David Ainsworth: Is charity regulation in Northern Ireland in crisis?

12 Apr 2018 Voices

David Ainsworth looks at the state of charity regulation in Northern Ireland, and finds a patchwork regime – one which fraudsters in England could exploit.

Lough Neagh Rescue was the first major decision for the new charity regulator in Northern Ireland

In 2013 the Charity Commission in Northern Ireland launched an investigation into Lough Neagh Rescue, a small charity which provided lifeboat services on the lakes of the same name.

The charity had effectively split down the middle, with two groups claiming to be the legitimate administration. There were claims and counter-claims about illegitimate votes, intimidation, and people changing the locks on the boathouse.

The investigation was one of the first serious pieces of work undertaken by the regulator, then newly formed. In a sign it wanted to come down heavily, it took the side of one group, and sacked five volunteer crew members – using a power which has not been employed in recent memory by the Charity Commission for England and Wales (CCEW).

Lough Neagh was uncharted waters for the CCNI. Up until its establishment, charity regulation in Northern Ireland – a devolved matter – had been piecemeal and unsatisfactory, with no central register, and partial records kept by HM Revenue & Customs. The CCNI was an attempt to bring the issue up to date. It was established in March 2009, with a remit to register all the charities in Northern Ireland – now estimated to be more than 17,000 organisations.

Registration began in 2013 and is going slowly. There are currently 6,000 charities on the register, of which 3,800 have filed accounts. The regulator’s board estimated last year that on its current annual budget of £1.8m, it will take up to 21 years to register all the charities in the province, although the CCNI has since said ten years is probably a more realistic figure.

Court battles and inquiries

Almost six years after it was first begun, the Lough Neagh case is still going on. The volunteer crew members have been reinstated on appeal, and the former trustee, Trevor McKee, has just won a ruling saying he has the right to appeal the institution of the inquiry that allowed the CCNI to remove him. If he is successful it has the potential to open the question of the legality of all such inquiries.

It is far from the only major battle. The CCNI has been repeatedly back and forth to the Charity Tribunal for Northern Ireland – a process which uses a lot of resources the regulator can ill afford to spare. The tribunal made 11 decisions this year, compared to 28 in England and Wales – a jurisdiction with 20 times as many charities.

The regulator’s critics say this is because it has been heavy-handed and inconsistent. Greg Burke, who is part of an organisation called Probity, which was set up to challenge the CCNI in the courts, says it has misinterpreted the law, and spent money it does not need to on minor issues, leading to increasing challenge in the courts.

“They’re facing a whole raft of legal challenges because of their own behaviour,” he says. “They aren’t targeting their resources correctly. They’re picking on small charities that don’t need the attention, and letting big ones go by.”

But Frances McCandless, chief executive of the CCNI, says the main problem is the lack of regulation historically.

“It’s like lifting a stone to see what’s under there,” she says. “You find a lot of problems. And it’s brand new legislation. When legislation is first used, you expect to see a lot of challenges.”

Seven key risks all ‘high’ or higher

There are even bigger challenges on the horizon. The regulator’s own risk register said last year that it was very likely the CCNI would not be able to discharge its function because it did not have the budget.

The risk register compiled by the CCNI board, published in February 2017, and shared with G&L’s sister online news service Civil Society News following a request under the Freedom of Information Act, uses a trafficlight system to quantify risk, with “extreme” and “high” risks graded red and orange.

Of the seven key risks on the register, all were at least high. The board said it was very likely that delays in registration would damage confidence in the sector. It said it was likely that a lack of staff and resources was likely to lead to poor practice being undetected, and the sector being less accountable. And it said it was likely that “weak oversight and poor governance arrangements” would put the CCNI “at risk of not meeting its legal obligations as a public body”.

Meanwhile the Attorney General for Northern Ireland (AGNI) has been to the tribunal to challenge the CCNI’s interpretation of the Charities Act (Northern Ireland) 2008, a challenge likely to impact the legality of all 141 orders the CCNI has so far made – as well as hundreds of other decisions. In a bizarre turn of events, the AGNI received rulings both for and against from the same court, and on the same day, which will now go to appeal in the High Court.

The CCNI’s own parent department has also launched an investigation into whether it is fit for purpose. This report, completed in October 2016, is still to see the light of day, because there is no functioning government in Northern Ireland, nor a minister in place who can take the decision to release the report.

McCandless says the CCNI is constituted in the same way as other comparable regulators and in a way that had the backing of its parent department.

“The AGNI has taken one view and we’ve taken another,” she says. “We’ve acted in good faith and on good advice. Ultimately it’s for the courts to decide.”

The review of whether the regulator is fit, she says, is something which is done periodically in all non-departmental bodies.

She says that despite the many issues, the regulator is a success story.

“This is about a generational change in Northern Ireland,” she says. “It’s taking time to say to charities that they must be registered, and getting them to think about contact with the regulator.

“We’ve taken huge steps forward in terms of transparency for the public. Obviously we’d like to be able to simply say that if a charity is legitimate it’s on the register, and we can’t do that right now. We have to have a more complicated message.

“We would have liked to have sent a stronger message in the first years about a culture of compliance, and there have been limits to what we could do. It’s always challenging It’s like lifting a stone to see what’s under there. You find a lot of problems. frances mccandless implementing a big change in regulation. No one likes change in their working lives.”


The root of the issues facing the CCNI is a lack of resources. It is very questionable whether there is enough cash on the table to do what is asked.

The CCNI has a little less funding per registered charity than the CCEW. But it is not fair to compare a new regulator with an existing one. The CCNI must register thousands of charities – a time-consuming and expensive process. In addition, the new regulator must build relationships, establish case law, and create procedures. It will uncover more wrongdoing as it lifts stones for the first time. It must deal with crossborder issues. And its fixed costs are not comparably lower. Producing guidance for charities costs just as much, for example.

And of course the comparatively wellfunded CCEW feels it cannot do its job with the resources available to it. How much more true must this be for the CCNI?

The regulator itself is not minded to argue. It, too, says candidly that it is underfunded.

“It’s fair to say that when implementing a big new piece of legislation, we could have done with more cash,” says McCandless. “We aren’t well resourced compared to other regulators – either the other charity regulators in the UK, or other regulators here in Northern Ireland. We’ve had to cut our coat to suit our cloth.”

The threadbare nature of charity regulation in the province offers major challenges for the rest of the UK, because while civil society is a devolved issue, tax and fundraising are not. If scams involving charities originate in Northern Ireland, there is only a patchwork and incomplete regulatory framework to stop them targeting charities and donors in England.

The likelihood is that it is already happening. Following the discovery in 2012 of the Cup Trust – a £176m tax avoidance scheme registered as a charity – HMRC told the National Audit Office that there were seven similar tax avoidance schemes involving charities. Only two have ever been identified, and one was in Northern Ireland. If the other five are also based there, we currently have no way of knowing, and no effective remedy.

David Ainsworth is group online editor at Civil Society Media

This article originally appeared in Governance & Leadership magazine, the only dedicated magazine for charity trustees. Find out what's in the latest edition here.


More on