It explains what we take into consideration when deciding if an organisation can become, or continue to be, a charity in Scotland.
How to use this Guidance
We have split our Guidance into sections to help you find parts most relevant to you. Key phrases within a section are shown in bold blue type and information most relevant to organisations that want to become charities highlighted with the new applicant’s icon:
The glossary provides you with further information, definitions and descriptions of some key terms. We’ve highlighted these key terms in bold purple type. Clicking on these terms will take you straight to the glossary or the relevant section of the Guidance
This Guidance doesn’t tell you about the process of becoming a charity or what help is available from other organisations.
If you are thinking about becoming a charity, you should read our Becoming a Charity in Scotland leaflet or look at our becoming a charity webpage first.
Who is this guidance for?
The Guidance is for:
- the charity trustees of existing charities
- organisations that want to become charities
- professionals who advise charities and organisations wanting to become charities.
This Guidance is about how we, the Scottish Charity Regulator, interpret and apply the charity test. It explains what we take into consideration when deciding if an organisation can become, or continue to be, a charity in Scotland. We also identify some other matters charity trustees should be thinking about to make sure that their charity continues to meet the charity test set out in the Charities and Trustee Investment (Scotland) Act 2005 (referred to in this Guidance as the 2005 Act).
This purpose covers directly relieving poverty, preventing it and addressing its causes.
We take a broad view of ‘poverty’ and recognise that poverty is relative to the economic and social context. The causes and consequences of poverty are complex and can overlap with other charitable purposes.
This purpose covers training, research and broader education in the development of individual skills and understanding.
Education increases learning and knowledge among members of the public. Generally, education includes both teaching and learning, and the provision ofinformation in a structured and neutral way, or training in a particular subject.
Education can be provided formally by schools, colleges and universities or it can be more informal, taking place in the community or online.
This purpose involves advancing serious and coherent beliefs in gods or spiritual principles, and in the worship of them.
Organisations can advance religion through activities such as seeking new followers for their systems of belief, helping people to practise their beliefs, raising awareness of their systems of beliefs, and undertaking duties and activities such as missionary and outreach work.
(including the prevention or relief of sickness, disease or human suffering)
This purpose covers advancing physical and mental health, conventional medicine and complementary or alternative therapies. Where non-conventional methods are used in the diagnosis, treatment or cure of health conditions we may ask for additional information.
This purpose focuses on saving people whose lives are in danger, and on protecting life. Activities in pursuit of this purpose might include the provision of rescue services and training in first aid or other life saving techniques.
This heading includes a number of purposes which focus on benefit to the community rather than the individual, by helping people to be active citizens, promoting voluntary organisations and networks, or by meeting the needs of particular communities or working to regenerate them.
These purposes include the promotion of civic responsibility, volunteering, the voluntary sector or the effectiveness or efficiency of charities, and rural or urban regeneration.
This section covers four purposes which we describe separately, though in practice they may overlap:
Advancement of the Arts: this can cover a wide range of imaginative, creative and expressive activities.
Advancement of Heritage: this can cover a country’s local or national history and traditions, and the preservation of historic land and buildings.
Advancement of Culture: focuses on the identification, preservation or celebration of the distinctive character of a society, or group within a society.
Advancement of Science: covers a range of scientific and technological subjects including academic disciplines, research, exploration, practical experimentation and scientific debate.
Although they are linked in the 2005 Act, a charity does not need to advance all four of them to have this charitable purpose. For example, a charity may only advance science.
This purpose focuses on advancing public participation in a sport that involves physical skill and physical exertion. It is not enough just to promote sport. The 2005 Act says that to be charitable, public participation in sport must be promoted and that the sport must involve physical skill and physical exertion. An organisation with this purpose must be able to demonstrate that it provides opportunities for a wide range of participants.
The provision of recreational facilities, or the organisation of recreational activities, with the object of improving the conditions of life for the persons for whom the facilities or activities are primarily intended.
This purpose covers a wide variety of activities, recognising that providing facilities (such as buildings) or organising activities that give people the opportunity to make constructive use of their leisure time, can be charitable.
The benefits can be available to the general public or targeted at people who might be disadvantaged in their ability to take part in recreational activities.
This purpose covers supporting the victims of human rights abuse, raising awareness of human rights, and securing the enforcement of human rights law. It also includes the resolution of conflicts on a local, national or international level and the promotion of restorative justice and mediation or reconciliation between individuals, organisations, authorities or groups.
This purpose focuses on actively promoting harmony and the lessening of conflict between people from different races, religions or belief systems.
This purpose covers the elimination of discrimination and the promotion of diversity in society.
This purpose focuses on protecting or improving the environment and can include:
- the preservation and conservation of the natural environment
- the promotion of sustainable development
- the conservation or protection of wildlife in general or of particular species, habitats or areas
- the protection of green spaces in a particular area
- sustainable creation and use of energy and other resources.
This purpose involves helping people who are in need because they are disadvantaged compared to others. Charities may benefit peopleaffected in this way by providing care, support, practical assistance or accommodation to eliminate or reduce the disadvantage.
This purpose focuses on the prevention of cruelty to animals or the prevention or relief of suffering by animals, rather than the conservation of a specific animal or species.
This purpose recognises that economic circumstances and social needs are constantly changing and that charitable purposes may evolve in future as charities find new ways of meeting those needs and providing public benefit. It gives us flexibility to recognise purposes that resemble an existing charitable purpose but which are novel or different in some way.
This is not a freestanding purpose on its own, nor is it a catch all to allow charities to pursue any other purpose that they may feel is relevant. It is for us to decide if a particular purpose is analogous to one of the other 15 charitable purposes set out in the 2005 Act.
Under this purpose, the advancement of any philosophical belief (whether or not involving belief in a god) may be analogous to the advancement of religion.
To pass the charity test an organisation must:
- have only charitable purposes, and
- have activities which provide public benefit in Scotland or elsewhere.
To see whether an organisation provides public benefit or (in the case of applicants) intends to provide public benefit, we look at what it does or plans to do to achieve its charitable purposes. Having charitable purposes will not on its own mean that the charity test is met; an organisation’s activity must also provide public benefit.
When we decide if an organisation provides public benefit, we must look at:
- whether anyone benefits from the organisation as a private individual other than as a member of the public (this is private benefit)
- how this private benefit compares to any public benefit the organisation provides.
If it appears that the organisation has been set up wholly or mostly for the private benefit of an individual or group of people, it is unlikely that it will pass the charity test.
Disbenefit is the opposite of benefit and we take it to mean the same as detriment or harm. We look at whether what an organisation does will cause any disbenefit to the public or any section of the public. If the disbenefit outweighs any benefit an organisation provides, it may fail the charity test.
Most organisations put limits on who can benefit from their activities. Most of the time this will not stop an organisation providing public benefit. We have to look at the organisation's purposes and decide if any restrictions are unreasonable, unjustifiable or unlawful.
When we decide if an organisation provides public benefit, we have to look at whether it restricts access to the benefits it provides and, if it does, whether the restriction is undue.
An organisation will fail the charity test if its governing document allows it to use any of its property (assets) for a purpose that is not a charitable purpose under the 2005 Act. This applies during the lifetime of the charity and when the organisation is being wound up.
If an organisation’s governing document says that government Ministers can control what the organisation does or tell it what to do, then usually that organisation cannot be a charity, even if it has charitable purposes and provides public benefit.
This applies to both Scottish and UK Ministers, but Scottish Ministers may disapply this exception (see full detail).
An organisation set up to be a political party or to advance a political party cannot become a charity.
This does not stop charities campaigning to further their charitable purposes.