Category: Governance

Boards of nonprofits have 27% more women than the national average!

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According to a recent survey carried out by Catalyst, an international nonprofit dedicated to progressing more inclusive workplaces, just 10% of Irish company directors are women*.  When compared to other European states, this figure is at the lower end of the scale – only Portugal has a lower percentage, at 7.9%.  Women hold 22.8% of Board positions in the UK and 29.7% in France.

We wondered – how do the boards of Irish nonprofits compare with this?

We analysed the numbers in the Benefacts Database of Irish Nonprofits, drilling down even further to uncover the gender mix not only for the sector as a whole but also for the various categories of organisations working within the sector.

Women form an average of 37% of the members of the boards of all nonprofits in Ireland – 27% above the national average**.

This average total figure varies quite significantly from sub-sector to sub-sector as you can see in the chart below.

On the boards of Social Services nonprofits, the number of woman directors – at 56% – is almost 6 times the national average for all boards.  This category includes nonprofit organisations providing emergency relief, childcare, services to support families, young people, older people, the Travelling community, homeless people and people with disabilities.

Likewise the proportion of women serving on the boards of advocacy and human rights organisations is higher than the norm, at 44%. At the other end of the scale, the representation of women on the board of recreation or sports nonprofits at 18% is closer to the national average, but 19% lower than the sectoral norm.

Later this year Benefacts will be releasing a major report providing insights into the nonprofit sector in Ireland.  For now, you can explore further governance information on this sector at benefacts.ie/explore

Leadership Profile- Nonprofits in Ireland

*http://www.catalyst.org/knowledge/2014-catalyst-census-women-board-directors
** Benefacts derived its analysis of gender balance among the 55, 519 people who serve on the boards of Irish non-profit companies from public data filed by them with the Companies Registration Office, using a name-recognition algorithm derived from data published by the Central Statistics Office.

 

What price accountability in the nonprofit sector

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Benefacts’ office is very busy these days because the period between September and December is when 75% of Irish nonprofit companies are required to file their annual financial statements. That’s because most have a financial year-end of 31st December. Companies are allowed nine months to prepare and adopt their accounts, have them externally audited, and present them to an annual general meeting of their members before filing them with the Companies Registration Office, which is where Benefacts gets them – they are public documents.

Audited financial statements are an extremely important source of data in the Benefacts Database of Irish nonprofits, because they have been verified as providing a true and fair view of the organisation’s finances. Benefacts uses them to find details of a nonprofit’s income, expenditure, assets and liabilities, as well as information about the numbers of employees, payroll costs, and other information of wide public interest.

So far, our team of financial analysts have digitised the contents of the 2015 financial statements for almost 5,000 nonprofits: our plan is to release the full set for 2015 in a major update to the database which will be published in Spring 2017.

A new trend that has given us cause for concern is the high number of nonprofits – including many that rely on public finding – which have elected to provide just a summary of the financial statements, in the form of “abridged” financial statements. Others have chosen to file accounts that have not been audited. Until last year, companies limited by guarantee were not permitted to file abridged or unaudited financial statements, but when the Companies Act 2014 made the reporting threshold for smaller companies available to all companies (including not-for-profit ones), many chose to take advantage of this. This means Benefacts is not able to present an analysis of their finances, and we report this on their Benefacts listing.

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In fact, compared to this time last year, we have seen a four-fold increase in the number of nonprofits filing abridged accounts.  As we write this, in excess of 20% have filed abridged accounts. This means that the company has chosen to put only very limited information about their income and expenditure in the public domain.

More positively, at the other end of the disclosure spectrum, about 5% of all nonprofits (9% of registered charities) have voluntarily elected to adopt best practice standards in financial reporting – the charities statement of recommended practice (or SORP). See below for a list of nonprofits that adopted the Charities SORP for their 2014 financial statements.

Advocates for greater transparency in charity accounting – including the incoming CEO of the Charities Institute of Ireland Lucy Masterson and the Charities Regulator John Farrelly – have encouraged charities that receive public funding to adopt the highest standards of public disclosure in publishing their annual accounts, and in fact a recent call for submissions from the Regulatory Authority, invites interested members of the public to comment on proposed new public reporting standards. Click here to review Benefacts’ own submission.

Tune in next week when we’ll be taking a closer look at SORP and some other current initiatives in this area.

 

Nonprofits that Adopted Charities SORP in 2014

What do we mean by ‘Civil Society’ and ‘Nonprofit’?

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We often get asked what is meant by the terms ‘Civil Society’ and ‘Nonprofit’ so let’s take a closer look at both the origin and meaning of these terms.

Civil society refers to the collective body of organisations that belong neither to government (the public sector) or the market (the private sector).

Nonprofit refers to individual organisations set up on a not-for-profit basis. This is a very wide definition that includes charities, community and voluntary organisations, non-governmental organisations, but also political, professional and membership bodies.

As many are not incorporated, we don’t describe them as companies.  Likewise, we don’t call them charities if they haven’t yet registered as such with the Charities Regulator. All charities by definition are nonprofits, but not all nonprofits are charities because the law actually excludes certain categories of nonprofit including sports bodies, trades unions and political parties.

So where did these terms come from?

In the 1990s, at Johns Hopkins University in the US, the Comparative Nonprofit Sector Project (CNP) built a framework to carry out comparative analysis of the scope, structure, financing and impact of nonprofit activity by civil society organisations globally.  This framework was subsequently adopted by the United Nations (UN).

The CNP produced two really important outputs:

  1. A definitive way to identify a nonprofit and
  2. A classification system grouping nonprofits according to their purpose.

How to identify a nonprofit: 5 core attributes

Organised: means organised or institutionalised to some extent. What is important is not that the organisation be registered or legally recognised, but that it have some institutional reality with a legal charter of incorporation. This excludes ad hoc or temporary gatherings of people with no real structure or organisational identity.

Private: means institutionally separate from government.This does not mean that nonprofit organisations may not receive significant government support or that government officials cannot sit on their boards. Rather, they must be “nongovernmental” in the sense of being structurally separate from the instrumentalities of government and they not exercise governmental authority.

Non-profit distributing: means not returning any surpluses generated to members or owners. Nonprofit organisations may accumulate a surplus in a given year, but this must be reinvested into the basic mission of the agency and not distributed to the organisation’s owners, members, founders or governing board.

Self-governing: means equipped to control their own activities. Some organisations that are private and nongovernmental may nevertheless be so tightly controlled either by governmental agencies or private businesses that they essentially function as parts of these other institutions even though they are structurally separate.  To meet this criterion, organisations must control their activities to a significant extent, have their own internal governance procedures, and enjoy a meaningful degree of autonomy.

Voluntary: means involving some meaningful degree of voluntary participation. This involves two different, but related conditions: (1) the organisation must engage volunteers in its operations and management either on its board or through the use of volunteer staff and voluntary contributions; and (2) “voluntary” also carries the meaning of “non-compulsory”. Organisations in which membership is required or otherwise stipulated by law are excluded from the nonprofit sector. These include some professional associations that require membership in order to be license to practice a trade or profession.

A classification system for nonprofits: 12 subsectors

Although the classification framework has divided nonprofits into 12 subsectors, it is still a very broad classification as it covers organisations of all kinds – local and national, small and large, religious and secular, professional and amateur, incorporated and unincorporated.

In order to fit the Irish context, we have adapted this classification system, dividing our database into 12 sub-sectors, as outlined below.

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The following provides examples from each subsector:

Subsector Example entity
1.  Arts, Culture, Media Adare Heritage Trust
2.  Recreation, Sports North Mayo Show
3.  Education, Research Clare Music Academy
4.  Health Muscular Dystrophy Society of Ireland
5.  Social Services Glenamaddy Community Care Limited
6.  Development, Housing Enfield CE Limited
7.  Environment Bat Conservation Ireland
8.  Advocacy, Law, Politics Women for Election Limited
9.  Philanthropy, Voluntarism NRH Foundation
10.  International Zikomo Limited
11.  Religion Patrician Brothers Irish Province
12.  Professional, Vocational Waterford Chamber of Commerce

We are continually updating our database, and periodically we add new groups of organisations read here for more information on how we collect data.  Likewise, we are always trying to improve the search and explore experience for users of our website – please submit your feedback here.

Change is imminent to Financial Reporting in the Nonprofit Sector

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Earlier this week we were delighted to have presented at an information event organised by Chartered Accountants Ireland. The audience consisted of charity finance directors, auditors and trustees who had all gathered to learn more about trends and developments in the nonprofit sector.

Our Finance Director Paula Nyland shared some insights on financial reporting by Irish charities, based on Benefacts’ review of all of the publicly available financial statements of nonprofits in our scope – at the last count, 7,921 organisations, of which 4,722 are registered charities. Paula noted that 91% of those charities whose accounts are publicly available have still not elected to use the voluntary financial reporting standard for charities (the Statement of Recommended Practice, or Charities SORP).

Most of the charities that have chosen to use this reporting standard are fundraising in an environment where funders’ expectations drive higher reporting standards: international development aid – where many of the institutional donors are international governmental bodies – health, and social care.

Analysis by subset of Irish charities that report using Charities SORP

We’ve pulled together a breakdown of Charities SORP reporters based on their 2014 financial statements (2015 data will be available early next year).

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3-fold increase in the number of nonprofits filing abridged accounts

Paula also took the audience through the dramatic increase in the number of nonprofits that have chosen to avail of the exemption from filing full financial accounts with the Companies Registration Office: under the 2014 Companies Act, this is available for the first time to smaller (<€8.8m turnover, €4.4m assets, <50 staff) nonprofit companies.

In effect, this means that very little financial information is publicly available about these entities. “Abridged” accounts give the reader only limited information about the financial profile of an organisation: namely, the names of the directors, the audit opinion, the balance sheet and a small number of other statutory disclosures. Compared to 2014, when only 7.5% of non-profit companies filed abridged accounts, the percentage of nonprofits taking advantage of the change in the law has jumped almost threefold to 21% in the case of 2015 accounts filed to date.

New financial reporting standards imminent

Section 47 of the Charities Act, 2009 provides for the setting of specific standards for financial reporting by charities. The Charities Regulator John Farrelly, speaking at the same event, said he was on the point of publishing new draft regulations, and would be touring Ireland for a round of consultation on these during October. These regulations will set a new mandatory reporting standard, albeit for unincorporated charities only, since under the Charities Act Section 47 (11), these regulations will not apply to charitable organisations that are incorporated as companies.

According to our database, 70% of registered charities are incorporated under the Companies Act. This means that the new regulations will apply to only 30% of currently-registered charities although of course this number is likely to grow as more charities complete the process of registration.

Here’s our analysis: the column on the right indicates the scale of charities that will be initially affected by the new regulations.

julia-table-2

To explore our database further, click here.

Sports organisations in the Benefacts Database of Irish Nonprofits

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Besides the Olympic Council of Ireland (OCI), there are more than 3,000 sports organisations listed today in the Benefacts Database of Irish Nonprofits. All enjoy the benefit of tax relief from Revenue, but only a handful are registered as charities by the Charities Regulator – this is because Section 2 the Charities Act 2009 specifically excludes sport from the definition of a charity in Irish law.

The OCI makes public disclosures as a company limited by guarantee, and these documents are re-published and analysed on their Benefacts listing. This indicates that the company was incorporated 34 years ago, in 1981, and reported having four paid employees in 2014. In addition, the company’s audited financial statements for that year report the payment of a €60,000 “Honorarium” to the Chairman of the Board (called the President in the company’s constitution), Patrick Joseph Hickey.

Besides the OCI’s President, who took office in 1982, six Directors have served for more than nine years including one who has served for 23 years, and three who have each served for 19 years on the Board, which is called the Executive Committee in the company’s constitution – download it here.

The Benefacts listing for OCI indicates that the company’s income in 2014 – of which 32% came from the Irish Sports Council – grew by 62% over the previous year, and its expenses by 25%. Net assets at €2m remained almost the same.

Besides paying for its own staff and overhead costs, the OCI distributed grants totalling €206,400 to “Olympic Solidarity Courses/Team Support” and to 12 affiliated sporting organisations – all listed in the Benefacts database of Irish Nonprofits: Rowing Ireland, Gymnastics Ireland, Swim Ireland, Snowsports Association of Ireland, Weightlifting Ireland, Basketball Ireland, National Target Shooting Association, Irish Ice Hockey Association, Irish Fencing Federation, Irish Amateur Boxing Association, Cycling Ireland, and Archery Ireland.