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 abo

Session 2007/2008

First Report

COMMITTEE FOR SOCIAL DEVELOPMENT

Report on the Charities Bill (NIA 9/07)

Membership and Powers

Table of Contents

Appendix 1

Appendix 2

Appendix 3

Appendix 4

Appendix 5

Executive Summary

Clause 2 – Meaning of “charitable purpose”

Clause 3 – The “public benefit” test

Clause 16 – Register of charities

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

Clause 122 – Power to transfer all property of unincorporated charity

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

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

Clause 166 – Designation, etc of religious charities

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

Miscellaneous drafting amendments and corrections

Guidance to be issued by the Charity Commission for Northern Ireland

Enabling powers

Introduction

Part 1: Introductory

Part 2: The Charity Commission for Northern Ireland

Part 3: The Charity Tribunal for Northern Ireland

Part 4: Registration of Charities And Charitable Names

Part 5: Information Powers

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

Part 7: Charity Land

Part 8: Charity Accounts, Reports and Returns

Part 9: Charity Trustees

Part 10: Charitable Companies

Part 11: Charitable Incorporated Organisations

Part 12: Powers of Unincorporated Charities

Part 13: Funding of Charitable Institutions

Part 14: Miscellaneous and Supplementary

Extension of Committee stage of the Bill

Report on the Charities Bill

Consideration of the Bill

Evidence from the Chief Officers 3rd Sector

Evidence from the Northern Ireland Council for Voluntary Action

Evidence from the Volunteer Development Agency

Evidence from Cleaver Fulton Rankin Solicitors

Evidence from the Police Service of Northern Ireland

Evidence from Evangelical Alliance Northern Ireland

Evidence from the Presbyterian Church in Ireland

Evidence from Magheraknock Mission Hall

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

Clause-by-Clause Scrutiny of the Bill

Clause 1 – Meaning of “charity”

Clause 2 – Meaning of “charitable purpose”

Clause 3 – The “public benefit” test

Clause 4 – Guidance as to operation of public benefit requirement

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

Clause 6 – The Charity Commission for Northern Ireland

Clause 7 - The Commission’s objectives

Clause 8 – The Commission’s general functions

Clause 9 – The Commission’s general duties

Clause 10 – The Commission’s incidental powers

Clause 11 – The official custodian for charities in Northern Ireland

Clause 12 – The Charity Tribunal for Northern Ireland

Clause 13 – Practice and procedure

Clause 14 – Appeal from Tribunal

Clause 15 – Intervention by Attorney General

Clause 16 – Register of charities

Clause 17 – Duties of trustees in connection with registration

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

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

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

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

Clause 22 – General power to institute inquiries

Clause 23 – Power to call for documents and search records

Clause 24 – Disclosure of information by and to the Commission

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

Clause 26 – Occasions for applying property cy-près

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

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

Report on the Charities Bill
(NIA 9/07)