The charity sector: Raising the bar, restoring confidence

The charity sector may be as old as Ireland itself, but the road to where we are now hasn’t always been smooth.

Not long ago, we were reading (all too often) of scandals in rehab, console and others in the sector. Public confidence was down, and so were donations – in fact, donations were decreasing significantly according to the 2014 report commissioned by The Wheel (charity representative organisation).

But fear not! Standards of governance, transparency and financial control are changing in the charity sector, and are now going the right direction. The bar has been raised thanks to the ongoing efforts of our new Charities Regulator, Mr. John Farrelly.

Speaking at the launch of new guidance documents for charity trustees, Mr. Farrelly outlined his vision for the sector. “If people break the law and we identify significant risk, we will use the law to stop that,” he said. However, it’s important also to note that he stressed, “good vibrant charities have nothing to fear.”

Maybe well-run charities have nothing to fear from the regulator’s perspective, but in fact all modern charities need to be wary of the breadth and extent of insurance risk they face daily.

Leaving aside the homogenous risks of fire, business interruption and general liabilities, charities also must assess sector specific issues such as trustee liability, libel and slander, death of a patron, cover for volunteers, D&O, professional indemnity, reputational risk and data protection.

Times are changing in the charity sector now because regulation is here to stay, and it’s having the desired effect. Since the Charity Regulators office was created, we have seen 899 charities registered in Ireland under the compulsory registration database. The database requires charities to publish their charitable objectives, charitable number, trustee details, income and expenditure, which is all publicly accessible. Needless to say, this has resulted in greatly increased transparency in the sector.

In addition, 700 charities were taken off the register due to being unfit for purpose or obsolete. Removing such charities from the register is right and proper, ensuring that charities are clear in their activities if they expect public support and tax exemptions.

The first prosecution against an unfit charity took place in January 2017, which involved a café in Sligo town advertising itself as a charity. The café was not registered, and the funds it collected were not used for a charitable purpose. Further prosecutions are pending, and it is a prime example of the Charity Regulator’s efforts to improve the sector.

Mr. Farrelly is clear in his purpose: he wishes to support the big, medium and small well-meaning charities in any way he can. For those that fail to meet the new standards of compliance and transparency, they will be subject to the full rigours of the law.

The charity sector poses a unique insurance risk with unique requirements, and it deserves a bespoke insurance product. We know this because Ecclesiastical is an insurance company that is owned by a charity (All Churches Trust). The charity sector is our preferred niche, and we have a new and improved product launching on 1st November. Ecclesiastical are aiming to meet and exceed the needs of this sector.

We are delighted to launch our brand-new charity product which is now providing all risks, including subsidence, as an option. These include fine art, cyber, PR crisis cover and much more. A market-leading product in plain English, we look forward to meeting and exceeding brokers and clients’ needs.

A full and detailed product specification is on its way to our broker community. A time of change is here, and Ecclesiastical will meet these challenges and are delighted to provide for our brokers and clients alike.

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Ecclesiastical Insurance Office plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, and is regulated by the Central Bank of Ireland for Conduct of Business rules.

Michael Brennan FCII