We have split our Guidance into sections to help you find parts most relevant to you. Key phrases within a section are shown in bold blue type and information most relevant to organisations that want to become charities highlighted with the new applicant’s icon:
The glossary provides you with further information, definitions and descriptions of some key terms. We’ve highlighted these key terms in bold purple type. Clicking on these terms will take you straight to the glossary or the relevant section of the Guidance
This Guidance doesn’t tell you about the process of becoming a charity or what help is available from other organisations.
Who is this guidance for?
The Guidance is for:
This Guidance is about how we, the Scottish Charity Regulator, interpret and apply the charity test. It explains what we take into consideration when deciding if an organisation can become, or continue to be, a charity in Scotland. We also identify some other matters charity trustees should be thinking about to make sure that their charity continues to meet the charity test set out in the Charities and Trustee Investment (Scotland) Act 2005 (referred to in this Guidance as the 2005 Act).
To be a Scottish charity or a charity registered in Scotland your organisation must pass the charity test and be entered in the Scottish Charity Register.
This registration tells the public (and the tax authorities and funding organisations) that:
What is the charity test?
The charity test is set out in the 2005 Act. Your organisation can only be entered in the Scottish Charity Register and be a charity in Scotland if it passes this test.
To pass the charity test your organisation will have to meet the following requirements:
In addition, your organisation will fail the charity test if:
When we look at whether or not your organisation provides public benefit, we need to consider if:
In this Guidance we explain how we make our decisions on becoming a charity.
A governing document is the document that sets up an organisation and says what its purposes are. It will usually deal with other matters such as:
The most common legal forms for charities are:
Charity law is devolved in Scotland, and the 2005 Act is the main authority governing charity law in Scotland. In applying the charity test we follow standard principles of legal interpretation. This includes looking at:
other relevant material, including case law in other jurisdictions (for example in England and Wales) which will be persuasive rather than binding.
In UK tax law ‘charitable purposes’ are defined following the law of England and Wales, which differs in a number of respects from Scots law.
We are aware that, while charities and bodies applying for charitable status must pass the charity test, they will also generally wish to qualify for recognition as charities for tax purposes. To achieve this, definitions of ‘charitable’ or ‘charitable purposes’ will need to ensure that the body’s assets can only be used for purposes which are charitable in terms both of the 2005 Act and tax law. OSCR and HMRC will work with applicants and charities to help them achieve this.
We look at your organisation’s governing document, the whole picture of what you do (or plan to do), and the benefit your activities provide. We also look at any private benefit, disbenefit or undue restriction. Depending on what your organisation does, these factors may not be issues, but some could have a big impact on your ability to pass the charity test.
We must follow good regulatory principles such as proportionality and consistency, and we apply these when looking at the charity test.
Your organisation’s purposes are usually set out in the objects, aims or purposes section of the governing document. The purposes say what your organisation has been set up to achieve, and should reflect its broad aims rather than the day-to-day activities. Anyone reading the purposes in your governing document should be able to get a clear picture of what your organisation intends to achieve.
You do not have to use the wording from the charitable purposes in the 2005 Act, as long as it is easy to see from your organisation’s purposes how they relate to the ones set out in the 2005 Act.
You only need to have one charitable purpose to meet this requirement of the charity test. Generally, the more charitable purposes an organisation has, the more information we need in your application about how you will advance them. This can cause delays in the application process, and it is often better to focus on a small number of clear charitable purposes at the start.
Charities can apply to us for consent to change their charitable purposes as their activities and aims change over time.
Unclear or badly worded charitable purposes might mean that there is a delay with your application or that it may be refused.
Making sure that the charitable purposes are clear and understandable should help you to communicate with your beneficiaries, the public and us about what your organisation, does or wants to do.
There are a number of ways that you can identify what charitable purposes you may have. If you already have a governing document with an aims or objects section then this is where you would start.
If you are writing (or rewriting) your purposes you could ask the following questions:
You could use the following wording to structure your purposes, although you don't have to:
‘To advance… [charitable purpose] by… [very brief outline of activities]’
‘To promote… [charitable purpose] by… [very brief outline of activities]’
‘To provide… [charitable purpose] by… [very brief outline of activities]’
‘To relieve… [charitable purpose] by… [very brief outline of activities]’
If you intend to benefit a particular group of people or a particular geographical area, then this should be clearly stated too. For example:
‘To advance the health of under 16s living in Fife by providing healthy eating and fitness sessions in schools.’
You can get help and advice from a number of organisations when you are writing the purposes. Some charities are set up to benefit specific groups of people who have one or more of the protected characteristics set out in the Equality Act 2010, which are:
If your charity limits its benefits to any group that shares a characteristic protected by the 2010 Act, then that restriction must be stated in your governing document, and you should be able to explain the reasons for the restriction. Our Charities and the Equality Act 2010 guidance gives more detail on how charity and equality law interact.
We will also look at your governing document to see if any of these exceptions apply:
To decide on public benefit (the second requirement of the charity test) we look at what your organisation does or plans to do. We look at your application form and any other information you send to support it (for example business plans, grant applications or leaflets). If we need more information, we will let you know.
If your organisation passes the charity test, we will enter it in the Scottish Charity Register and let you know its charity number.
If there is an issue with your organisation passing the charity test, we will usually contact you to explain the problem. If you cannot resolve the issue and your organisation fails the charity test, we cannot enter it in the Scottish Charity Register and will send you a refusal notice.
If you disagree with our decision to refuse your application to become a charity, you can ask us to review the decision. You must do this within 21 days of our sending you the refusal notice. Our review decision may be to confirm, vary, revoke or reverse the original decision, and we will let you know the outcome within 21 days of receiving your review request.
If you are dissatisfied with the review decision, you can appeal to the General Regulatory Chamber of the First-tier Tribunal for Scotland, then to the Upper Tribunal for Scotland and ultimately to the Court of Session. You must appeal to the General Regulatory Chamber of the First-tier Tribunal for Scotland within 28 days of our review decision. This Tribunal may decide to confirm our decision, to overturn it, or ask us to reconsider our decision.