Step 2 What it means to be a charity

To be a charity in Scotland you must meet the charity test. This applies equally to existing charities and organisations that want to be charities.

The charity test means you must

• have only charitable purposes, and

• provide public benefit in Scotland or elsewhere.

Key OSCR guidance:

• Meeting the Charity Test: Guidance
• Being a Charity in Scotland

Charity trustees are at the centre of running a charity. They are the people who have general control and management of a charity. The duties are set out in law and charity trustees must follow them. If these duties are not followed OSCR may take action.

The role of a charity trustee is similar to the director of a company – they might not do all the day to day work but they are the people who are legally responsible for the charity and what it does. Where a charity is a company then the directors are the charity trustees.

If you become a charity trustee this means you will:

• have to devote time and energy to the charity
• be legally responsible for what the charity does and
• need to make sure the charity fulfils all of its legal obligations to OSCR and others.

As a charity trustee, you are trusted to look after the charity’s assets and you are responsible for making sure that the charity fulfils its charitable purpose(s). 

Specific duties

All charities have specific duties that they have to follow:

Reporting requirements

• Charity trustees must make sure that the charity keeps accounting records. These should include a record of the money it receives and the money it spends as well as anything the charity owns like property, investments, money in the bank (assets) and any money the charity may owe to anyone else (liabilities).
• Every year charities must send us:

1. Annual accounts
   Accounts represent the organisations finances for a particular period, showing how much money was received and how much was spent, broken down into different categories. Charities must prepare accounts each year and must send a copy to us each year.
   
   
2. Trustees’ Annual Report
   The Trustees Annual Report is a part of the annual accounts and contains information about the charity and its activities and achievements in that year.
   
   
3. External scrutiny report
   Your charity's accounts must be externally scrutinised. That is, someone who is independent of your charity must review the accounts and produce a report, attached to the accounts, that highlights any issues to the reader.
   
   
4. Online annual return
   The online form charities complete each year to provide us with information about the charity (in particular for the Scottish Charity Register, and including information about the charity’s finances).

• Charities must get our prior consent before making certain changes and make sure they keep information we hold about the charity up to date.  
  
  
• Charities should report any events that have a significant impact on the charity or its assets under our notifiable events regime.

Key OSCR guidance:

•       Being a Charity in Scotland
•       Guidance and good practice for Charity Trustees
•       Accounts and finance guidance