeals have been heard yet, although there have been requests to review the decisions made by OSCR.

Charitable Incorporated Organisations (CIOs)

Part 11 of the Bill proposes a new legal form for charities - the Charitable Incorporated Organisation (“CIO”). At present charities can choose to structure themselves in a number of ways for example, as an unincorporated body or an incorporated body such as a company limited by guarantee or an industrial or provident society.

There may be a number of benefits for a charity to being incorporated, for example it can enjoy limited liability and can hold property and contracts in its own right. These benefits may be particularly beneficial for larger charities that employ a lot of staff, enter into contracts or own land or other property. However, there are strict legal requirements about annual general meetings, accounts, and audit involving company status.

The intention behind the CIO is to avoid the need for charities that wish to benefit from incorporation to register as companies and be liable to dual regulation by Companies House as well as the Charity Commission. The suggestion of a new legal form for charities was first made in the Department of Trade and Industry’s review of company law in 2001.[42] It was subsequently developed by an advisory group set up by the Charity Commission.

Issues Arising

There was relatively little comment made on this aspect of the proposals during the consultation process, other than it being viewed as a positive development. Provision for CIOs exists in the other UK legislation but further regulations will need to be made and it is likely to be at least 2008 before these are enacted. There is therefore little to learn from experience elsewhere. It is likely that a key issue will be the detail in the regulations and the extent to which they make establishing a new body as straightforward as possible.

Trustees

The Bill, under Part 9 Chapters 1 and 2 makes a number of proposals relating to “charity trustees.” There are a variety of names used to describe those controlling a charity depending on its legal form, e.g. directors of a company, trustees or committee members. ‘Trustees’ is the most widely accepted name used for all types of persons controlling a charity.

Incorporation of Trustees

Part 9 of the Bill comprises two Chapters covering clauses 74 to 95. Chapter 1 deals with the incorporation of charity trustees. Under the provisions the trustees of a charity may apply to the Commission for a “certificate of incorporation” of the trustees. Clause 74 empowers the Commission to issue a certificate of incorporation. After their incorporation the trustees may enter into contracts and sue and be sued in the name of the incorporated body. This is different to incorporating the whole charitable body, for example, by becoming a company limited by guarantee.

Disqualification and Remuneration

Part 9 Chapter 2, clauses 87 to 95 sets out a number of other provisions relating to charity trustees, including provisions concerning persons disqualified from being a charity trustee and remuneration of trustees.

Disqualifications

Under Clause 87 the Bill proposes that certain persons will be disqualified from being a charity trustee, for example, people with unspent convictions for offences involving dishonesty or deception, undischarged bankrupts or people disqualified from acting as company directors. If any person acts as a charity trustee while disqualified they will be guilty of an offence liable to a fine or imprisonment on conviction.

Remuneration

An underlying principle of charitable organisations is that trustees carry out their duties on a voluntary basis. The Bill proposes, under Clause 89, that in certain circumstances a trustee may be entitled to remuneration for services provided for the charity. This also applies to someone connected with a charity trustee where the remuneration may benefit the trustee. In clarifying the nature of services that may be entitled to remuneration the Charity Commission in England and Wales (where similar provisions exist) give an example of a trustee who is a plumber providing plumbing services to the charity.

The Bill sets out the nature of the circumstances in which such remuneration may be provided. For example, it must be in the charity’s best interests, that a minority of trustees are either paid in this way or connected to trustees who are, and that the governing document must not contain any specific provision forbidding this type of payment.

Indemnity Insurance

Trustees may wish to have trustee indemnity insurance or liability insurance which protects them from any personal liability they may have or for a breach of trust. In order to address this the Bill, under Clause 94, proposes to provide trustees with a statutory power to purchase trustee indemnity insurance and to pay the premiums with the charity’s money, subject to certain limitations and conditions.

Issues Arising

There was relatively little comment in the consultation responses on the proposals regarding trustees. Where comment was made it was generally supportive. According to NICVA in relation to the proposed incorporation power:

“The main advantage of the incorporation of charity trustees is that the charity itself can have property in its own name, whereas under the current rules, it would need a holding trustee to hold the property on its behalf. Taking away the need for a holding trustee avoids the need for the execution of deeds, transferring land and/or investments, which costs money and can be quite time consuming.”[43]

Fundraising

Fundraising is of vital importance to charities. The nature of fundraising activity has developed over the years. Nowadays, in addition to traditional forms of street and house to house collections, fundraising is often undertaken through electronic media and through modern collecting techniques such as direct debits. However, the existing legal framework in relation to such techniques is “non-existent.”[44]

Charities are also increasingly relying on professional fundraisers. Areas such as payroll giving and direct marketing campaigns are normally run on charities behalf by professional fundraisers. There has been much discussion in the media about the presence of on-street professional fundraisers. They have suffered from a poor public image and are often referred to as ‘chuggers’, short for charity muggers. Despite the importance of professional fundraising their activities are not closely regulated in Northern Ireland. This contrasts to the rest of the UK where statutory regulation is in place

Research[45] has revealed that the most popular form of giving is where individuals are approached and asked for a donation as happens through street collections. But reports over bogus charitable street collections suggest that public confidence in this type of collection could be higher.[46]

Public Charitable Collections

The current legislation governing street collections is the Police, Factories etc (Miscellaneous Provisions) Act 1916 and the legislation governing house-to-house collections is the House-to-House Charitable Collections Act (NI) 1952. The Bill, Part 13 Chapter 1 (sections 130 to 148) proposes to replace the current legislation governing street and house to house collections and introduce a modernised framework in order to improve public confidence in the system.

The Bill, under Clause 130, introduces a new concept of “public charitable collections” which are defined as charitable appeals, made either in a public place or by door to door collections. This will provide greater clarity than under the current framework. For example, in relation to door to door collections it is clear that this includes business properties rather than just residential properties.

The term ‘appeals’ includes the giving of money by whatever means. This would include, for example, direct debits. Clause 131 defines the types of appeals that are not considered public charitable collections. This includes those that take place on land occupied by places of worship.

In order to conduct these collections individuals or organisations responsible for them must obtain both a public collections certificate and a permit from the Charity Commission.

Public Collections Certificates

In essence the public collections certificate will prove that an organisation or individual is trustworthy to collect. The Bill, under Clause 138, specifies grounds on which the Commission could refuse to approve a collection certificate, for example, where the applicant has been convicted of a criminal offence, or where the amount likely to be given for charitable purposes is inadequate given the total amount likely to be obtained.

Permits

A permit will allow a collection to take place at a particular location and at a particular time. There is only one ground on which the CCNI can refuse a permit, under Clause 144, that is where it “would cause undue inconvenience” to the public or businesses. This could be, for example, where there were already collections taking place at the same time on the same day.

Short-Term Local Collections

It is proposed, under Clause 135, that short-term local collections would be exempt from the certificate and permit requirements. Although these collections are exempt from the need to obtain certificates and permits the promoter must still notify the Commission of the proposed collection.

Issues Arising

Generally consultees were supportive of the proposals in relation to public collections. There was a concern from some organisations, for example, the Law Centre Northern Ireland, that regulation in this area should not be “unduly bureaucratic.”[47]

Initially the Department proposed that door to door collections would only require a certificate, but not a permit.[48] However, some respondents to the consultation suggested that both should be required. The Department therefore changed the proposals and the draft Order required both a permit and certificate to be obtained.

Not all respondents were supportive of this change though. As the Institute of Fundraising Northern Ireland,[49] argued, “regulation should be proportionate to the scale and nature of activity” and that as door to door collections “do not raise capacity issues like street collections” they should not require to obtain a permit.

Professional Fundraisers

Part 13 Chapter 2 of the Bill proposes to introduce new controls over the use of professional fund-raisers and commercial participators. The intention behind the proposals is to increase accountability and to provide greater transparency to those making donations.

The proposals can be found in clauses 149 to 158. The following is a summary of the key proposals:

A professional fundraiser can only collect on behalf of a charity if there is a written agreement in place. The agreement must meet prescribed conditions which will be set out in regulations.
A professional fundraiser must indicate which charity they are collecting for, how they will be remunerated and, where they are collecting on behalf of more than one organization, how the proceeds of the appeal will be distributed.
Lower-paid collectors will be excluded from the requirements.
A person making a donation over £50 by credit card / debit card in response to a radio or television appeal should be able to cancel their payment within 7 days and obtain a refund from the fundraiser.
A charity can apply to the Courts to issue an injunction preventing unauthorised fundraising on its behalf.
It will be an offence to collect money for an institution which is not a registered charity by falsely claiming that it is.
The Department is given a reserve power to introduce further controls if required. In particular the regulations may impose good practice requirements on those involved in charity fundraising. A good practice requirement may be that undue pressure is not placed on members of the public to donate.

Issues Arising

Again those responding to the Department’s consultations generally welcomed these proposals. For example, NICVA suggested that the proposals would be of benefit to the public, enabling them to be more discerning about where and to whom they make donations. The Law Society (NI) thought that the existence of written contracts “will ensure better resolution of disputes where they may arise regarding the arrangements between parties.”[50]

The Institute of Fundraising, which was supportive of the proposals, already provides model written agreements between charities and professional fundraisers and commercial participators as part of its wider Code of Practice.

The approach in the Bill including the reserve powers given to the Department is consistent with the rest of the UK. Further good practice in the UK is being encouraged through a self-regulatory approach. The Fundraising Standards Board[51] (FSB) is a new body funded by the Cabinet Office and the Scottish Executive (for the first five years). It encourages charities and other fundraising organisations to become members and deals with public complaints about fundraising activity. Memorandums of Understanding have been established with the Charity Commissioners to cover potential areas of overlap and eliminate any areas of duplication. It is not clear as yet if Northern Ireland will, and to what extent, be involved in this approach.

Other Provisions

There are a range of other provisions in the Bill that aim to support the better administration of charities. A brief outline is given below.

Application of Property Cy-Pres

Part 6 of the Bill covers a range of powers designed to improve the administration of charities. It covers, for example the powers of the Commission to suspend any trustee where any mismanagement in the administration of a charity has been found. This was referred to on the section on the CNNI above.

Part 6 under clauses 26 to 30 also deals with ‘cy-pres’ schemes. Cy-pres occurs when a gift is given to charity and that gift fails or lapses. Under the 1964 Act the Charities Branch and the courts can create a scheme to change the purposes of the failed gift. Instead of going to the failed charitable purpose the gift goes to a new but related charitable purpose.

The Bill sets out the circumstances in which the original purposes of a charitable gift can be altered by the Court or Commission to allow the property given or part of it to be applied cy-pres. Consideration must be given to the spirit of the gift concerned and the social and economic circumstances prevailing at the time of the proposed alteration of the original purposes.

Under the 1964 Act there are monetary limits that define the maximum value of charity property with which the Department can currently deal; more valuable property can only be dealt with by the courts. For example, the power to make Cy Pres Schemes to change the purposes of a charity is limited to £50,000. According to the Department’s 2005 consultation paper, “These powers have proved popular with trustees, since they save the charity concerned the cost of an application to the Court.” The Department proposed that the limits on its powers to make such schemes should be abolished, giving the Charity Commission unlimited jurisdiction. This would not affect a charity’s right to apply to the Court for such a scheme if it felt this would serve its interests better than an application to the Charity Commission. The Bill therefore does not specify any monetary limits.

Charity Land

In terms of distribution of property, if a charity is being wound up, approval will have to be sought from the CCNI. This protects the public interest as the assets were gained for a charitable purpose.

Part 7 of the Bill under clauses 58 to 63 sets out provisions for the disposal of land held by or in trust by a charity not requiring an order from CCNI. These include a number of requirements in relation to obtaining professional valuations, advertising the sale, and ensuring that the terms of sale are the best obtainable. Certain disposals, for example where the purchaser has some connection with the charity, would still require consent from the Court or the CCNI.

January 2008

[1] Department of Social Development (2005) Consultation on the Review of Charities Administration and Legislation in Northern Ireland in 2005: http://www.dsdni.gov.uk/charities_consultation.doc

[2] The Charities Bill discussed in this Bill Paper was introduced by the Minister for Social Development in the Northern Ireland Assembly on 10 December 2007. It contains two sections that are additional to the Charities (Northern Ireland) Order 2007 laid before the UK Parliament in January 2007. The sections relate to religious charities and charities from, or operating outside, Northern Ireland.

[3] Department of Social Development (2005) Consultation on the Review of Charities Administration and Legislation in Northern Ireland in 2005: http://www.dsdni.gov.uk/charities_consultation.doc

[4] O’Halloran, K and Cormacain, R (2001) Charity Law in Northern Ireland

[5] Commissioners for Special Purposes of Income Tax v Pemsel (1891) AC531

[6] Cormacain, R. O’Halloran, K and Williamson, A (2001) Charity Law Matters

[7] O’Halloran, K and Cormacain, R (2001) Charity Law in Northern Ireland

[8] NICVA State of the Sector IV http://www.communityni.org/index.cfm/section/article/page/WhatIs

[9] Information provided by Department officials to the Social Development Committee 31 May 2007

[10] See discussion in Select Committee Northern Ireland Affairs, 3 May 2006 http://www.publications.parliament.uk/pa/cm200506/cmselect/cmniaf/886/6050306.htm:

[11] www.oireachtas.ie/viewdoc.asp?DocID=7535&&catID=59-60k

[12] Department of Social Development (2005) Consultation on the Review of Charities Administration and Legislation in Northern Ireland in 2005: http://www.dsdni.gov.uk/charities_consultation.doc 11 February – 3 June 2005, 106 responses received

[13] Department of Social Development (2006) Consultation on Draft Primary Legislation: http://www.dsdni.gov.uk/dsd_charities_review.pdf

[14] Department of Social Development Consultation on the Review of Charities Administration and Legislation in Northern Ireland 2005. Summary of Consultation Responses: www.dsdni.gov.uk/responses_summary.doc Department of Social Development Summary Of Responses Public Consultation on Charity Law in Northern Ireland 17 July -13 October 2006 : http://www.dsdni.gov.uk/dsd-charities-review06-summaryofresponses.doc

[15] www.opsi.gov.uk/si/si2007/ draft/em/uksidem_9780337968150_en.pdf

[16] Rural Development Council Response to the Charities (Northern Ireland) Order 2006.:http://www.rdc.org.uk/publications/news.asp?ID=120

[17] NICVA Response: The Charities (Northern Ireland) Order 2006.

[18] Better Regulation for Civil Society Task Force (2005) Better Regulation for Civil Society. p25

[19] Department of Social Development (2005) Summary of Responses. Public Consultation on Charity Law in Northern Ireland. http://www.dsdni.gov.uk/dsd-charities-review06-summaryofresponses.doc

[20] Information provided by Department officials to the Social Development Committee 31 May 2007.

[21] Department of Social Development (2005) Consultation on the Review of Charities Administration and Legislation in Northern Ireland in 2005: http://www.dsdni.gov.uk/charities_consultation.doc,

[22] ibid

[23] The Charity Law Association Working Party On Charity Law Reform In Northern Ireland (2005) Response To Department For Social Development In Northern Ireland Consultation Paper:http://www.charitylawassociation.org.uk/wpartyjune05.html

[24] Information provided by Department officials to the Social Development Committee 31 May 2007.

[25] Law Centre (NI) (2006) The Charities (Northern Ireland) Order 2006 Proposal for an Order in Council Consultation Response: http://www.lawcentreni.org/Policy/Responses/Responses%202006/charities.htm

[26] OSCR (2006) Guidance on Registration with the Office of the Scottish Charity Regulator (OSCR) for England and Wales Charities. http://www.oscr.org.uk/DocumentViewer.aspx?id=65c7f261-e853-4d3d-8a4d-3e04bd079861

[27] Department of Social Development Summary Of Responses Public Consultation on Charity Law in Northern Ireland 17 July -13 October 2006 : http://www.dsdni.gov.uk/dsd-charities-review06-summaryofresponses.doc

[28] http://www.charity-commission.gov.uk/spr/corcom1.asp#5

[29] Law Centre (NI) (2006) The Charities (Northern Ireland) Order 2006 Proposal for an Order in Council Consultation Response: http://www.lawcentreni.org/Policy/Responses/Responses%202006/charities.htm

[30] Belfast Today News New Moves Threaten Church Status Claim 30 May 2007

[31] Belfast Today News letter, New Moves threaten Church Status Claim 30 May 2007.

[32] Information provided by Department officials to the Social Development Committee 31 May 2007.

[33] The Bill under Clause 4-(1) states that CCNI must issue guidance on public benefit objectives, so this is likely to be a priority for the new Commission.

[34] OSCR (2006) Meeting the Charity Test : http://www.oscr.org.uk/PublicationItem.aspx?id=aec25378-896e-448a-bb07-906b8b715a96

[35] OSCR (2006) Rolling Review Proposals for Consultation. http://www.oscr.org.uk/PublicationItem.aspx?id=a053326f-49a5-4858-a1f7-7dc84b38e613

[36] OSCR (July 2007) Rolling Review Pilot Study Report: http://oscr2005phase2.cctechnology.com/NewsItem.aspx?ID=aba97c8c-73ff-40c1-a79b-d5a63bde7845

[37] This was because their constitutions permitted Scottish Ministers to direct or otherwise control their activities; forbidden under Section 7 (4)(b) of the 2005 Act.

[38] Charity Commission (2007) Consultation on Draft Public Benefit Guidance http://www.charity-commission.gov.uk/library/enhancingcharities/pdfs/pbconsult.pdf

[39] OSCR and Charity Commission (2007) Memorandum of Understanding. http://www.oscr.org.uk/PublicationItem.aspx?ID=0180b205-f4cf-4e4e-9bb7-bbef90b70e85

[40] Fairbairn. C (2006) The Charities Bill [HL] Bill 83 of 2005-06 http://www.parliament.uk/commons/lib/research/rp2006/rp06-018.pdf

[41] http://www.scap.gov.uk/

[42] Modern Company Law: Final Report, para. 4.63ff

[43] NICVA(2006) Briefing Paper: The Charities (Northern Ireland) Order 2006 http://www.communityni.org/uploads/docs/Draft%20Charities%20Order%202006%20NICVA%20Briefing%20Paper%20_4_.pdf

[44] Cormacain, R and O’Halloran, K (2001) Charity Law in Northern Ireland

[45] NICVA (2005) Is it Worth More Than Small Change? http://www.communityni.org/index.cfm/section/Publications/key/smallchange

[46] http://news.bbc.co.uk/1/hi/northern_ireland/2933852.stm

[47] Law Centre (NI) (2006) The Charities (Northern Ireland) Order 2006 Proposal for an Order in Council Consultation Response: http://www.lawcentreni.org/Policy/Responses/Responses%202006/charities.htm

[48] Department of Social Development (2005) Consultation on the Review of Charities Administration and Legislation in Northern Ireland in 2005: http://www.dsdni.gov.uk/charities_consultation.doc

[49] Institute of Fundraising Response to the Review of Charity Law in Northern Ireland: http://www.institute-of-fundraising.org.uk/current_intro.html#4. Review of Charity Law in Northern Ireland

[50] Law Centre (NI) (2006) The Charities (Northern Ireland) Order 2006 Proposal for an Order in Council Consultation Response: http://www.lawcentreni.org/Policy/Responses/Responses%202006/charities.htm

[51] http://www.fsboard.org.uk/what-are-we.aspx

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Charities Bill
Briefing Note on Designated Religious Status

Background

The draft Charities Bill (‘the Bill’) will require any organisation wishing to call itself a charity to register with the Charity Commission for Northern Ireland (CCNI). Section 166 of the Bill provides for a special category of ‘designated religious status’ to apply to religious organisations satisfying the following criteria:

advancement of religion as their principal purpose;
regular holding of public worship as its principal activity;
having been established in Northern Ireland for at least 10 years;
a membership of at least 1,000 persons over the age of 16 years who are normally resident in Northern Ireland; and
an internal system of governance with supervisory and disciplinary functions and a requirement for the keeping of and auditing of accounts.

It is a provision of the Bill that the Department may by order alter or modify any of the provisions under the Act as they apply to charities with ‘designated religious status’. CCNI will also have the power to withdraw ‘designated religious status’ if the charity ceases to satisfy the criteria in Section 166, or has been the subject of an unresolved investigation by the CCNI.

Overview

The Table below addresses some issues/questions in relation to Section 166 which are then explained in greater detail.

Table: ‘Designated religious’ charitable status proposed by the Bill.

Question	Answer
Is there a financial advantage in being a ‘designated religious’ charity?	None. Any financial advantage is in registration with the Inland Revenue for tax exemption.
Is the Inland Revenue concerned with whether a religious group has ‘designated religious’ status in Northern Ireland?	Not at all. They are only concerned that they fulfil the criteria set out by the Inland Revenue which are that their activities are carried out for charitable purposes. The Inland Revenue is not concerned with the regulations imposed by the CCNI.
What actual differences will there be for churches that have ‘designated religious’ status?	Charities with ‘designated religious’ status will still be required to produce annual reports and an audit of their accounts to the CCNI. The only difference between them and other registered charities will be that Sections 33-36 of the Bill will not apply. This means that the CCNI cannot remove trustees or appoint an interim manager to protect members and any other trustees if there is a suspicion of wrong-doing. The CCNI still has powers under Section 22 to investigate a ‘designated religious’ charity if it believes there are grounds to do so in line with its powers for all registered charities in Northern Ireland.
Does the CCNI have powers to investigate ‘designated religious’ charities and/or withdraw their status?	Yes. Firstly the CCNI can report any concerns to a ‘designated religious’ charity’s own regulatory body. If the CCNI are still not satisfied that a matter has been dealt with, the CCNI can instigate its own investigation (under Section 22). Crucial is Section 166: 5 of the Bill which provides that if a ‘designated religious’ charity no longer fulfils the qualifying criteria (in Section 166: 2), or following an investigation by the CCNI, the CCNI can withdraw its ‘designated religious’ status.
What effect will this have?	This will mean that the full powers invested in the CCNI will apply to that charity as with all other registered charities in Northern Ireland. It will no longer be exempt from clauses 33-36 thus allowing the CCNI to remove its trustees and, if thought necessary, appoint an interim manager.

Issues Explained

Is there a financial advantage in having ‘designated religious status’?

Registration with the CCNI will be a legal requirement for any organisation operating in Northern Ireland (religious or not) wishing to call themselves a charity and accepting donations from the public.

This is a completely separate issue from a charity claiming charitable status from the Inland Revenue (‘the Revenue’). Recognition from the Revenue provides a charity with exemption from having to pay tax on any surplus funds they may hold after their charitable functions have been carried out. Churches that do not have ‘designated religious’ status will not be treated any differently by the Revenue; their designated religious status will not be of concern or make a difference to the Revenue’s decision to grant tax exemption. All that is required is that they can satisfy the Revenue that their activities are carried out for a charitable purpose. It is generally the case that religious organisations, irrespective of their size, fulfil the Revenue’s criteria. Once a charity has been granted charitable status by the Revenue, they do not provide annual reports or audits to the Revenue as they will to the CCNI when it is established.

Status of a ‘designated religious’ charity

There is an advantage for the CCNI in allowing ‘designated religious’ charities to be self-governing. It means that the CCNI will not have to duplicate regulatory powers that can be provided by a central governing body with a proven record of having done so over a substantial period.

To take the example of what are referred to as ‘the four main churches’ in Northern Ireland, all have central governing bodies to regulate their finances, assets and disciplinary procedures. They also have elected governing bodies from within their membership. It is feasible therefore to assume, at least in the first instance, that they can govern themselves and have mechanisms in place that provide accountability to their members. This is the reasoning for the provision of at least 1,000 members and a church having been in existence for at least 10 years.

However, this does not mean that these churches do not still have to provide the CCNI with an annual report and audit of accounts. Nor does it mean that they cannot be the subject of an investigation by the CCNI, or have their ‘designated religious’ status withdrawn. If the CCNI believes that a charity no longer fulfils the criteria for a ‘designated religious’ charity, or if following an investigation under Section 22 the CCNI sees fit, it can withdraw ‘designated religious’ status.

The main difference between churches that have ‘religious designated’ status and those that do not is that clauses allowing the CCNI to act to protect charities do not apply to churches that have ‘designated religious’ status unless there is reason for the CCNI to withdraw it. These clauses refer to the CCNI’s powers to remove trustees and, if necessary, appoint interim management to protect the interests of other trustees and members.

January 2008

Correspondence from DSD
10th January 2008

Briefing to the N.I. Assembly Social Development Committee
on 10th January 2008

Charities Bill

Detail

1. Since the last Social Development Committee Meeting held on the 31st of May, there have been a number of developments in relation to the draft Charities Bill.

2. Following some concerns raised by the Churches, DSD officials and political advisors met with representatives of the main Churches on 29 June. The purpose of the meeting was to clarify / address concerns raised by the Churches about the Charities Bill.

3. Following these representations and a further meeting with churches representatives on 16 October, the DSD Minister agreed to amend the Charities Bill to include a provision to introduce ‘Designated Religious Charity Status’. This has been established within the Scottish charities legislation and officials have discussed this at length with the Office of the Scottish Charities Regulator (OSCR).

4. The key criteria to be satisfied to enable ‘Designated Religious Status’ to be granted are as follows:

advancement of religion is the principle purpose;
regular worship;
established in Northern Ireland for at least 10 years;
Membership of at least 1,000 persons; and
Good internal / auditing governance is in place.

5. If all of the above criteria are satisfied the CCNI may grant ‘Designated Religious Status’, which will except a religious organisation from having to seek consent from the CCNI to alter its constitution, and also give it control over the appointment / suspension of Trustees. This does not preclude the requirement for registration with the charity regulator. Designated Religious Status is not automatic and must be applied for following registration.

6. The DSD Minister has also approved the following amendments to the Bill:

the definition of Religion has been revised to take into account the Churches’ views; and
the clause relating to assets has been removed from the Bill. It is proposed that the reporting of Charity Assets will be separated out and considered through a separate statement by the CCNI rather than the triggering full audit.

7. Additionally, following discussions with the Charity Commission for England / Wales and OSCR, the Bill has been amended to enable charities which are established outside Northern Ireland but operate here to register / report to the Charity Commission for Northern Ireland (CCNI). This will preclude the need for some charities established under separate acts in England having to amend their constitutions to enable them to register in Northern Ireland.

8. Departmental Solicitors Office was consulted on the new provisions that have been incorporated into the Bill, and has advised that Legislative Competence remains in order. The revised Charities Bill was submitted to the Executive for approval on 22 November and cleared for introduction to the Assembly.

Possible Items for discussion

Organised Crime

9. The PSNI does not keep information that would allow the number of cases of fraud involving charities to be quantified, nor the value of money diverted to criminal purposes. Enquiries, however, indicate that there are several such cases each year.

10. PSNI investigations have highlighted cases where bank accounts in the names of charitable organisations associated publicly with current and former paramilitary groups have been used to encash monies collected from extortion and other criminal activities. In these cases, persons with strong paramilitary connections undertook the criminal activities.

11. HM Revenue & Customs has encountered a number of Northern Ireland charities that appear to have been set up as vehicles for sophisticated tax avoidance. The cases are not large in number but the sums involved can be substantial. It is worthwhile noting that over the last ten years the number of cases referred to DSD regarding potential abuse has been in single figures and these have mainly been issues of management rather than abuse.

Exchange of Information with Other Bodies

12. The Charities Bill will include arrangements for exchange of information with other key bodies including other charity regulators in the UK and Ireland, PSNI and Revenue and Customs. This will facilitate more comprehensive sources of information on the charitable sector and identification of potential areas of abuse.

13. The NIO is supportive of any enhancement to the existing regulatory framework and would welcome new arrangements in Northern Ireland to do that.

14. In terms of the need for a Northern Ireland Register of Charities, checks by HM Revenue & Customs on those organisations seeking charitable tax exemption status are based on tax, not charitable law requirements. Organisations claiming to be NI charities can operate elsewhere in the UK, Europe and throughout the world and enforcement agencies in those jurisdictions have no reference point for information on purposes, annual reports and accounts.

Comparison with the Charity Commission for England & Wales/Scotland

15. The Department has sought to be consistent as far as possible with the rest of UK and Ireland and to ensure we have a bill which can provide strong regulation. Reviews of charity regulation have taken place in other UK and Ireland jurisdictions. A new Charities Act was passed last year for England and Wales. In Scotland following the passing of new legislation last year, OSCR was established by the Scottish Executive. In the Republic of Ireland a draft Bill was published in April 2007 and is now progressing through the Dail. Officials in DSD have been working closely with other jurisdictions through the UK and Ireland Charity Regulators Forum to ensure a common approach.

16. Like the Charity Commission for England and Wales, the Charity Commission for Northern Ireland will not be a crime investigation body, nor will it directly confront organised crime, but it will work closely with the Police Service of Northern Ireland. The UK and Ireland Charity Regulators Forum involving the various regulators, Revenue and Customs and Police Service of Northern Ireland will improve efficiency and reaction times in dealing with emerging threats.

Cross Border Position

17. The UK and Ireland Regulators Forum was established in October 2006 and meets on a quarterly basis. The Forum has a key objective of maintaining consistency of approach to charity matters in the UK / Ireland.

18. The DSD Minister has written to Éamon Ó Cuív, T.D., Minister for Community, Rural and Gaeltacht Affairs to arrange a meeting to discuss the coordination of consistency of approach between the two jurisdictions in charity matters.

Status of the Charity Commission

19. The proposed Charity Commission for N. Ireland will be a Non- Departmental Public Body. It will be led by a Chief Commissioner, 1 Deputy Chief Commissioner and 3 - 5 Commissioners, all recruited through the Public Appointments Procedure. A Chief Executive and 12 staff will also be appointed. The public consultation exercise provided widespread support for the model proposed of a Charity Commission for Northern Ireland.

20. It will work with the charity sector to improve levels of governance and accountability. The legislation will cover public collections by charitable and philanthropic bodies (not just charities) thus reducing further the opportunity for potential abuse by criminal elements.

Charity Commission Powers to Protect the Public / Charities

21. By providing a definitive comprehensive register of Northern Ireland charities, based on a robust public benefit test, and stringent accounting and reporting standards, the proposed new Northern Ireland charities legislation will make it more difficult for “borderline” charities to be set up or to divert money from strictly charitable purposes.

Charitable Status for Tax Purposes

22. Many Charities in Northern Ireland currently seek recognition from Revenue and Customs in order to obtain tax benefits. Tax is a reserved matter. Charities if they wish to seek tax benefits will still have to apply for this from Revenue and Customs. We have however maintained close contact with HMRC throughout the review to ensure a sound working relationship.

Correspondence from DSD
25th January 2008

Department for Social Development.ai

Marie Austin
Committee Clerk
Committee for Social Development
Northern Ireland Assembly
Parliament Buildings
Belfast
BT4 3XX

25th January 2008

Dear Marie

Charities Bill

Thank you for your letter of 16 January to John Ball requesting information on two issued raised during the briefing with the Social Development Committee held on 10 January 2008.

Fred Cobain MLA asked why there is a provision in the Bill that a person who is aged over 70 cannot hold office as a member of the Charities Appeal Tribunal. This provision is contained in Schedule 2 of the Bill. This requirement is consistent with the Lord Chancellor’s policy on the mandatory retirement age for judicial office holders.

Schedule 5 to the Judicial Pensions and Retirement Act 1993 provides that for persons who were appointed after 31 March 1995 (the date the 1993 Act scheme came into operation) the retirement is mandatory at age 70 (section 26 refers).

For those appointed prior to 31 March 1995, transitional provisions were introduced which enabled them to retain their pre -1993 Act scheme retirement age (generally between 70 and 75).

We are aware that the then Department of Constitutional Affairs sought a legal opinion on the impact of this legislation on age discrimination. In particular, advice was sought on the policy regulating the mandatory retirement age for the judiciary and this was considered to be defensible.

Claire McGill MLA raised the issue of the proposed connection between the Department for Social Development and the Charity Commission, after it is established. The proposed Charity Commission for Northern Ireland (CCNI) will be a Non–Departmental Public Body (NDPB).

There is no statutory definition of NDPB, but the definition used by the Cabinet Office as follows:-

“A non-departmental public body (NDPB) or quango is a body which has a role in the processes of national government, but is not a government department, or part of one, and which accordingly operates to a greater or lesser extent at arms length from Ministers.”

The CCNI will therefore be independent of the Department. However the Department will provide its funding and the CCNI, at the end of each financial year, will be required to provide a report to the Department on its performance. Arrangements will be made for the Department to lay a copy of that report before the Assembly. The Department will also have a role in producing the CCNI’s orders and regulations to enable it to carry out its general functions.

The Chair of the Social Development Committee, Gregory Campbell MP MLA, referred to an enquiry from Donaghadee Sailing Club relating to its charitable status under the proposed Bill. The Minister for Social Development, Margaret Ritchie MLA, responded to an enquiry from this organisation on 20 December 2007 explaining the position of Community Amateur Sports Clubs under the proposed legislation. An official from this Department contacted the group by email on 11 January 2008 offering further assistance on this matter, however to date no response has been received.

If Members of the Committee require any further information, please do not hesitate to contact me.

Yours sincerely

Seamus Murray.ai

Seamus Murray

Director
Voluntary and Community Unit
Department for Social Development

Correspondence from DSD
to Equality Commission

Mr Paul Noonan
Policy Manager (Statutory Duty)
Equality Commission for Northern Ireland
Equality House
7 - 9 Shaftesbury Square
Belfast
BT2 7DP

3 March 2008

Dear Mr Noonan

Charities Bill

Your letter of 6 February to John Ball refers. As the Voluntary and Community Unit (VCU) within the Department for Social Development (DSD) has policy responsibility for the Charities Bill, I have been asked to provide a response on this matter.

DSD has conducted a comprehensive review of charities legislation in Northern Ireland leading to the introduction of the Charities Bill 2007 to the NI Assembly. Following an extensive public consultation in early 2005, the Department undertook an equality screening of its charities policy. This concluded that there was no adverse impact on any Section 75 group or any significant risk to the department’s obligation to have due regard to the need to promote equality of opportunity.

Following the return of devolution in May 2007, the draft Charities Bill 2007 was presented to the NI Executive for consideration. At this stage, some concerns were raised about the impact of this legislation on the faith-based sector in Northern Ireland. After discussions with the main churches, the DSD Minister approved the inclusion of a Designated Religious Charity Status provision in the Bill (clauses 165 and 166).In so doing, account was taken of particular constitutional arrangements of certain religious charities whilst retaining the need for registration. Provision analogous to Clauses 165 and 166 was made in Section 65 of the Charities and Trustee Investment (Scotland) Act 2005.

Whilst Clauses 165 and 166 offer limited exemptions to designated religious charities in respect of the requirements of Sections 33 to 36, it was considered appropriate that such charities should meet a number of specified criteria in line with the Scottish Act. The membership criterion was reduced from 3,000 (as per the above-noted section 36) to 1,000 to take account of the reduced population in Northern Ireland.

It is the Department’s view that charities should only be granted designated religious charity status where there is clear evidence of well-established organisational and governance structures in place. It is considered that the criteria to be applied under 166(3)(c) and (d) are necessary to safeguard against potential abuse of this exemption and to ensure public confidence in the role of the Charity Commission. It is proposed that the criteria will apply to all faith-based organisations and the Department does not consider that this will have a particular adverse impact on minority ethnic groups. The impact of Clauses 165 and 166 are minimal in terms of the overall regulatory framework proposed in the Charities Bill and the Department remains of the view that the power to designate religious charities in accordance with clauses 165 and 166 constitutes a reasonable and proportionate provision.

The Charities Bill is currently going through its Committee Stage and this has recently been extended to 27 June 2008. Officials from DSD will be engaging in clause by clause scrutiny of the Bill with the Social Development Committee and it is likely that the Minister will be asked to consider a number of amendments once the Committee’s report is finalised.

I trust that the above remarks may be of some assistance to you.

Yours sincerely

Roy McGivern
Head of Finance, Governance & Charities Team

Correspondence from DSD
3 March 2008

Department for Social Development.ai

Marie Austin
Committee Clerk
Committee for Social Development
Room 412
Parliament Buildings
BELFAST
BT4 3XX

3 March 2008

Marie,

Charities Bill – Appointment of Commissioners to the Charity Commission for Northern Ireland (CCNI)

At the Social Development Committee’s clause by clause Scrutiny of the Charities Bill on 28 February 2008, officials advised that they would provide details of the duration of Commissioner appointments to the CCNI, including any maximum number of terms an individual can serve.

Schedule 1 clause 2 (1) of the Charities Bill provides that a person can be appointed as a Commissioner for a term not exceeding 5 years.

The appointment of a Commissioner to the CCNI will be made through the Public Appointments Procedure. The Office of The Commissioner for Public Appointments for Northern Ireland (OCPANI) will oversee this procedure. OCPANI’s code of practice states that the maximum term of a public appointment is two five year terms or ten years.

I trust this explains the position.

Yours sincerely

Roy McGivern
Finance, Governance & Charities Team

Correspondence from DSD
28 March 2008

Department for Social Development.ai

Marie Austin
Committee Clerk
Committee for Social Development
Room 412
Parliament Buildings
BELFAST
BT4 3XX

28 March 2008

Dear Marie

Charities Bill – Committee Stage

Thank you for your letter of 11 March 2008. Following evidence given by non – Departmental witnesses at the Social Development Committee’s meeting held on 6 March 2008, the Committee has asked Officials to provide further information the following points.

(i) The number of churches in Northern Ireland where the membership is less than 1,000 people

Following investigations the Department is unable to provide a definitive list of the number of churches in Northern Ireland where the membership is less than 1,000. The Department has, however, agreed to consider removing the membership criteria from clause 167, subject to Minister’s approval.

(ii) The status of donations which do not appear to fall within the definition either of public or non-public charitable collections, e.g. funding provided to a church by local businessmen for youth work.

A donation to a charity is a simply a donation similar to a bequest or legacy, it is not a public or non charitable collection as specified in clause 130 -131 of the Bill.

I trust this explains the position.

Yours sincerely

Roy McGivern
Finance, Governance & Charities Team

Correspondence from DSD
1 April 2008

Department for Social Development.ai

Marie Austin
Committee Clerk
Committee for Social Development
Room 412
Parliament Buildings
BELFAST
BT4 3XX

1 April 2008

Dear Marie

Charities Bill Clause – By – Clause Scrutiny

Following the Social Development Committee’s recent clause-by- clause scrutiny of the Charities Bill, officials have considered the issues raised and the need for possible amendments to the Bill. We have also consulted with the Minister for Social Development, Margaret Ritchie, and she has indicated that she is content with the proposed changes.

The Department’s response to the issues raised on each of the relevant clauses is attached at Annex A. I trust that this will inform the Committee’s discussions at the formal clause-by-clause scrutiny stage, commencing on 3 April.

Yours sincerely

Seamus Murray
Charities Implementation Team

Annex A

Proposed Amendments to the Charities Bill

1. Clause 2 – Meaning of charitable purpose

Officials agreed to consider an amendment to Clause 2(3)(a)(i) to reflect the fact that the advancement of religion involves a belief in one god or more than one god.

Response: Clause to be amended as suggested.

2. Clause 3 – Public benefit test

Some faith-based organisation suggested that this clause should be amended to ensure that intangible benefits such as spiritual support would be recognised as providing public benefit.

Response: The Department’s view is that spiritual benefit would be covered within the existing legislation and it would be a matter for the proposed Charity Commission to issue guidance and consult on this matter.

Officials agreed to consider the use of the term “harm” or “detriment” in the legislation instead of “disbenefit.”

Response: Guidance issued by the Charity Commission for England and Wales uses the terms harm and detriment. These terms are easier understood and it is recommended that, in the NI Bill, the word detriment should be substituted for disbenefit.

3. Clause 4 - Guidance as to the operation of public benefit requirement

Officials agreed to consider if this clause should be amended to require the Charity Commission to consult on any material changes to its guidance.

Response: The Bill already requires the Commission to carry out public consultation on any public benefit guidance and, unless it considers it unnecessary, to consult on any revised guidance. This is considered to be sufficient and an amendment is not required.

4. Clause 13 – Practice and procedure

Officials agreed to consider how this clause could be amended to allow the Commission to make provision for applicants to be represented by special advocates at a Charity Tribunal.

Response: There may be merit in this suggestion and officials have sought advice from the Charity Commission in England & Wales and from the Office of the Third Sector. The Department will need to consider further with the NI Court Service and, if necessary, an amendment will be brought forward.

5. Clause 16 - Register of charities

It has been suggested that the Charities Register should include a separate statement if an organisation has been granted Designated Religious Charity Status.

Response: Clause 16(4)(b) should be amended to reflect this suggestion, subject to instructions from Office of the Legislative Counsel.

Officials were also asked to consider if clause 16 could be amended to ensure Assembly approval was required for any further exemptions for Designated Religious Charities.

Response: An amendment is not required as this provision will be included in the amended Clause 165(3).

6. Clause 52 – Power to order taxation of solicitor’s bill

The Department agreed to investigate if the provisions in this clause duplicate provisions contained within existing legislation, Solicitors (Northern Ireland) Order 1976.

Response: Legal advice received would indicate that there is duplication in this area. It is recommended that Clause 52 is removed from the Bill and that the Charity Commission relies solely on the powers contained in the 1976 Order as regards taxation.

7. Clause 87 – Persons disqualified for being trustees of a charity

Members of the Social Development Committee asked if the clause could be amended to include disqualification of trustees who had been removed from office in other jurisdictions, outside the UK and Ireland, where charities legislation exist.

Response: DSD does not hold information on charity regulation outside the UK and Ireland and this suggestion may not be practical. There is no corresponding provision in other charity legislation in the UK or Ireland.

8. Clause 119 – Power to transfer all property of unincorporated charity to one or more CIOs

Clause 122 – Power to transfer all property of unincorporated charity

Officials agreed to consider how both the above clauses could be amended to provide for an exception for a transfer of designated land that has a very low value.

Response: Designated land is subject to special safeguards to ensure that it is used for the specific purpose for which it is held in trust. Any proposal to enable a transfer of designated land would need to include provision for the consent of the Charity Commission to ensure that the land continues to be used for a specific purpose. If this safeguard is

included, it is recommended that this would be a useful de-regulatory measure. The proposed wording of this amendment should include reference to designated land of a very low value. Advice will be required from the Office of the Legislative Counsel on the specific wording of this proposed amendment.

9. Clause 127 – Power of unincorporated charities to spend capital: general

Officials agreed to consider a point made by the Charity Commission for England and Wales in relation to endowment funds.

Response: Office of the Legislative Counsel has advised that this clause follows the English legislation and that we should await any amendments in GB before making a corresponding provision.

10. Part 13 – Public Charitable Collections

Some Committee Members expressed concern that this part of the Bill did not apply to internet fundraising activity. Officials indicated that this was an evolving area of work and agreed to check the position with other regulators

Response: This is an evolving area which can be difficult to regulate. Officials have held discussions with other charity regulators who are compiling advice and guidance in the area of internet fundraising. The Institute of Fundraising in GB has issued a code of practice for internet fundraising and this is available to charities in Northern Ireland. The Charity Commission for NI will wish to consider this issue and issue appropriate guidance here. At this stage regulation would not be appropriate.

The Committee received further correspondence from the Association of Charity Shops to discuss permitting requirements and its concerns about the process to be followed in NI.

Response: Officials have held further discussions with this organisation and a meeting has been scheduled for 9 April. In discussions with the Charity Commission for England and Wales, it has become apparent that Section 50 of the Charities Act 2006 was included to address concerns raised by the Association of Charity Shops. This provides exemption from the certification and permit process for local, short-term collections. There is a similar provision at Clause 135 of the Charities Bill but this still requires notification of collections to the Charity Commission (local authority in GB). On this basis, no amendments are considered necessary.

11. Clause 164 – Effect of registering charity merger on gifts to transferor

Officials agreed to consider how this clause could be amended to make provision for any gift which takes effect on or after the date of the transfer to take effect as a gift to the transferee. Advice has been received from the Office of the Legislative Counsel on this issue.

Response: The possibility of losing the benefit of a gift between merger and registration should act as a strong incentive to register mergers promptly. There is minimal risk of gifts not transferring in this situation and an amendment is not considered necessary.

12. Clause 165 - Application of Act in relation to designated religious charities

Officials agreed to consider how this clause could be amended to reflect that any order made by the Department to extend exemptions to charities in this area should be approved by resolution of the Assembly.

Response: It is agreed that Clause 165(3) should be amended to reflect the provisions in Clause 167(7).

13. Clause 166 – Designation of religious charities

Officials agreed to consider the criteria to be applied to any applications for Designated Religious Charity Status. The issues raised and options available are outlined in Paragraphs 4 to 6 of the main submission. It is considered that some concessions will be required in this area to ensure that cross party support is received.

Response: Minister is asked to agree to remove Clause 166(3)(d) relating to membership within NI and to reduce the requirement in Clause 166(3)(c) from 10 to 5 years. The Charity Commission will still retain sufficient powers to exclude faith-based charities which do not have sufficient governance and accountability arrangements in place.

14. Clause 167 – Institutions which are not charities under the law of Northern Ireland

Officials agreed to consider how this clause could be amended to make it clear there is a link between it and Clause 16. There is a need for further clarification on this issue rather than any amendment to the legislation. Section 167 charities, which operate outside NI, will be registered separately from Section 16 charities, which operate under the law here.

Response: No amendment required, officials will provide clarification to Committee.

Correspondence from DSD
7 April 2008

Department for Social Development.ai

Marie Austin
Committee Clerk
Committee for Social Development
Room 412
Parliament Buildings
BELFAST
BT4 3XX

7 April 2008

Dear Marie

Charities Bill Formal Clause – By – Clause Scrutiny

Following the Social Development Committee’s formal clause-by-clause scrutiny of Charities Bill held on 3 April 2008, Legislative Counsel has produced the amendments to the Bill for the Committee’s approval, attached at Annex A.

Legislative Counsel has further advised that large portions of the Companies Act 2006 have recently been brought into force, and as previously advised to the Social Development Committee the Charities Bill will have to be amended to reflect the changes in company law. These are changes of a technical nature and do not have any policy impact in relation to the operation of the Charity Commission. The changes bring the N. Ireland legislation into line with Scotland, England and Wales. These include amended reference to the Companies Act 2006.

The Department will forward the amendments to the Committee for consideration following approval by Minister.

Yours sincerely

Seamus Murray
Charities Implementation Team

Annex A

Charities Bill
Amendments to be moved at Consideration Stage

Clause 2, page 2, line 29, after ‘belief in’ insert “one god or’

Clause 3, page 3, line 41, leave out ‘disbenefit’ and insert ‘detriment’

Clause 16, page 11, line 15, leave out ‘and’ and insert —

‘(b) if the charity is a designated religious charity within the meaning of section 165, a statement to that effect, and’

Clause 52

The Minister for Social Development gives notice of her intention to oppose the question that clause 52 stand part of the Bill.

Amendments to be
moved at Consideration Stage

Clause 2(3)(a)(i) – (meaning of “charitable purpose”)

Amend -

“(3) In subsection (2)—

(a) in paragraph (c) “religion” includes—

(i) a religion which involves belief in more than one god,”

to read -

“(3) In subsection (2)—

(a) in paragraph (c) “religion” includes—

(i) a religion which involves belief in one god or more than one god,”.

Clause 3(3)(a)(ii) – (the “public benefit” test)

Amend -

“(3) In determining whether an institution provides or intends to provide public benefit, regard must be had to—

(a) how any—

(i) benefit gained or likely to be gained by members of the institution or any other persons (other than as members of the public), and

(ii) disbenefit incurred or likely to be incurred by the public,

in consequence of the institution exercising its functions compares with the benefit gained or likely to be gained by the public in that consequence,”

to read –

“(3) In determining whether an institution provides or intends to provide public benefit, regard must be had to—

(a) how any—

(i) benefit gained or likely to be gained by members of the institution or any other persons (other than as members of the public), and

(ii) detriment incurred or likely to be incurred by the public,

in consequence of the institution exercising its functions compares with the benefit gained or likely to be gained by the public in that consequence,”.

Clause 16(4)(a) – (register of charities)

Amend -

“(4) The register shall contain—

(a) the name of the charity, and

(b) such other particulars of, and such other information relating to, the charity as the Commission thinks fit.”.

to read –

“(4) The register shall contain—

(a) the name of the charity,

(b) if the charity is a designated religious charity within the meaning of section 165, a statement to that effect, and

Correspondence from DSD
9 April 2008

Department for Social Development.ai

Marie Austin
Committee Clerk
Committee for Social Development
Room 412
Parliament Buildings
BELFAST
BT4 3XX

9 April 2008

Dear Marie

Charities Bill Formal Clause – By – Clause Scrutiny – 10 April 2008

This is to make you aware of a further proposed amendment for consideration at tomorrow’s Committee meeting. Apologies for the short notice but the possible need for the amendment only came to light this afternoon.

The Clause in question is Clause 159 (Power of Department to give financial assistance to charitable, benevolent or philanthropic institutions). We have established that this Clause is an unnecessary replication of section 70 of the Charities Act 2006. Section 70 was included to provide additional legislative cover to make grant payments to the voluntary sector in England and Wales and is not relevant to charity regulation.

As Article 3 of the Social Need (Northern Ireland) Order 1986 makes corresponding provision for Northern Ireland in this respect it is proposed that Clause 159 be removed from the Bill

Yours sincerely

Seamus Murray
Charities Implementation Team

Correspondence from DSD
10 April 2008

Department for Social Development.ai

Marie Austin
Committee Clerk
Committee for Social Development
Room 412
Parliament Buildings
BELFAST
BT4 3XX

10 April 2008

Dear Marie

Power to Transfer all of Unincorporated Charity – Clause 122

Thank you for your phone call last night seeking clarification on the issue of designated land in relation to the above clause.

We sought advice from the Office of The Third Sector (who draft legislation for the Charity Commission) on this issue. Their advice is below

“Designated land is subject to special safeguards to ensure that it is used for the specific purposes for which it is held in trust. I think that any proposal to enable a transfer of designated land would need to include provision for the consent of the Commission to ensure that the land continues to be used for the specific purposes on which it is held in trust. Provided that those safeguards are there, this could prove a useful de-regulatory measure”.

We felt there was merit in this amendment and Minister subsequently approved the proposal.

Clause 122 (1) currently reads:

Power to transfer all property of unincorporated charity

122.— (1) This section applies to a charity if—

(a) its gross income in its last financial year did not exceed £10,000,

(b) it does not hold any designated land, and

“Designated land” means land held on trusts which stipulate that it is to be used for the purposes, or any particular purposes, of the charity.

Subject to Legislative Counsel’s advice we envisage the amended clause 122 (1) to read

Power to transfer all property of unincorporated charity

122.— (1) This section applies to a charity if—

(a) its gross income in its last financial year did not exceed £10,000,

(b) it does not hold any designated land, or has designated land of a very low value, and the Commission has been notified prior to the transfer, and

“Designated land” means land held on trusts which stipulate that it is to be used for the purposes, or any particular purposes, of the charity.

I hope this provides clarification

Yours sincerely

Seamus Murray
Charities Implementation Team

Correspondence from DSD
16 April 2008

Department for Social Development.ai

Marie Austin
Committee Clerk
Committee for Social Development
Room 412
Parliament Buildings
BELFAST
BT4 3XX

16 April 2008

Dear Marie

Charities Bill Formal Clause – By – Clause Scrutiny

Following the Social Development Committee’s formal clause-by-clause scrutiny of Charities Bill held on 10 April 2008, Legislative Counsel has produced the amendments to the Bill for the Committee’s approval, attached at Annex A.

Last week the Committee deferred consideration of clause 13 (special advocates) as it was understood that the Department was considering potential developments in England and Wales. Having discussed the matter with our counterparts no change is imminent is felt therefore that any amendment would not appropriate at present. The Department will consider again if and when there are future developments in this area in England and Wales.

We have consulted with Legislative Counsel regarding the wording of amended clause 122 (Power to transfer all property of unincorporated charity). Counsel’s advice on the term “very low value” in relation to designated land, is that it would be unacceptably vague. A figure would need to be quoted. It would have to be stated how that value is determined. It is for example rateable value or market value or book value in the accounts. The revised narrative for clause 122 has therefore been drafted on this basis. The figure of £90,000.00 ties in with the threshold for small charities in the Charities Bill and Companies Act.

Can I once again thank you for all your support in this process

Yours sincerely

Seamus Murray
Charities Implementation Team

Annex A

Charities Bill
Amendments to be Moved
at Consideration Stage

(Amendments made are shown in bold italics)

Clause 122 - Power to transfer all property of uninxcorporated charity
(Current Wording)

122.— (1) This section applies to a charity if—

(a) its gross income in its last financial year did not exceed £10,000,

(b) it does not hold any designated land, and

“Designated land” means land held on trusts which stipulate that it is to be used for the purposes, or any particular purposes, of the charity.

(2) The charity trustees of such a charity may resolve for the purposes of this section—

(a) that all the property of the charity should be transferred to another charity specified in the resolution, or

(b) that all the property of the charity should be transferred to two or more charities specified in the resolution in accordance with such division of the property between them as is so specified.

(3) But the charity trustees of a charity (“the transferor charity”) do not have power to pass a resolution under subsection (2) unless they are satisfied—

(a) that it is expedient in the interests of furthering the purposes for which the property is held by the transferor charity for the property to be transferred in accordance with the resolution, and

(b) that the purposes (or any of the purposes) of any charity to which property is to be transferred under the resolution are substantially similar to the purposes (or any of the purposes) of the transferor charity.

(4) Any resolution under subsection (2) must be passed by a majority of not less than two-thirds of the charity trustees who vote on the resolution.

(5) Where charity trustees have passed a resolution under subsection (2), they must send a copy of it to the Commission, together with a statement of their reasons for passing it.

(6) Having received the copy of the resolution, the Commission—

(a) may direct the charity trustees to give public notice of the resolution in such manner as is specified in the direction, and

(b) if it gives such a direction, must take into account any representations made to it by persons appearing to it to be interested in the charity, where those representations are made to it within the period of 28 days beginning with the date when public notice of the resolution is given by the charity trustees.

(7) The Commission may also direct the charity trustees to provide the Commission with additional information or explanations relating to—

(a) the circumstances in and by reference to which they have decided to act under this section, or

(b) their compliance with any obligation imposed on them by or under this section in connection with the resolution.

(8) Subject to the provisions of section 123, a resolution under subsection (2) takes effect at the end of the period of 60 days beginning with the date on which the copy of it was received by the Commission.

(9) Where such a resolution has taken effect, the charity trustees must arrange for all the property of the transferor charity to be transferred in accordance with the resolution, and on terms that any property so transferred—

(a) is to be held by the charity to which it is transferred (“the transferee charity”) in accordance with subsection (10), but

(b) when so held is nevertheless to be subject to any restrictions on expenditure to which it was subject as property of the transferor charity;

and the charity trustees must arrange for the property to be so transferred by such date after the resolution takes effect as they agree with the charity trustees of the transferee charity or charities concerned.

(10) The charity trustees of any charity to which property is transferred under this section must secure, so far as is reasonably practicable, that the property is applied for such of its purposes as are substantially similar to those of the transferor charity.

But this requirement does not apply if those charity trustees consider that complying with it would not result in a suitable and effective method of applying the property.

(11) For the purpose of enabling any property to be transferred to a charity under this section, the Commission may, at the request of the charity trustees of that charity, make orders vesting any property of the transferor charity—

(a) in the transferee charity, in its charity trustees or in any trustee for that charity, or

(b) in any other person nominated by those charity trustees to hold property in trust for that charity.

(12) The Department may by order amend subsection (1) by substituting a different sum for the sum for the time being specified there.

(13) In this section references to the transfer of property to a charity are references to its transfer—

(a) to the charity, or

(b) to the charity trustees, or

(d) to a person nominated by the charity trustees to hold it in trust for the charity, as the charity trustees may determine.

(14) Where a charity has a permanent endowment, this section has effect in accordance with section 124.

Clause 122 - Power to transfer all property of unincorporated charity
(Amended Wording)

122.— (1) This section applies to a charity if—

(a) its gross income in its last financial year did not exceed £10,000,

(b) either-