Charity Law Reform

31 October 2011

The Minister for Social Development, Nelson McCausland, is currently considering various options to sort out the public benefit test issue. 

In a briefing to the Committee for Social Development at Stormont on 20 October 2011, officials from the Department for Social Development stressed the importance of solving this legal issue so that the CCNI can begin registering charities.  They also outlined the three options that the Minister is currently considering to rectify the situation and clarify section 3 of the Charities Act 2008:

Option 1:    

All charities in Northern Ireland would be required to demonstrate how they benefit the public, as is provided for in the Charities Act 2008, however it would be up to the Charity Commission for Northern Ireland (CCNI) to determine whether or not a charity is set up for the benefit of the public (as is the case in England and Wales) rather than having a prescribed test enshrined in legislation;

Option 2:    

Restore the presumption of public benefit to those charities working for the relief of poverty, the advancement of education and the advancement of religion (the three original heads of charity);

Option 3:    

Restore the presumption of public benefit only for those charities that are engaged in the advancement of religion.

The first option was the course of action that the previous Minister, Alex Attwood, received accelerated passage for from the Committee for Social Development last December.  However the NI Executive would not accept this technical amendment to the legislation, preferring instead to restore the presumption of public benefit for those charities classified under the original heads of charity.  The Executive’s intended course of action was not implemented before the Assembly dissolved in March 2011, as there was insufficient clarity to introduce a Bill to the Assembly at that time.

The second option proposes to reintroduce the presumption of public benefit for the original heads of charity, dating back to the Pemsel classification in 1891. The principle that a charity must benefit the public in some way has always been central to the meaning of charity and in the 19th century, those charities working to advance education, advance religion or for the relief of poverty were all presumed to be for the benefit of the public.

A 19th century presumption that certain types of charity are established for the benefit of the public is not a prudent strategy for the 21st century and NICVA believes that all charities should be required to demonstrate how they benefit the public.

The third option, to reintroduce the presumption of public benefit for religious charities only, could serve to create an unequal and unfair charity sector in which these types of charities would be treated more favourably than others.

At the Social Development Committee, Department Officials, in response to a question on the fears that religious organisations may not be able to demonstrate public benefit, assured the Committee that if a religious organisation were to hold an act of worship once a week then this would in itself satisfy the public benefit requirement.

Further questions around the reporting requirements for charities concentrated on the need for proportionate reporting.  Some Committee Members were seeking assurance that a small charity, such as a gospel hall, would not have the same reporting requirements as a large organisation like NICVA.  All charities, regardless of purpose, will be required to submit annual reports and statement of accounts to CCNI on an annual basis and this information will be open to public inspection.   The accounting and audit thresholds for all charities should be ready for consultation in Spring 2012.

The work programme for the Committee for Social Development had included several dates for consideration of this issue for this Autumn, but the work programme has been revised again until such time as an amendment is approved by the Minister, hopefully by the end of this year.  Then the Committee for Social Development can begin its consultation process on a Charities Amendment Bill early next year.

Charities Amendment Bill

21 September 2011

The Committee for Social Development was scheduled to commence consideration of the Charities (Amendment) Bill at the end of September, this has now been rescheduled for 20 October.  We still do not know what the planned changes are for the public benefit test wording as the Minister for Social Development, Nelson McCausland, has still not disclosed/decided on his favoured course of action. 

New accounting rules delayed

The Department for Social Development was expected to launch the draft regulations for consultation in the autumn but has now deferred the launch until early spring next year.    This will in turn delay the requirement to submit annual accounts to the Commission, of which, there is no known commencement date.

Public benefit issue soon to be resolved

25 July 2011

There is still no date for the establishment of the Register of Charities as the issue with the public benefit test has still not been resolved.

NICVA wrote to the Minister for Social Development in early March to outline concerns over the Executive’s intention to use accelerated passage to restore the presumption of public benefit for certain categories of charity.

The Minister responded, saying that he shared our concerns on this matter and, that he was of the view “that such an amendment is contrary to the intention and content of the current legislation” that is, that no charity should be presumed  to be for the public benefit.

The Executive’s intended course of action was not implemented before the Assembly dissolved in March, as there was insufficient clarity to introduce a Bill to the Assembly.   

Since the last elections, Nelson McCausland MLA, has been appointed as the new Minister for Social Development.   It is anticipated that he will present his preferred course of action, over the public benefit test issue, at the next Social Development Committee meeting in September.

New accounting regulations for all charities

Despite the delay over the establishment of the Register of Charities, the Department for Social Development is currently working on preparing further secondary legislation and hopes to launch draft accounting regulations for consultation in September or October of this year. 

NICVA’s Governance and Charity Advice team will be holding consultation workshops on the new financial requirements for charities.  Dates will be publicised on nicva.org when the consultation document is launched.

The Department is also in the process of drafting the Fourth Commencement Order to the Charities Act, which should see the transfer of powers, in relation to the transfer or disposal of charity land, from the Department to the Charity Commission.  It is anticipated that this will become effective sometime in September or October.

Not all charities to be treated equally

11 March 2011

NICVA has written to the Minister for Social Development (after reading his Ministerial Briefing to the Committee for Social Development) seeking clarification on plans, by the Northern Ireland Executive, to reintroduce the presumption of public benefit for certain types of organisation via a Draft Charities (Amendment) Bill.

NICVA understands that it was necessary for the wording of the public benefit test to be amended, as it potentially created problems in its current form. NICVA understood that the issue concerned a legal technicality and supported the Department’s course of action to obtain accelerated passage for the rewording of the public benefit section of the Act.  However, NICVA understands that it was never the intention to change the essence of the public benefit test requirement and is very concerned with the Executive’s proposals. 

During the extensive consultation carried out on the key provisions of the Charities Act (NI) 2008, it was widely agreed that any organisation wishing to establish as a charity in Northern Ireland should have to demonstrate that it is for the benefit of the public and that all charities should be treated equally and fairly.   NICVA is therefore concerned that if the Executive continues with their proposed amendment to reintroduce the presumption of public benefit for religious institutions and, possibly for those that are established to relieve or prevent poverty, or promote education it will create an unfair advantage for these types of organisation.  It would also undoubtedly create confusion for charities operating in Northern Ireland. 

NICVA has asked Mr Atwood, the Minister, to clarify whether this intended course of action, by the Executive, creates new law as it alters what was originally intended in the current legislation.  NICVA has also raised concern that these changes would be given accelerated passage in the Assembly as changes on this scale, we believe, require full and thorough scrutiny to ensure that sound legislation is progressed. 

Charity Commission announces its new powers

7 March 2011

The Charity Commission for Northern Ireland (CCNI) has now been granted its powers of regulation, investigation and enforcement via the third commencement order to the Charities Act.  All NI charities, recognised by HMRC, as of 18 February 2011, are now officially answerable to the new regulator, CCNI under a transitional provision order.  For a full explanation of the range and scope of its powers, visit the Commission’s website.

A list of all charities (recognised for tax purposes) which are now answerable to the new regulator can be viewed on the regulator’s website under the Organisations Previously Known as Charities section. Please note that this is not the Register of Charities, as this has not been established as yet. 

The Charity Commission calls for information

18 February 2011

As highlighted previously, the wording of the public benefit test needs to be amended, through the legislative process of the Assembly, before the Register of Charities can be established.  It now looks unlikely that the amendment will happen before the Assembly dissolves for elections in late March, which will further delay the establishment of the Charities Register. 

Despite the delay with the establishment of the official register of charities, CCNI has launched a pre-registration process.  It has written to all organisations that have been granted charitable status for tax purposes, asking them to verify the contact information that it has been given from Revenue and Customs (HMRC).  If your organisation has not received a letter from the Charity Commission, and you already possess a HMRC letter, then please contact CCNI Pre Registration on Tel: 028 9051 5492 or email admin@charitycommissionni.org.uk

Free seminars focusing on the new rules and regulations that will come into being from the Charities Act have been organised by the Developing Governance Group, in association with the Charity Commission and local support networks, in various areas throughout Northern Ireland.   The seminars will also give charities practical guidance on how to help ensure good governance within their organisations. 

Charities Act (NI) 2008 to be amended

1 November 2010

Alex Attwood, the new Minister for Social Development, has directed that the Charities Act (NI) 2008 be amended to clarify the law on the public benefit test. 

Once the issue is fully resolved and new amended legislation is in place, the Charity Commission will then be in a position to issue draft guidance on the public benefit test for consultation.    

The Register of Charities can then be established and the Commission will be able to begin the process of registering the first charities in Northern Ireland.  There will be a clearer idea of timescale when the amendment has passed through the legislative processes of the Assembly but it is envisaged that the Register may not be operational before Easter of next year.

For more information on this latest development see www.dsdni.gov.uk/charities-act-to-be-amended.htm and for more detail on the progression of charity law reform, visit www.nicva.org/governance/charity-law-reform

Establishment of Register of Charities delayed

18 June 2010

The Charity Commission has identified a potential technical hitch with some of the wording in the Charities Act and has asked the Department for Social Development to investigate.  This means that the registration process of charities will not commence at the end of June as planned.  It is more likely to be the autumn, or potentially next year, before registrations are taken as any necessary amendments would have to be laid before the Assembly.   See the Charity Commission’s website for more information.   Download NICVA's updated briefing paper at the bottom of this page.

Register of Charities timescale announced

The Charity Commission has announced that the Register of Charities for Northern Ireland will be operational by the end of June.  The Revenue has handed over its list of charities, which are registered for tax purposes, to the Commission.  This list, which hopefully will be made available on the Commission’s website, is NOT the Register of Charities – it is only the Organisations that have previously been known as charities list.

The Commission will write to all charities in the near future explaining what they will have to do to register, so there is no need to contact the Commission. The Charity Commission also anticipates that it will issue the public benefit test guidance in early June as charities will have to demonstrate, as part of the registration process, how they meet the public benefit test requirement.

Once the official Register of Charities is up and running every new charity and those currently deemed charities will be required to register with the Charity Commission.  The Commission anticipates that it will target the largest charities first and have the process complete within 24 months.  It will encourage charities to register online but will permit registrations in hard copy also.  

See the Charity Commission’s website for full details on the establishment of the Register and the indicative timetable. Download NICVA's updated briefing paper below.

News from the Charity Commission (January 2010)

NICVA has got the latest update on the implementation timetable for various provisions of the Charities Act following a recent meeting with the Secretariat of the Charity Commission for Northern Ireland. Whilst the Commission does not have possession of the Inland Revenue’s listing of charities registered for tax purposes in Northern Ireland as yet (plan to receive it in February) it is envisaged that the charity register will still go live in April of this year as was originally planned.  The Commission will conduct an awareness raising campaign before May to communicate what will be expected of charities. Download the updated briefing paper below, or read the full article.

Public benefit test guidance consultation launched (September09)

The Charity Commission for Northern Ireland has embarked on its first major piece of work with the launch of the public benefit test guidance for consultation on 3 September in NICVA.

To find out more about the public benefit test and how this impacts on registering as a charity it is advisable to go along to one of the evening consultation sessions arranged by the Charity Commission throughout Northern Ireland or download the consultation document from the Commission's interim website.

DSD advertises Charity Commissioners' Positions (January 2009)

The Department for Social Development is seeking to appoint a Chief Commissioner to lead the Commission, as well as a Deputy Chief Commissioner and up to five Charity Commissioners, including a legally qualified Commissioner.

The Charity Commission can now commence its work as it has already been given the power to operate and fulfil its duties by the First Commencement Order which was passed in March 2009. The Department for Social Development still has to appoint a Commissioner who is legally qualified.

Royal Assent for Charities Act (NI) 2008 (April 2008)

The long awaited new charities legislation for Northern Ireland received Royal Assent on 9 September 2008. Many of the provisions of the Charities Act require secondary legislation and as such will be introduced in stages. The Department for Social Development anticipates that all parts of the Act should become fully operational by early 2011. It is expected that the Charity Commissioners will be appointed and the Charity Commission established in April 2009.

The first main business of the new Commission will be to consult on public benefit guidance and this exercise will probably take place in May or June 2009. It is envisaged that charities will not be required to register with the Charity Commission until the spring of 2010 with the first reporting requirements happening the following year in April 2011. The new rules for fundraising and public collections are not likely to take effect until 2011.

The Charities Implementation Team in the Department has set up a Charity Regulation Stakeholder Forum to consider the implications of the new Charities Act. NICVA is represented on this group and will keep the sector informed of any important issues that may emerge as well as raising any concerns to the Forum.

The Department has set up an interim website for the new Charity Commission for Northern Ireland which provides information on the Charities Act, the role of the new Commission and the timescales for implementation. The Department will update this website until the Commission is in place and is in a position to develop its own corporate image.

NICVA produced a Briefing paper on the Charities Act for our members.

Final Stages for Charities Bill

The Charities Bill (as amended at consideration stage) reached its final stage in the Assembly on 30 June and is now waiting Royal Assent. The Social Development Committee published its Report on the Charities Bill to the Assembly on Tuesday 13 May 2008.

It is anticipated that the Charities Bill will receive royal assent in mid September 2008.

Assembly grants Committee for Social Development more time

The Charities Bill will not be enacted in the first part of 2008 as had been anticipated.

The Committee for Social Development, which is currently considering the Bill, has been granted an extension until 27 June 2008 to allow the Committee sufficient time to consider the views of all submissions and to compile its report on the Bill. It is now envisaged that it will be late summer at the earliest before the new charities legislation comes into being.

For further information on this latest announcement visit the They Work for You website

Charities Bill for Northern Ireland introduced

The Charities Bill for Northern Ireland was introduced to the Assembly on 10 December 2007. The Bill which replaces the draft Charities (NI) Order 2007 (which was originally intended to be enacted earlier this year in Westminster) will:

Submit evidence to the Assembly Committee

The Charities Bill is now moving through the Committee Stage of the legislative process of the Assembly , which will hear oral evidence from interested parties, including NICVA. Any organisation or individual with an interest is invited to submit written evidence to the Committee via email (in MS Word format ) by Tuesday 5 February 2008.

Background

The Charities (NI) Order 2007 which was laid before parliament in January will not continue its passage through Westminster as planned. Instead, with the restoration of Devolution on 8 May 2007, the new Minister will consider the charities legislation for referral to the Northern Ireland Assembly.

If the legislation had been passed through Westminster the new Charity Commission would have been established by the end of Summer 2007 and the first registrations taken by the end of December 2007. It is now anticipated that the legislation will be delayed by approximately one year and consequently the proposed timetable for the Charity Commission and the implementation of the other provisions in the Draft Order will also be delayed by at least one year.

Some of the key issues that emerged during the consultation period on the draft Charities (NI) Order 2006 influenced change on the Order that was laid before parliament, most notably, the accounting and audit thresholds. NICVA welcomes the Department’s decision to bring the accounting thresholds and audit requirements in line with the rest of the UK which is a considerable change from the draft Order which was consulted on.

NICVA, however, was concerned that the Charities (NI) Order 2007 listed a ‘Fellow’ instead of ‘Full Member’ of the Association of Independent Examiners (ACIE) as a type of prescribed person permitted to carry out a qualified independent examination. The Department has accepted that this is a valid point and has stated that it will amend Article 68.

There were only two other substantial changes from the draft Charities Order 2006 that was consulted on. Firstly, a requirement has been added that a permit must be sought for a house-to-house collection to be carried out. Secondly, the advancement of sport as a charitable purpose now includes sports or games which promote health by involving mental skill and not just physical skill or exertion.

NICVA's consultation response 2006

As part of the 2006 consultation process, the Department co hosted various seminars with NICVA in Belfast, Londonderry/Derry, Newry and Omagh to give charities, and those working with them, the opportunity to discuss how the new regulations would affect their organisations. NICVA’s response to the draft Charities (NI) Order 2006 is informed by these consultation seminars and also from the work on the previous year’s consultation paper on the Review of Charities Administration and Legislation in Northern Ireland and the ongoing work of its Governance and Charity Advice section.