“Trust is always conditional” – why Data Protection matters

Damien Smyth, IT OfficerWe’re sitting on the cusp of a vast data-driven age that some have even started to refer to as the fourth industrial revolution.

The theory goes that if steam powered the first, electricity, mass production and the division of labour the second and computing the third then the fourth epoch of technological progress will be driven by what we can store

Indeed, we can already see how this is beginning to shape our lives. Drones, artificial intelligence, 3D printing and ‘the internet of things’ are already starting to impact on our day-to-day lives. Much of this is powered by information sharing and while the sharing of information helped power our last great technological jumps, the next few years will be defined by it.

It is perhaps with great foresight that the Data Protection Act 1998 came into being. In an increasingly interconnected world it sought to strike a balance between innovation-feeding and the right of the individual to enjoy privacy.

Increasingly the place of Data Protection has entered the national consciousness. In September of this year the Information Commissioner, Elizabeth Denham, gave a speech in which she argued that data protection laws did not hamper the success of anyone. Success, she said, increasingly sits hand in hand with respecting the individual’s right to privacy and with it, the law.

In hard terms the consequences of violating data protection laws can be severe. The biggest fine on the table is £500,000. Prison sentences are also a possibility. This year alone the ICO has levied fines totalling £911,000 and you don’t have to Google very hard to find recent examples of charities that have incurred financial penalties as a result of contravening regulations.  And if that wasn’t enough to be worried about, the European General Data Protection Act, enforced (most likely through a need to demonstrate equivalence) from May 2018 can impose fines of between 2 and 5 percent of global revenue.

But what Denham was referring to was not the potential for fines to limit success in monetary terms but rather the impact that disregarding people’s privacy or not treating their personal information in a proper fashion would have on business.

She continued:

“It’s not privacy or innovation – it’s privacy and innovation. The personal information economy can be a win win situation for everyone. Get it right, and consumers and business benefits. Firstly you need to make sure you’re following the law as it stands – which is a blueprint for responsible data practices. You also need to make sure you’re building something that is future proof to withstand the law of tomorrow. And most of all, you need to make sure that whatever direction you’re taking with people’s information; you’re taking those people with you.”

Playing fast and loose with data is not only illegal, but it is a way of destroying your organisation’s credibility and that of the sector you operate in. The public’s trust of charities remains high in Northern Ireland but as Chief Commissioner Tom McGrath has said “that trust is always conditional. Keeping people’s data safe and using it only in a way that is permitted by law helps to maintain and enhance that trust.”

As the potential for data to drive greater revenue by charities increases, so must vigilance. It’s never been more important for trustees to know their Data Protection obligations.

The Charity Commission for Northern Ireland has produced guidance on Data Protection for charities. You can download it on our website.

No such thing as average – what the register of charities tells us about the sector in Northern Ireland

aoife-morrison-policy-managerNorthern Ireland has a long history of a vibrant, trusted and well thought of charity sector. But, as strange as it seems now, there was no way to fully and accurately quantify its existence until 2013 when the Commission began registering charities.

While we may only be part of the way there – with 5,300 charities registered out of a final estimated total of between 11,000 and 17,500, we’re now able to put together a much fuller picture of the charity sector in Northern Ireland than has ever existed before.

So what’s the bottom line? What we find is a sector that is marked by its diversity where simple ‘averages’ do not reflect the breadth of charities in terms of what they do, how they are established, their income and where they are located.

Take income as an example. Analysing income, self reported by charities at the point of their registration, we could generate an ‘average’ income of £234,466. However, this is an ‘average’ that would be far removed from the reality facing the majority of charities. In fact, 83% of registered charities have an income of £200,000 or less, with almost one quarter having an income of £5,000 or less per annum.  Conversely, the top 20% of registered charities by income account for more than 88% of the overall income of the sector.  The income of charities that have been registered to date amounts to more than £1 billion. This is a not insignificant sum, comparable to around 10% of the money available to devolved government – and will only increase as more charities are registered.

Perhaps what this highlights is that the term ‘charity’ is home to a wide range of organisations. There is often a perception that charities are small, local, volunteer run bodies. While this is the case for many, there are also large, complex and high income registered charities that are significant local employers.  Some of them have registration and reporting requirements to a range of bodies. Almost one quarter of registered charities are also companies and required to register with Companies House. Additionally, there are charities which are governed by Royal Charter and others, industrial and provident societies, that are also registered housing associations.

Charities in Northern Ireland are established to achieve a wide range of purposes. Again, our findings here mark that there is no such thing as an ‘average’ charity. While 57% of charities are established to advance education, a significant proportion of charities are established to advance citizenship or community development (44%), to relieve those in need (29%), and to advance religion (28%). There are others with purposes ranging from the advancement of animal welfare to the advancement of the arts, culture, heritage or science. Many charities will be established to achieve a range of purposes. Some undertake to provide services themselves, while others provide grants, funding or support to other charities.

Of interest is the number of charities we have who are dedicated, wholly or in part, to post-Troubles issues. Our research found that 345 charities listed ‘interface communities’ as one of their beneficiaries, while 213 charities exist to help ex-prisoners and offenders.  883 list cross-community/cross-border work as one of their beneficiaries. That such charities exist is no surprise – indeed, many of them are high profile – but the scale will be surprising to some.

We are excited to be making this information available and to be highlighting some of what can be viewed on the register of charities. As the register grows, we hope to frame the vibrancy of the charity sector in Northern Ireland, painting a true picture of the scale and diversity of those organisations established to meet a charitable need for the public benefit.

Our report is available to view here.

Open data – who benefits?

damien-smyth-it-officerLate last month the Commission began the process of opening up the data it holds for public consumption.

In line with a general drive in the Northern Ireland public sector, to “improve the transparency and accountability of government”, it’s aimed at stimulating innovation both within the public sector and without and having Open Data As Default, because it’s the right thing to do.

But with the amount of information we hold about charities, and the insights provided by the research we produce, becoming increasingly vast, we also realised that there were potential benefits to those we regulate of releasing our data as well.

Open Data is more than just a buzzword. With talk of the fourth industrial revolution being driven by data, and the increasing likelihood that future economic innovation will be driven by raw numbers rather than raw metal, the potential for open data to transform the charity sector is a very real one. Charities are already becoming more data-literate and are using data to inform their strategies and align outcomes with their purposes and public benefit. And when budgets are limited, innovation is key.

A notable example of a charity using open data is how Macmillan Cancer Support has been able to use released NHS open data sets to plan cancer care on a regional level, hopefully leading them, in the end, to better outcomes. In the field of international development data has been increasingly open since 2008. Publishing the details of grants and funding outcomes ensures that agencies become better at identifying need and building projects that aren’t already in existence, and that learn from the experiences of others. The more data about charities that is available, the more collaboration can take place.

Trust in Northern Ireland charities is relatively high, as our recent research revealed, but where it fell one of the major reasons was because of a lack of clarity over where donations go. Concerns about the perceived high earnings of Chief Executives were prevalent across focus groups. The Commission already publishes data on the expenditure and incomes of charities that have submitted their annual returns but making this available in a format that could be easily shared and analysed was important to us. We wanted to ensure that people had the information they needed to put their trust in charities and that, where trust was receding, charities had the opportunity to put it right.

Open Data is essential for all of those who are interested in supporting the good work that charities do, and in ensuring that the public retains high levels of trust and confidence in charities.

So who benefits? The Commission does, but so does everyone who supports a charity – 90% of the Northern Irish public – who deserve an open, transparent and well informed charity sector.

 

“It’s like conducting an orchestra.”

Kate Fleck, Chair of Open College Network NI on what makes a great Chair

I knew that being Chair of a Board can be both challenging and rewarding when I took over as Chair of the Board of Open College Network NI (OCNNI) in January 2016. Having been on the Board for the three previous years, one of these as Vice Chair, I had a clear idea of the sort of Board I wanted to be involved with and lead. For me it was about ensuring that the Board was both effective and active in supporting the CEO and that fully understood its role. It was also important that there was a sufficient and appropriate skills base.  Having just emerged from a difficult period, and with the organisation embracing a new strategic plan, there were certainly challenges – but opportunities as well.

With my goals as Chair in mind, before I commenced the role I attended two training events delivered by Leading Governance which I found enlightening and which focused my attention on the role of the Chair and review of Board appraisal and performance.

With my own experience in mind, one of the first things I suggested was to bring in Leading Governance to deliver a training event to all members of the Board on the role of the Board exploring responsibilities, understanding governance and the importance of monitoring performance. This event was really valued by the members and it clarified some of the issues that existed.

During the summer months I initiated a face-to-face appraisal and performance review with all Board members. As a new Chair I found this process, although time consuming, really worthwhile as it enabled me to get to know members of the Board better and also see what the emerging challenges were for the individual Board members as we move into the future.  Some of those emerging issues are those confronted by many Boards such as addressing poor attendance; not fully understanding the business and confusion around strategy versus operations which in some cases could lead to potential conflict of interests.

As we move forward as a Board into 2017 we have initiated a series of training sessions organised before the Board meetings on the issues which we feel need to be addressed or which will provide better information and understanding for all the members. I have encouraged Board members to attend training events provided by for the CO3 Trustee Network which is delivering excellent information and update sessions that enhances trustee learning and development.  We will also continue with annual appraisal of performance for the Board.

All in all it has been an interesting and busy first year. Asked to describe the experience to date to recently , I replied that the role of Chair is like that of conducting  an orchestra – making sure that all the members are contributing effectively and that they know exactly what their particular role is in the overall performance.

 

Mind the Gap – a Chief Executive’s view of charity regulation

20161006-john-farrelly-ceo-of-irelands-charities-regulatorJohn Farrelly, Chief Executive Officer of Ireland’s new Charities Regulator, provides an overview of his approach to regulating and protecting charities.

For many years I lived in London. One of my abiding memories was the announcement as you step off the Tube  to “Mind the gap”. Twenty years later, that message underpins my approach to regulating and protecting charities.

Early in my career I worked with a small mental health charity, where I had the pleasure of meeting and working with some founding members. In my first weeks I was trying to gain an understanding of what drove a group of volunteers to set up the charity. A 78-year-old mother explained that 10 years previously, in 1977, her child required support. The state care was lacking so she, and like minded people, set up a charity to fill the gap.

I was captured by the idea that a citizen would set up an organisation to do the right thing. Over the course of the following 20 years I was amazed at how, again and again, I have come across charities that have been founded in this gap. It is in the gap of suffering, unmet need and vulnerability that many charities emerge and flourish. I believe that a good regulator is required to be mindful of this gap and ensure that regulation will not be a barrier to good people doing the right thing to serve their communities.

To regulate and protect those age old charitable values, a regulator needs to be modern, robust and nimble, implementing the law so that the public can have confidence in the good work that occurs and is occurring, 24/7. Good people doing good work in the public interest should be protected and encouraged and the law applied so that good charities flourish.

While the regulation of charities is a relatively new concept, the international evidence indicates that effective regulation needs to be independent of the political system, transparent, accountable and proportionate, targeting resources and effort at the areas of highest risk.

Regulatory activities in the modern world need to be tailored along a continuum, ensuring interventions are effective, taking into account sector diversity while keeping focussed on the regulator’s ultimate goal – ensuring that charities comply with the law and their statutory obligations. The international evidence shows that engagement is a key feature of an effective regulator. Because of the diversity of mission and capability in the sector it is imperative to work closely with, and leverage, the capacity of parties who understand and communicate with the sector.

The vision of the Charities Regulator is that Ireland will have a vibrant, trusted charity sector that is valued for the public benefit it provides.

Ireland’s charities play a vital role in our society and provide public benefit in diverse ways to communities in Ireland and across the world. In my view charities soften the state and, for me, the independence and growth of charities is crucial to the growth of a modern, compassionate and caring Ireland.

Charity Commission’s new blog

The Charity Commission for Northern Ireland has this week launched a new blog, which will offer information, updates and advice straight from the Commission’s management team.

The blog, a new development for the charity regulator, has gone live this week with the Commission’s first post, which is focused on the annual reporting duties of registered charities.

Welcoming the publication, the Commission’s Chief Executive Frances McCandless looked forward to seeing the blog grow into an informative and accessible resource for charity trustees.

Frances McCandless, Charity Commission for Northern Ireland Chief Executive.JPGShe commented: “Working alongside our website and newsletter, this new blog will provide the public with a fresh way to keep updated on our work and other charity regulation news.

“I look forward to seeing the blog grow over coming months, with posts and discussions on a wide variety of topics and issues, as well as updates on Commission events and activities.”

The Commission’s first post Annual reporting – the next chapter for registered charities has been penned by the Commission’s Monitoring and Compliance Manager, Fiona Muldoon.

It provides an overview of annual reporting requirements for registered charities, as well as the benefits annual reporting will bring to charities and the wider public.

Future posts will include an overview of the Commission’s progress during the 2015-16 year, a focus on new research into public trust and confidence in Northern Ireland’s charities and information on Trustees Week 2016.

Annual reporting – the next chapter for registered charities

While the commencement of charity registration in Northern Ireland has been the headline news in recent years, it is important to remember that registration is only the beginning.

Registration as a charity with the Commission is a one off, compulsory process. However, once registered, all charities are then required to report annually to the Commission on their activities, governance and resources.

For many charities, this will be the first time they will have to report annually to a regulator, with accounts and reports submitted under annual reporting published on the charity’s register of charities entry.

This is an important development, providing a meaningful way for charities to be more open and accountable to their funders, their supporters, beneficiaries and the wider public – as well as the Commission as charity regulator.

Simultaneously annual reporting provides charities with a credible, public means of demonstrating the good work they are doing year on year, including vital information on their income, spending and activities. In effect, supporting charities in telling their story.

Capture

From the Commission’s point of view, and now that charity registration is well underway, annual reporting presents the next major challenge, as well as a new opportunity to build public trust and confidence in charities.

With limited resources, we have worked to design and implement a strong compliance regime, alongside an integrated IT system which will support the online reporting process.

In conjunction with this intensive programme, we are working to educate and support charity trustees in how to comply with annual reporting legislation and develop best practice in running charities.

While any change is daunting, annual reporting is something which charities should not fear. As with registration, the information requested under annual reporting is information charities should already hold, albeit charities will need to familiarise themselves with the requirements of the trustees annual report and may need to update the format of annual accounts they prepare.

Additionally, all registered charities must have an independent review of their accounts, with only larger charities requiring a full audit. These requirements were carefully considered by the Department for Communities (formerly the Department for Social Development) during the 2015 consultation on the new charity accounting and reporting regulations. This helps to ensure any potential financial costs to charities did not outweigh the benefits of increased transparency and accountability under the new regime. For this reason smaller charities enjoy lesser requirements under the new regime.

To help charities understand their new requirements the Commission has produced a suite of clear and comprehensive guidance on how charities can comply with their reporting duties. That guidance is available in Annual reporting section of the Commission’s website by clicking here.

Annual reporting – an overview

On 1 January 2016, The Charities (Accounts and Reports) Regulations (Northern Ireland) 2015 commenced, bringing into place a full annual reporting regime for all registered charities in Northern Ireland for the first time.

Registered charities are now required to comply with these regulations for each financial period beginning  1 January 2016 or their date of registration with the Commission, if later.

Broadly speaking the regulations set out:

  • the form and content requirements for all charity accounts – that is whether you must prepare accruals accounts or can elect to prepare receipts and payments accounts, and the format these accounts must take
  • a requirement for all charities to produce a trustees’ annual report – the content of which will depend on the size of your charity
  • a requirement for all charities to have their accounts independently examined or audited – broadly, smaller charities may opt to have their accounts independently examined whereas larger charities will be required to have a statutory audit. The Commission has produced new Directions for Independent Examiners, which examiners must follow when reviewing charity accounts.

On receipt of the accounts, reports and online annual monitoring return the Commission will publish the charity’s accounts on the register of charities, assess submitted documents and address all zero tolerance issues identified.

Prior to the commencement of the full regulations, an interim annual reporting programme was in place, covering the transitional period between the commencement of registration and the full annual reporting regulations.

This means that, while the full regulations did not commence until January 2016, the Commission had already started to receive – and publish – accounts and reports of registered charities.

Interim reporting guidance picture - purchased from iStockAs at 31 March 2016 the first 42 charities required to submit accounts and reports to the Commission had done so within their ten month deadline. Using these first submissions, the Commission was able to commence its monitoring programme and carry out basic compliance checks.

However, this is only the beginning – as more charities meet their annual reporting deadline and are required to submit information, the register of charities will continue to develop as a vital, public information hub.

For more information on annual reporting, or to view the Commission’s suite of accounting and reporting guidance, visit the Annual reporting section of www.charitycommissionni.org.uk

Tagged