Charity law consultation 2019

The Scottish Government are consulting on proposed changes to Scottish Charity law. 


This page links to the consultation and to background information on Scottish charity law. Scottish Government consultation link. If you want more information about the consultation you should contact Scottish Government directly at Thirdsector@gov.scot

The sections below set out what changes OSCR has requested to the law and why. 

Background information

What changes has OSCR requested? 

Promoting greater transparency and accountability

Sections 1 and 2 focus on transparency and accountability in the charity sector. We want public trust in charities to remain high and as Regulator we want to support this through our work.

Our research consistently shows that public trust in charities is closely linked to:

  • understanding what the charity has achieved
  • knowing that a charity is well run
  • knowing that a charity is independently regulated
  • knowing how much of donations are spent on the cause. 

We think that these proposals will help all charities to demonstrate these things to the public.

Enhancing trust through stronger enforcement powers

Sections 3 to 9 identify areas where our practical experience has shown gaps in our powers. To be able to take quick and decisive action where necessary is vital to maintaining public trust in the charity sector and its regulator.  

Streamlining operations and introducing efficiencies

Section 10 seeks to clarify the law and OSCR's powers of regorganisation. 


  • What’s the issue?

We publish the annual reports and accounts of all charities with an income of £25,000 or more and all Scottish Charitable Incorporated Organisations (SCIOs). This amounts to around half of the 24,400 charities registered in Scotland. All personal information is redacted (blacked out) before the accounts are published, to satisfy data protection requirements.

If a charity is also a company or a Registered Social Landlord we link to the Companies House website or Scottish Housing Regulator where accounts are published in full.

For the majority of cross-border charities, those registered with the Charity Commission for England and Wales, we link to that website where accounts are published in full. 

  • What do we want to change and why?

We want to have a clear legal power to publish the annual reports and accounts of all charities registered in Scotland, without having to redact all the personal information.

Removing personal information often makes the annual reports and accounts difficult to understand. It is also very resource intensive for OSCR staff.

There is already a legal duty on charities to provide a copy of their recent annual reports and accounts to anyone that requests a copy. What we want to do is publish that information directly so charities don’t need to provide copies on request they can just direct people to the OSCR website.

We want the public to be able to see the annual reports and accounts of all charities registered in Scotland. Public trust in charities is closely linked to understanding what the charity has achieved and how much of donations are spent on the cause. We want all charities to have the opportunity to show the public through their accounts and annual reports how money is spent and what the charity does.


  •        What’s the issue?

There are an estimated 180,000 charity trustees in Scotland. Charity trustees are the people in management and control of a charity and have legal duties to act in certain ways. We have powers to investigate and take action against trustees where appropriate; however, we currently hold limited or no information on the vast majority of trustees. Having powers to regulate charity trustees without knowing who most of them are can severely hamper our work.

We collect and keep current information for one Principal Contact for each charity - the Principal Contact will not always be a charity trustee, it may be an employee, an accountant or a lawyer.

Our view, based on our experience as a regulator is that collecting trustee details from all charities will give us valuable and relevant information to support the effective regulation of charities and communicate directly with trustees. 

  •        What do we want to change and why?

Internally
We want the power to collect specific information to be held internally about all charity trustees:

  • Title
  • First Name
  • Last name
  • Date of Birth
  • Charity Number
  • Charity Name
  • Home Address
  • Data appointed
  • Date Resigned

Having this information about charity trustees will help us in our range of operations. For example, when we are considering the use of our power to suspend or disqualify a charity trustee, we will be able to know if that individual is a trustee of any other charity.

Externally
We would also like to publish the first and last names of trustees on the charity’s register entry, in the same way as the other UK Charity Regulators: the Charity Commission for England and Wales and the Charity Commission for Northern Ireland.

Information about a charity’s trustees is already listed in its annual reports and accounts, which are available on request from the charity – see section 1. We want to make this information easily accessible by listing the trustees on the charity’s register entry.


  •        What’s the issue?

The reasons for automatic disqualification as a charity trustee in Scotland are set out in the 2005 Act. These were written to be consistent with the law in England and Wales at the time.

Charity law in England and Wales has moved on significantly and the reasons for automatic disqualification are now much wider than in Scotland. Those individuals to whom automatic disqualification applies also include those in senior management positions in a charity – chief executive and finance director. 

  •        What do we want to change and why?

We want Scottish charity law to be updated to ensure consistency with other parts of the UK. There is a risk that a person may be disqualified from acting as a charity trustee in England, Wales and Northern Ireland but that disqualification would not apply to Scotland. The risk is that a person could still act as a charity trustee of a Scottish charity despite being found unsuitable for the role in another part of the UK.


  •        What’s the issue?

We have powers to direct charities and charity trustees not to take certain actions for specific periods of time. For example, by directing the charity trustees not to dispose of any funds belonging to the charity, without our consent.    

These powers of direction are a vital part of protecting charitable assets, however, there are other areas, like poor governance, where a direction ‘not to do something’ is ineffective. 

  •        What do we want to change and why?

In certain circumstances we want to be able to direct charities to take positive action to address problems they’re facing or non-compliance. For example, we could direct a charity to appoint additional trustees to ensure they have the correct number required by their governing document to make decisions.

Having a positive power of direction will allow OSCR to focus on the steps a charity can take to improve its situation, rather than just preventing charities taking certain actions.  


  •        What’s the issue?

Every charity has a legal duty to prepare annual reports and accounts and to send them to OSCR every year. Most charities to do this, but a small proportion don’t. We call these ‘defaulting charities’.

Some defaulting charities persistently fail to send their annual reports and accounts to us and don’t respond to any of our communications. Where charities don’t provide us with information we have no evidence they are fulfilling their legal duties, or that they still exist. It’s these charities that we want to be able to remove from the Register.

Our existing powers of removal are quite specific and don’t include a power to remove a charity for persistently failing to comply with legal duties. We don’t think this is fair on the majority of charities that work hard to meet their legal duties.  

  •        What do we want to change and why?

We want the power to be able to remove the small number of charities that persistently fail to engage with us or to comply with the requirement to submit annual accounts.

Having this power would improve the accuracy of the Register by making sure that the charities on the Register are actively working to achieve their charitable purposes and have a positive impact on public trust and confidence in the sector and in OSCR.

The power would also introduce efficiencies for OSCR, reducing the amount of staff time spent pursuing persistent defaulters – this includes time spent trying to find contact details for charity trustees, see section 2 Trustee database.


  •        What’s the issue?

At the moment an organisation can become a charity in Scotland without having any connection to or activities in Scotland. This makes it hard for us to understand what the charity is doing in practice and regulate these charities effectively. This could leave the Scottish system open to exploitation.

  •        What do we want to change and why?

We want a connection to Scotland to be part of the requirements for being a charity to safeguard against any potential for exploitation. What ‘connection’ means needs to be defined to include cross-border charities – those registered in England and Wales too.


  •        What’s the issue?

We have powers to request the Court of Session to permanently disqualify people from being charity trustees in Scotland, including former charity trustees. To do this we need to make inquiries and get the sufficient evidence before applying to the court.

At the moment we don’t have the power to make inquiries into people who were trustees of a former charity. This means that if an individual did something wrong at a charity and the charity closes down or the organisation stops being a charity we cannot take action against that individual.  

  •        What do we want to change and why?

We want to close this loophole so that we can investigate people who were involved in running a former charity so that that they can be permanently disqualified where appropriate.


  •        What’s the issue?

If a charity is removed from the Register for any reason, it must still prepare and submit accounts to us for any outstanding charity assets held at the time of removal. This is because the assets still need to be used for charitable purposes and we use the accounts to check that is the case.

However, the law doesn’t require former charities to use these assets for public benefit as well – one of the requirements of being a charity. For example, a former regeneration charity can continue to use the remaining charitable assets for regeneration purposes but on a commercial, profit-making basis. 

  •        What do we want to change and why?

We want the law to change so that former charities must use their remaining charitable assets for public benefit. This means individuals cannot profit from assets, like property or cash that were once charitable.


  •        What’s the issue?

There are two issues in this section:

  1. The 2005 Act gives us powers to request information from third parties to help us with our inquiries into charities, former charities and those misrepresenting themselves as charities. Before we can request information from a third party, we must notify the charity in question, giving them chance to request a review. This isn’t possible where there is no charity involved, that is where the inquiry is about a former charity or someone misrepresenting themselves as a charity.

  2. The timescales for requesting information are unclear as to whether they include the timescales for a charity to request OSCR to review our decision. If they do include review timescales this can mean that it may be up to eight weeks before we can enforce our request for information notice. 

  •        What do we want to change and why?

We want the law to be changed to include information requested from and about former charities and those misrepresenting themselves as charities. We also want the law to be clear about how long the timescales are before we can enforce a request for information notice. This should reduce the amount of time it takes to get information for our inquiries and make it clearer for the charities and non-charities involved.


  •        What’s the issue?

The 2005 Act is unclear whether OSCR can approve reorganisation schemes proposed by charities established under Royal charter or an Act of Parliament (UK or Scotland). Reorganisation allows often older charities to become more effective in a number of ways.

Some charities established in this way have to resort to making changes through private bills in Parliament, which is not a good use of the charity’s money or the Parliament’s time.

  •        What do we want to change and why?

We want the law clarified to set out the circumstances that these types of charities can apply to OSCR to reorganise, saving the charities time and money.