The Charities and Trustee Investment (Scotland) Act 2005
- The main legislation governing charities in Scotland is the Charities and Trustee Investment (Scotland) Act 2005 (“the 2005 Act”). In particular, the 2005 Act established the “Office of the Scottish Charity Regulator” (“OSCR”). OSCR’s general functions are:
- to determine whether bodies count as “charities”;
- to keep a public register of charities (“the Scottish Charity Register”),
- to encourage and monitor compliance by charities with the provisions of the 2005 Act;
- to identify and investigate apparent misconduct in the administration of charities; and
- to give information or advice to the Scottish Ministers on matters relating to OSCR’s functions.
The Charities (Regulation and Administration) (Scotland) Bill (“the Bill”)
- In November last year the Bill – the Charities (Regulation and Administration) (Scotland) Bill – was introduced to the Scottish Parliament to make various changes to the 2005 Act. The changes are more evolutionary than revolutionary. Nevertheless, they are extensive.
- That is demonstrated by the fact that there is published along with the Bill a “Keeling schedule” which is rarely done and only in cases where the proposed amendments to an Act are extensive. The Keeling schedule Keeling schedule (parliament.scot) shows the 2005 Act with the insertions proposed by the Bill in red and deletions proposed by the Bill in blue and strikethrough. A quick glance through the schedule shows there is a great deal of red and a fair amount of blue and strikethrough.
- This note outlines of some of the key changes – keeping in mind however that the Bill still has some way to go in the Parliamentary process before it becomes an Act.
Some of the key changes proposed in the Bill
- A requirement on OSCR to publish the statements of account for all charities in the Scottish Charity Register;
- Requirements on OSCR to include charity trustee names in the Scottish Charity Register and to create a publicly searchable record of removed charity trustees;
- Updating the criteria for the automatic disqualification of charity trustees;
- Providing OSCR with a new power to issue positive directions to charities;
- Removal from the Scottish Charity Register of unresponsive charities that fail to submit statements of account;
- A power for OSCR to conduct inquiries into former charities and their charity trustees;
- A requirement for de-registered charities’ assets to continue to be used to provide public benefit;
- Clarification of existing provision, to improve speed and efficiency regarding OSCR’s powers to gather information for inquiries; and
- The creation of a record of charity mergers and provision for the transfer of legacies.
Further comment on two of those proposed changes
- The publication of statements of accounts
- All charities in Scotland are already under a legal duty to prepare annual statements of account, and to have these independently examined or audited, before sending the statements to OSCR. But there is currently no legal requirement for statements of account to be published on the OSCR website although charities are required to supply a copy to anyone who asks.
- Nevertheless, as a matter of practice, OSCR currently publishes copies of statements of account for charities that have an annual income of more than £25,000, and for all Scottish Charitable Incorporated Organisations (SCIOs) regardless of their income. OSCR also includes links to statements of accounts published directly by the charities, or to other regulators that already publish the information such as Companies House.
- The approach taken in the Bill goes further so as to ensure the statements of account sent to OSCR are easily accessible on the OSCR website by anyone wishing to access them. However, a guarantee is built into the Bill which ensures that it will never be necessary to include information which is exempted from having to be included in the Register on safety and security grounds.
- Requirements on OSCR to include charity trustee names in the Scottish Charity Register
- At present the law only requires the Register to set out the principal office of the charity or (where the charity does not have such an office) the name and address of one of its trustees.
- And, at present, OSCR only gathers information on trustees at the start of the life of a charity and afterwards through statements of account submitted annually. The contact details provided in the trustee declarations made when a charity starts are not subsequently updated, and the statements of account need only provide trustee names but not contact details.
- The Bill provides that each charity’s entry in the Register must include the names of each of its charity trustees. The idea is that having such information publicly available will increase transparency and accountability, both key drivers of public trust in the charity sector. It also brings information about Scottish charities up to the same standard as is available in other parts of the UK.
- But, where charities or trustees have concerns regarding the publication of names or other details, the Bill provides a mechanism for them to request that information is withheld. OSCR will consider such requests and, if refused, there are channels for review of these decisions.
Note: This material is for information purposes only and does not constitute any form of advice or recommendation by us. You should not rely upon it in making any decisions or taking or refraining from taking any action. If you would like us to advise you on any of the matters covered in this material, please contact Lauren Booth: email Lauren@mitchells-roberton.co.uk