Involve - Solicitor

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The services a legal professional provides to non profit organisations An overview of some of the functions legal professionals provide to the community and voluntary sector, including: o Setting up a community and volunteer organisation as a legal entity o Tax reliefs available on the income and property of Charities o The Charities Act 2009 o Complying with fundraising laws o What to consider when looking for an appropriate legal adviser o Health and safety issues How this could be relevant to your community and voluntary organisation in a skills based volunteering capacity?

What services do legal professionals provide? A non profit group or organisation has legal requirements just like any other type of organisation, it interacts with other individuals and organisations, it may enter into commercial agreements, it can own property and other assets. All organisations, whether for-profit or non profit are required to meet statutory obligations and will require legal assistance and advice from time to time. Solicitors offer practical legal advice on many areas of the law. Their areas of experience may include the following: consumer legislation, corporate and commercial matters including company law, banking, finance, taxation, charity and trust law, family law (divorce, wills and probate), land law (purchase, sale or rental of property), planning, civil and criminal litigation and employment law. Solicitors can also advise on general or specific matters. The following list is a sample of typical legal issues and advice that a non profit organisation may require: • • • • • • • • • • • • • •

Advice in relation to setting up a non profit organisation as a legal entity Applying for tax concessions and exemptions Advice on Charities Act 2009 Complying with fundraising laws (e.g. Gaming and Lotteries Act) Defining employee relationships Complying with health and safety legislation Advice in relation to conveyancing law (e.g. purchasing or selling a premises) Advice on landlord and tenant matters (e.g. renting a premises) Avoiding pitfalls on planning legislation (if applicable) Advice about intellectual property issues Advice on inheritance law (wills and grants of administration and probate) Advice on civil and criminal litigation (as and when matters arise) Data Protection issues (if any) Advice on equality legislation (including disability issues)

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Knowledge of specialist areas such sports law (e.g. if the organisation is involved in the promoting of sports) or maritime law (e.g. in the case of RNLI and related organisations) Advice on applying for grants Advice on potential liability issues particularly when hosting events Advice on other laws which may impact on the non profit sector Advice when entering into contracts with suppliers, contractors or other vendors e.g. a web site design agency, a PR agency, IT consultancy services, provision of accountancy services etc. Advice when merging with another group/nonprofit organisation with common objectives

The distinction between barristers and solicitors in the Irish legal system In the Irish legal system, there is a distinction between solicitors and barristers. Traditionally solicitors deal with most legal matters apart from conducting proceedings in court (advocacy) although this is changing. Small civil cases and minor criminal cases are usually dealt with by solicitors in the small claims court, district court and in some instances the circuit court. Barristers, the other branch of the Irish legal profession, have traditionally carried out the functions of advocacy in the courts. In the past, barristers did not deal with the public directly. This rigid separation is changing, Conversely, the public may now hire and interact with a barrister directly in certain types of work without having to go to a solicitor first. Typically however a solicitor is still primarily the person to initially consult regarding any legal matter and a barrister is normally retained when any legal issue proceeds to court or where a specialist legal opinion is required.

Understanding what a non profit organisation is and how to set one up Many people have successfully established a non profit organisation on their own with limited formality and without engaging a solicitor. To assist them in this venture there are several useful websites and government agencies that provide information (see useful contact list below). However, engaging with a volunteer solicitor may save valuable time and leg work. The main question to consider is the proposed structure of the charitable entity itself. It can be any of the following: • • •

(a) an unincorporated association with a constitution or rules (b) a charitable trust established by trust deed (c) a private company limited by guarantee that is governed by a memorandum and articles of association. This is perhaps the more common form of charitable organisation used today.

It is important to establish the purpose of the charity itself. The organisation may benefit from tax exemption from the Revenue Commissioners provided it meets their requirements. In general, if the proposed non profit organisation is formed for any of the following purposes it may be considered exempt from taxes such as Corporation Tax and Income Tax. • • • •

The Relief of Poverty The Advancement of Education The Advancement of Religion Other purposes beneficial to the Community

Setting up a community and volunteer organisations as a legal entity Form a Board of Directors Forming a board requires careful thought and extensive recruitment efforts. There are regulations that determine the minimum and maximum size of a board but the optimum number of people who sit on the board should be determined by the needs of the organisation. While no formal qualifications are required to be a director, certain persons may be prohibited from acting as directors e.g. an undischarged bankrupt or an auditor of the company etc. The Directors will have some statutory duties to fulfil, such as the submission of an annual return to the Companies Registration Office. In addition, it is essential to ensure that the directors do not have a conflict of interest in relation to the organisation. The name of the charity it is important to ensure that the proposed name does not conflict with existing company names. The Registrar of Companies in Ireland may have to refuse a name if it is identical to or too similar to a name already appearing on the register of companies, or if it suggests state sponsorship. Further information about this is available from the Companies Office ( www.cro.ie/ena/downloads-information-leaflets.aspx. See Information Leaflet no 1. entitled Company Incorporation July 2009). It is also important to consider if the proposed charity name should be registered as a trademark. Further information about the law on trademarks in Ireland and registration is available from the Patents Office ( www.patentsoffice.ie/en/trademark.aspx ). Marketing material may also have to be approved to ensure that it is accurate and there are no copyright infringements (for example the use of a photograph without permission or the unauthorised use of another entity’s logo without permission. File Articles of Incorporation Articles of Incorporation are official statements of creation of an organisation, filed with the Companies Registration Office. It protects both board and staff from legal liabilities incurred by the organisation, making the corporation the holder of debts and liabilities, not the individuals and officers who work for the organisation. A volunteer legal professional can help you obtain and process all the information. Further information about company formation may be obtained from the Companies Registration Office; ( Tel:(0) 1 804 5200/Lo call 1890 220 226 or email: [email protected]) Draft bylaws Bylaws are simply the “rules” of how the organisation operates. Although Bylaws are not required to file ‘charity status’, they will help you govern your organisation more effectively. Bylaws should be drafted with the help of a legal professional and approved by the board early on in the organisation’s development. Develop a budget Creating a budget is often one of the most challenging tasks when creating a nonprofit organisation. A budget is the expression, in financial terms, of the plan of operation, designed to achieve the objectives of an organisation. New organisations may start the budgeting process by looking at potential income to figure out how much money they have to spend. Develop a record-keeping system Legally, you must save all board documents including minutes and financial statements. It is necessary to preserve your important corporate documents, including board meeting minutes, bylaws, articles of incorporation, financial reports, and other official records. A volunteer legal professional can guide you through the correct processes and help obtain the right information and instructions from the appropriate state agency e.g. what records you are required to keep in the official files. Develop an accounting system If your board does not include someone with a financial or accounting background, it is best to work with an accountant familiar with non-profit organisations. Nonprofits are accountable to the public, their funders, and, in some instances, government granting bodies. It is vital to establish a system of controls (checks and balances)

when establishing the organisation’s accounting practices. Responsible financial management requires the establishment of an accounting system that meets both current and anticipated needs. Data protection Many non profit charitable organisations are exempt from the requirement to register with the Data Protection Commissioner (see Section 16(1) (b) of the Data Protection Act). However, they are still required to comply with data protection obligations under the Data Protection Act 1988 and the Data Protection (Amendment) Act 2003; •

http://www.dataprotection.ie/docs/Home/4.htm

Apply for a legal recognition - charity identification number Regardless of whether or not you have employees, non profits are required to apply for recognition or public charity status which is a legally recognised charity identification number. The application is an important legal document, It is advisable to seek out the assistance of an experienced legal professional or a certified accountant when preparing your application. This number is used to identify the organisation when tax documents are filed. Once you have your charity status then you may apply for exemptions from income, sales and property taxes. It is also imperative your board understand the terms and conditions of charity legislation so that your organisation does not unknowingly break the law.

What reliefs from tax are available on the income and property of Charities? It is important to note that not all non profit organisations are deemed charitable in law. For example the promotion of sport and amateur games is not accepted as being legally charitable. Certain approved athletic or amateur games or sports bodies may obtain an exemption from Income Tax and Corporation Tax. Please consult with the Revenue Commissioners for further information. A separate leaflet has been produced by the Revenue Commissioners in relation to ‘Sporting Bodies’. People who are interested in setting up a non profit organisation should consult with The Revenue Commissioners Charity section and an experienced volunteer legal and taxation professional. The tax codes which provide exemptions are: • • • • • • • •

Income Tax - Sections 207 and 208, Taxes Consolidation Act, 1997 Corporation Tax (in the case of companies) - Sections 76 and 78 Taxes Consolidation Act, 1997 Capital Gains Tax - Section 609, Taxes Consolidation Act, 1997 Deposit Interest Retention Tax (DIRT) - Section 266 Taxes Consolidation Act,1997 Capital Acquisitions Tax - Section 54, Capital Acquisitions Tax Act, 1976 and Section 108(a), Finance Act, 1984 Stamp Duty - Section 50, Finance Act, 1979

As useful summary of taxation legislation may be found on: www.wheel.ie/funding/fundraising-guide/tax-relief-donations-charities

The Charities Act 2009 - A Synopsis The enactment of the Charities Act 2009 has seen the most significant overhaul of the charity sector in nearly 50 years. The primary objectives of the 2009 Act are to foster accountability in the charities sector, to protect against abuse of charitable status and to prevent fraud. Dramatic changes have been introduced which all non profit organisations and personnel should be aware of. The Charities Act 2009 has introduced a regulator in the charity sector

and formally establishes a register of charitable organisations. Existing charities which have been granted a charitable tax exemption will be deemed registered under the Act. A list of authorised charities is available using this link; www.revenue.ie/en/business/authorised-charities.html There are also new financial transparency measures which are contained in Part 3 of the Act. There is now a statutory obligation on charitable organisations to keep books of account and file them annually with the Charities Regulatory Authority. Generally, speaking if organisations comply with the accounting obligations of the Companies Acts they will satisfy the requirements of the Charities Act 2009. Charities must provide: • • • •

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Statement of Activities for the 12 month period Annual reports and other documents Latest Financial Statements List of Names. Addresses. Occupations, PPS Numbers of the Officers/ Directors/Trustees/ at least three officers who are not related and who are resident in the State A completed Application Form called a CHY 1

Full details of the Charities Act 2009 can be obtained here: http://www.pobail.ie/en/CharitiesRegulation

Complying with fundraising laws The Charities Act 2009 has introduced significant changes in relation to fundraising which non profit organisations should be aware of. A Charity Regulator has been appointed and all non profit organisations to which the Charity Act applies will have to give details of its fundraising activities in their annual reports and returns. Moreover, the operational and administrative aspects of fundraising (both cash and non cash) is now regulated by agreed codes of practice. The Irish Charities Tax Research Ltd recently developed a scheme for this, in partnership with the Department of Community, Rural and Gaeltacht Affairs. The Irish Charities Tax Reform Group (ICTRG) now provides free online educational seminars to highlight the contents of the Statement of Guiding Principles for Fundraising, for more information on these events and further information on all aspects of fundraising go to www.ictr.ie. For example when cash funds are raised using teams of street collectors the recommended guidelines include such things as: • • •

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Wearing of garments and the display of charity details Charities will have to show their charity name and number on collectors’ garments and on collection boxes Cash collection boxes will have to be sealed but the Regulator will have the discretion to make exceptions to the sealed-collection-box rule to enable those charities that offer fixed-price tokens to make change for donors Garda Permits will be required for all types of fundraising including non-cash collections

There are also many issues to consider when hosting events. Your volunteer legal adviser will assist you in drafting and negotiating key agreements including sponsorship agreements or if any unusual licences, permits or other consents are required. A standard form of fundraising at charitable events is the sale of raffle tickets or scratch cards, a tombola or prize draw. These are all forms of lotteries and as such are regulated by the law. Under the Gaming and Lotteries Act 1956-1986, a lottery licence or permit is required to hold a lottery or draw.

The District Court authorises the holding of a series of lotteries or draws, the total value of the prizes for which cannot exceed €20,000 on any occasion. If alcohol is sold on the premises a liquor licence may required, also an event will require insurance cover to cover public liability and personal accidents. Make sure you are dealing with an experienced specialist insurer or broker. If there is an outdoor concert, perhaps a temporary right of way may be required to access the venue? Your volunteer legal adviser should be able to assist you with many of these issues.

Health and Safety issues Non profit organisations and entities must abide by the Safety, Health and Welfare at Work Act 2005. The purpose of this act is to ensure the safety, health and welfare of employees, volunteers and non-employees (visitors) in the workplace. Areas which should be considered include: workplace safety of employees and volunteers and customers in charity shops, driving and transport, fire safety, fundraising, manual handling e.g. lifting heavy boxes, violence at work, supervision and training. Another area of concern is to ensure that both employer’s and occupier’s insurance is maintained. In the case of the former this is insurance in the case of accidents in the workplace. In the case of the latter, it is essential to ensure that a premises even if it rented by the charitable organisation is insured. For example, in the event that a patron slips and falls he/she may sue both the landlord of the building and the occupier (the charity). Further information is available from www.hsa.ie

Finding an appropriate Legal Adviser In the event of a serious matter, you should ensure that the right type of professional is engaged to handle your case. This is a major decision and you need to spend some time making sure you select the right type of solicitor for your needs. A friend may have used a lawyer once and told you he/she was excellent. Every case is different and choosing somebody without relevant experience can be a costly mistake.

Here is a handy checklist to consider before you recruit a volunteer lawyer: • • •

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Learn about your legal problem, search the internet for FAQs, read articles or discuss it with friends and colleagues who may have been in a similar situation Call your local legal referral service or check out www.findyoursolicitor.ie or the contact the Law Society directly www.lawsociety.ie Conduct both peer and client reviews to find out more about your potential solicitor. Talk to others who have used their services. Many Solicitors and Barristers tend to specialise. The good ones usually have an established reputation in the community Do not be afraid to use a solicitor in a different city, town or village particularly if the matter does not involve court work. Remember that advice can be sent via email Ask about the lawyer’s experience in the field. There is no point in retaining a solicitor who does not have experience or interest in the area you require. It is of course possible to retain one solicitor with experience in one area (e.g. litigation) and another for something else (e.g. commercial advice) Ensure the solicitor qualified under Irish Law and is duly insured to give legal advice? Rogue solicitors do exist. Check with the Law Society to see if the proposed solicitor has a valid practicing certificate and is insured to advise you Explore what the possible outcomes of your case are and if there are alternatives in resolving the matter? Some issues can be resolved out of court without incurring large expenses? Approximately how long will it take to resolve?

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Does the legal adviser recommend mediation or arbitration? If you are paying for this service how much would it cost and how will you be billed? How will you be kept informed of progress? If your legal adviser does not keep you routinely updated and is generally reluctant to discuss your case with you then he/she is not worth having on either a voluntary basis or a paid one! What kind of approach will the lawyer take to resolve the matter - aggressive and unyielding, or will he/she be more inclined to reach a reasonable settlement? Quite often in litigation cases a plaintiff may wish to have his or her day in court where the matter is thrashed out in front of a judge. However this can prove to be a costly exercise where the plaintiff may in fact be required to pay his/her legal fees together with the defendant’s legal costs. Ensure that you are properly advised