Reviews of charitable status

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Individual charity reviews

Under the 2005 Act, OSCR has a duty to review entries in the Scottish Charity Register from time to time, as well as to remove any charity that no longer meets the charity test.

Background

These requirements form the basis of our individual reviews of selected charities, which test whether organisations in the Register continue to meet the requirements for charitable status, and look at any issues with the governance of the charities or their compliance with charity law.

We have been carrying out these reviews since 2006. We take a risk-based approach, which means we target those types of charities that we consider may be most at risk of failing to meet the requirements for charitable status. We also review a small number of charities at random.

In addition, through our day to day work, we have granted charitable status to over 5,000 new charities using the same charity test specified in sections 7 and 8 of the Charities and Trustee Investment (Scotland) Act 2005.


Our experience

In January 2011, we issued a report called 'Protecting charitable status: a report on individual charity reviews 2006-11' that explains how we developed our risk-based approach. It covers the history of the programme of reviews (previously called the Rolling Review), explains which groups of charities were chosen, and sets out the results of our reviews so far.

Our report also includes a useful 'Checklist for charity trustees' to help trustees review their own charity to ensure it continues to comply with the law and with our recommendations for good practice.

From 2012, we broadened the basis for individual charity reviews, to ensure that future reviews cover all our regulatory concerns, including charitable status and governance. We review and update our assessment of which types of charities we should review regularly, taking into account newly identified areas where issues may arise - for instance in how charities comply with the new Equalities Act 2010.

Moving forward

Based on our experience, we do not believe that we need to subject a large number of charities on our Register to active individual reviews, although we do have powers to review any charity. All Scottish charities must report to us annually and provide us with certain financial information, which varies depending on the size and complexity of the charity.

Our individual charity reviews are one part of our work to protect charitable status, which also includes ad-hoc and routine monitoring work and our inquiries and investigations. We communicate regularly with charity trustees to explain lessons we have learned from reviews and help them ensure that each charity continues to fulfil its charitable mission and protect its charitable assets.

We continue to publish a list of charities under review.

OSCR's review of fee-charging schools - updated 24 July 2014

We have confirmed 39 fee-charging school charities that will be reviewed as part of our ongoing work.

On 11 January 2013 we announced our decisions on 13 of the 39 schools.  We determined that 10 of the 13 met the charity test and retain their charitable status.  Three, however, failed to meet the charity test due to insufficient mitigation of high fees or to otherwise widen access to the benefit they provided.

On 3 May we announced our decisions on a further six schools, five of which met the charity test.  One failed to meet the charity test, for the same reason set out above.  On 3 October 2013, we announced a further nine decisions, where eight schools met the charity test and one failed.  On 24 January, we announced our decisions on a further six schools, all of which met the charity test.

On 29 April 2014 we confirmed that one school issued with a direction on 3 May 2013 had complied with our direction and met the charity test.  On 19 June 2014 we confirmed that two schools issued with directions on 10 January 2013 and 1 October 2013 had complied with directions and met the charity test.  On 24 July 2014 we announced decisions on two further schools.

Read the short reports on all the schools that met the charity test.

Read the section 33 reports on all the schools that failed to meet the charity test.

The charity test in Scotland


The charity test set out in Scots law requires that a charity:

•    must have charitable purposes
•    must not use its assets for non-charitable purposes, and
•    must provide public benefit.

When assessing whether a charity provides public benefit, OSCR must look at whether the charity's activities involve any private benefit, or disbenefit to the public; and whether there is any undue restriction on gaining access to the benefit the charity provides.

The area of concern with fee-charging schools is whether the fees they charge unduly restrict the access of potential pupils to the educational benefit the charity provides.  Since 2007, fee-charging schools have been a high priority for OSCR's programme of individual reviews. We have already assessed 26 of these charities, along with other high priority groups, some 66 charities in total.

For further details on our approach, see our report Protecting Charitable Status published in 2011.  This contains reports on our reviews of schools that were undertaken up to that point, 13 in total.

While the majority of those schools were able to show that they provided public benefit and met the charity test, four of them failed on the grounds of public benefit and one on the issue of Ministerial control.  They were directed by us to take action to ensure that they would pass the test within a specified timescale.  All four charities where public benefit provision was an issue did so through a combination of measures such as increasing means-tested bursaries to mitigate the effect of the fees they charge, and increasing the amount of educational benefit they provided without charge - for example, the use of school facilities or partnerships with state schools and local groups.  All five schools therefore continue as charities.

While these reviews showed that it is entirely possible for a fee-charging school to comply with public benefit requirements, concerns about undue restriction were borne out in a significant number of cases.  This type of charity therefore continues to be a high priority for our proactive review activity, along with other categories such as charities working overseas and those affected by the requirements of the Equality Act 2010.

Our approach for the current set of reviews reflects our experience, lessons learned, and feedback from the 13 reviews we have already carried out, and our routine work in assessing the status of over 5,000 new charities since 2006.  It also reflects the fact that the public benefit requirements of the Charities and Trustee Investment (Scotland) Act 2005 have been in force for over six years, and that all charities should be complying with them.  Our aim through a fair, consistent and proportionate process is to ensure that over the next few years the public can have confidence that the requirements of charitable status are being met, and that the uncertainty for charities within this sector around public benefit can be resolved going forward.

We examined the information which we already have about the schools, by examining the Annual Reports and Accounts which they submit to us.  This reduces the need for new information gathering and shortens the assessment process.  Having confirmed the schools under review, we will work on a phased basis with them to fill in any gaps in information, and reach individual decisions on whether they meet the charity test.

We continue to liaise with stakeholders and umbrella bodies - in this case the Scottish Council for Independent Schools.

Our aim with these reviews is to underpin the public's confidence in charities, by showing that we ensure that the requirements of charitable status are being protected.   As with all our work, we wish to achieve the widest possible compliance with the requirements of charity law and any formal measures we take, such as issuing directions to charities which do not meet the charity test, will have this as their aim.

We regularly update the full list of charities that have been reviewed to date.