What is a charity?
An organisation must meet specific criteria to be legally recognised as a charity in Ireland. These criteria and a charity’s legal obligations are set out in the Charities Act 2009.
Under the Act, a charitable organisation is defined as a body:
- That exclusively promotes a charitable purpose (a charitable purpose is a goal that is of public benefit)
- That states in its constitution or governing documents that it must use all of its property to further its charitable purpose (except for money used in its operation and maintenance, for example, staff wages)
- Does not use its property to pay or provide benefits in kind to its members, except in specific circumstances
A charity must be set up in one of 3 ways. The people who control and are legally responsible for its management are its trustees. Read more about the governance structures of charities.
The Charities Regulatory Authority (Charities Regulator) is an independent statutory body that regulates charities in Ireland. It maintains a public register of charities active in Ireland and monitors their compliance with the Charities Act 2009.
In November 2018 the Charities Regulator published a new Charities Governance Code, which sets out minimum standards for the governance of charities. Charities should be ready to comply with the Code and report on their compliance in 2021.
What is a charitable purpose?
Your organisation must have a charitable purpose to become a registered charity. A ‘purpose’ is the reason your organisation was set up. It includes what your organisation aims to achieve, how it will achieve these aims, who will benefit and where the benefits extend. To be charitable, your organisation’s purpose must be of public benefit.
Your purpose is usually set out in your organisation’s governing document. The type of governing document your organisation has depends on how it is structured, so if your organisation is:
- A charitable trust - this document is the deed of trust that establishes the trust.
- A company - this document is the constitution (formerly known as the memorandum and articles of association).
- An unincorporated association - this document is a written set of rules.
Types of charitable purpose
The Charities Act 2009 lists four types of charitable purpose.
1. The prevention or relief of poverty or economic hardship
Poverty and economic hardship does not only mean a lack of money or material things. It can also refer to the impact a lack of money or material things has on a person. For example, your organisation could provide advice about how to manage debt, or training to improve people’s employment prospects.
What the prevention or relief of poverty or economic hardship means varies depending on who your organisation works with, and where it works. For example, an organisation working in one of the world’s poorest regions might provide basic sanitation and running water while an organisation working in Ireland might help relieve homelessness.
2. The advancement of education
The advancement of education means that your organisation must support education. All schools are required to register as charities. But many organisations that are not schools may also qualify as charities under this definition. For example, your organisation can build schools in a developing country or provide school books to children of low-income families in Ireland.
3. The advancement of religion
Existing case law establishes that a religion has two core elements:
- Belief in a ‘Supreme Being’
- Faith and worship of that ‘Supreme Being’
The Charities Regulator will examine whether your organisation meets the criteria of a religion (as outlined above) and how your organisation advances this religion. For example you might provide places of worship, raise awareness of religious beliefs or organise pilgrimages or retreats.
Donations or gifts for the advancement of religion are presumed to be of public benefit, unless it is proven otherwise. However, a donation or gift is not covered by advancement of religion if it benefits an organisation or cult:
- That uses oppressive psychological manipulation
- Whose main objective is to make a profit
If the Charities Regulator wants to rule that a gift for the advancement of religion is not of public benefit, it must get the consent of the Attorney General
4. Any other purpose that is of benefit to the community
This is a broad category, but the Charities Act 2009 provides examples of purposes that are of benefit to the community, which include:
- Advancement of community welfare, including assistance for people in need who are young, old, sick or have a disability
- Promotion of civic responsibility or voluntary work
- Promotion of health
- Promotion of religious or racial harmony
- Protection of the natural environment and the prevention of animal suffering
- Advancement of the efficient use of the property of charitable organisations
- Advancement of the arts, culture, heritage or sciences
- The integration of disadvantaged people into society
An organisation that only benefits one person is not legally a charity, it is regarded as being a private benefit rather than a public benefit. An example of this would be fundraising for one person’s medical costs.
It is acceptable for an organisation to benefit only a small group of people, as long as there are no restrictions, or only reasonable restrictions, on who can benefit. For example, fundraising to pay medical costs for people who all have the same illness, even if it is a rare illness and there are a small number of people eligible.
The charity test
Your organisation must meet specific requirements to be considered a charitable organisation. The Charities Regulator describes these requirements as ‘the charity test’ and your organisation must meet allthe criteria to qualify. Your organisation must:
- Operate in the Republic of Ireland (the people your organisation helps do not need to be in Ireland)
- Exist for a charitable purpose(s) (see above)
- Exclusively promote this charitable purpose(s)
- Carry out all activities to further this charitable purpose(s)
- Exist to benefit the public or a section of the public in Ireland, or elsewhere, through its charitable purpose(s)
- Not be an excluded body (see below)
Certain types of organisations cannot become charities. They are known as excluded bodies and include:
- Sporting bodies (see below)
- Bodies that promote a political cause, unless it relates directly to the advancement of the charitable purposes of the body (see below)
- Political parties, or bodies that promote a political party or candidate (there are separate registration requirements for political parties)
- Trade unions or representative bodies of employers
- Chambers of commerce
- Bodies that promote purposes that are unlawful, immoral, contrary to public policy, in support of terrorism or terrorist activities, or for the benefit of an organisation that it is unlawful to be a member of
Not all sports-related bodies are automatically excluded from becoming a charity. For example, a cycling club for survivors of cancer and their families in a particular part of Ireland may be considered a charity under the advancement of community welfare and the promotion of health. A sports club set up for the integration of people with special needs may be eligible for charitable status.
Promotion of political causes
An organisation which has an exclusively political purpose cannot be registered as a charity. An organisation is considered to have a political purpose if it:
- Is a political party
- Promotes a political party or candidate
- Is set up exclusively to promote a political cause, such as bringing about a change in the law or policies of the Government or other public bodies
However, a charity can engage in activities that promote a political cause if the promotion of the political cause:
- Relates directly to the advancement of its charitable purpose
- Does not promote a political party or candidate
- Is not contrary to the charity’s governing document
The Charities Regulator has published Guidance on Charities and the Promotion of Political Causes (pdf), which explains the rules that apply to organisations when they work to promote a political cause.
If your charity is promoting a political cause, you should also comply with the Regulation of Lobbying Act 2015. Under this Act anyone engaged in lobbying must register on the public Register of Lobbying and supply information about their lobbying activities to the Standards in Public Office Commission. Lobbying.ie have published a list of the top ten things charities need to know about lobbying. You can register on lobbying.ie.
If you are concerned about a charity or its activities, you can raise a concern with the Charities Regulator. They will deal with concerns relating to:
- Risk of significant loss or damage to a charity
- Charity trustees who have breached their duties
- Misconduct by those in control of a charity
- If a charity does not meet the legal requirements to be a charity
Concerns about a charity that should not be raised with the Charities Regulator include:
- Matters that do not relate to charity law – such as employment issues
- Criminal activity – this should be reported to An Garda Síochána
- Complaints related to services provided by the charity – these should be raised with the charity
- Disputes between charity trustees – these should be resolved internally