Arthouse cinema criticised by charities regulator over handling of public donations

Galway Daily news Palas cinema founders on latest tax defaulters list

The Charities Regulator has criticised Galway’s arthouse cinema for reporting no income after 2007 despite receiving charitable donations.

The report by the charities regulator says that donations to the Solas – Galway Picture Palace were instead listed as liabilities, despite that fact that there was no obligation or expectation for the registered charity to repay the donations.

Several other areas of the management of the arthouse cinema by the charity’s trustees were also subject to intense scrutiny by the regulator’s report.

In 2016 the charity came to an agreement to transfer a large portion of its assets and liabilities to a third party operator, Element Pictures.

According to inspectors for the Charities Regulator, trustees didn’t get an independent valuation of the charity’s assets before transferring them, or make a serious effort to keep those assets in the public sector.

The inspectors said, “The trustees’ decision to enter into negotiations with one preferred operator effectively removed any potential opportunity for the asset to remain within the charitable sector, which may have been a motivation of public donation.”

CEO of the Charities Regulator John Farrelly said that poor management decisions undermine public confidence in charities: “It is important that the disposal of charitable assets is done in a way that is transparent, fair and in the best interests of the charity.

“While there is now an arthouse cinema in Galway, the lack of oversight and sufficient competence to manage a capital project of this size evidenced in this case serves to undermine public trust and confidence in the management and administration of charities.”

The renamed Pálás cinema opened this February after years of delays and controversy about the mounting costs of the project.

€9 million price tag of public money for arthouse cinema

Public interest in the Solas, now Palás, cinema rests on the fact that over its ten year development the project received €7 million in funding from public bodies, as well as living virtually rent free.

Galway city council purchased the site for the arthouse cinema at a cost of €1.9 million, and though the council still owns the freehold, a 30 year lease was signed as part of an agreement with Element Pictures, with very favourable conditions.

For the first 25 years of the lease Element Pictures will pay only €1 in rent a year, and for the final five years will pay market value rent, whatever that amount might be at the time.

The inspectors recommended that the regulator review the legal responsibilities of trustees of a charity; Mr. Farrelly has confirmed that a Code of Governance for all Irish charities is being written and will be published later this year.