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Dynamic initiative to boost governance in the charity sector

08 July 2016 by Conor Ryan

Governance and compliance are sometimes seen as being solely concerned with big business, so much so that when we think of the necessity for proper management and regulation, or the consequences of a failure to implement such, we instinctively picture corporate giants like FIFA, Volkswagen or Anglo Irish Bank. In reality governance and compliance are essential cornerstones of every organisation − big and small − operating in all sectors of the economy.

As part of its mission to promote dynamic awareness of this fact, ICSA: The Governance Institute is embarking on a joint initiative with The Wheel, Ireland’s support and representative umbrella network for community, voluntary and charitable organisations. This exciting collaboration centres on the provision of training courses to raise awareness across the charity sector of the legal responsibilities and duties of directors and company secretaries and the ways in which many of those responsibilities have changed or deepened with the introduction of the Companies Act 2014 (the "Act").

The majority of Ireland’s charities are companies limited by guarantee without share capital, and thus are legally obliged to comply with the provisions of the Act. One of core provisions of the Act is the requirement for a company secretary who is fully resourced and skilled to the level necessary for carrying out their duties. Failure to ensure sufficient resources and an adequate skillset will be treated as a breach of the Act for which all directors can be held legally accountable. This is no small matter, as another notable feature of the Act is the introduction of very significant penalties which can run to fines of €500,000 or terms of imprisonment of up to ten years.

This new legislation coincides with a period of intense media and government scrutiny which has arisen not only because of high profile failures within big business, but also because of governance and compliance issues located specifically within the charity sector, Console being the most recent case in point. The work that Ireland’s charitable organisations carry out is invaluable, providing essential service to those who are most in need or who have been neglected by other sectors across society. However, there remains as much of a requirement here as in any other sector to ensure that proper levels of governance, accountability and regulatory oversight are established and nurtured. The significance of this requirement cannot be emphasised enough, as it plays a fundamental role in maintaining the trust of partners, patrons and sponsors, the general public, and all those who rely on charities’ vital services.

To this end The Wheel has already undertaken significant measures and worked energetically to oversee and help charities to integrate effective governance structures. The new partnership with ICSA will bring a wealth of experience and industry-leading insight to build on the existing knowledge base, harnessing ICSA’s particular expertise to ensure that charity directors and secretaries know their governance and compliance duties and responsibilities. It will also ensure that they have a clear view of the Act and the specific ways in which it impacts on their charity and the consequences of failure to implement it.

Every healthy, functioning organisation, including charitable organisations, need to be underpinned by a culture of strong governance. This important and timely initiative between ICSA and The Wheel will widen the recognition of both, the need for such governance and, crucially, the ubiquity of that need.