Stephen Donnelly, Fianna Fáil TD for Wicklow and East Carlow has today welcomed the publication of a report by the Charity Regulator into the practice of charities holding shares in companies in order to provide them with so- called ‘bankruptcy remoteness.’
In September 2016, Deputy Donnelly wrote to the Charity Regulator requesting an investigation into the use of charities by the so-called vulture funds as part of their tax avoidance mechanisms. On the back of this request, a review was launched, and has now published its findings.
The regulator found that ‘It appeared that the activities of the charities solely consisted of holding shares in section 110 companies and the distribution of the income derived from them to other charitable organisations’. While the charities identified by the review have all been restructured, it further found that ‘in order to qualify for and maintain charitable status the organisation must have exclusively charitable purposes’ effectively closing the door on the ‘orphaning’ technique.
Deputy Donnelly commented, “The Charity Regulator deserves enormous credit for taking such a proactive stance in ensuring that Irish charities are not used as part of tax avoidance schemes.
“My understanding is that the use of charities has been legal. However, there was a strong public reaction when I raised the chase of a children’s charity being the sole shareholder in a so called vulture fund.
“The Irish people need to know that charities are engaged in charitable works, and the regulator is to be commended in his actions today.”