Religious Organisations Stepping Out of Governance

Over the past 20 years, many Religious organisations in Ireland have adapted to changed times by separating out particular works and ministries from their Religious Congregation or Order into standalone legal entities. Many of those separate entities are run by third parties, while those in religious life continue to act as either charity trustees or members, with all the responsibilities that attach to those positions. In some instances the Religious organisation will still be in ownership of the main property asset from which the work of ministry is carried out. Religious organisations are now looking at whether they should step out of these roles as charity trustees/members and pass the governance or ownership interest to others.

We outline some key considerations to help those in Religious organisations navigate this complex transition while also preserving their legacy.

What you need to know

• Many Religious organisations are considering “stepping out” of direct governance or ownership of services they originally established.
• Preserving the founding ethos ensures institutional values continue under lay leadership and trusteeship.
• Compliance, property, and financial management remain essential to protect legacy and reduce risk.
• If required, long-term oversight mechanisms, such as advisory boards, PJPs or reserved powers, may help balance continuity and operational autonomy.

Religious organisations have a long history in Ireland of stepping up to provide vital services, in:

• Healthcare
• Education
• Emergency relief, and
• Other charitable services

Some Religious organisations transferred the delivery of these ministries to separate entities, legally housed outside of the religious way of life governed by canon law. Religious organisations were, understandably, hesitant to completely hand off a service that they had founded, without having some element of control. As a result, many of these services are now delivered by lay people within separate service companies. However, most services continue to be under the trusteeship of members of the founding Religious organisation, either by Religious acting as charity trustees (also known as directors) on the boards of these service companies, or by acting as the members (exercising an ownership interest) of these service companies. In some cases, the service company Constitution will also make express reference to the founding Religious organisation and give that organisation a role or rights or privileges regarding the service company.

Time has moved on. Many of these separations of ministries into service companies have proved successful, as the services first established by the Religious continue to be delivered and grow. Numerous Religious organisations are again facing into a period of transition. With the numbers in Religious life continuing to decline, and increasing regulatory compliance and governance obligations, Religious organisations are looking again at these ministries and the ties that they created between them and the Religious organisation, and asking:

• Do we continue to need this tie?
• Can we continue to deliver the governance we committed to?
• Should we now step out from whatever role we still have regarding these services?

This decision is not simply an operational one. It is a significant legal, governance and potentially “ethos” shift for both the Religious organisation and the service provider. Many service providers have been under religious trusteeship and oversight for decades, and some even predate the founding of the Irish Free State.

For the purposes of this article, we are assuming that the ministries in question have:

• Already been separated out from the Religious organisation and sit within a separate legal entity/services company
• A lay management team, and
• The Religious organisation continues a role in trusteeship or membership or via express provisions in the service company Constitution

However, should any Religious organisation wish to get advice on the first phase of this discussion – the separating out of certain ministries - please contact a member of our Charity and Not-for-Profit team.

We outline some key considerations for Religious organisations considering stepping back from these ministries.

1. Preserving the founding ethos

Religious organisations have shaped their ministries with values and identities that remain central to their character. Some Religious organisations will want to ensure that these principles are not lost but clearly embedded in the new framework under new trusteeship. Other Religious organisations will not wish to impose any ongoing obligations pertaining to ethos.

Tools such as ethos charters, use of the Canonical public juridic person model, binding agreements, and reserved powers around key decisions can safeguard the founding mission while allowing lay leaders, members and charity trustees the freedom to manage and govern effectively. The challenge is striking the right balance between independence and legacy, ensuring the institution remains true to its origins while adapting to modern governance demands. Religious organisations might like to retain an engagement with the particular institution by formally visiting, engaging with the service users and spreading the word regarding the history of the foundation of the ministry. This frees those in Religious life from the demands and responsibilities of trusteeship. It also gives those individuals time to concentrate on their original mission of advancing religion within their daily lives, in accordance with their canonical rule of life.

Some Religious organisations may wish to maintain a greater degree of oversight to safeguard their mission and values. It is important to ensure that this type of oversight does not result in the individual religious members being a “shadow” charity trustee, a concept introduced by the Charities (Amendment) Act 2024, which would by default result in them having the same obligations and responsibilities as if they were a charity trustee. However, if properly set up and managed, certain arrangements can strike a balance between continuity and autonomy, helping to ensure the institution remains faithful to its founding ethos while operating effectively in a modern context

2. Regulatory and compliance obligations – finding the right successors

Schools, hospitals, and charities in Ireland are subject to some of the most demanding regulatory frameworks in the State. Education law, healthcare regulation and charity governance each impose significant compliance requirements, with oversight from multiple statutory bodies.

Religious organisations have been involved in, and very often led in, the governance of these institutions for generations. It is important that before retiring as charity trustees or members, stepping out from these governance obligations, and if applicable divesting of property to the services company, Religious organisations are satisfied that proper structures are in place to ensure continued compliance. It is key that people with the appropriate skills, commitment and understanding are appointed. Ensuring that new governance structures are fully compliant, and lay charity trustees or members are properly trained and supported to meet their legal duties, is essential.

3. Managing property and financial interests

If the service in question operates from a property owned by the Religious organisation, this ongoing relationship and use should be carefully considered, post the Religious stepping out from trusteeship. For instance, should the property continue to be leased? If so, should the terms of the lease be changed? Or could the property be given or sold to the service provider? Or might the Religious organisation be in a position to allow the provider pay for the freehold in instalments, so that it has the security that ownership of a freehold provides, but does not have the immediate full cost, which in most instances would be impossible to take on.

Similarly, if the Religious organisation has been funding or part-funding the delivery of the service, this must be carefully considered. The same applies where the Religious organisation has other assets located within the property from where the service is being delivered. These ongoing links and engagement must be carefully taken into account where the Religious plan to retire as charity trustees and step out of governance.

Conclusion

Retiring as charity trustees or stepping out of ownership or of a bespoke role in a services company is a significant decision for any Religious organisation. This decision also has operational, cultural, financial and strategic implications. Thoughtful planning, clear decision making and structured governance will help ensure that the institutions established and nurtured by the religious for generations will continue to thrive, sustaining their legacy while adopting a sustainable model for the future.

For more information and expert advice, please contact a member of our Charity and Not-for-Profit team.

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The content of this article is provided for information purposes only and does not constitute legal or other advice.