The Charities (Amendment) Act 2024 (“the Act”) was signed into law on 10 July 2024, setting the way for a stronger regulatory framework and responsible management of charitable organisations.
The Act amends specific provisions of the Charities Act 2009, which will be implemented gradually. The amendments require a ministerial order to go into effect. Twelve sections of the Act came into force on 27 January 2025, while the rest await subsequent Commencement Orders.
Key Provisions of the Act
Definition of a charity trustee and trustees' duties and obligations
The definition of a charity trustee has been updated. A company secretary is no longer automatically considered a charity trustee unless the same person is also a company director. Charity trustee registrations may need to be revised to reflect this change.
Charities are now required to have a minimum of three trustees on their board/committee at all times.
The Act specifies the key duties of charity trustees, providing greater clarity on their role in a charity. The trustees are required to act in the charity's best interest, maintain proper oversight of the charity's activities, and avoid conflicts of interest. Trustees must clearly understand the charity's financial position, ensuring funds are used appropriately to achieve the charity's objectives.
The new definition of a "member of the charitable organisation"
This definition applies to charities that are not registered as companies. Members are those who have the authority to appoint, nominate, or vote for the appointment of someone as a charity trustee. Charities should review their governing documents to determine who qualifies as a member under the new regulations.
Financial Regulations
New accounting regulations standardise financial reporting for all charities, with different requirements based on their size.
The Act increases the income and expenditure threshold for charities that are not companies, allowing more of them to be exempt from the requirement to prepare a full statement of accounts. The threshold is raised from €100,000 to €250,000. Charities that are registered as companies, however, must continue to prepare financial statements in accordance with the Companies Act 2014.
Additionally, the Amendment Act has increased the threshold for requiring an audit of charities’ financial statements. As a result, smaller charities will face less stringent reporting requirements, while larger organisations will need to adhere to more comprehensive financial reporting standards.
The minister may set an audit exemption limit for income of no more than €1,000,000. Despite the higher limit allowed in the legislation, the minister is believed to set the limit at €500,000. At the same time, the Revenue currently requires all entities with income of more than €250,000 to audit their financial statements in order to maintain their tax charitable status.
Agreements and Appointments
In certain circumstances, a charity may enter into paid agreements with charity trustees and members. A key factor that charities must consider is the requirement that remuneration for any such agreements be reasonable and proportionate to the service provided.
Constitutional Amendments
The 2024 Act now continues the Charities Regulator's recently adopted practice regarding the types of constitutional amendments that will require the Charities Regulator's approval. These include changes to a charity's name, objects, charitable purpose, income and property clause, and winding up clause. It is worth noting that a breach of this requirement will be an offense and may result in the charity being deregistered.
Charities must include their charity status and registration number in all public documents.
Mandatory Notifications
The Act requires that written notification be submitted to the Charities Regulator in the following situations:
The resignation or appointment of a charity trustee/director.
A breach of any condition of the charity's registration.
When information provided during the registration application or on the register of charities is no longer accurate.
A proposal is in place for the charity to be wound up.
Annual Report
The annual report is now referred to as an annual return, with the same filing obligations.
Enhanced Powers for the Charities Regulator
The new Act grants enhanced powers to the Charities Regulator. The regulator will now have more authority to conduct investigations, inspect records, and take necessary enforcement actions. The Charities Regulator will now have the power to freeze bank accounts, remove trustees, and impose financial penalties on charities that fail to comply with the new rules.
Human Rights
Human rights are added as a charitable purpose, allowing relevant organisations to register as charities.
The Charities (Amendment) Act 2024 reflects a strong commitment to enhancing the charity sector in Ireland. The new Act emphasises greater transparency, accountability, and good governance to ensure that charities can continue to fulfil their essential role in Irish society.
It is worth mentioning that the Charities Regulator has promised to develop guidance advising charities about the changes.
Should you require any advice on the provisions of the 2024 Act, please get in touch with a member of our team.
Disclaimer: This blog post is intended for informational purposes only and should not be considered legal or professional advice.