CONSULTATION on the Review of CHARITIES ADMINISTRATION AND LEGISLATION In NORTHERN IRELAND in 2005 Charities Branch Voluntary & Community Unit Department for Social Development This document can be made available in an alternative format, style or language. Please contact us to discuss how we can best provide this alternative format for you. Tel. (028) 90 829 414 Fax. (028) 90 829 431 Text Phone. (028) 90 829 446 E-Mail: email@example.com INTRODUCTION INTRODUCTION Charitable organisations play a significant and vital role in society, often serving and helping those who are most disadvantaged, marginalised or helpless. Some are substantial international organisations with million pound turnovers whilst others; particularly in Northern Ireland; are small locally based groups run by a number of committed volunteers. My Department and I recognise this important contribution but also recognise that the environment and circumstances which charities work within has changed significantly since the last review of charities legislation in 1996. Across the United Kingdom and the Republic of Ireland, consideration is being given by government as to the suitability of charity legislation to meet the changing demands of society. As charities become increasingly involved in public service delivery in tackling disadvantage and social exclusion, the best possible legislative framework must be developed to support their work. Much charitable work is supported by public donations. It is important therefore that appropriate safeguards are in place to ensure such donations are properly spent. The current framework for the regulation of charities in Northern Ireland does not provide for any form of local registration or enforcement. My Department is proposing that new Northern Ireland charities legislation should be brought forward to introduce an integrated system of registration and regulation (including control of charitable fundraising) as well as supervision and support of registered charities. The aim of these proposed changes will be to provide a structure and process through which charities can demonstrate their contribution to society, the public can be assured regarding how charities are spending any donations and government can assist in the better governance of the charity sector. I commend the work carried out to date in drafting these proposals and would encourage you to submit your views of our proposals for change in this most important area of policy and law. John Spellar MP BACKGROUND BACKGROUND What is a charity? A charity is any organisation which is established for purposes which are exclusively charitable in law (at present, the advancement of religion or education, the relief of poverty, and other purposes regarded as being for the benefit of the community). A charity may be set up in many ways, a simple trust in a Will, an unincorporated association, an incorporated association, a friendly society, or a limited company. The structure does not matter; the purposes do. An organisation set up for purposes which have not been recognised as being charitable (no matter how philanthropic, benevolent or well-intentioned those purposes are) is not a charity. Similarly, an organisation set up for purposes which are partly charitable and partly non-charitable is not a charity. Charity administration in Northern Ireland Because most media reports of charity matters originate from England, it is often assumed that the system of charity administration is the same throughout the United Kingdom. This is not the case. One system covers England and Wales and is operated by the Charity Commissioners, while a different system is operated in Northern Ireland by the Department for Social Development; Scotland is different again. All three jurisdictions have different legislation and differ in detail, though the basic principles are the same, and the system of tax relief for charities is the same throughout the United Kingdom. The most obvious difference between Northern Ireland and the rest of the UK is that England and Wales has a system of compulsory registration for most types of charity. A similar system is to be introduced in Scotland. This does not exist in Northern Ireland. Where a charity is established in Northern Ireland it normally applies to the Inland Revenue for charitable status for tax purposes, and the document granting it such status is generally accepted by the Department and others as evidence that it is a charity. The Department for Social Development The Department for Social Development is the charity authority for Northern Ireland: Charities Branch within the Voluntary & Community Unit handles the normal day-to-day work. Most of its functions are carried out under the Charities Act (Northern Ireland) l964 and the Charities (Northern Ireland) Order l987, but it has no statutory role in connection with the setting up of new charities. 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 BACKGROUND change the objects of charities whose original functions can no longer be carried out effectively. Apart from its specific functions under the legislation a major part of the Branch's work consists of giving informal advice to trustees and their solicitors and to advise on any problem which a charity or would-be charity faces. The Background to the Review of Charities Administration and Legislation A previous review and consultation took place during 1994/1996. There was insufficient agreement on a way forward across all sectors, and the matter was deferred until an approach could be identified which would gain more widespread support. The Department for Social Development has been reviewing the Northern Ireland charities legislation in parallel with similar reviews in England and Wales and Scotland. This review is also taking account of a similar review in the Republic of Ireland with a view to deciding which areas of the existing Northern Ireland charities legislation could usefully be amended to adopt the best of the new ideas elsewhere and to improve some existing procedures. In March 2004 the Department for Social Development established a Northern Ireland Charities Review Panel comprising representatives of the Department, the Department’s solicitors, the Inland Revenue, the Police Service of Northern Ireland, and the voluntary sector. The Panel’s remit was to consider the existing system of charity legislation and administration in Northern Ireland and make recommendations as to how it should be developed, focussing on the definition of charity and on whether a Charity Commission and/or Register of Charities are necessary in Northern Ireland. The Panel reported in July 2004 and recommended the establishment of a Northern Ireland definition of charity (distinct from that used in England and Wales or Scotland), a Northern Ireland Charity Commission and a Northern Ireland Register of Charities. The Panel’s Report agreed on proposals for a Northern Ireland Charity Commission and Northern Ireland Register of Charities. Based on the Panel report the Department for Social Development developed a model which is comparable in terms of staffing structure and remit to other similar regulatory bodies in Northern Ireland and the Office of the Scottish Charities Regulator (OSCR). The staffing levels also reflect the experience of the current DSD Charities Branch dealing with existing workload and responsibilities. In consideration of potential costs account has to be taken of increased demands on government budgets against other priorities. These factors have resulted in a very much tighter view of staffing levels whilst still being capable of delivering the key roles envisaged. The Task Force on Resourcing the Voluntary and Community Sector BACKGROUND The Task Force on Resourcing the Voluntary and Community Sector has been working to develop a strategy to help ensure that the voluntary and community sector can continue to make a substantial contribution to the achievement of Government objectives and the well-being of the Northern Ireland community. The Task Force recently issued its report, Investing Together, which recommends that regulation of charity law in Northern Ireland needs to be strengthened to sustain public confidence, that a Northern Ireland Register of Charities should be created, and that a Northern Ireland Charity Commission or similar instrument should be established to regulate charities. The Task Force’s report is available from www.taskforcevcsni.gov.uk. Review of Rating Policy As part of the overall Review of Rating Policy launched in 2002, The Department of Finance and Personnel (DFP) is considering the need to reform existing non-domestic charitable exemptions and reliefs from rate liability in Northern Ireland. DFP intends to issue a consultation paper containing policy proposals in the near future. The policy paper will cover a wide range of areas including a review of existing charitable exemptions and reliefs, the current levels of sport and recreational relief and the treatment, for rating purposes, of certain organisations that are publicly funded. The review being carried out by DFP is completely separate from the present review of charities administration and legislation being carried out by The Department for Social Development and therefore you need to reply directly to DFP should you wish to contribute to the rating policy review. POLICY AIMS POLICY AIMS Northern Ireland charity law has been reviewed in the light of developments in the United Kingdom and Republic of Ireland. While this review has taken account of the position elsewhere, it has focused on Northern Ireland's needs, and has resulted in the proposals set out later in this document, which are now being presented for public discussion and comment. The overall policy aim of the Department for Social Development’s 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. The focus will be on draft legislation which provides:Clarity on the meaning of charity: to give a clear statutory definition of charity which reflects a modern perspective of what constitutes charity; Transparency and Confidence: to establish a comprehensive register of charities which provides accessible information on charitable activity, thus promoting transparency and public confidence; Accountability: to establish a framework for regulation of charities which promotes accountability and which is consistent with developments across the UK and the Republic of Ireland while meeting the particular needs of Northern Ireland; Proportionality and simplicity: to ensure the proportionate regulation of charities and to enable the easier implementation of appropriate changes to charities; Best Practice: to support and promote best practice in the management and governance of the charity sector, which is a necessary underpinning of confidence in charity. EQUALITY EQUALITY Section 75 of the Northern Ireland Act 1998 requires the Department in carrying out its functions to have due regard to the need to promote equality of opportunity between: Persons of different religious belief; Persons of different political opinion; Persons of different racial groups; Persons of different marital status; Persons of different sexual orientation; Persons of different gender; Persons of different age; Persons with or without a disability; and Persons with or without dependants. In addition and without prejudice to its obligation above, the Department shall, in carrying out all its functions in relation to Northern Ireland, have regard to the desirability of promoting good relations between persons of different religious belief, political opinion or racial group. Any proposed policy or policy options developed following this consultation exercise will be screened in accordance with the criteria set out in the Equality Commission’s Guide. If screening identifies any significant implications for equality of opportunity, the Department will subject the proposal to an Equality Impact Assessment. Notwithstanding this commitment, we would welcome comments on this consultation paper in relation to potential section 75 implications and these of course will help inform any future screening of the proposals. HOW TO RESPOND HOW TO RESPOND TO THE CONSULTATION PAPER The Proposals Charity law is a complicated field, and not all the Department's proposals can be expressed briefly. For convenience, the major proposals are summarised in Annex A. Inevitably, however, some require a good deal of explanation and we would urge you to read this paper thoroughly rather than rely on the summary. Responses Comments on the possible changes to the law would be welcome and should be sent to the Department by 20 May 2005. Further details on how to make comments to the Department are given below. What sort of comment is being sought ? The Department welcomes comments of any description from anyone with an interest in charity matters, whether as a trustee, a charity worker, a beneficiary, a donor, or a member of the public. How to respond All responses must be made in writing (or by fax or E-mail) so that there is an objective record of the views expressed, and addressed to:Charities Branch Voluntary & Community Unit Department for Social Development 3rd Floor Lighthouse Building 1 Cromac Place Gasworks Business Park Ormeau Road Belfast BT7 2JB Tel. Fax. Text Phone. E-Mail: Website: (028) 90 829 414 (028) 90 829 431 (028) 90 829 446 firstname.lastname@example.org www.dsdni.gov.uk While we cannot accept responses by telephone, general enquiry calls may be made to the above number. HOW TO RESPOND In view of the number of responses anticipated, the Department will not acknowledge responses or enter into correspondence about the details of proposals. It will be assumed that copies of all responses may be made available to the public by the Department for Social Development on the Department’s website, unless the contrary is specifically stated. If respondents indicate clearly that they wish all or part of their replies excluded from this arrangement their confidentiality will be respected. All responses should be received by the deadline specified above, and it may not be possible for responses received after this date to be considered. If you wish to respond but cannot meet this deadline please telephone Charities Branch to discuss the problem. It would be helpful in the collation and consideration of comments if you could organise your response as far as possible under the headings used in the proposals. Responses on the Department’s website The Department will post relevant information on its website from time to time. This will include updates on the progress of the consultation exercise, copies of responses received, or summaries of responses received. Assistance in preparing responses If you require any further information, or wish to discuss any subject connected with charity law before responding, or if you wish to discuss your proposed response in general terms, please telephone Charities Branch. Alternative Formats This document can be made available in an alternative format, style or language. Please contact us to discuss how we can best provide this alternative format for you. Tel. (028) 90 829 414 Fax. (028) 90 829 431 Text Phone. (028) 90 829 446 E-Mail: email@example.com Web site: www.dsdni.gov.uk/vcu CLARITY CLARITY Definition of Charity in Northern Ireland The Department proposes to bring in a new definition of “charitable purpose” in Northern Ireland, as follows. This definition is based on that proposed for England and Wales, but with two specific Northern Ireland additions (which are underlined):1. the prevention or relief of poverty; 2. the advancement of education; 3. the advancement of religion; 4. the advancement of health; 5. the advancement of citizenship or community development; 6. the advancement of the arts, heritage, culture or science; 7. the advancement of amateur sport; 8. the advancement of human rights, conflict resolution or reconciliation; 9. the advancement of environmental protection or improvement; 10. the relief of those in need, by reason of youth, age, ill-health, disability, financial hardship or other disadvantage; 11. the advancement of animal welfare; 12. the promotion of peace; 13. the promotion of good community relations; 14. any other purpose recognised as charitable under existing charity law and any purposes which may reasonably be regarded as analogous to such purposes and the purposes above. Public Benefit Charity Test The Department further proposes that all charities should demonstrate public benefit and that no particular purpose should be presumed to be for the public benefit. It is proposed that a body meets the charity test if:(a) its purposes consist only of one or more of the charitable purposes as above; and (b) it provides (or, in the case of an applicant, provides or intends to provide) public benefit in Northern Ireland or elsewhere. A body does not meet the charity test if:(a) its constitution allows it to distribute or otherwise apply any of its property (on being wound up or at any other time) for a purpose which is not charitable, or (b) it is, or one of its purposes is, to advance a political party. TRANSPARENCY TRANSPARENCY Registration of Charities The Department proposes that a comprehensive Northern Ireland Register of Charities should be established which provides accessible information on charitable activity, thus promoting transparency, public confidence, and accountability. Such a register should have the following features: All Northern Ireland charities should be registered (see Note 1 below). Registration should be compulsory. There should be no automatic assumption of charitable status or exemption from oversight for religious or any other category of charities; Charities based outside Northern Ireland, but operating in Northern Ireland, should have to register in Northern Ireland. Charities based outside Northern Ireland, but operating in Northern Ireland, should be required to have at least one trustee resident in Northern Ireland. It is proposed that “operating” should be taken to mean the delivery of services, or fundraising, but not to include the provision of grant aid to existing Northern Ireland charities. The introduction of the Northern Ireland Register of Charities should be phased in over a period of time. Details should be updated, and accounts, etc. supplied, annually to ensure information is current. To protect individuals, there will need to be provision for certain charities (e.g. charities connected with security forces, sexual preferences, etc.) to have their registration details checked but not made public. All charities would be obliged to inform the Department of any major change in their circumstances, such as a change of trustees or name or address or income level, and of their winding-up or moving outside Northern Ireland. All charities would be required to prepare annual accounts and reports to be available on request by the Department or the public. Registration would be phased in, 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. TRANSPARENCY Note 1. Most charities in England and Wales have to register with the Charity Commission. There are two reasons why charities in England and Wales do not have to register: some are exempt from registration under the 1993 Charities Act (this includes universities, many state schools, industrial and provident societies and various national institutions) and some are excepted from registration because they are have income under £1000 (and no endowment or land) or because they are churches, voluntary schools, or registered places of worship). ACCOUNTABILITY ACCOUNTABILITY Charity Commission The Northern Ireland Charities Review Panel considered a number of organisational options, including having the Department carry out the role of Charity Commission, a Charity Commission located within or closely attached to the Department, and an independent Charity Commission. The Panel came down in favour of the last alternative on the grounds of independence and consistency with the rest of the United Kingdom and the Republic of Ireland. The Department proposes that a Northern Ireland Charity Commission should be established to operate the Northern Ireland Register of Charities and act as a charities regulator for all charities operating in Northern Ireland. The Department proposes that the Northern Ireland Charity Commission should be kept at arms length from government to ensure independence in operation and should be constituted as an independent Non-Departmental Public Body (NDPB) similar to the Charity Commission for England and Wales. The Department proposes that the Northern Ireland Charity Commission should be organised as follows. 1 Chief Charity Commissioner 1 Deputy Charity Commissioner 3 Charity Commissioners 1 Chief Executive 3 Business Areas Investigation (part-time) (part-time) (part-time) Register Support Advice, guidance and best practice (an existing DSD function) Quasi-Judicial Functions (making Cy Pres schemes, etc. An existing DSD function) Support (legal and administrative support for all other functions) Registration of new charities Maintenance of the register (ensuring annual accounts etc. are submitted) Compliance (checks on annual returns and accounts) Investigation and enforcement (investigating issues arising from compliance checks and external complaints; freezing assets, removing trustees, criminal prosecution etc. in response to investigation results) 4 staff 4 staff 4 staff ACCOUNTABILITY The costs of the proposed organisation will depend to some extent on the precise functions to be carried out, and the speed with which the Northern Ireland Register of Charities is phased in. However, it is estimated that outline costs will be somewhere in excess of £800,000 a year. In addition, there will be start-up costs for computer systems and other office equipment in the region of £300,000. Costs may be further reduced by buying in services from other bodies, such as the English and Scottish bodies responsible for charity regulation, and from bodies with similar functions in Northern Ireland, such as the Companies Registry. Appeals The Northern Ireland charity sector is on a smaller scale than that in England and Wales, and therefore issues of precedent and principle tend to arise there rather than in Northern Ireland. It is important of course that there be clear rules of accountability in place for the work of the proposed Charity Commission. In this context we seek views on the nature and scope of an appeals mechanism relating to the decisions of the Northern Ireland Charity Commission . COMPLIANCE COMPLIANCE Regulation of Northern Ireland Registered Charities The Department proposes that the regulation of Northern Ireland Registered Charities should be based on the following principles:1. All Northern Ireland Registered Charities should be regulated to seek to ensure that they are well-run and deserving of public support; 2. The Northern Ireland Charity Commission should have powers to:a. institute inquiries (with related powers to request or access documents and other information relevant to enquiries); b. deregister charities; c. suspend or appoint trustees; d. freeze charities’ assets; e. appoint receivers; and f. recover misapplied assets from trustees. 3. Trustees should be subject to appropriate checks for suitability on their appointment and during their tenure as trustees on the basis that people falling into the following categories will be disqualified:a. People with unspent convictions for offences involving dishonesty; b. Undischarged bankrupts; c. People disqualified from acting as company directors; and d. People who have previously been removed as charity trustees due to mismanagement or misconduct. It is also proposed that the Department should have the power to waive disqualification on any of the above grounds in exceptional cases. Powers To Control Abuses 1. The Department proposes that it should have the power to require a charity to change its name where:a. this name is the same as, or similar to, the name of another charity which was founded earlier, or b. this name is likely to mislead the public as to the charity's purposes or activities, or c. this name is likely to falsely give the impression that the charity is connected in some way with any government department or local or other public authority or any other body of persons or individual. Accounts, Audits And Annual Reports Arrangements Section 27 of the Charities Act (NI) 1964 requires charities to "keep proper books of account" and prepare annual accounts consisting of either a receipts and payments or COMPLIANCE income and expenditure account, as the trustees decide, and, if the charity's capital exceeds £500 and the Department so directs, an end-of-year balance sheet. There is no obligation to supply copies of accounts to the public or to the Department except where the Department has reasonable grounds to believe that charity property has been concealed, misapplied or withheld and the Attorney-General agrees that it is entitled to demand the accounts. The preparation of annual accounts, subject where appropriate to independent examination and audit, is an important means of demonstrating accountability for charities. The Department proposes, therefore, that there should continue to be a statutory requirement on the trustees of Northern Ireland charities to prepare annual accounts. The objective would be to keep the burden placed on charities to the minimum necessary to ensure that they are properly supervised. To this end, the form and minimum content of the accounts would be prescribed by regulations, and would vary for charities of different sizes. As a minimum, an end-of-year balance sheet (or a statement of assets and liabilities in the case of smaller charities) would be mandatory in all cases. The Department proposes to introduce an accounting and reporting regime applicable to charities in Northern Ireland proportionate to income with three income bands: below £25,000 accruals or receipts and payments accounts, and independent examination. £25,000 - £100,000 accruals accounts and independent examination; and over £100,000 accruals accounts and a full independent audit by a qualified accountant . "Independent examination" means an examination by an individual appointed by, but having no connection with, the trustees of a charity. The individual must be "suitable for the circumstances of the charity", but need not be professionally qualified. As well as a requirement to supply accounts to the Department, the Department proposes that charities should be obliged to supply copies of their accounts to the public on request. It is proposed that the Department should have power to exempt charities from the public right of access to their reports and accounts. This power would only be used in exceptional circumstances where the charity concerned could make a strong case for concerns about the security of their staff and/or beneficiaries. In these circumstances the charities exempted would be required to submit their reports and/or accounts to the Department on a confidential basis. GOVERNANCE GOVERNANCE Charitable Incorporated Organisation (CIO) The Department proposes to set up a new type of organisation, equivalent to the Charitable Incorporated Organisation to be introduced in England and Wales. This would be similar in some ways to a limited company but would not need to be formally constituted as such, and would have the following characteristics: It would have legal personality. It would protect trustees from personal liability for the charity's debts. It would avoid the disadvantage of dual regulation under both company and charity law. It would have to be established for charitable purposes. It would be able to change its purposes as long as the new purposes remained charitable and the Northern Ireland Charity Commission consented to the change. It would have to apply its income only for charitable purposes. On winding up, all its assets would have to be applied for appropriate alternative charitable purposes. It would have to be registered by the Northern Ireland Charity Commission in the register of charities before it could become a CIO. It would be regulated by the Northern Ireland Charity Commission. An existing charitable company could convert easily to CIO form, without having to make any change to its purposes. It should be noted that this is not the same as a Community Interest Company (CIC). The latter is a way of setting up an organisation for socially useful (but not charitable) purposes which may also be introduced to Northern Ireland at some stage but which will not be the responsibility of the Northern Ireland Charity Commission. The differences between CIOs and CICs are summarised below. Charitable Incorporated Organisation (CIO) Designed for charities wanting the business benefits of legal personality (including the ability to protect their charity trustees/members from personal liability for the charity's debts) without the disadvantage of dual regulation under both company and charity law. Always charitable. No organisation would be eligible to constitute itself as a CIO unless it was a charity. A CIO would be entitled to the same tax benefits as any other charity. Community Interest Company (CIC) Designed for social enterprises: that is, organisations wanting to operate flexibly in a business environment but for sociallyuseful purposes. Always non-charitable. No CIC would be a charity. A CIC would not be entitled to charitable tax benefits. THE ADMINISTRATION OF CHARITIES THE ADMINISTRATION OF CHARITIES The Department proposes to introduce a number of provisions, described below, to improve the administration of charities. Changes include increases to certain monetary limits found in existing legislation and the removal of requirements that place unnecessary burdens on charities. The functions identified below are presently the responsibility of the Department, but it is anticipated that they will become the responsibility of the Charity Commission with the exception of charitable collections which will remain the responsibility of the PSNI Small Charities Existing legislation (Articles 3, 4 and 5 of the Charities (Northern Ireland) Order 1987) permits the winding-up of small charities where the trustees are satisfied that the objects of the charity may fairly be considered obsolete, or lacking in usefulness, or that the assets of the charity are too small in relation to its objects for any useful purpose to be achieved by the expenditure of income alone. These provisions are quite limited in extent. The Department proposes to amend the existing provisions so that a charity whose income is less than £5,000 pa could alter its purposes or transfer its assets to another charity and a charity whose income is less than £1,000 pa could expend its capital. This will provide a formality-free way of enabling assets trapped in unsuccessful charities to be put to effective use. Disposal of Charity Property The Department proposes that charities should in general be allowed to dispose of property without the consent of the Charity Commission or the Court if they fulfil 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 (e.g. where the purchaser has some connection with the charity) would still require consent. Public Notice When appointing new trustees for a charity, or making a scheme to alter its objects, the Department is required by the existing legislation to give public notice of its intention on two occasions, in each case allowing 28 days for public comment before proceeding. This delays the making of schemes and can impose considerable costs on charities (who bear the cost of publication). In general the public respond to approximately 5% of first notices, and no comments have ever been received in response to a second notice. The Department proposes, therefore, to amend the legislation to require only one notice to be given, and to allow the Charity Commission to dispense with notices altogether where, in its opinion, they would serve no useful purpose. Scrutiny of Wills THE ADMINISTRATION OF CHARITIES Under the existing legislation the Probate Registry is required to send copies of all Wills containing charitable bequests to the Department, which may require the executors to produce receipts from the charities concerned. No evidence of misbehaviour by executors has ever been revealed in the exercise of this role. The Department proposes to abolish the automatic aspects of this function, while retaining the Charity Commission's right to ask for all or any copy Wills containing charitable bequests if spot checks are considered to be necessary. Revision of Monetary Limits The monetary limits listed below define the maximum value of charity property with which the Department can currently deal in the circumstances described. Charities with more valuable property can only be dealt with by the courts: Power to make Cy Pres Schemes to change the purposes of a charity under section 13 of the Charities Act (Northern Ireland) 1964 - Limit £50,000. Power to apply misdescribed charitable bequests to an appropriate charity under section 14 of the Charities Act (Northern Ireland) 1964 (with the Attorney-General’s consent) - Limit £2,500. Power to make schemes to apply property given for mixed purposes to charitable purposes under section 24 of the Charities Act (Northern Ireland) 1964 - Limit £50,000. These powers have proved popular with trustees, since they save the charity concerned the cost of an application to the Court. No such scheme made by the Department has ever been the subject of legal challenge. The Department proposes that the limits on its powers to make such schemes should be abolished, giving the Charity Commission unlimited jurisdiction (but still subject to the Attorney-General’s consent in relation to misdescribed charitable bequests). 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. Fund Raising Professional fund-raisers are a recent development in the charity field and their activities are not closely regulated in Northern Ireland. The Department proposes to introduce a range of provisions making professional fund-raisers more accountable to the charities on whose behalf they are collecting. In brief, they would provide that: A professional fundraiser could only collect on behalf of a charity if he has a formal agreement with it to that effect. A professional fundraiser must indicate which charity he is collecting for and how his remuneration is to be calculated. A charity could apply to the Courts to issue an injunction preventing unauthorised fundraising on its behalf. It would be an offence to collect money for an institution which is not a registered charity by falsely claiming that it is. THE ADMINISTRATION OF CHARITIES Charitable Collections The legislation governing street collections is the Police, Factories etc (Miscellaneous Provisions) Act 1916 and the Regulations made under that Act. The legislation governing house-to-house collections is the House-to-House Charitable Collections Act (NI) 1952 and the Regulations made under that Act. All street and local house-to-house collections must be licensed by the PSNI. In the case of province-wide house-to-house collections only, the Department may issue an exemption order permitting a charity to collect without having to approach the PSNI. In practice exemption orders are only issued after consultation with the PSNI. The Department proposes to replace the existing legislation governing street and house-to-house collections with new legislation with the following features: a single new definition of "public charitable collections" to include both street and house-to-house collections. embracing other types of collection (e.g. street collections for direct debits or other commitments rather than cash) including those whose present legal status is imperfectly clear and those that may evolve in the future. defining “public place”. requiring all public charitable collections to be approved by the Police Service of Northern Ireland (PSNI). specifying grounds on which the PSNI could refuse to approve a collection. requiring the promoters of collections to account to the PSNI for the proceeds. making it an offence to carry out an unapproved collection or to fail to comply with conditions attached to an approved collection. allowing the Department to make regulations governing the method of applying for approval to, and the conduct of, public charitable collections. It is expected that the existing close liaison between the Department and PSNI will be continued through the Northern Ireland Charity Commission. The Roles Of The Attorney-General And The Court The Department proposes that there should be no change in the arrangements by which certain of the Department's powers require the Department to consult the AttorneyGeneral before taking action, for example, before calling for documents or searching the records of a charity, applying to the court to have the conduct of an action or charitable funds transferred to it, appointing new trustees, allocating a misdescribed bequest in a Will to an appropriate charity, or applying to the Court for action in relation to a charity: these arrangements provide a valuable independent oversight of the Department's activities. All these powers will transfer to the Northern Ireland Charity Commission, but, as with the Department at present, the exercise of these powers by the Northern Ireland Charity Commission will require it either to notify the AttorneyGeneral of its intentions, or to obtain his explicit consent. Educational Endowments Schemes THE ADMINISTRATION OF CHARITIES These Schemes were originally made towards the end of the 19th century under the Educational Endowments (Ireland) Act 1885 for the government of certain educational charities. From time to time these Schemes require amendment, and this is done under the provisions of the 1885 Act rather than under the more recent charity legislation. At present it is difficult for the 100 or so affected charities to be wound up. The Department proposes to amend the 1885 Act to allow the Charity Commission to make Schemes, on the application of the Trustees, to wind up these charities and apply their assets to other similar purposes. Minor Amendments The Department proposes to make a number of minor amendments which would have the following effects: Ensuring that charitable companies cannot amend their constitutions so as to allow charitable funds to be used for non-charitable purposes. Transferring the Department of Finance and Personnel's charities functions under the Consumer Credit Act 1974 and the Reserve Forces Act 1980 to the Charity Commission. Allowing the Charity Commission to share and exchange information about charities with other government bodies, including the Inland Revenue. Charities with Individual Legislation There are 4 charities in Northern Ireland which have specific legislation under which some or all of their functions are carried out. They are:1. Queen’s University 2. Magee University College Londonderry 3. Vaughan’s Charity 4. King George VI Memorial Youth Council There is no compelling reason for these charities to operate under legislation rather than under normal schemes, and the Department proposes to: revoke the legislation concerned. provide for the charities to continue to operate under the schemes embodied in the legislation. provide for future changes to these schemes to be made by the Charity Commission in the usual way. SUMMARY OF PROPOSALS - Annex A SUMMARY OF PROPOSALS Please note that these are only the main proposals. A good deal of the detail of the proposals is contained in previous paragraphs. CLARITY A new definition of charities for Northern Ireland, based on that proposed for England and Wales, with the addition of the promotion of peace, and the promotion of good community relations. All charities should demonstrate public benefit. A test of public benefit will be introduced. TRANSPARENCY There should be a Northern Ireland Register of Charities and all Northern Ireland charities should be registered. ACCOUNTABILITY There should be a Northern Ireland Charity Commission. COMPLIANCE All Northern Ireland registered charities should be regulated to seek to ensure that they are well-run and deserving of public support. Certain persons should be disqualified from being charity trustees. Charities should be required to produce accounts in specified forms, supply them to the Department, and make them available to the public on request. GOVERNANCE A new type of organisation, the Charitable Incorporated Organisation, should be introduced. THE ADMINISTRATION OF CHARITIES The limits within which small charities can alter their purposes, amalgamate, or expend their capital without undue formality should be relaxed. SUMMARY OF PROPOSALS - Annex A In most cases, charities should be allowed to dispose of property without applying to the Department for a power to do so. Only one statutory notice should be required in connection with schemes made by the Department, and it may be dispensed with in certain cases. The Department should not automatically scrutinise all Wills containing charitable bequests. The limit of £50,000 on the Department's powers to make schemes to change charities' purposes, and to apply property given for mixed purposes to charitable purposes, should be removed. Similarly, the limit of £2,500 on the Department's power to make schemes to deal with misdescribed charitable bequests should be removed. Controls should be introduced to prevent professional fundraisers from exploiting charities. The present systems for licensing street and house-to-house collections should be replaced with a new system covering all public charitable collections. The Attorney-General's role in relation to charities should not be altered. The Department should have power to wind up charities established under the Educational Endowments (Ireland) 1885. A number of minor technical changes in the charity law are required. The need for four specific charities to operate under legislation should be removed. EQUALITY Section 75 of the Northern Ireland Act 1998 requires the Department in carrying out its functions to have due regard to the need to promote equality of opportunity. We would welcome comments on this consultation paper in relation to potential section 75 implications, and these of course will help inform any future screening of the proposals.
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