What do the changes to Scottish charity law mean for you?
Yesterday (Wednesday 28 June), the Scottish Parliament voted in favour of the Charities (Regulation and Administration) (Scotland) Bill, and so we anticipate that the Bill will receive royal assent later this year. This act of parliament will strengthen and update the current law by:
- increasing transparency and accountability in charities
- making improvements to OSCR’s powers
- bringing Scottish charity legislation up to date and more consistent with certain key aspects of charity regulation in England, Wales and Northern Ireland.
Why is new Scottish charity law needed?
The current law, the Charities and Trustee Investment (Scotland) Act 2005, is 18 years old and has remained largely unchanged since it was introduced. The new legislation aims to bring this up to date to ensure Scottish charity law reflects the needs of Scotland’s charities, at the same time as enabling OSCR to regulate in the most effective way.
The new law will help to promote greater transparency and accountability of charities and their trustees, making sure the public can have confidence in Scotland’s charity sector.
Most of OSCR’s existing powers will stay the same, as will the ‘charity test’ and the status and duties of charity trustees. The new law intends to enhance these measures and strengthen charity law in Scotland to bring it in line with key aspects of charity regulation elsewhere in the UK.
All charities and trustees should be aware of the upcoming changes, but there’s no need to take immediate action yet. The timetable for introducing these changes will be announced by the Scottish Government in the next few months. The timetable will ensure there is time for OSCR to engage with charities and those who advise them on how best to implement the changes. The individual measures will be introduced gradually, allowing charities time to prepare for them and for OSCR to provide the guidance and systems that will ensure a smooth introduction for them.
The Scottish Parliament’s website has more information about the changes.
What will be changing?
The new Bill will strengthen and enhance existing Scottish charity law, at the same time as adding some new measures. Some of the main changes will be:
Trustee information
OSCR will be required to publish the names only of trustees on the public Scottish Charity Register, and we will also maintain an internal database of trustee contact details.
In special circumstances, for example when there is a risk to personal safety, trustees will be able to request that this information is not published on our website.
Publishing more information
OSCR will publish additional information on our website and on the Scottish Charity Register. This will include:
- annual accounts for all charities, which will not be redacted; and
- a list of trustees whom the courts have removed and barred from acting as trustees in the future.
We will also keep a record of charities who have merged. This will assist with the transfer of legacies.
Increasing OSCR’s inquiry powers
OSCR’s inquiry powers will be extended to allow us to investigate organisations which are no longer charities, and former charity trustees. Our inquiry process and how we obtain information during an inquiry will be streamlined.
We will also have the power of positive direction, which will mean that in certain specific circumstances we will have the power to direct charity trustees to take specific action.
Disqualification of trustees and senior managers
The range of offences and situations that result in automatic disqualification of charity trustees will be extended to include offences such as being convicted under bribery or proceeds of crime legislation, association with terrorist groups or sexual offences.
The criteria for disqualification will also be extended to apply to those who are in senior management positions within a charity.
OSCR will also be able to appoint interim trustees in specific circumstances.
Removing charities
If charities fail to submit their accounts and do not engage with communications from OSCR, we will have the power to remove them from the Scottish Charity Register.
Connection to Scotland
OSCR may refuse charitable status to applicants who have no (or very little) connection to Scotland. Existing charities must maintain a connection to Scotland, and could be removed from the Register if they do not. This is not intended to affect genuine cross-border charities.
What action do charities and trustees need to take?
If you want to keep up to date with the latest news, the best way to do so is to make sure you have subscribed to our OSCR Reporter newsletter to get the latest updates about the changes to charity law.
No action is needed at the moment, but OSCR will be engaging with sector bodies about the measures and we will provide guidance and advice for charities on our website over the coming months.
In the meantime, as always, please make sure your accounts are up to date, submit your latest annual return on time, and ensure your contact details in OSCR Online are correct.