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Step 2 What it means to be a charity

Published: 02/04/2019
Updated: 02/04/2019

A charity in Scotland is an organisation which is entered on the Scottish Charity Register. An organisation can only become a charity if it meets the ‘charity test’, meaning that it must show it has only charitable purposes and benefits the public.

If you become a charity, you will be granted a status that recognises a contribution to society but also carries ongoing legal responsibilities 'Charity trustee duties'.

Becoming a charity is not a rubber stamping exercise: you have to demonstrate to us and those that you deal with that you meet the legal requirements and you must continue to do so throughout the life of the charity. 

Setting up a charity is just the start of the journey. Having a longer term plan, beyond your individual involvement in the charity, is a key part of running a charity. 

A charity needs people to run it. All charities must have charity trustees, some charities have members, staff and/or volunteers.

Remember: it is against the law to describe yourself as a charity unless you are on the Scottish Charity Register.

Being a Charity in Scotland - 2

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

Charity test

Key OSCR guidance:

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.

1. Always do what is best for your charity:
As a charity trustee you have a legal responsibility to put the interests of your charity above your own interests. All the charity trustees are collectively responsible for making sure that the charity is run properly and lawfully. 

2. Act with care and diligence:
You have to protect your charity including its beneficiaries, assets and reputation. 

3. Understand your charity’s legal responsibilities:
Make sure your charity is meeting its legal duties under charity law and other relevant laws. 

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:

Specific Duties

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).

Key OSCR guidance: