Charities to face governance code for first time

Charities Regulator Chief Executive John Farrelly

Charities in Ireland will be subject to a code of governance for the first time later this year, according to the sector’s watchdog.

The announcement from the Charities Regulator is on the back of the publication of the report on a consultative panel’s findings on proposed recommendations for the code.

While the code itself has yet to be finalised, the panel’s findings provide an indication as to the manner in which the regulations will be drafted.

It is unlikely that the regulations will be strictly imposed on charities, and will instead be imposed on a ‘comply or explain’ basis, where any charities that deviate from the guidelines will be expected to declare and justify their divergence from the code.

The code is also unlikely to impose term limits on high-ranking officials within charities, instead recommending ‘advisory’ maximum limits.

Smaller charities that consulted with the panel had expressed concerns that they would find it difficult to comply with mandatory term limits as it was harder for them to recruit and retain trustees.

More than two-thirds (68%) of charities consulted on the proposals for a maximum trustee term favoured three to six years and around 30% favoured a term of five years.

Charities Regulator chief executive John Farrelly said the eventual publication of the code will be “a landmark in the development of Irish charities”.

For the first time there will be a code which will clearly set out what is expected from charity trustees,” he said.

“Good governance is the foundation stone of a well-managed charity. It needs to be proportionate to the size of the charity and the work that particular charities do. It is clear from our work to date that a one-size-fits-all approach will not work.”

Of those who supported a new code in an online questionnaire, 59% favoured making it proportionate based on the turnover of the charity, 26% thought it should be based on asset size, and 31% on the number of employees.

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