Author: Benefacts Dev

Benefacts Latest Third Sector Analysis

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Today we released our third annual analysis of the Third Sector in Ireland, based on all of the data available from the public filings of nearly 30,000 nonprofits, as at the end of Q1 2019

SOME KEY FINDINGS

• Fewer than 300 nonprofits have a turnover greater than €5m, with more than 3,000 reporting a turnover of €50,000 or less.

• State funding is not evenly distributed. €4.2bn, or more than 70% of public money committed to the Third Sector is directed at only 60 major charities for which data is available – 22 higher education bodies, and 38 health or social care services, on behalf of the State.

• Most of the remaining €1.7bn goes to c.1,500 nonprofits – about half of which are registered charities – that derive more than 50% of their funding from the State. About half of these smaller nonprofits were established between 2000 and 2010, often as special purpose vehicles to provide job creation, local development, social supports and other arms’ length services on behalf of the State. The rest were set up independently of Government to provide services mostly in health and social services, local development, housing and advocacy.

• The average size of a nonprofit board is 6 directors/charity trustees – mostly older men. Nearly a quarter have served on the same board for nine years or more. These trends are most pronounced in the boards of sports bodies (where the male:female balance is 80:20, and one-third of directors/trustees have served for more than nine years), and in social enterprise and social housing.

• The Report debunks the impression that nonprofit employees are highly paid. Outside of the higher education and “Section 38” where staff are remunerated as though they were public servants, Third Sector pay norms fall well below the average in the rest of the economy, with fewer than 1% of jobs attracting higher pay (more than €70,000 per annum).

• More than 80,000 people served as directors and/or trustees in Irish nonprofits during 2018. This figure does not include the many thousands of people who serve on the Boards of Management committees of clubs and societies.

WELCOME FOR BENEFACTS ANALYSIS

Speaking at the launch, Mr Sean Canney TD, Minister of State with responsibility for Natural Resources, Community Affairs and Digital Development, said

“I would like to acknowledge the very important work undertaken by Benefacts, as reflected in this third annual analysis of Ireland’s not for profit sector. The inclusion of data from the Public Participation Networks is particularly welcome, given the on-going growth in PPN membership supported by my Department and the local authorities.”

TRENDS IN THIRD SECTOR DATA AND DISCLOSURES

Ireland’s Third sector presents a complicated mosaic of organisations and groups, which contribute to the wealth and health of our society, environment and culture. Thanks to Open Data policies driving more and better digital disclosure of public information, Benefacts is able to extract a rich dataset from the regulatory filings of about two-fifths of the entities in its database.

• This year, we were able to add nearly 10,000 nonprofits not already in the database, because they are published on the registers of 29 local Public Participation Networks (PPNs), with support from local authorities and the Department of Rural and Community Development. This number will grow as data from the four remaining PPNs are added, and as more local entities sign up.

• We have also started to report on the numbers of nonprofits gaining, or losing, charitable status from Revenue – where there has been a small contraction overall – and from the Charities Regulator – where the majority of newly-registered charities in 2018 were schools.

• 562 nonprofit companies now elect to file their financial statements using Charities SORP – an increase of 4% over the previous year – and 593 nonprofits comply with the Governance Code for Community and Voluntary Organisations, an increase of 19% over the previous year.

Despite these positive indicators, Benefacts is limited in its capacity to provide year-on-year, sector-wide trend data, because the biggest data source of all – the financial statements of thousands of nonprofits including charities – are subject to a double standard.

ACCOUNTABILITY WITHOUT TRANSPARENCY

The rules operated by Government funding departments and agencies require nonprofits receiving State aid to provide their funders with the same version of accounts that they prepare for themselves – detailed statements including the auditor’s report, a directors’ narrative report, balance sheet, income and expenditure statement and notes setting out things like related party transactions, policies on reserves, staff remuneration and so forth.

The 2014 amendment to company law allows nonprofit companies (including charities) to send these to the Companies Registration Office in an abridged form; new financial reporting regulations introduced in 2017 allow smaller companies (which is the majority of nonprofits including charities) to provide even less information, with no notes or narrative at all.

A feature of charity law is that charities that are also companies file their accounts only to the Companies Office, and a delay in promised regulations to specify the form in which charity non-companies are to prepare their financial statements means that the public still has no access to the accounts of unincorporated charities – mostly religious dioceses and congregations, trusts and foundations.

This is accountability without transparency, and it amounts to a lack of joined-up thinking on the part of State funders and regulators. This year these trends – 45% of nonprofit companies filing abridged accounts, 5% of nonprofits (including charities) filing as micro-entities, no financial statements for 4,000 unincorporated charities – deprived us of the capacity to analyse about €1.7bn of sector turnover.

Less doesn’t equal more in nonprofit disclosure

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Filing of abridged accounts by nonprofits rose again in 2018

40% of registered charities filed abridged accounts for 2017.

For non-charities the level was 56%.

Filing of abridged accounts by nonprofits has almost doubled

Benefacts latest analysis shows that since the filing regulations changed, the number of nonprofits submitting their accounts in abridged form to the CRO has almost doubled, from 27% in 2015 to 48% in 2017.

Use Benefacts new advanced search facility to review the list of companies that filed abridged accounts. Click here to see the latest list of abridged accounts, and charity companies that filed abridged accounts.

What are abridged accounts?

Since the Companies Act was changed in 2014, nonprofit companies can avail of the same filing exemptions as privately-owned companies. More and more choose to do so.

By law, every company must produce a directors report and full set of financial statements and present these to an annual meeting of its members/its owners. After that, the members of the company decide the form in which they share it with the rest of us.

The new rules mean that once the full accounts have been adopted at the AGM, they may be filed in a summary or “abridged” form. Abridged accounts include the Directors and Auditors’ report, the balance sheet and notes to the accounts, but exclude the income and expenditure statement.

Who cares?

The transparency of charity accounts is a matter of public interest. By concealing information about their income and expenditure, more than 1,500 charity companies – including those that rely on public funding – are giving us less than the full picture about where their money comes from and what they do with it.

Smart nonprofit Boards will be asking not “how little can we get away with reporting?” but “how can we use our annual report to communicate better with our stakeholders?”.

The reality is, full accounts are an integral part of any due diligence research. They’re used by prospective donors, government funders, volunteers and people considering serving as directors on Boards. They’re accessed more readily than ever before now that Benefacts publishes detailed information derived from them on this website.

Another burden of regulation on nonprofits?

On the contrary. The Charities Act provides that charities which are also companies don’t have to file twice. They just have to send their accounts to the CRO which in turn forwards them to the Charities Regulator.

The cost of audit is the same whatever the form in which the accounts are filed. In fact, it’s surprising so many nonprofits take the trouble to publish abridged accounts to the Companies Registration Office when the terms of their funding contracts require them to make the full accounts available to their funders.

Less isn’t more – act now to reverse the trend

Most nonprofits have a financial year-end of 31st December, and 2018 audits are now being planned or are underway already. Now is the time to plan for a great annual report including a clear account of what you are doing and why it’s important, and the income and expenditure that supports this.

Make your views known

For charities, even charity companies, higher reporting standards will soon be regulated for because a new financial reporting standard is not far off. In fact a call for submissions has been made on behalf of the four regulators of charities in these islands – view it here, and consider making a submission before the 4th February deadline.

Celebrating good governance and Third Sector impact

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Congratulations

Two of Ireland’s leading nonprofit advocacy organisations held their annual award ceremonies recently, celebrating the best of nonprofit disclosure, and charity impact.

Use the links below to learn more from Benefacts about the winners of Carmichael’s Good Governance Awards, and the Wheel’s Charity Impact Awards.

Carmichael Good Governance Award Winners 2018

Care Alliance
Aidlink
Camara Education
CMRF Crumlin
Trócaire
Proudly Made in Africa
Irish Girl Guides
The Care Trust
Extern Ireland
Central Remedial Clinic

The Wheel Charity Impact Awards

The Rainbow Club for Children with Autism
SpunOut.ie
Barretstown
Spraoi Agus Spórt Family Centre
Irish Girl Guides
Clare Haven Services

And tell us how we’re doing

Every year around this time, Benefacts asks for feedback from the users of our free public website. Your views are very important in helping us to develop and improve our services so if you have some time before 16th January, follow this link to give your views.

From all of us at Benefacts, have a happy Christmas.

We welcome your views on Benefacts

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Benefacts is planning for the future, and we’d like your help.

This time last year, we asked for your views about our free public website, and based on that feedback, we took steps to improve the functionality of the site and the accessibility of the data.

You can now use the new advanced search facility on benefacts.ie to isolate nonprofits by geography, institution type, classification, charitable purpose, financial scale and/or regulatory status. People are using this facility, for example, to discover charities that qualify for tax efficient gifts, or to analyse the profile of compliance with best practice standards in financial reporting or governance.

Now we’d like to hear from you again, whether you are a regular user or an occasional visitor. Why do you visit the website? What do you like/what don’t you like about the experience? How could we improve it further?

Go to the consultation website at https://consult.benefacts.ie and make your views known before 21st December. This survey is being managed for us by CiviQ – they will be preparing an analysis of your views and in a further round of consultation will invite you to participate in a new type of survey on the views that everyone has shared.

We’re especially interested to hear from people who visit the site often, use the free public API, and/or regularly take print-offs of the content or download documents. How does Benefacts support your work? Is there anything more you think we could do to help make the work of Irish nonprofits even more transparent and accessible?

We hope you find this a helpful opportunity to shape the future of Benefacts and look forward to your participation.

Using Benefacts.ie v.2 to learn more about the world of Irish Nonprofits

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Some users of Benefacts.ie have been telling us about what they’ve been using the new advanced search functionality to find out.

Searching by classification allows you to discover the distribution of different kinds of nonprofits around the country, and the facet tools provide a further breakdown of the data analysed. For example, there are 357 group water schemes in the Benefacts Database of Irish Nonprofits, most of them incorporated as Friendly Societies. The largest number (62) are in County Mayo, and 10 have a turnover of more than €500k. Use this search query.

Or search the 3,967 primary and secondary schools to see how many are registered as charities (1,844), and how many receive HSE funding under Section 39 of the 2006 Health Act (20).

Use the filters to discover more about the 3,467 nonprofits that publish abridged accounts – including 1,488 registered charities, mostly based on 2016 data. The latest news from our finance analysts is that the level of abridgement for 2017 has reached 50%, up 10% on the previous year.

Where full accounts have been provided by incorporated nonprofits to the Companies Registration Office (CRO) – which is our main source – you can also search by financial turnover: we’ve structured the analysis in bands of less than €10k, €10 – €50k, €50 – €250k and so on.

Some things we can’t yet report on. None of the financial statements filed by charities are yet available from the Charities Regulatory Authority, nor are the names of charity trustees included in the open data file that they release, even though director data is readily available from the CRO, including names and dates of appointment of the trustee/directors of incorporated charities. Because the unincorporated trustee data isn’t available, we haven’t been able to respond to various queries about gender distribution, length of service and other interesting governance questions – but hopefully that will change soon.

Thanks to the support of our funders in the Department of Public Expenditure and Reform and the Ireland Funds, www.benefacts.ie comes to you free of charge. Give us your feedback, and if you like what you see, spread the word!