The Department of Justice & Equality is currently consulting on the implementation of the Charities Act, 2009 (the “Act”). The bringing into force of the legislation which was enacted in 2009 has been delayed due to the resources required to give effect to the legislation. The purpose of the consultation is therefore to examine how the Act might best to advance the aims of the Act given the changed budgetary circumstances.
Purpose of the Act
The purpose of the Act is to reform the law relating to charities in order to ensure greater accountability and to protect against the abuse of charitable status. The Act is also designed to enhance public trust and confidence in charities as well as enhance the transparency of the charitable sector.
Charities Regulatory Authority
The Act provides for the establishment of a new independent regulator for charities – the Charities Regulatory Authority (the “CRA”). The CRA will maintain a Register of Charities and will also have significant monitoring and investigatory powers. The Register which will include contact details and certain other information on charities will be publicly available. Charitable organisations registered with the CRA will be obliged to comply with certain reporting requirements dependent on their turnover including the production of accounts and annual activities reports.
Exclusion of Sport
Sport is excluded from the remit of the 2009 Act, by the cross reference in the definition of “excluded body” at section 2 of the 2009 Act to s.235 of the Taxes Consolidation Act, 1997 which defines an approved body for the purposes of that legislation as “any body of persons established for the sole purpose of promoting athletic or amateur games or sports.”
Charitable Purpose as defined by the Act
The 2009 Act sets out at Section 3(11) a number of specific purposes included in the definition of “purpose of the benefit to the community”. These include a number of purposes in which, sport has a significant role to play:
- The advancement of community welfare
- The promotion of civic responsibility or voluntary work
- The promotion of health, including the prevention or relief of sickness, disease or human suffering
- The promotion of religious or racial harmony and harmonious community relations
- The advancement of the arts, culture, heritage or sciences; and
- The integration of those who are disadvantaged, and the promotion of their full participation, in society
There are a number of countries that share Ireland’s Common Law background. Most of these countries have in recent years passed legislation regarding charities with all introducing charitable status for sport in some shape or form. These include:
- England & Wales – “advancement of amateur sport” – sport meaning sports or games which promote health by physical or mental skill or exertion – Charities Act (England & Wales), 2006
- Northern Ireland – “advancement of amateur sport” – sport meaning sports or games which promote health by physical or mental skill or exertion – Charities Act (Northern Ireland), 2008
- Scotland – “the advancement of public participation in sport” – sport meaning sport which involves physical skill and exertion – Charities & Trustee Investment, (Scotland) Act, 2005
- New Zealand – “the promotion of athletic sports” – Charities Act, 2005
- Singapore – “the advancement of sport, where sport promotes health through physical skill and exertion”
- USA – “fostering national or international amateur sports competition” – s501 Internal Revenue Code
Tax Relief on Donations
The Act makes specific provision that the designation of charitable status does not automatically qualify an organisation for the tax relief current available to such organisations on donations. In order to qualify for such relief organisations are required to go through an application with Revenue. It is not envisaged that this will change following the implementation of the Act.
Fundraising by Sports Clubs
Under the Act, charitable organisations will be prohibited from engaging in fundraising activities if they are not registered with the CRA. Sports clubs or organisations that engage in fundraising will be able to continue to fundraise without registering with the CRA as they do not qualify for charitable status However, there are likely to be issues as the public become accustomed to having access to information about charities that fundraise but find that such information in relation to sporting organisations is not so available.
It should be of interest to sport in this regard, that the Act and the regulation that comes with it is something the vast majority of the charitable sector actively lobbied for believing that it would serve to safeguard the trust the public currently have for the sector.
Moving forward for Sport….
The Federation in its Vision 2020 have outlined the belief that sport should have “charitable status” in part because of the recognition that comes with the designation that the activities of the organisation are of public benefit. The Federation is also of the view that sport is at a significant disadvantage to other parts of the not-for-profit sector such as arts and culture when it comes to accessing private sector and philanthropic funding as such organisations do qualify for charitable status whilst sport does not.
The Federation is already working with the Department of Transport, Tourism & Sport and the Irish Sports Council on the issue. We recently submitted a briefing paper a copy of which can be accessed here.
The Federation will look to consult further with members on this issue over the next few weeks. In the meantime, we would encourage all members to look at the consultation issued by the Department of Justice & Equality and to consider making a submission on an issue that is likely to have a significant impact on available resources to sport.