Abstract
This chapter reviews the evolution of charitable foundations in Ireland and assesses the challenges facing the foundation sector from a financial, regulatory and governance perspective. As one of only two common law jurisdictions in the European Union, Ireland differs from its continental counterparts in its facilitation of and familiarity with foundations. Establishing or calling one’s entity a ‘foundation’ does not imbue the entity with a specific legal status in Ireland, thus requiring would-be foundations established in Ireland to use an existing legal form (typically a trust or company limited by guarantee) as the basis for the entity. This lack of separate legal status is reflected not only at the point of creation but throughout a foundation’s existence since no separate laws or regulations governing foundations exist in Ireland. Rather, such entities are governed by the appropriate charity, tax, company or trust law or, most often, a combination of these regimes. In light of these elements, this chapter sets out the regulatory framework that applies to charitable foundations in Ireland, examines recent moves to better support foundation growth in Ireland and looks at the challenges that stand in the way of such further evolution.
The author wishes to thank Niall O’Sullivan, Patricia Quinn and Alison Dunn for their assistance with the preparation of this chapter. All views expressed and all errors remain those of the author.
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Notes
- 1.
Cited in McKinsey and Company (2009, 5).
- 2.
This number compares poorly with the estimated 8,000 active grant-making foundations operating in the United Kingdom. See McKinsey and Company (2009, 8).
- 3.
The effect of the global downturn on foundation wealth in Ireland is evident in the financial accounts for 2010. The JP McManus Charitable Foundation’s investments fell from €41 m to €36million in 2010, resulting in payments totalling €1.9 million being made to 139 charities in 2010 as compared with payments valued at €10.6 million to 143 good causes in 2009 (Source: Business Section, The Sunday Times, July 10, 2011).
- 4.
A notable exception to this general trend is the Vodafone Foundation Ireland. The Vodafone business model approach to CSR has led to the creation of 27 Vodafone foundations in the countries in which Vodafone operates. In Ireland, since its creation in 2003, the Vodafone Foundation, which is a company limited by guarantee which enjoys charitable tax-exempt status, has given an average of €1.5 million to charitable causes each year.
- 5.
See http://www.foundation.ie/images/uploads/file/CFI%20ANN%20REP%202013%20F-A%20COMP%20L-R.pdf (Accessed May 20, 2014).
- 6.
See, for instance, the Malmar Foundation, established by Forward Emphasis International as its vehicle for corporate social responsibility; the World Wildlife Foundation which styles itself as a charity although it does not enjoy charitable tax-exempt status; and the FairFund Foundation, which is primarily dedicated to economic investment, economic growth and stability in the developing nations of the world and, in particular, in the Commonwealth member countries, the Anglophone and the Francophone countries. None of these foundations are charitable tax-exempt entities in Ireland.
- 7.
Charities Act, 2009, s.7 provides that nothing in the Charities Act shall operate to affect the law in relation to the levying or collection of any tax or the determination of eligibility for exemption from liability to pay any tax. Section 7(2) also provides that the Revenue Commissioners shall not be bound by a determination of the Charities Regulatory Authority as to whether a purpose is of public benefit or not in the performance by them of any function under or in connection with the tax acts.
- 8.
Charities Act, 2009, s.3.
- 9.
Charities Act, 2009, s.39.
- 10.
Charities Act, 2009, s.40.
- 11.
See Barclay’s Wealth (2010, 7) citing O’Sullivan of the Community Foundation of Ireland to the effect that wealth in Ireland is to a large degree only one step removed from working or middle class.
- 12.
McKinsey and Company (2009, 9) noting that 80 percent of foundations in Germany and 60 percent of foundations in the United Kingdom have an annual budget of less than €250,000.
- 13.
See http://www.transnationalgiving.eu/tge/default.aspx?id=219948&LangType=1033 (Accessed October 21, 2011).
- 14.
See http://www.philanthropy.ie/our-partners/ (Accessed May 21, 2014).
- 15.
The European Foundation Centre provides annual status reports on the health of foundation law and regulation throughout the European Union. Reports, which are presented in template form for ease of country comparison, are compiled by national experts and made available online. For the most recent Report on Ireland, see http://www.efc.be/programmes_services/resources/Pages/Legal-and-fiscal-country-profiles.aspx (Accessed May 21, 2014).
- 16.
See Vol. 535 Dáil Debates, Written Answers – Foundation for Investing in Communities, Tuesday May 1, 2001.
- 17.
Local Government Act 2001, s.109.
- 18.
See http://www.environ.ie/en/LocalGovernment/LocalGovernmentAdministration/Local GovernmentFinance/#Current%20Expenditure (Accessed July 11, 2011).
- 19.
Local Government Act, 2001 (Commencement) (No. 2) Order, 2002, SI 213 of 2002.
- 20.
See http://www.communityfoundation.ie/news/news/philanthropy-forum-re-established (Accessed July 11, 2011). The forum now includes amongst its members: The Community Foundation for Ireland, Philanthropy Ireland, The Ireland Funds, ICTR, Business to Arts, Atlantic Philanthropies, The One Foundation, Dept of Finance, Dept of Environment, Community and Local Government, Fundraising Ireland and Dept of Foreign Affairs, giving foundations and their intermediaries 5 out of 11 seats on the forum.
- 21.
- 22.
Charities Act, 2009, s.2.
- 23.
Charities Act, 2009, s.46.
- 24.
See C-386/04 Centro di Musicologia Walter Stauffer v Finanzamt München für Körperschaften [2006] E.C.R. I-8203; C-318/07 Hein Persche v Finanzamt Lüdenscheid [2009] ECR I-359. See also Houlder (2009).
- 25.
Finance Act, 2010, s.23 inserting ss. 208A and 208B into the Taxes Consolidation Act, 2007. See also Revenue Commissioners Guidance (2010).
- 26.
Taxes Consolidation Act, 1997, ss. 207 and 208.
- 27.
Taxes Consolidation Act, 1997, ss. 76 and 78.
- 28.
Taxes Consolidation Act, 1997, s. 609.
- 29.
Capital Acquisitions Taxes Consolidation Act 2003, ss. 17, 22 and 76.
- 30.
Taxes Consolidation Act, 1997, s. 266.
- 31.
Stamp Duties Consolidation Act, 1999, s. 82.
- 32.
Taxes Consolidation Act, 1997, Chapter 8A, Part 6.
- 33.
Taxes Consolidation Act, 1997, s. 848A provides for a scheme of tax relief for certain eligible charities and other approved bodies in respect of donations received on or after 6 April 2001.
- 34.
A good example of this is Wexford Festival Trust, a tax-exempt charity that operates as the fundraising arm for the world famous Wexford Opera Festival. In its dealing with sponsors, the media and the public, however, the word ‘trust’ is shed and the organisation is referred to publicly as the Wexford Festival Foundation.
- 35.
This assumption is confirmed by Patricia Quinn, former CEO of INKEx who kindly ran data keyword searches on my behalf in the beta version of INKEx, an Irish non-profit database. See http://www.irishnonprofits.ie/ (Accessed May 21, 2014).
- 36.
See Charities Act, 2009, s.3(3), which provides that a gift will not be for the public benefit unless it is intended to benefit the public or a section of the public and (b) in a case where it confers a benefit on a person other than in his or her capacity as a member of the public or a section of the public, any such benefit is reasonable in all of the circumstances, and is ancillary to, and necessary, for the furtherance of the public benefit.
- 37.
Charities Act, 2009, s.89.
- 38.
Taxes Consolidation Act, 1997, s.208.
- 39.
For further details on the Companies Bill, see http://www.clrg.org/ (Accessed May 21, 2014).
- 40.
See also Law Reform Commission (2006) for earlier efforts by the Law Reform Commission to bring to light anomalies and short falls in the particular area of charitable trusts and legal structures for charities.
- 41.
See www.governancecode.ie (Accessed May 21, 2014).
- 42.
The principles relate to the provision of leadership within the organisation, the exercising of control over it, being transparent and accountable, working effectively and behaving with integrity.
- 43.
Comprising volunteer only organisations, emergent and small single-staff membered organisations, and larger, more complex organisations with 10 or more members of staff.
- 44.
The Governance Code at http://www.governancecode.ie/about.php (Accessed May 21, 2014).
- 45.
See Dunn (2013) on the regulatory issues that currently arise in the United Kingdom for foundations subject to the UK’s Charities Act 2006.
- 46.
Charities Act, 2009, s.46.
- 47.
Charities Act 2009, s. 52.
- 48.
Charities Act 2009, ss.48–51.
- 49.
Thus, the O’Reilly Foundation, the One Foundation, the Naughton Foundation, the Quinn Family Foundation and the Charles McCann Charitable Foundation are amongst those foundations likely to benefit from this exemption from public scrutiny.
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Breen, O.B. (2014). In Search of Terre Firma: The Unpacking of Charitable Foundations in Ireland. In: Prele, C. (eds) Developments in Foundation Law in Europe. Ius Gentium: Comparative Perspectives on Law and Justice, vol 39. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-9069-7_8
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