In general, if a charity does nothing for a prolonged period, it is unlikely to be providing public benefit, and this may result in it failing the charity test. There are some exceptions where this principle does not apply. We call these ‘inactive charities’.
One type of inactive charity is where a charity is set up to act if a particular event occurs in the future, and where public benefit is provided because the charity is there ‘just in case’.
- a charity is set up to relieve the needs of those who might be made homeless by flooding in a flood-prone area of Scotland – there may be no floods and therefore no activity for several years, but the existence of the charity allows prompt relief should a flood occur.
Another type of inactive charity is a ‘legacy’ charity:
- where one charity is replaced or taken over by another, the charity which has been taken over continues purely to receive legacies and pass them to the new charity – there may be long periods where no money is received or transferred, but the ‘legacy’ charity provides benefit by making sure that donations reach the right destination.
Where an inactive charity remains on the Register, it will still need to meet all the requirements of being a charity.
In particular it must:
- meet the charity test
- have charity trustees who comply with all the charity trustee duties
- comply with annual monitoring: preparing and submitting accounts, trustees’ annual report and the Online annual return.