Irish Soup Kitchen Centres refused charity status due to uncertainty over counting cash

On 21 August, the sign was torn and the windows dark at the former Irish Soup Kitchen Centre at the bottom of Linen Court, a housing complex on George’s Hill in Balbriggan.

The organisation, which had provided hot food and food parcels here and elsewhere, closed up earlier this year, its founder Mark O’Neill says.

In 2015, the Irish Soup Kitchen Centres applied to the Charities Regulator for charity status. Eight years later, the regulator rejected the application – a decision upheld by the Charity Appeals Tribunal after a hearing in March of this year.

In August 2023, the regulator had said that it wasn’t satisfied the organisation had shown that all the money raised was being spent on the charitable purpose, as it was required to.

Irish Soup Kitchen Centres had submitted financial accounts that included a qualification. The auditors said that there “was no system of internal control” on which they could rely for the audit.

“There were no other satisfactory audit procedures that we could adopt to satisfy ourselves that the recorded turnover was free from material misstatements,” says the tribunal report.

O’Neill, founder of Irish Soup Kitchen Centres, says the statement around internal controls is standard terminology used by accountants and that the organisation kept close track of the money.

“Absolutely everything was above board,” said O’Neill by phone on Friday. “For an organisation to have achieved what we achieved over 11 years, for such a small outfit it was incredible, all because of volunteers.”

Irish Soup Kitchen Centres appealed the August 2023 decision by the regulator. But it didn’t appear at the appeal hearing in March 2024.

At the hearing, the tribunal criticised the lengthy time that the Charities Regulator had taken to decide the application.

Tribunal Member Nuala Dockry, a barrister, said she found the delay extraordinary and baffling, according to the tribunal report.

Irish Soup Kitchen Centres has now wound up its operations, says O’Neill, and the bank account is closed.

Almost eight years

Irish Soup Kitchen Centres ran four centres – in Balbriggan, Navan, Dundalk, and Drogheda.

For years, fundraisers for the organisation have been on the streets of Dublin, selling pens and scratchcards, and shaking buckets.

Meanwhile, for almost as long, a decision on its charity status has been pending.

Irish Soup Kitchen Centres first applied for charity status in October 2015, says the tribunal report.

The tribunal report gives glimpses into the years-long process, before the final refusal in March this year.

In February 2017, the regulator had sent a list of actions that Irish Soup Kitchen Centres needed to take to progress its application.

It pointed to the organisation’s fundraising, and “the need for documented procedures and policies to be put in place as a matter of urgency” for cash handling, purchase authorisations, and payments for collectors.

In October 2018, after some back-and-forth, the Charities Regulator had again “recommended urgent action on a range of outstanding matters including the cash handling policy, rental income derived from apartments, governance issues, risk assessments, the main object of the organisation”, the tribunal report says.

The regulator had referred Irish Soup Kitchen Centres to organisations that support charities, says the tribunal report.

In March 2019, the regulator had told Irish Soup Kitchen Centres that the application was “at the last stage” but there could be further queries, according to the tribunal report.

Twice in 2019 and twice more in 2020, Irish Soup Kitchen Centres looked for updates on the status of its application to become a registered charity.

In April 2021, the Charities Regulator apologised for the delay, which it said was caused by human error.

At that time, the Charities Regulator said it had found out that one of the charity trustees had entered a personal insolvency arrangement and therefore couldn’t remain a charity trustee. (O’Neill says that was a different charity trustee, not him.)

The organisation was then not eligible to be registered as a charity for one year, starting from July 2020, because one of the trustees was insolvent, according to the tribunal report.

In November 2021, the Irish Soup Kitchen Centres was given extra time to respond to outstanding queries, says the report. In February and April 2022, the regulator told the organisation that these responses were overdue, and “reminded” them that it is a criminal offence to act as a charity while not being a registered charity, says the report.

O’Neill forwarded an email that he received from the Charities Regulator in 2016 which says that organisations like his that were operational before 16 October 2014 – the date when registration came in – could continue to operate as charities while they were going through the registration process.

After more back-and-forth around submitting accounts, in August 2023, the Charities Regulator finally refused to register Irish Soup Kitchen Centres, citing 10 issues – mostly relating to the charity’s accounts.

“In light of the qualified nature of the audited accounts from 2017, the Authority is not satisfied that the Applicant has been able to demonstrate that all of its property is applied in furtherance of its charitable purpose,” it said.

Speaking in general and not about this case, a spokesperson for the Charities Regulator said: “When we engage with a charity in relation [to] a concern that is raised with us, we seek to bring them into compliance voluntarily.”

“The length of time involved can vary depending on the issue, its complexity, and the responsiveness of the organisation,” she says. “When an organisation does not take meaningful action, further regulatory action including prosecution, may be considered.”

O’Neill says that trying to register as a charity became time-consuming. They dealt with 13 different people in the Charities Regulator and he also had his own businesses to run, he says.

“I put 11 years of blood and sweat and tears,” says O’Neill. “We put a lot of smiles on a lot of families’ faces.”

No system of internal control

The main issue cited by the regulator for refusing to grant charitable status centred on how the organisation accounted for income and expenditure.

Each year, the accountants auditing the accounts did so in a qualified manner, due to a lack of internal controls on money, they said, and they were unable to be sure the accounts were accurate.

For example, the independent auditor’s report for 2017 said that the company’s main source of income was “distributing pens to the general public for a fixed donation, over which there was no system of internal control on which we could rely for the purpose of our audit”.

“There were no other satisfactory audit procedures that we could adopt to satisfy ourselves that the recorded turnover was free from material misstatement,” said the report.

O’Neill says that Irish Soup Kitchen Centres did keep books of all the money in and out and two people were involved each time money was counted.

He says it is common for accountants to use the above qualifying statement, which he says means that the accountant wasn’t there himself when the money was counted.

At the tribunal, Madeleine Delaney, a solicitor, and director of legal affairs and registration of the Charities Regulator rejected that suggestion.

“She said this is not the case and that there are well recognised procedures that charities put in place for cash collections, which will satisfy an auditor,” says the tribunal report.

The tribunal board queried why the issue of the qualified opinion, which was provided in the accounts from 2017  onwards, was only raised as an issue in 2022.

Delaney said it was unfortunate that this case occurred in a period when there was a lot of staff turnover at the regulator.

Delaney said the Charities Regulator refused the application because it wasn’t satisfied that Irish Soup Kitchen Centres had shown that it used all its income for its charitable purpose, which charities are required to do.

“The applicant had not been able to specify the amount of monies raised and the gross income of the organisation in the preceding 12 months as required under section 39, the figures provided having been qualified by the auditor,” says the tribunal report.