A question of good governance

A question of good governance

In recent weeks reputational issues associated with charity operations continue to challenge the sector with standards in some organisations falling below what would be expected of those in receipt of public and/or government funding.  This ripple effect is leaving few charities untouched.

The work that Ireland's charitable organisations carry out is invaluable, providing essential services to those most in need or who have been neglected by other sectors across society.  But, there remains as much of a requirement here as in any other sector to ensure proper levels of good governance, transparency and accountability. The significance of this requirement cannot be emphasised enough as it is imperative in maintaining the trust of partners, patrons, sponsors, the general public and all those who rely on the vital services of charities.   

Charities Institute Ireland believes that the success of the charitable sector going forward will be in how the sector confronts the inconvenient truths of past practices of some charities and use the current challenges to integrate good corporate practice, procedures and effective governance to ensure that it reaches the highest standards of accountability, transparency and public trust. Without good governance, this sector will find it hard to achieve any sustained development let alone rise to the challenge of achieving true equitable social change.

To Merge or Not to Merge

To Merge or Not to Merge

Charity leaders scanning the external landscape will inevitably encounter the tempting concept of ‘merger’. Mergers are not for the faint-hearted, but neither are they necessarily to be avoided
— Mary Chadwick, Cass Business School

To mark the first anniversary of the merger that formed Charities Institute Ireland, we hosted a breakfast event for Chairpersons and CEO’s to focus on charity mergers - the opportunities, the challenges and practical guidance on how to ensure a successful outcome.

Opening remarks were made by Caitriona Fottrell, Vice President and Director, Ireland, The Ireland Funds.

Setting the Scene for Charity Mergers - Trends in the charity sector: Patricia Quinn, Managing Director of Benefacts provided insights from the Database of Irish Nonprofits.

Merger Process - A guide on ‘How To Merge’: Niamh Callaghan, Partner at Mason Hayes & Curran, specialising in Governance and Restructuring of Charities, has worked with charities of various sizes that have merged. Niamh took guests through the legal methods that can be used and highlighted the main legal stages in the process.

Successful Rebranding: Margaret Gilsenan, Partner and Head of Strategy at the award winnning creative agency Boys and Girls Ltd spoke about the process of successful rebranding and the importance of bringing all your stakeholders on the journey.

What is the charities SORP?

What is the charities SORP?

The Charities SORP is a Statement of Recommended Practice which sets out how charities should prepare their annual accounts and report on their finances. The SORP is an interpretation of the underlying financial reporting standards and generally accepted accounting practice. The SORP is overseen by a committee of 17 expert members drawn from the 4 charity law jurisdictions covered by UK-Irish GAAP.

What is the charities SORP (FRS102)?

The introduction of Financial Reporting Standard 102 (FRS 102) was a radical change as it brought together a whole series of piecemeal standards and guidelines on general accounting into a single standard. When FRS102 was introduced, the charity SORP was revised to interpret FRS102 for charities. A charity will now need to comply with FRS102 and the SORP (FRS102) for their financial statements to show a true and fair view.

How are charity SORP (FRS102) accounts different from standard FRS102 accounts?

The charity SORP requires a far greater level of information and disclosures in order to provide transparency and accountability. There are more requirements for the directors’ report, more analysis of income and expenditure and a focus on the funds position.

What is different about the directors’ report?

The directors’ or trustees’ report has to provide information on why the charity exists, so its objectives and aims, plus describe the types of activities it undertakes and how it delivers public benefit. The trustees’ report will incorporate the requirements of a business review or strategic report but offer more in terms of explaining the charity’s performance in the financial period and the impact its achievements have had on its beneficiaries.

Then there are the 3Rs: risk, reserves and remuneration. A charity has to describe the principal risks it faces and how it manages them, explain its policy for holding reserves and explain how it remunerates its executive staff.

What’s different about the statement of comprehensive income?

A charity will call this the SOFA, being the Statement of Financial Activities. A SOFA has far more detail than a typical income statement, with analysis of the key income streams between donations and legacies, income from charitable activities, income from trading activities and investment income. The expenditure will be analysed in a similar way, showing the costs of raising funds, investing and trading and the costs of delivering the charitable activities. 

The charitable activities should be analysed into the key activities described in the trustees’ report, so providing the reader with an understanding of the income and expenditure for each activity.

The most striking difference on a SOFA is the analysis of funds. There will be multiple columns on the SOFA to report the income and expenditure for endowment funds, restricted funds and unrestricted funds and the total. The nature of the fund determines what it was given for and how it can be used. Charities must use funds received in accordance with the conditions the funds were given under, so this analysis is key to providing accountability in the financial statements.

The SOFA does not report a profit or loss, but rather the net income/expenditure for the year and the net movement in funds. This is because a charity is not focussed on generating a profit/surplus or loss/deficit. The key things to report are the funds in, the funds out and the funds carried forward to spend in future periods. There is additional analysis in the notes of the movements of individual funds, whether they are endowments to be held as capital, restricted funds to be spent on particular purposes, designated funds which the trustees have earmarked for specific purposes or the general or “free” reserves.

What’s different about the statement of financial position?

A charity’s balance sheet will be very similar in presentation to a commercial entity’s, with the exception of the funds. The bottom half of the balance sheet will be analysed to show the amounts held in each of the endowment, restricted, designated and general funds.

What’s different about the statement of cash flows?

The statement itself is not different, but there are different requirements for which charities must prepare one. The charities SORP requires all “larger” charities with income over €500,000 to prepare a statement of cash flows, regardless of whether they could take the exemption under section 1A of FRS102.

What else is different?

The notes will provide an analysis of the income and expenditure by activity. As well as the key activities on the face of the SOFA, the notes will report expenditure incurred by way of overheads to support the key activities and the governance of the organisation. These are reported in the notes and then allocated to the key activities on the SOFA.

The notes also need to disclose any transactions with related parties. The related parties of a charity include all the trustees and their close family members, plus the key management personnel and their spouses. If the charity transacts with any of these individuals, it will need to consider if the transaction needs to be disclosed in the financial statements. The SORP provides information on the types of transactions that must be reported and those that do not.

The most important disclosure is where a trustee has been paid, either for performing their trustee role or in their professional capacity.

The most common disclosure is in relation to trustees’ expenses, which must be disclosed whether they are reimbursed costs that the trustee has paid for themselves or whether the charity paid for the expenditure directly on the trustees’ behalf.

The SORP also requires the disclosure of any donations from related parties, with detailed disclosure for any donations made with conditions. The charity must also disclose the aggregate total of donations received from related parties without conditions. 

Joanna Pittman, Sayer Vincent UK

Where can I find out more?

Join Joanna at the next "Getting to Grips with SORP" full day training course on the 19th September at the RCPI, 6 Kildare St, Dublin.



Managing Long Term – A space for mergers?

Managing Long Term – A space for mergers?

Charitable and not-for-profit organisations serve a unique function, offering public benefits through private and voluntary actions. Playing such an important and omnipresent role in the lives of so many of us here in Ireland and abroad requires this sector to operate in a manner as not to be wasteful with its resources and to achieve the greatest positive impact on behalf of its beneficiaries, donor, sponsors and patrons. These challenges have become more pronounced because of the recent economic collapse and consequential fall in fundraised income, and in part, due to the erosion of trust resulting from the failures within the sector. Coupled with this, a decrease in government funding, which previously had been a given and stable source of income, is now a new reality for many organisations. This is particularly poignant and ironic, coming at a time of greater need for the services offered by this sector.

With public perception of an overcrowded and highly competitive marketplace coupled with constrained public and private funding and the continuing public interest in how this sector is managed and funded, demands the sector to justify its effectiveness, fulfil its objectives and demonstrate its impact. In this period of great social, economic and regulatory change it is essential for organisations to assess their effectiveness and areas for improvement, to create more innovate flows of finance to secure their future and maintain public legitimacy and integrity.  

By being viewed in the broad context of partnership and collaboration, articulating the value of mergers as a means of joint working could be an obvious answer, and part of the innovation to create value and an important means of making charities more effective by improving existing services, creating new benefits and saving money.

Mergers within this sector are not very common suggesting that the sector is not organised to maximise value. To help understand this we need to look at the structure of the sector and what defines the trends and behaviours around mergers, most being perceived as hostile and/or predatory, frequently driven by crisis but rarely seen as a means to growth. This defensive approach is in direct contrast to the growth seeking attitude that we often see in the ‘for-profit’ sector where acquiring companies is normal business creating value for shareholders. Charities worry that merging will reduce income and their ability to generate revenue often arguing that a merged charity will only attract one grant where two charities would normally get one each.  Patrons, sponsors and donors prefer to fund projects rather than organisations so this reasoning should have no basis. A merger that is done well and reduces costs could be a powerful argument for attracting more funding. 

Organisations managed as a single entity or formed by the amalgamation of two or more organisations is greater than the sum of its parts not only creating clear economies of scale but by consolidation: aligning mission, capital and impact strategies, will help to secure sustainability and growth whilst optimising efficiencies, ensuring long-term viability, funding growth opportunities and balancing risk. Each charity is unique and does a remarkable job given their size and budgets, but some have much in common. By coming together and retaining the best elements of both, organisations can boost what each has rather than compete for it.

But what of the opportunities for improving services for beneficiaries? What of the economic benefits, the opportunity that a hard Brexit could bring and the possibilities of mergers or alliances between Irish and UK charities?

The motivation for a merger needs to come from within with the broad support of trustees and staff and viewed as a strategic decision, driven by a desire to improve services for beneficiaries and achieving its charitable purpose. Foremost in the minds of trustees and executives should be the question ‘how can we achieve the most for the people we seek to help?’ Pursuing a charitable objective should encourage trustees and the executive to seek what is best for their beneficiaries, not what is best for their charity. Putting mission ahead of individual organisational interests should effect greater collaboration and an openness to merge.

It is time for those of us within this sector to find solutions to our recurring problems. Charities Institute Ireland does not advocate a merger without careful consideration or due process but does realise that an important obstacle to considering mergers and alliances is the availability of information thus making it hard to spot opportunities for collaboration and identifying potential mergers. Charities Institute Ireland, itself born of a merger, will over the coming months host a number of ‘Member Advisory Forums’ which will cover this important topic and discuss opportunities in greater detail. 

Profiling' provision - submission to the Data Protection Commission

Profiling' provision - submission to the Data Protection Commission

30th March 2017

Dear Sir/Madam,

Charities Institute Ireland would like to thank you for the opportunity to make a submission regarding ‘Profiling’ under the upcoming General Data Protection Regulation (GDPR).

The GDPR contains several Recitals on profiling.  The criteria of ‘legal effects and ‘significant effects’ does pose problems of interpretation. The data subject has the right not to be the subject of a decision based exclusively on automated processing.  The definition of profiling provided for in the regulation raises questions about the cases involved in profiling. To determine whether it is profiling, two criteria must be taken into account:

  • Automated processing
  • A purpose for assessing certain aspects relating to a natural person.

Firstly, it is necessary to understand that if the decision is not fully automated, and if a person intervenes in the processing of the data, notably to make the decision, that this is not profiling?  The legislation appears to go in this direction since it states that the person has the right not to be subjected to fully automated processing based solely on profiling and is not applicable where the interest of the recipient does not constitute a decision for ‘legal consequences’ or ‘not significantly’ affecting the person concerned, such as an automatically declined loan, mortgage, increase in an insurance policy etc.

Any classification of individuals according to specific segmentation criteria can be considered as profiling, assuming that it is actually performed by machines e.g., students ranked by grades to assess their performance, sales professionals in an organisation evaluated on the basis of ranking of sales figures etc. From our interpretation, we understand that none of these examples fall within the scope of the ‘profiling’ provision.

In our opinion, the main problem is not necessarily profiling but rather the way in which the profiling is actually used, its impact on the individual and the lack of human intervention. 

Attention should first be paid to profiling activities:

  • Based solely on automated processing
  • May cause unfair, detrimental and significant effects to the persons concerned in relation to access to essential services (mortgages, loan Insurance) or to their dignity and freedoms.

Furthermore, the GDPR definition of profiling appropriately includes basic online business activities such as consumer segmentation to provide appropriate advice or advertising.  This type of profiling is often referred to as ‘current’ profiling and is at the origin of a free internet for all.  The GDPR distinguishes ‘current’ profiling from profiling associated with fully automated data processing that has ‘legal effects’ or ‘significantly affect’s the data subjects.  ‘Current’ profiling is legitimate business interests and the data subjects have the right to object.

The right to object to profiling which is based on legitimate business interests of the controller is a reflection of the previous directives and an equitable way of offering individuals the ability to choose and control.   GDPR rightly recognises that companies cannot offer users the main services on which they rely without ‘current’ profiling such as preference based advertising.  Should it be considered that targeted advertising has legal effects or affects the person concerned significantly?  If this is the case we would like to draw your attention to the fact that such a qualification could have serious economic consequences, since all sectors of activity today use targeted advertising.

Charities Institute Ireland calls on the Data Protection Commissioner to interpret these provisions in line with the original spirit of the GDPR – that is, by limiting decisions considered to have ‘legal effects’ or ‘significant effects’ to situations where these effects would have a real negative impact on the persons concerned e.g., the ability to obtain credit etc.

Charities Institute Ireland further calls on the Data Protection Commissioner to accept and confirm, with respect to the charitable, not-for-profit and the voluntary sector and their funding model that:

  • Detailing profiling/development purposes within the Privacy Statement and Data Usage Statements of a charitable organisation is sufficient to adhere to this element of the GDPR.
  • That the right of donors to oppose profiling is satisfied by allowing the person concerned to delete their information without any other conditions.

Charities Institute Ireland considers that donor profiling does not deprive the person concerned of a right but on the contrary fosters true engagement and giving as it is adopted to the donors values and interests and thus seen as an opportunity to express their support for a charity and not an intrusion on privacy.

Sincerely yours.


Caroline Lafferty.

Membership and Communications Manager.



A survey commissioned by Charities Institute Ireland (Cii), published today, Monday 27th March, shows that there is a rise in the number of people who feel that Irish charities are doing a good job of restoring trust in the sector.


Of those who expressed an opinion, 27 per cent feel that the Irish charity sector is “doing enough to build trust with their donors” - an increase of 14 per cent from 2016’s survey, when the same question was asked.

The survey, undertaken by Amárach Research, also shows that while just 24 per cent feel that they can trust Irish charities nowadays, this figure remains unchanged from last year, showing that the decline as halted.

Lucy Masterson, CEO of Charities Institute Ireland, commented on the findings today. “While trust in the sector is still much lower than we would like it to be - largely due to the malpractice that was brought to light in the last two years - these new findings are encouraging. They show that the declining trend in trust has halted, and that the public are beginning to have confidence that the sector, as a whole, is working hard to restore that trust,” she said.  


46 per cent of those surveyed feel that wages in the charity sector are too high. This is unchanged since last year, but is down from 51 per cent in 2015.

43 per cent agree that senior management in the charity sector should be paid less than their private sector counterparts.

However, 55 per cent agree that charities should get the best professionals possible to work for them. This is down from 68 per cent in 2015, but it is still a high percentage. In addition, 37 per cent of those surveyed agree that charities need to pay competitive wages to get the best people to work for them.

Gerard O’Neill, Chairman of Amárach Research, says: “This research points to a positive shift in Irish attitudes towards the charity sector. It seems that a lot of the anger that was there just a few years ago is giving way to a more pragmatic recognition that charities have an important job to do and they need the right people to do it.”


Overall, people are more likely to sign up to a regular direct debit payment to a charity. Direct mail is the most likely form of communication to lead a sign-up.

The survey shows that people’s preferred method of communication is email or direct mail, with those under 45 more likely to opt for email.

This survey is the 3rd annual tracker developed for the charity sector by Amárach Research and supported by An Post.

Fiona Heffernan. Head of Post Media, An Post says: “An Post is proud to support Charities Institute Ireland, and the broader charity sector, in producing this benchmark annual research.”

General Data Protection Regulation (GDPR) - Survey

General Data Protection Regulation (GDPR) - Survey

The upcoming General Data Protection Regulation (GDPR) signals a new generation of data privacy laws that commands a major shift for many charities, religious orders and not-for-profits.  This new legislation will impact how these organisations use data.  Charities Institute Ireland believes that this legislation will enable religious orders, charities and not-for-profits to appropriately balance collaboration and transparency with data protection and privacy, supporting them in their work with donors and beneficiaries to bring about a culture of engagement and giving that is progressively seen as a welcome opportunity to express one’s values and support for these organisations and not an intrusion on privacy.

Charities Institute Ireland has devised a survey to examine the readiness of Irish charities, religious orders and not-for-profits towards GDPR, to benchmark key operational impacts and assess the difficulty in complying to the new regulations.  Your feedback will enable Charities Institute Ireland to plan on how best to assist you in your preparation for and compliance with GDPR.

Please complete our survey at: https://www.surveymonkey.com/r/G26RYTV

An issue of TRUST

An issue of TRUST

According to the latest NFPSynergy report the recognised vulnerability for Irish charities is the issue of trust.  With continuous and intense media and government scrutiny, it is imperative to ensure that proper levels of governance, accountability and transparency are established and nurtured. The significance, and crucially the ubiquity of this requirement cannot be emphasised enough as it plays a fundamental role in maintaining the trust of partners, patrons, the general public and all those that rely on the vital services of charities.

Charities Institute Ireland's 'Triple Lock' mechanism is in place to explicitly rebuild trust. It is important to reflect on the benefits for charities that actively engage with this process. Such a benefit will be the trust of their donors. In an age of high and pervasive levels of cynicism, for charities trust is their most valuable economic asset.

The Naked Truth - Trust and Transparency - The Leadership Challenge

In the run up to the Brexit referendum Michael Gove commented that the people were fed-up with experts.  Donald Trump might as well have said the same thing. In all areas of society, from the political establishment to the mainstream media, people are turning away from the traditional sources of authority and leadership.

For CEOs and Departmental Heads within the not-for-profit sector, this disconnection has serious implications. It is not an option to, in the words of Bertold Bercht, "dissolve the people and elect a new one".  Instead the current models of leadership must undergo a crucial evolution. 

Our upcoming conference on Thursday January 19th  The Naked Truth - Trust and Transparency - The Leadership Challenge, will map out the nature of this necessary evolution, showing leaders within the charitable sector how they can reconnect with a largely disillusioned populace and the new ways in which they can actively earn and build on the vital trust of the people.  It will deal with the roles of leadership in the phenomena of the ever changing market situations which are compelling charities to incessantly reassess and re-evaluate how they work and to help those working within the sector to understand, adopt and implement changes in their business model in response to changing trends.

Full details on this conference are available here on our Events page

Cii's Response to the Irish Times Article

Letter to Editor, the Irish Times.

 Dear Sir,

Oliver Callan’s article ‘The Season of charity guilt-tripping’ in the Irish Times (Dec 15th) conflates facts with one-liners and replaces analysis with misinformed opinion.

His allegation that charities are ‘out of control’ and ‘in urgent need of regulation’ is simply false. Strict accounting requirements, from Revenue to HSE, apply to all charity fundraising and spending. Charities actively sought the additional monitoring and regulation now provided through the Charity Regulator.

His claim that there are 24,000 charities is wrong by a multiple of three. Revenue have granted charitable tax exemption in 8,150 cases.

Charities are appalled at the rare occurrence of fraud, as alleged in the case of Console, and I have publicly and strongly condemned this type of behaviour.

His conversation with ‘one lady’ who claimed that only five cent in every euro raised ‘was used for the actual cause’ bears no link to the reality. The average is 70 cent in every euro going to the cause.

Charities do not ‘fumble in greasy tills, free from proper oversight.’ Only a fraction of charities engage in any significant fundraising and this is undertaken to maintain essential services under increasing pressure as an outcome of recession.

He complains that ‘so many services for the most vulnerable fall to charities’ and that ‘the vast majority are probablypointless’ Health charities, for example, provide expertise, understanding and support to individuals and families that matches and regularly surpasses the state in competence and efficiency. Charities continue to be contracted by the state and its agencies to deliver vital services in health and other areas for this precise reason.

Like any other sector of society, charities are not perfect. But the vast majority of the thousands of people who work or give their time to charities day in, day out, do so out of genuine commitment and belief in a cause. The general public understand the role and contribution of the sector. 

In a brief lapse into factual reality, Oliver Callan acknowledges this and that Ireland is consistently ‘in the Top 10 in the World Giving Index.’ But he has otherwise abused his considerable talents in taking a cheap shot at the very concept of giving and working for social impact and justice.

Yours sincerely,

Lucy Masterson,


General Data Protection Regulation

Following four years of intense negotiation the General Data Protection Regulation (GDPR) is now due to come into effect May 25th 2018. For charities, as for all other businesses, this updated data protection framework represents both an opportunity and a challenge. The GDPR has been designed to give the public a greater amount of control over their personal data and the manner in which it is collected and used by companies. As such, charities need to be aware that when it comes to fundraising, all data collection and processing activities will soon require more rigorous controls than at present, while potential penalties for non-compliance will be far more onerous. Naturally charities will now have to audit their processes from top to bottom to ensure that they are fully prepared and in compliance pre-2018. No mean feat, yet it is important to remember that the GDPR is, at least in part, a regulator’s answer to an issue that sooner or later all companies, including charities, must face up to: namely, the substantial erosion of public trust.

This lack of trust manifests itself in several ways. In a broader context, it fuels the anti-establishment upheavals that have characterised 2016: Brexit, Trump, and most recently Italy’s rejection of Matteo Renzi’s proposed reforms. In terms of personal data, a raft of data breaches coupled with revelations of mass surveillance programs have left the public extremely wary of the interface between technology and their private information. While in the context of Ireland’s charity sector, a number of well-publicised scandals, though confined to specific bodies, have unfortunately placed the sector as a whole in a critical light, inevitably impacting on public trust.

This is an issue that must be tackled on many fronts, but perhaps the safeguarding of personal data is a good place to begin. Under the GDPR, charities will need to build sustainable measures for ensuring data privacy into all aspects of their operations. They must  gain explicit consent from donors before processing their personal data. They will need to clearly inform them of the complaints channel open to anybody unhappy with how their data has been processed. They will need to be responsive: donor requests concerning access to their data must be actioned in a timely fashion, and where a data breach occurs and a donor’s data is clearly at risk, the charity must notify them with all due haste. In addition, they must respect their donor’s right to be forgotten and, upon request, delete any personal data that is not necessary for contractual purposes.

These are only some of the obligations that Ireland’s charities must attend to between now and May 2018. As we said before, no mean feat. However, a positive and energetic engagement with the incoming regulations will greatly benefit the charities in question, sending a clear message to prospective donors that their personal data is highly valued and will be rigorously protected. In the vital effort to rebuild public trust post 2016, this will count for a lot.

To ensure that charities are fully prepared for the GDPR, Charities Institute Ireland will be hosting a professional certificate in Data Protection on February 22nd 2017.