Report to the Board of Gay and Lesbian Equality Network (GLEN) Jillian van Turnhout, Consultant. 16 May 2017

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1 Report to the Board of Gay and Lesbian Equality Network (GLEN) Jillian van Turnhout, Consultant 16 May 2017 Introduction On 21 April 2017, I was professionally engaged as a consultant by the Board of Directors (Board) of the Gay and Lesbian Equality Network (GLEN) to carry out a comprehensive review of the organisation, a Company Limited by Guarantee. Separately, the Board engaged an independent financial consultant, Donal Ryan and Associates accountants, to review the financial administration of the organisation. This report, which I hereby submit to the Board, contains the findings of my review and presents my conclusions. The report reflects the evidence I have gathered and verbal reports I have given to the Board since my appointment, it also takes into consideration the findings of the report of Donal Ryan and Associates of 15 May I have endeavoured to provide a frank and fair account of the situation as I have found it. I have had full editorial control of this report. This report is now the property of the Board of GLEN, who are free to determine whether or not they wish to make it a public document. I understand that it is the intention of the Board to provide this report to the Charities Regulator. I wish to acknowledge and thank the Board and staff for their positive engagement and co-operation, and for granting me full access to all available information and records. I appreciate this is a difficult time for the organisation, its Board and staff. Methodology In consultation with the Board, it was agreed that my review of the organisation would comprise three components. The primary focus was to identify what policies were in place to ensure the organisation was in compliance with the law and to advise the Board on best practice in the organisation s governance, management and administration. The secondary focus was to review the strategic purpose of the organisation, its financial sustainability and current and future staffing needs. The Board tasked me with advising on the critical strategic decisions it faces. The third focus was to compile an Internal and Financial Controls Policy and a Directors Handbook to bring together existing policies in GLEN and to develop policies where needed. On 24 April 2017, I commenced my work with a desk review of the organisation s Board documentation and governance and internal policies, over the past five years. The five-year time span was chosen, and agreed by the Board, to ensure a thorough review. To support my work, I initiated contact with all past and current staff and Board members of GLEN from the period 2012 up to the present day with a view to commencing a consultation process on governance and compliance. The vast majority replied to my request and agreed to engage and support the review of the organisation.

2 Fundamental Challenges Within two weeks of my appointment it became clear to me that there were a number of urgent fundamental challenges facing GLEN. I believe these needed to be fully explored, understood and prioritised. I sought direction from the Board and they agreed with the suggested re-prioritisation of my work, namely to frontload my efforts on supporting the review being undertaken by the Charities Regulator and to inform the Board s discussions on the future of GLEN. Below is an outline of five critical challenges that I identified the organisation to be facing at this time: 1. Compliance 2. No reserves policy 3. No Chief Executive and reduced staffing 4. HR issues 5. Future financial sustainability Challenge 1: Compliance GLEN is currently under review by the Charities Regulator following a self-disclosure by the organisation. At its 13 December 2016 Board meeting, the Executive Director (CEO) raised concerns of potential breaches of the 2009 Charities Act and of compliance by the organisation with the Governance Code. The Board minutes reflect actions taken on foot of these concerns. At its next Board meeting on 17 January 2017, the Executive Director further updated the Board and proposed the importance to be upfront with the Charities Regulator about any possible past irregularities in governance, even where minor, and ask for its advice and recommendations. Consequently, the Board instructed the Executive Director to make a voluntary disclosure to the Charities Regulator in relation to concerns of a suspected breach of corporate governance rules. The Executive Director contacted the Charities Regulator on 21 January 2017 and met with Head of Compliance on 16 March On foot of this voluntary disclosure, the Charites Regulator wrote to GLEN on 5 April 2017 seeking further information to inform their review. From my review of the Board documentation, it is clear that the Board self-disclosed to the Charities Regulator via the Executive Director (December 2016 to March 2017 Board Reports and Minutes). In addition, in my communications with the Charities Regulator it is clear they always understood it was the Board of GLEN who self-disclosed. The Board has fully co-operated with the Charities Regulator. All documentation requested by the Charities Regulator, pursuant to Section 53 of the Charities Act 2009, was submitted by the Board by the deadline set by the Regulator of 26 April I understand that the Board intends to submit my report and the report of Donal Ryan and Associates to the Charities Regulator to aid their review. The organisation is currently under review by the Charities Regulator given its self-disclosure. However, no investigation has been commenced by the Charities Regulator. Under the Charities Act 2009, when an organisation is under review the Charities Regulator gathers evidence to determine whether or not it should appoint an inspector to conduct an investigation into the affairs of the charitable organisation. The Charities Regulator was established in October 2014 following 25 years of lobbying and the successful passage of the Charities Act in The Charities Regulator is Ireland's national statutory regulator for charitable organisations. Since September 2016, the Regulator has the power to conduct statutory investigations into any organisation believed to be non-compliant with the Charities Acts under Part IV of the Charities Act The perception that there is already an investigation ongoing by the Charities Regulator into GLEN has led to a diminishing of trust in the work of the organisation by the public and more immediately pressing by funders Page 2 of 8

3 and key stakeholders. It is critical that organisations be able to make a self-disclosure to the Charities Regulator without a disproportionate response in the absence of evidence. Use of Credit Card The Board had referred a number of corporate governance issues to the Charities Regulator, including the use of GLEN facilities and resources on a Seanad election campaign involving a Board member. The Board had addressed this issue prior to the commencement of my review. In this report, I wish to specifically address the issue surrounding the use of credit cards and to share my understanding of this issue as gathered through my review. At its meeting of 13 December 2016, the Board took the decision to cancel all company credit cards except for the card held by the Executive Director (CEO). The credit card held by the Executive Director was subsequently cancelled in advance of her departure from the organisation on 21 April The Board has appointed Donal Ryan and Associates (Accountants) to undertake: a detailed analysis and review of the financials of GLEN, from 1st January 2014 to date to include but is not limited to the following: We shall analyse in detail all company cash, bank and credit cards with a view to ensuring expenditure is; actually occurred was wholly and exclusively for the purpose of the charity recorded accurately recorded in the correct period This work will entail detailed analysis of all transactions in the above period under headings appropriate to the funding streams the organisation receives. My finding is that a culture developed around the use of credit cards by GLEN staff which amounted to extremely poor practice. However, there was no material gain to any staff member or other individual. It is my understanding that the following events led to this practice developing within the organisation. The policy of issuing credit cards to key staff members commenced in response to a belief that staff members should not be out of pocket or put in a position of funding the organisation, even if on temporary basis, when required to make a payment on behalf of the organisation. In addition, staff members believed if they repaid the organisation for any personal payments made on a company credit card before the organisation had to pay the credit card company then this practice was acceptable. In the minds of staff members, they would pay back the expense before it was incurred by the organisation. It was seen as a system of goodwill. Likewise, staff members have informed me they paid for items and activities from their personal funds for which they did not seek reimbursement. All of this adds up to a specific culture and practice that developed in the organisation. I should also note staff members of GLEN did not receive any daily allowance, honorariums or fees. Any income of this nature accruing to an individual staff member was paid to the organisation. From a procedural perspective, all staff member had to submit an expense claim form each month. However, not all staff members submitted their expenses with the regularity you would wish. At the time of writing this report there are no staff expenses outstanding and all forms have been submitted and are up-to-date. Page 3 of 8

4 When a credit card statement arrived into the office, the accounts administrator would sit down with the relevant staff member and categorise the items appearing on the card under the following categories: - Vouched organisational expenses for allocation to a distinct heading within the online book-keeping system; - Vouched expenses where part belonged to the organisation and part to the individual. The organisational expense was allocated to a distinct heading and the balance was allocated to Other Debtors / Control Account ; - Vouched expenses incurred for reimbursement by another organisation e.g. attending an international conference where travel and so forth were reimbursed after the event. I understand these expenses were allocated to Other Debtors / Control Account ; and - Personal expenses by an individual to be reimbursed to the organisation were allocated to Other Debtors / Control Account. This clearly showed established practice in the organisation. The Board have advised me they were not informed or aware of this established practice. From Board documentation, it is clear Balance Sheets were not included as part of financial documents presented to the Board. At the time of receipt by the organisation of a credit card statement, I understand all transactions were allocated to a heading within the online bookkeeping system. The use of the others Debtors heading was to ensure all personal expenditure and items for reimbursement by external bodies were identified and tracked. No evidence was found of material gain by any staff member or other individual in relation to the use of a company credit card. The report of Donal Ryan and Associates concluded we did not find any evidence of misappropriation of state or donors funds or any fraudulent activity taking place." However, the manner in which the credit cards were used was extremely poor practice. Organisations must treat credit cards in a similar manner to that of a company bank account. Any personal transaction should not be permitted on an organisational credit card and organisations must ensure appropriate authorisation, fraud checks, financial policies and internal controls are in place to prevent any such occurrences. Challenge 2: No Reserve Policy GLEN has minimal financial reserves. Reserves can best be understood as income which is available to a notfor-profit organisation and which can be spent at the discretion of the Board to further any of the not-forprofit s objectives, but which is not yet spent, committed or designated for a specific purpose. I examined the Audited Accounts from 2010 to 2015 and the draft Audit figures for the I note from the accounts the organisation made significant loses over several years. Audited Accounts Operating surplus /-deficit % of Income ,003-33% ,947-7% ,226-6% ,802 14% ,969-11% ,230-13% 2016 (anticipated) - 33,829-4% The reserves presented in the Audited Accounts were largely from restricted or designated funds that were committed for a specified purpose. Upon further probing the deficit reported was due to the stretching of funds received over a longer period than the period for which they were granted. Page 4 of 8

5 It appears that the majority of funds received by GLEN has been for the purpose of project funding for its services and programmes. In particular, the ending of Atlantic Philanthropies funding without securing an appropriate replacement added to the stress on its finances. It is clear from Board documentation the organisation was acutely aware and were actively discussing over the past number of years the financial cliff it faced. It should be noted the Board of GLEN had previously agreed to move towards implementing the Statement of Recommended Practice Accounting and reporting by charities, referred to as SORP for charities. If this process had been progressed the identification of restricted and unrestricted funds may have been highlighted at an earlier juncture. On examination of the Audited Accounts and the supporting material provided to the Board, I can see GLEN managed to continually deliver services and initiatives. However, it was not able to build a general reserve to cushion the organisation s finances against a shortfall or an unplanned event or expenditure. It is at times such as the current one being experienced by an organisation that a reserves policy is critical. Additionally, the organisation has not been able to secure core funding to support its internal capacity. The ability to attract funding to cover an organisation s annual core costs is a challenge shared by many notfor-profit organisations. Core costs include expenditure on the activities and supports necessary to ensure good governance and management of the organisation. Boards, funders and stakeholders need a greater understanding of this challenge and its impact on an organisation. Challenge 3: No Chief Executive and Reduced Staffing Currently, there is no Executive Director (CEO) employed by the organisation. In addition, the organisation is operating under a significantly reduced staffing capacity compared to 12 months previous. On 30 September 2016, GLEN announced the appointment a new Executive Director. GLEN uses the term Executive Director; however, this person is not a member of the Board and would be more appropriately described as a Chief Executive Officer (CEO). In January 2017, the Board, following the direction of the Executive Director restructured the organisation. Two long-standing staff members, each with over 10 years of experience, were made redundant. In addition to other staff losses in 2016 this meant significant organisational memory was lost over the past year. To understand the significant changes to the organisation I have compared the situation in April 2016 and April In April 2016, GLEN had a staff team of eight including an Executive Director, funding through a variety of sources. By end April 2017, GLEN has a staff team of three without an Executive Director. Of the three staff members one has only recently commenced working with the organisation and the other two started with the organisation in 2013 and 2015 respectively. To support its accounting administration GLEN appointed an external bookkeeper to maintain and manage the day-to-day finances. The Report of the Executive Director (referred to as a CEO Report) of 18 April 2017, states the CEO has issued [her] resignation notice and recommended the organization source an interim organizational consultant to guide the board in its current governance process. The Executive Director left the organisation on 21 April Without a named individual leading the day-to-day operations it is difficult, if not impossible, to rebuild critical relationships with stakeholders and funders. Any recovery plan would need a clear leader at the helm. Given the tight financial situation faced by the organisation it is not viable for the Board to recruit a CEO at this time. Page 5 of 8

6 Challenge 4: Human Resources Issue The Board is awaiting the report of a human resources investigator. The Board formally agreed to appoint the investigator on 16 March 2017 to review complaints made by two staff members against another staff member. The two staff members who made the complaints were both on extended sick leave from early One of these staff members has since left the organisation and the second staff member returned to work on 26 April The staff member, against whom the complaints were made, has since left the organisation. On receipt of the investigator s report, the Board will need to take immediate and appropriate measures to respond to the investigator s findings and recommendations (if any). Any human resource issue that continues for a period of time will naturally have an impact on the staff and more broadly on the organisation as a whole. Challenge 5: Future Financial Sustainability The funding streams available to GLEN to continue to deliver ambitious and positive change for lesbian, gay, bisexual, trans and intersex (LGBTI) people in Ireland are under serious threat. I examined the organisation s expenditure and income to-date this year, current commitments and anticipated funding streams. While each programme/service is funded to deliver its activities, it does not provide sufficient funding towards either the governance or management of the organisation. In addition, funders are hesitant about engaging with an organisation while a review is ongoing by the Charities Regulator. I have also identified that for some period of time communications with key funders has been inadequate and inconsistent. This has exacerbated the situation the organisation now finds itself in. Currently, the most significant programmes and services run by GLEN are: Diversity Champions, Ireland's workplace diversity programme assisting employers with the inclusion of lesbian, gay, bisexual and transgender employees; The Workplace Equality Index and Best Places to Work for LGBT Equality and Leadership Awards 2016; The LGBT Helpline provides access to a network of trained volunteers who provide a non-judgemental, confidential, listening support and information service for lesbian, gay, bisexual and trans (LGBT) people as well as their family and friends. The LGBT Helpline operates 7 days a week; and Know Now a community-led free rapid HIV testing pilot, aimed at ensuring getting tested for HIV is as simple, accessible and convenient as possible in Dublin, Cork and Limerick. GLEN operated the Dublin delivery of this pilot up end of April GLEN also provides a range of services, runs a number of initiatives and hosts several online domains. Each of these programmes, along with past work of GLEN, provides an important service to the needs of the community they serve. It is evident over the past number of years decisions were made, by the Board and management, to reduce costs incurred by the organisation. All costs and expenditures were reviewed and cuts made as appropriate. For example, staff salaries were frozen in 2009 and there have been no increases since that date. In the specific case of the then Executive Director he took a number of significant salary cuts from 2009 until his departure in 2016, with his salary reducing from 80,000 to 64,000. Page 6 of 8

7 In 2016, the organisation increased its income with respect to funding designated for specific services and initiatives but not core funding. In addition, in August 2016, there were several funding opportunities identified for the organisation to pursue. Unfortunately, these funding streams have not been successfully secured by the organisation to-date. Identifying and then securing funding takes planning and time. Conclusions At critical junctures, there were warning signs that were not heeded or not fully understood. The environment for not-for-profits is ever changing. What was standard practice for many organisations 20, 10 or even five years ago is no longer acceptable. It is critical a Board has a policy of continual training and supports to ensure its systems of governance meets best practice. I note the Board had undertaken a skills audit and had commenced recruiting new members in early Board members of not-for-profits give of the time and expertise voluntarily. It is important organisations have the capacity to invest in their staff and Board to ensure there is effective governance and compliance. The Governance Code is an excellent resource to assist organisations develop their overall capacity in terms of how they run their organisation. All charities should adopt and implement SORP, the Statement of Recommended Practice accounting and reporting by charities. The Charities Regulator has established a consultative panel to produce Accounting and Reporting Regulations for charities and Guidelines for Charitable Fundraising. These regulations and guidelines, when available, will provide important clarity and guidance to organisations. However, it is with sadness and regret I conclude that GLEN is no longer viable given the challenges it is facing. Organisations that face one or more of the challenges described above may be able to weather them with the support of robust governance, financial policies and clear strategies. However, the fact GLEN is facing five significant challenges simultaneously has aggravated and compounded its difficulties. It is, regrettably, a perfect storm. I had hoped when I commenced my work I would be able to support the Board to overcome the challenges faced by GLEN and to see the organisation flourish once again. I did not anticipate this would be the advice I would give to the Board and I thank the Board for their continued engagement and sincerity in this process. It is clear the organisation is not viable in its current form. At this stage, the most responsible action the Board can take, in my opinion, is to consider a voluntary wind down and transfer of assets and programmes as appropriate. In all my discussions with the Board, the Board has communicated to me that their overarching priority is to ensure the community GLEN serves continues to be served through services, initiatives and programmes and to ensure staff are treated fairly and with respect. Regarding the main programmes and services of the organisation I propose the following: Know Now: GLEN was the Dublin partner for the first year of the pilot up to end of April The HSE advised GLEN given media reports in relation to the disclosure to the Charities Regulator it could no longer fund GLEN to provide this service. The Board of GLEN has worked with the HSE to identify a new partner in Dublin. GLEN fully supports the transfer of the second year of this pilot to that partner and will do all in its power to ensure its success. Diversity Champions: Funding is received through corporate membership. This is a cutting edge programme. GLEN should identify a suitable organisation to continue and grow this programme and Page 7 of 8

8 examine if the staff involved can be transferred (if they wish). In this context, the Workplace Equality Index Awards is also a valued initiative and should be transferred if possible. The LGBT Helpline: LBGT Helpline is funded by the HSE and the National Office for Suicide Prevention (NOSP). The LGBT Helpline employs one staff member and is working towards the establishment of a separate entity to ensure the continuity of this important service. GLEN should continue to support the full transfer of this service into a separate entity. I appreciate the Board has been working on the above and are cognisant of its three committed and dedicated staff members. Decisions taken by the Board will need to include the staff in their considerations. This report is not a comprehensive report of all the issues facing the organisation nor a record of past events. I have made every attempt to ensure that the information contained in this report is accurate and has been obtained from reliable sources. Its purpose is to provide an understanding for the Board of the immediate challenges confronting the viability of GLEN. I submit my report to the Board for consideration and will attend the Board meeting of 16 May 2017 as requested. Page 8 of 8