Faith-based charities in a New Age of Regulation

Throughout the ages, faith-based charities have made an invaluable contribution to society. The monasteries, for example, provided a refuge for the destitute and needy in the past.

Today, the charity sector is at a crossroads. The Charities Act was passed in February 2009 and parked - the government did not have the funding or resources to establish the Charity Regulatory Authority (CRA). Following the difficulties that arose at the Central Remedial Clinic and Rehab and the public outcry that followed, the government was forced to enact certain sections of the Act, which led to the establishment of the CRA in October 2014. For the first time, there is one body that is specifically charged with regulating the charity sector.

The CRA will place extra demands on charities such as:

  1. Having to file an annual report with the CRA
  2. A statutory obligation to keep proper account books.
  3. The CRA may appoint an inspector to investigate the affairs of a charity.
  4. The CRA can enter and search the premises of a charity.
  5. If the CRA believes that a charity is committing an offence under the Act or its property is being misapplied, it can apply to the High Court seeking protection orders for the charity’s property.

Faith-based charities make up a sizable portion of the approximate 8,500 registered charities in Ireland. The vast majority of churches are registered with the CRA and Revenue and enjoy all the tax benefits this brings.

Faith-based charities make up a sizable portion of the approximate 8,500 registered charities in Ireland.

Faith-based charities have been strong advocates in the areas of outreach to the poor, sick and needy. For example, they run hospitals, schools and soup kitchens and have sent missionaries to the four corners of the globe.

Section 3 (1) (C) of the Act states that ‘the advancement of religion’ is a charitable purpose and subsection (2) goes on to say that ‘a purpose shall not be a charitable purpose unless it is of public benefit.’

A faith-based charity that was in existence and had a CHY (charitable status number issued by the Revenue Commissioners) prior to the establishment of the CRA is now deemed to be a registered charity. Any faith-based organisation that existed prior to the CRA but did not have a CHY number or any organisation established since then whose main purpose is the advancement of religion must now register with the CRA.

Section 41 of the Act states that it is now an offence for an unregistered charitable organisation to carry out activities in the State, and in breach of this, they will face various sanctions.

It is clear on a strict interpretation of the Act that religious organisations therefore need to register with the CRA, although every case needs to be examined on its own merits. There are some religious organisations, including churches, that may not fulfil the various conditions of becoming a registered charity and will therefore not have to register.

The Act imposes sanctions on organisations that hold themselves out as ‘charities’ but are not registered. However, it does not have sanctions for organisations that fall into a ‘charitable purpose’ category but choose not to register because, for example, they do not confer any ‘public benefit ‘ on the State, or they simply do not want to register because they do not engage in fund raising or refer to themselves as a ‘charity.’

A recent high profile case in the UK concerned a Plymouth Brethren Church (Preston Down Trust), which was initially refused charitable status because the church failed the ‘public benefit’ test (i.e. the public were not benefiting). The church subscribed to the doctrine of separation, which in essence is that members should be separate from the ‘world’ and not associate with those who are from the ‘world.’ They subsequently secured charitable status after a long campaign and legal battle lasting five years. They eventually agreed to amend their constitution and to greater engagement with the wider public.

There has been a significant growth over the past 20 years of new independent non-institutional churches. Many of these independent churches are not regulated internally in the same way the main denominations are. There are French, Polish, Romanian, Chinese and African churches now based in Ireland. Many of these new churches have been pioneered by foreign nationals who have come to Ireland from countries where Irish missionaries were sent in the past.

In this age of secularism and hostility towards the Gospel of Jesus Christ, Christian churches need to focus on what they have in common and be ‘salt and light’. The new regulatory environment poses a challenge but also an opportunity to many faith-based organisations. At its heart, it is an attempt to better regulate this sector and ensure that public trust and confidence can be secure and nurtured.

With the decline of the welfare state, the demands on the services of charities will only increase. One just needs to look at the example of housing charities, which cannot cope with the demands on their services brought about by the government refusal until recently to increase the rent supplement and the lack of investment in social housing. The Capuchin Day Centre in Church Street in Dublin city run by Brother Kevin is at full capacity, providing up to 500 meals a day to homeless and destitute people.

The challenge for charities is to have better systems of governance and regulation, to sign up to the Governance Code and work through it diligently and actually implement it. This also represents an opportunity for faith-based charities to examine their governing documents (e.g. deed of trust, constitution or memorandum and articles of association) to ensure that sufficient safeguards are built in so that they retain their faith-based ethos. There have been many charities in the past that started out life as faith-based charities but were not sufficiently anchored and are now secular charities, such as Oxfam, Barnardos and Save the Children. I am not suggesting that there is anything wrong with secular charities, but very often, faith-based charities have an extra dimension they can offer.

Faith-based charities need to be above reproach. Being a registered charity is a privilege and not a right.

Faith-based charities need to be above reproach. Being a registered charity is a privilege and not a right. One hopes that faith-based charities can enjoy the trust and confidence of the public; however, if this trust is broken, it can be very difficult to repair and redeem. The cynicism and disillusionment in some sectors of the public need to be overcome by greater ‘buy-in’ from churches and faith-based charities in the form of greater transparency and integrity.

By embracing the changes the new Act has introduced, charities can get their houses in order and ensure that they enjoy continued support and trust. Faith-based charities still have an important role to play in society by catering for people’s practical needs and also their spiritual ones.
 

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Cormac O Ceallaigh is a solicitor specialising in Charity Law.