Issue 1
OSCR Quarterly
– OSCR’s Quarterly E-Newsletter for Scottish Charities
Issue 1 : May 2006
Headlines
Click on the headlines below to take you to the relevant articles or just scroll down the page to read them all ....
- Scotland’s First New Charity
- Major event launches OSCR
- Charity Law takes effect
- New law – key points
- Scottish Charity Register reaches 20,000
- New OSCR Guidance
- Meet the Regulator
- New OSCR
- Trustee Duties
- Have your say
Scotland’s first new charity
OSCR hit the ground running with the first new charities granted their status within two weeks of the commencement of the Act.
First up was the new Clatto Community Woodland, which was created to acquire woodland on Clatto Hill in Fife and create a new public amenity. The charity intends to work with local community groups and rural businesses to encourage understanding and appreciation of the environment of Clatto Hill and secure it for future generations. Woodland walks are being organised with Fife Council, and school visits are planned to encourage participation in outdoor and environmental activities. Pitlessie Scouts are helping to make seats and wooden signage for the area.
There had been claims that, with the transition between HM Revenue and Customs, which ceased granting status in March, and OSCR, which assumed such powers in April, that a period of ‘months’ would ensue before new charities were confirmed. However, as OSCR and HMRC had addressed this issue well in advance, a joint transition arrangement was established where the new regulator considered existing applications in readiness for the new regime.
As a result, there has been a seamless transition in the transfer between the two organisations and further new charities are to be announced in the coming few weeks.
Major event launches OSCR
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Nearly 900 representatives of Scotland’s 20,000 charities attended the day-long conference – The Future for Scottish Charities – held at Edinburgh’s Corn Exchange, with Deputy Minister for Communities, Johann Lamont, delivering a key note speech.
All of OSCR’s senior management team and staff participated in the event, as well as OSCR’s newly appointed Board. OSCR’s Chair, John Naylor, welcomed delegates and chaired the event, as well as setting the scene for the day and outlining the regulator’s priorities.
Chief Executive Jane Ryder outlined the regulator’s powers and priorities, new accounting practices required under the Act, and the new Charity Test. Speakers also included a serving charity trustee, a specialist solicitor who advises charities, a specialist charity accountant and the Chair of the Institute of Fundraising in Scotland, Fiona Duncan.
OSCR is producing a post-conference report, available to download from its web site next week. In the meantime, you can download all the presentations from the conference, as well as John Naylor’s speech and Jane Ryder’s speech.
OSCR’s Chief Executive Jane Ryder, said that the conference was the culmination of two years’ preparation. ‘This marks the transition to a new legal landscape which will reinforce public confidence and create a more appropriate, modern environment for the operation of charities in Scotland,’ she said. ‘For the first time ever, Scotland has legislation dedicated to charities. The new Act places specific responsibilities on charities and we are keen to ensure that these are explained and understood from day one.’
Deputy Communities Minister Johann Lamont said:
‘The Charities Act provides a new system of regulation and gives reassurance to the public who expect that the way in which our charities operate is trustworthy and transparent. The Executive and OSCR have been working with the voluntary sector in Scotland to prepare for this day. As the independent regulator, OSCR will now be taking up its powers to determine and grant charitable status and I look forward to seeing charities thrive in the new environment.’
New charity law takes effect
The Charities and Trustee Investment (Scotland) Act 2005, the main provisions of which came into effect from 24th April, govern how Scotland’s charities are regulated and run, placing new responsibilities on charity trustees and establishing a new legal definition of ‘charity’.
All new charities must meet a new two-part Charity Test, showing that they have one or more charitable purposes, and provide public benefit. Charities must also seek consent from OSCR for proposed changes such as amendments to their charitable purposes or a proposed change of name.
The aim of the new legislation is to reinforce public confidence in the charity sector and create a more appropriate, modern environment for the operation of charities in Scotland.
The Act establishes OSCR’s independence from Ministers and confers a new status as a Non-Ministerial Department (NMD). OSCR’s new six member Board, headed by its Chair, John Naylor, was appointed in March. The non-executive Board will meet quarterly and is responsible for OSCR’s policy direction.
OSCR was established as an Executive Agency in December 2003 and in the past two years has worked with other regulators, Scottish charity groups, HM Revenue and Customs and the Scottish Executive to ensure a seamless transition to the new regime.
New law – key points
The Charities and Trustee Investment (Scotland) Act 2005 is the first dedicated legislation outlining the responsibilities and regulation of charities in Scotland. Its key points are as follows:
- A new Office of the Scottish Charity Regulator, OSCR, is formally established with powers to monitor and regulate Scottish charities.
- A comprehensive Scottish Charity Register, kept and maintained by OSCR, lists Scotland’s 20,000+ charities including name, principal address, charitable purposes, and annual income. This will also state whether any Notices or Directions have been given to a charity by OSCR.
- A new legal definition of ‘charity’ is established – an organisation that is entered in the Scottish Charity Register.
- It will be an offence for an organisation to ‘hold itself out to be a charity’ if it is not entered in the Scottish Charity Register.
- There are 16 charitable purposes defined in the Act, for example, ‘the advancement of health’; and ‘the advancement of human rights’.
- A new Charity Test will be applied by OSCR to all new applications for charitable status. The Charity Test will over time be applied to all existing charities currently on the Scottish Charity Register – the ‘Rolling Review’.
- To meet the Charity Test, a prospective charity must have one or more charitable purposes; and must provide public benefit.
- All charities on the Register must submit an Annual Return form to OSCR, accompanied by a copy of their most recent accounts. Charities with an annual income greater than £25,000 must submit more detailed information by completing an annual Monitoring Return.
- Where a charity wishes to change its name, change its purposes, amalgamate with another body, or wind itself up, it must seek OSCR’s consent.
- OSCR will monitor charities on an ongoing basis and has powers to intervene or conduct investigations in response to public complaints about alleged misconduct or mismanagement.
Scottish Charity Register reaches 20,000
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The New Farm Loch Playgroup, located in Kilmarnock, was named by the regulator as the 20,000th charity, and provides nursery, pre-school and after school facilities for 37 children in partnership with East Ayrshire Council.
Administrator Brenda Butler welcomed the news and said that it marked an important year for the playgroup, as it celebrates its 30th anniversary in September. ‘We were thrilled to be told that our charity was the one that saw the Register reach 20,000,’ she said. ‘It’s a great start to the build up to our anniversary celebrations.’
‘We see the arrival of OSCR and the new regulations as a good move for charities,’ she added. ‘It will help charities to better understand what’s required of them, as well as allowing them to show the public that they are genuine in what they do.’
OSCR’s Chief Executive, Jane Ryder, said that the regulator had originally estimated a total of 18,000 charities. ‘It is easy to understimate OSCR’s achievement in establishing for the first time, a comprehensive list of charities, as information prior to our establishment was extremely scarce,’ she added. ‘There was no central register and even the exact number of charities was unknown. This demonstrates how the new regulatory regime will reinforce public confidence and create the environment in which charities can flourish.’
New OSCR guidance
The Act places new responsibilities upon charities, their trustees and professional advisers, to ensure compliance. OSCR has published new Guidance on key aspects of the legislation, and this will be developed further over coming weeks. OSCR as regulator, cannot ‘micro-manage’ charities, nor provide specific advice tailored to individual needs, but general information will be produced as required.
Meeting the Charity Test outlines OSCR’s interpretation of the requirements of the Act relating to new applications for charitable status and to existing charities who are equally required to meet the charity test.
Consents and Notifications outlines circumstances under which charities must inform OSCR about changes or seek consent, as well as the documentation required and procedures involved.
The new Guidance backs up existing information already prepared by OSCR regarding the operation of Cross-Border Charities.
Guidance on the following topics is currently being prepared and OSCR will email you to advise you when these are available:
- Overview of the New Regulatory Regime
- Reviews and Appeals
If you have a general query, or would like to give feedback on OSCR’s guidance, please email info@oscr.org.uk
Meet the Regulator
Since the New Year, OSCR has reinforced its ongoing contact with charity groups and representative bodies established during the consultation exercise which took place in November and December 2005.
In early March, OSCR was represented at the Perth and Kinross CVS Conference held in Perth City Hall, and on 31st March Communications Officer David Perkins spoke at the Isle of Skye CVS Funding Forum held in Kyleakin. David Perkins also gave a presentation at a meeting of ACCA Tayside in April. Chris Smith and David Perkins also attended an awareness-raising event organised by Moray VSO on 17 May in Elgin.
This ongoing communication is set to continue through May and June: OSCR participated in the ICAS Charity Conference on 10th May and is to host a ‘Help Desk’ seminar from 2.30pm to 4.15pm on 19th June at The Gathering, SCVO’s annual event, held at the SECC in Glasgow. If you’re at the event, please drop by and raise any issues or questions face to face with OSCR’s team. It would be helpful to know in advance what you would like to talk to us about so that we can make sure we are adequately staffed. Please e-mail us.
Also at The Gathering, OSCR’s Chief Executive Jane Ryder is to particpate in a panel session from 2.30pm on 20th June, organised by solicitors Maclay Murray & Spens. The title of the panel session is: ‘Benefiting the Public? The New Landscape for Charities and the Charitable’.
OSCR’s consultation exercise at the end of 2005 proved highly successful and generated a great deal of feedback. At six events we met with over 1,200 representatives of Scotland’s charities. You can read a summary of the consultation here.
The (new) Office of the Scottish Charity Regulator
A landmark month for OSCR, the Scottish charity regulator, has continued, with a move to new offices in Dundee. The regulator has relocated within the city to occupy new offices at the Waterfront, shared with other organisations such as the Care Commission and the Scottish Social Services Council.The move to Quadrant House illustrates the increase in OSCR’s responsibilities and team since its establishment in December 2003. From a team of three, chief executive Jane Ryder and two investigators from the Crown Office, OSCR has steadily developed to employ a full time staff of 36, responsible for considering new applications for charitable status, monitoring existing charities and granting consent to proposed changes.
There was some slight disruption to our phone lines and email over the two day period – thank you for bearing with us. View a map of our new location.
Trustee Duties
The Act contains provisions covering charity trustee duties and remuneration for charity trustees that came into force in April.
This article gives an overview and touches on some implications that charity trustees may need to consider. More detailed guidance on the duties of charity trustees will be published by OSCR on its website in the autumn.
Who can be a charity trustee?
Charity trustees are people that have general control and management of the administration of the charity. They will be members of the group or board that has overall responsibility for the charity and might be known by a number of different names, for example the ‘Executive’; or ; ‘the Management Committee’; or ‘the Board of Directors’.
A charity’s constitution will specify who is eligible to be elected or appointed as a charity trustee. However, under the Act the following people are disqualified from acting as charity trustees:
- Someone with an unspent conviction for dishonesty, or an offence under the Act
- An undischarged bankrupt
- Someone who has been removed under either Scottish or English law or the courts from being a charity trustee
- A person disqualified from being a company director
Charities will need to make sure that people they want to appoint, or nominate for election, are not disqualified from being a charity trustee.
What are the key duties of trustees?
The Act lays down the following four key duties that must be complied with by trustees carrying out their functions:
- Act only in the interests of the charity rather than any other person or organisation. Where a conflict of interest prevents a charity trustee from putting the interests of the charity first, they must disclose the conflicting interest and take no further part in any discussion or decision making on that issue
- Ensure the charity operates in a way that is consistent with its charitable purposes laid down its constitution
- Act with the care they would exercise if they were looking after someone else’s affairs
- Ensure the charity complies with the provisions of the Act and any other relevant legislation
The duty to act only in the interests of the charity has particular implications for charity trustees who are appointed by another organisation, or who are also in control of a connected organisation. They must now either put the interests of the charity before the interests of the organisation that appointed them, or not take part in any discussion and decision taking even if the organisation that appointed them would want them to.
Remuneration of Trustees
Because charity trustees have to act in the interests of the charity, any personal benefit they receive from the charity has to be treated with some caution.
The Act states that, unless they were entitled to receive remuneration by virtue of an authorising provision in their constitution which was in force on 15 November 2004, an order of the court or an enactment, charity trustees may only receive remuneration from the charity if:
- The charity trustees are satisfied that it is in the interests of the charity for the charity trustee to provide a service to the charity for a particular amount
- That this amount is reasonable
- There is a written agreement between the charity trustee and the charity that sets out the maximum amount of the payment.
- The majority of charity trustees remain unpaid
- The constitution does not expressly forbid payments to trustees.
Charities that have trustees who do receive remuneration, either as a payment or as benefit in kind, will have to consider both whether it is in the interests of the charity from them to receive that benefit and whether the amount is reasonable.
If they agree that the payments are in the interests of the charity and the amount is reasonable, then, as long as the majority of trustees remain unpaid, a written agreement will need to drawn up setting out the maximum amount to be paid.
Have your say
Have you found OSCR’s e-newsletter useful? What information would you like to see?
OSCR is committed to ongoing improvement – we’d especially welcome your views on our e-newsletter, our new web site and our guidance publications.
Please let us have your comments at info@oscr.org.uk. If you have colleagues whom you’d like to include in our circulation, please advise them to subscribe via info@oscr.org.uk
The newsletter is intended to be a quarterly publication – the next issue will therefore be sent out week commencing 15th August. However, if in the meantime any news or issues arise that require rapid distribution, we will issue information on a ‘spot’ basis.
