The Charities (Amendment) Act 2024 was signed by the President on 10 July 2024. We are awaiting commencement orders to be signed for the new Act.
The Act makes some significant changes to the Charities Act 2009, as well as updating the Charities Act 1961 and the Taxes Consolidation Act 1997 respectively.
Key Provisions of the Act
The Act introduces some key provisions and changes to charities including:-
- The introduction of ‘the advancement of human rights’ as a charitable purpose;
- Increase in the audit exemption thresholds and other annual accounts requirements for the charities;
- Charity trustee definition does not now include the company secretary;
- Definition of a Member of a Charitable Organisation;
- Register of Members required to be kept;
- Constitutional Amendments require Regulator approval;
- Mandatory Notification to the Regulator of Specific Events;
- Clarification on the duties and responsibilities of charity trustees;
- Indemnity for court appointed trustees;
- Strengthening the Charities Regulator’s powers and enforcement in relation to the protection of charitable organisations.
The Advancement of Human Rights’
The Act adds the ‘advancement of human rights’ as a charitable purpose and something that was missing from the original definition. Organisations that are set up for this purpose may now apply for charitable status with the Regulator.
Increase in the Audit Exemption Threshold & other Annual Accounts requirements
The Act provides for an increase in the maximum threshold that the Minister may set regarding the requirement to audit the annual accounts. The threshold is provisionally set at €1 million gross income or total expenditure of the charitable organisation. It is understood that the Minster will set the audit exemption threshold at €500k and not the maximum amount of €1m which is an increase of 50% from the current threshold. Charities above the threshold will have to have its financial statements audited.
Charities that fall below the prescribed audit exemption threshold will have the option to either have the annual accounts examined by an independent person or have the accounts audited.
Charities that satisfy 2 out of 3 of the following conditions will not be required to complete either an audit or examination of their accounts
(i) its balance sheet total does not exceed €10,000, or such greater amount not exceeding €50,000 as may be prescribed;
(ii) its gross income does not exceed €10,000, or such greater amount not exceeding €50,000 as may be prescribed;
(iii) it has no employees,
Charities that are not companies and have gross income or expenditure not exceeding €250k, may prepare an income and expenditure account and statement of the assets and liabilities for the charity instead of an annual statement of accounts.
There are new provisions regarding the remuneration of charity trustees and their associates, requiring declarations in annual returns and ensuring compliance with the charity’s governing document.
Charity Trustee definition does not now include the company secretary
The definition of a charity trustee has been amended to clarify that a secretary, including a company secretary, is not considered to be a charity trustee unless they are also a director of a company or in the case of an unincorporated body, they are a member of the board or the governing body or act in a similar capacity to a “shadow director”.
Definition of a Member of a Charitable Organisation
The Act now defines what a member of a charitable organisation is. For a company it is the same meaning as set out in section 168 of Companies Act 2014. For charitable organisations that are not a company it is a person who is entitled to appoint, nominate or vote for the appointment of a person as a charity trustee of that organisation.
Register of Members
All charitable organisations are now required to keep a register of members of the charitable organisation.
Constitutional Amendments
The Act formalises the requirement for certain constitutional changes (e.g., charity’s name, objects clause, charitable purpose, income and property and winding up clauses) to receive approval from the Charities Regulator, with non-compliance potentially leading to deregistration.
Mandatory Notifications
Charities must notify the Charities Regulator in writing about specific events, such as breaches of registration conditions, significant changes in the charity’s information, proposed winding up, and changes in trusteeship. Failure to comply with these notification requirements constitutes an offence.
Summary
These amendments aim to ensure greater clarity, transparency, and accountability in the operation of charities, ultimately enhancing public trust and confidence in the charitable sector.
Charities should review the changes in advance of the commencement orders being signed and take necessary steps and advice to comply with the new Act.
NB: The content of this article is provided for information purposes only and does not constitute legal or other advice.
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