Ireland – Tax legislation

Seperate from the legal statue issue is the tax treatment of non profit organisations that have been granted charitable recognition by the Revenue Commissioners.  Organisations whose purposes include the advancement of education or religion, the relief of poverty or organisations that are of benefit to the community can apply to the Revenue Commissioners for a charity number which allows them certain tax exemptions such as exemption from paying income tax and corporation tax on interest, annuities, dividends and shares, rents on property, gifts, profits from trade or land owned.

Section 848 of the Taxes Consolidation Act 1997 provides tax relief, at the standard rate, for personal donations between IR£200 (Irish Pound /Punt – currency used prior to introduction of the Euro) and IR£750 per annum to designated third world charities.  The tax relief goes to the charity, rather than the donor and is given by means of a top‑up payment by the Revenue Commissioners to the charity of the tax associated with the donation.  The charities are designated by the Minister for Foreign Affairs with the consent of the Minister for Finance.
http://www.irishstatutebook.ie/1997/en/act/pub/0039/sec0848.htmlhttp://www.irishstatutebook.ie/1997/en/act/pub/0039/sec0848.html

Section 486A of the Act provides tax relief for company donations to eligible charities.  An eligible charity is one authorised by the Revenue Commissioners and which has been granted exemption from tax for three years prior to its application for approval.  Relief is given where the donation to any single charity by a company is not less than IR£250 and not more than IR£10,000 in any 12 month accounting period.  The upper limit for donations from a single company to all charities in a 12 month accounting period is the lesser of IR£50,000 or 10% of the company’s profit.
http://www.irishstatutebook.ie/1997/en/act/pub/0039/sec0486.html

The VAT (Value Added Tax) treatment of charitable organisations is a direct consequence of EU VAT law, with which Irish VAT law must comply.  Under the Sixth VAT Directive, a wide range of charitable and voluntary organisations are deemeded to be exempt for VAT purposes.  This means that the organisations involved do not charge VAT on their services, but as a necessary corollary, they are unable to recover the VAT they bear on the goods and services that they purchase in the course of their activities.  Generally speaking, VAT can only be recovered by registered businesses who charge VAT to their customers.  This position cannot be altered unilaterally by the Government in view of the EU provisions.
http://www.revenue.ie/leaflets/chy10.pdf

Under the Charities Acts recognised charities are exempt from certain other taxes such as Capital Gains tax, Deposit Interest Retention Tax, Government Stamp Duty on property sold, Capital Acquisitions Tax and Probabe Tax.  In addition, educational establishments are allowed tax free gifts fr the purposes of the teaching of the natural sciences, carrying out research and promoting education in art, architecture, theatre, filem arts, literature and music.
http://www.cnm.tcd.ie/publications/uncovering%20pdf.pdf

Ireland – Legal Forms of The Non-Profit Sector

Unlike other countries there is no one legal form in Ireland that is specific to the nonprofit status of an organisation.  The legal and regulatory basis of the Non-Profit Sector is defined by three main strutures:

• Companies limited by guarantee with no share capital:
  A group can form a company in accordance with the rules laid down by the Companies Acts and thus acquire a legal status seperate from that of its members. The provisions of the Companies Acts provide for a company limited by shares or a company limited by guarantee.  Community and Voluntary groups adopt the latter. There are no shares and the personal liability of members is limited to a nominal account.  This is the most common form of incorporation used by the Community and Voluntary Sector organisations.
• Industrial and provident societies
  In order to be registered as an industrial and Provident Society (IPS) a society must be formed ´for carrying on any industrial, businesses or trades´.  While this covers non profit making groups or service providers it would appear to excludes campaigning bodies.  The standard rules of an IPS allow profits to be distributed among its membership, although this is not always so.
• Incorporation under the Charities Act 1973 (although not many nonprofit organisations have taken this option).  A body which is a charity can apply to the Commissioners of Charitable Donations and bequests to be incorporated i.e. granted seperate legal status.
  Non profit organisations can also be trusts or friendly societies but these do not grant a seperate legal status to the organisation. 
  http://www.ceis.it/euroset/products/pdf/Third_Sector_in_Ireland.PDF

The advantages of having a legal status are:

• The individual members of the group are not generally responsible for the groups activities, including any debts that may arise.
• The group can own property, enter into contracts and employ people in its own name.
• The group can bring and defend court proceedings in its own name.
• The group can apply for charitable recognition.

The Government in its White Paper strongly recommends that Community and Voluntary organisations should adopt an appropriate legal framework; in most cases this will involve registering as companies limited by guarantee.  The Government accepts the need for a more modern legal framework of law governing the sector.  The White Paper and its recommendations are a first step towards addressing this matter. http://www.pobail.ie/en/CommunityVoluntarySupports/WhitePaperonCommunityandVoluntaryActivity/file,2200,en.doc

 

Ireland – Codes of Good Practice

Codes of Good Practice will be developed, in consultation with the sector, in relation to practices and procedures for the operation and administration of charitable fundraising. The Bill includes a reserve power for the Minister to introduce regulations for fundraising should Codes of Good Practice turn out to be inadequate or not provide the expected benefits

http://www.cidb.ie/comhairleVCS.nsf/HTMLPages/FundingNS?Opendocument

Ireland – Regulatory Authority

A key function of the new Authority will be the establishment and maintenance of a mandatory register of charitable organisations operating within the State. The Authority will have the power to remove a body from the register, and it will be an offence for a body not on the register to claim that it is a charity or to operate or engage in public fundraising in Ireland.

One of the most important areas covered by the proposed legislation is fundraising by charities. Permits will be required for all public collections for the benefit of charities except within the grounds of places used for public worship. The Charities Regulator will require charities to provide information concerning their fundraising activities in their applications for registration.

Ireland – Government Department responsible for the Community & Voluntary Sector

The Department of Community Rural & Gaeltacht Affairs ( An Roinn Gnóthaí Pobail, Tuaithe agus Gaeltachta) has lead responsibility for developing the relationship between the State and the Community and Voluntary Sector.
http://www.pobail.ie/en/CommunityVoluntarySupports/

 

Ireland – Legislation relating to the Non Profit Sector

Important Government Policy Document:
“White Paper on a Framework for Supporting Voluntary Activity and for Developing the Relationship between the State and the Community and Voluntary Sector”, September 2000.   The aim of this white paper is to provide a more cohesive framework of support and encouragement for the Community and Voluntary Sector.  It gives formal recognition to the partnership ethos that informs much of the working relationship between the two sectors, while recognising the differences between them.
http://www.pobail.ie/en/CommunityVoluntarySupports/WhitePaperonCommunityandVoluntaryActivity/file,2200,en.doc

Charities Legislation

The main existing charities legislation comprises:

• The Charities Acts 1961 and 1973 (with the most recent significant amendment made by the Social Welfare [Miscellaneous Provisions] Act 2002)
• Charities Regulation Bill

Aspects of fund-raising by charities are addressed in:

• The Street and House to House Collections Act 1962
• The Casual Trading Act 1995.

http://www.pobail.ie/en/CharitiesRegulation/

Charities Regulation Bill
In March 2006, the Government proposed new legislation for charities. The Department of Community, Rural and Gaeltacht Affairs, with responsibility for charity law, has since published the Charities Regulation Bill and presented this was presented to the Dáil in April 2007.

The Charities Bill aims to ensure accountability, protect against abuse and fraud, enhance public trust and confidence and increase transparency in the sector. It will provide a new regulatory framework through a combination of legislative provisions, which include:

• A definition of “charitable purpose” for the first time in primary legislation
• A mandatory Register of all Charities
• A Regulatory Authority to secure compliance and encourage better administration
• Updating law relating to fundraising, particularly for collections, direct debits and other non-cash methods
• A Charity Appeals Tribunal
• Dissolution of the Commissioners of Charitable Donations and Bequests
• Transfer of jurisdictions vested in the Attorney General in regard to charities
• Co-operation with statutory bodies on regulatory and law enforcement matters inside and outside the State
• Consultative panels to assist the Authority and to ensure effective consultation with stakeholders.

In future, charitable status will be dependent on an organisation having charitable purposes only, and being for public benefit, rather than having any particular legal form. Certain kinds of organisations will be excluded from being charitable: e.g. political parties and causes; trades unions and employer representative bodies; chambers of commerce; and any body that promotes unlawful or immoral purposes.  Sporting bodies are also excluded, as they are subject to a separate regime.

Charitable purposes is defined in the Charities Bill as follows:

• the prevention or relief of poverty or economic hardship
• the advancement of education
• the advancement of religion
• other purposes of benefit to the community, including:
  • community welfare
  • the relief of those in need
  • community development
  • rural or urban regeneration,
  • civic responsibility or voluntary work
  • health and prevention or relief of sickness, disease or suffering
  • conflict resolution or reconciliation,
  • religious or racial harmony and community relations
  • the natural environment
  • prevention or relief of suffering of animals
  • arts, culture, heritage or sciences, and
  • social inclusion.

Ireland – Definition of the Non-Profit Sector

The non‑profit Sector can be defined as the sector that is non‑market and non‑state.  Broadly speaking as well as small‑scale local Community and Voluntary organisations, it spans a range of specialised organisations and institutions, such as voluntary public hospitals, major mental handicap organisations, major sporting organisations, credit unions, trade unions, political parties, employer organisations, educational institutions and church‑based institutions.  However for the greater part, the non profit sector in Ireland is usually referred to as the Community and Voluntary Sector.   
It includes organisations and groups that are:

• Organised: they have an institutional presence and structure
• Private or non‑governmental: they are institutionally separate from the state;
• Non‑profit distributing: they do not return profits to their managers or to a set of ‘owners’;
• Self‑governing: they are fundamentally in control of their own affairs;
• Voluntary: membership is not legally required and such organisations attract some level of voluntary contribution of time or money.  

http://www.pobail.ie/en/CommunityVoluntarySupports/WhitePaperonCommunityandVoluntaryActivity/file,2200,en.doc

History of the Community and Voluntary Sector in Ireland

The Community and Voluntary Sector in Ireland is sometimes seen as comprising two discrete subsections – a Community Sector and a Voluntary Sector.  This reflects the historical development of the sector. 

The roots of the Voluntary Sector can be traced back to the charitable organisations, many church based, of the 18th century. This sector is the larger of the two with a focus often on service delivery and a greater reliance on charitable donations and fundraising.  Many voluntary sector organisations are major service providers, particularly in the fields of health, disability and services for the elderly.

The Community Sector groups tend on the other hand to be smaller in scale and focus on responses to issues within a given community (geographical or interest based) and often with a social inclusion ethos.
In practice, the two are opposite ends of a continuum and many organisations combine features of both.  Just as many large voluntary sector service providers have a strong advocacy role, so many community groups deliver practical services (e.g. childcare) in their local areas.
 
In Ireland the Voluntary Sector not only complements and supplements State provision but it is the dominant provider in particular areas.  Minimum statutory provision for social welfare and social services was provided under the Poor Laws in the 1830s.  Voluntary activity, especially by religious orders and their concern with charity and the poor, played a major role in providing supplementary welfare provision. The Church based education system, at both primary and secondary level and voluntary hospitals predate the foundation of the State.  The primary role of church‑based voluntary organisations and services provided by religious orders in meeting education and social welfare needs continued after the foundation of the State. Many services have been initiated and run by religious organisations, for example services for people with a mental and physical disability, youth services, the elderly, residential child care services and services for the homeless (their role is now changing which has created gaps that are increasingly being filled by the statutory sector and other voluntary organisations).  The Society of St. Vincent de Paul is one of the largest voluntary organisations with its roots in Catholic social teaching has 1000 branches nationwide with 10,000 members, active not only in welfare services but also enabling people to become self sufficient and raising the structural inequalities in society.   In the 1950s, the State gradually began to play a wider role in funding voluntary social welfare provision and voluntary activity.   The Health Act 1953 introduced Section 65 grants for funding of voluntary organisations providing services ‘ancillary’ to those provided by Health Services themselves. This enabling provision is still an important source of funding for voluntary social service providers, although it is currently being replaced on a phased basis by a new legal framework. 
 
Community development also has historical roots, as typified by the co‑operative movement which was designed to counteract the exploitation of the poor and to give voice and autonomy to the people.  Muintir na Tíre, founded in the 1930s, also stresses the importance of self-reliance and local initiative.  The 1970s saw the development of community empowerment and involvement with self-help initiatives aimed at disadvantaged groups.  EU funded anti‑poverty programmes were instrumental in this regard, emphasising empowerment, participation and social inclusion.  The tradition of self‑help as typified by the co‑operative movement, evolved into a focus on disadvantage with increased citizen involvement and community activism cumulating into a growing number of organisations representing sectoral and geographical communities, as well as sporting, youth, arts, heritage and cultural interests.  Community development is described as an interactive process of knowledge and action designed to change conditions which marginalise communities and groups and is underpinned by a vision of self-help and community self-reliance.  A strong infrastructure of community and local development has been built up in Ireland both at central and local level.  For example, the Community Development Programme funded by the Department of Social and Family Affairs was established in 1990 in recognition of the role of community development in enhancing the capacity of local communities to work together to tackle poverty and exclusion.  Since then the number of community development projects funded through the Programme has increased steadily and there is now a strong network of approximately 100 projects all over the country.  The aim of the Programme is to develop a network of supported community development resource centres and projects in areas and for groups affected by high unemployment, poverty and disadvantage.  Many community groups are issue-based, rather than area-based.  Examples are lone parents groups, groups concerned with responses to homelessness or drugs and equality issues.  Many issue‑based organisations have succeeded in getting issues adopted at Local Development Partnership level for incorporation into local development plans.   In Ireland, anti‑poverty networks and other national level Community and Voluntary sector organisations have had a significant input into national social partnership agreements.  At EU level, their equivalent NGO networks have been active in influencing the development of EU social policy. 
 
The Community & Voluntary Sector has changed considerably in the past two decades.  It has changed in terms of size, methods of operation and organisation employed, development of linkages and networks, diversity of outlook and perspective, numbers employed, etc.  These changes have happened at national, regional and local level and have also involved development of transnational linkages and a greater interest in debates and issues at EU Level.  At this point the Community and Voluntary sector is active in

• delivery of essential services
• advocacy and provision of information
• contributing to policy‑making
• national and local partnership arenas
• undertaking research
• creation of opportunities for members and participants to access education, training, income and employment opportunities

Recent decades have also seen the growth in voluntary social service organisations such as voluntary housing associations, social services councils, childcare services, services for people with disabilities, day care services, care of the aged committees etc.  There has also been a growth in the number of independent information-giving organisations that play a key role in creating a more inclusive and participative society.  These include the national network of Citizen’s Information Centres (85), Money Advice and Budgeting Services (50), Congress Centres for the Unemployed (38), and Youth Information Centres (27).
 
According to the Government White Paper a key challenge for the future for these groups is to harness their collective energy in order to maximise their impact, both at policy development level (e.g. in relation to welfare/health issues), and at the level of their individual client base.
 
http://www.pobail.ie/en/CommunityVoluntarySupports/WhitePaperonCommunityandVoluntaryActivity/file,2200,en.doc

The Role of NGOs in Ireland in relation to Government

The important role played by the Community and Voluntary Sector in Ireland has been higlighted in a number of reports
 

• Government “White Paper on a Framework for Supporting Voluntary Activity and for Developing the Relationship between the State and the Community and Voluntary sector” 2000
  http://www.pobail.ie/en/CommunityVoluntarySupports/WhitePaperonCommunityandVoluntaryActivity/file,2200,en.doc 
• “People, Productivity and Purpose”,  The National Economic and Social Council Strategy,  2006
  http://www.nesc.ie/dynamic/docs/Main%20Report.pdf
• “Towards 2016, The National Partnership Agreement” 2006
  http://www.taoiseach.gov.ie/attached_files/RTF%20files/Towards%202016PartnershipAgreement.rtf

The Government recognises that the Community and Voluntary (C&V) sector plays a crucial role in society, quite separate to and independent of the institutions of Government.  It represents the engagement by individuals in their own development, in that of their communities and of the wider society.  The Government values the existence of a lively and involved Community and Voluntary sector independent and sufficiently wide‑ranging to represent the many diverse elements of society.  Civil society is greatly enriched when ordinary citizens come together in voluntary action, community involvement and self‑help initiatives.  The Government sees the sector as having a specific role in ensuring that the experiences and interests of marginalised communities and groups are articulated and are heard when decisions that affect them are being made.  It sees the C&V sector as having a role and potential to

• Help create a vibrant civil and active society in which individuals are encouraged and enabled to participate fully.  This is an essential component of a mature democracy
• Respond to pressing social needs quickly, directly and effectively
• Pioneer new approaches to service provision and local and community development
• Improve the effectiveness of services through feed‑back and monitoring of services by consumers and users
• Provide opportunities for volunteers to participate and develop skills
• Create employment opportunities through the provision of services and through the activities of community development projects, thus contributing to community infrastructure
• Foster self‑help and enable people to become active participants in shaping their future
• Identify needs and appropriate responses tailored to the specific needs of local communities and neighbourhoods and specific communities of interests
• Offer new solutions where conventional approaches have failed
• Enable people who are excluded to become involved in the regeneration process in their own communities and at a wider societal level.
  http://www.pobail.ie/en/CommunityVoluntarySupports/WhitePaperonCommunityandVoluntaryActivity/file,2200,en.doc