Scottish charity law: consultation analysis

Section 10

The reorganisation of charities established under royal charter, warrant or enactment

Context

Reorganisation can be a valuable tool for certain charities in Scotland.  A reorganisation scheme can enable charities to modernise their governance or purposes and to release unused or underused funds for public benefit.  If charities want to reorganise they need to apply to OSCR for approval.  However, it is not clear in the legislation whether it is competent for OSCR to approve reorganisation schemes proposed by certain charities established under a royal charter, warrant, or enactment.  While this issue only affects a very small number of charities, there has been substantial expense to the charities involved and consequent use of parliamentary time, putting through private bills that could have been avoided if the legislation was less ambiguous. 

Table 26: Question 22

Should the legislation be clarified to make clear whether OSCR can approve reorganisation schemes for certain charities that have been established by royal charter, warrant or enactment?

Note: Percentages have been rounded therefore percentage totals may not equal 100%.

Over three-quarters of respondents SUPPORTED the proposal to clarify the legislation to make clear whether OSCR can approve reorganisation schemes for certain charities that have been established by royal charter, warrant or enactment (78%).

Similar to the previous question, the general view provided by respondents was that clarifying the legislation and removing any existing ambiguity would be a good thing.  Further, there was considered merit in simplifying and modernising this aspect of charity regulation. Taken together, the proposal was welcomed by most respondents.

While there was recognition among respondents that the proposal would only affect a very small number of charities, it was reported that the reorganisation of such charities could be complex, costly in terms of legal fees, and time consuming.  

As such, there was strong support for the proposal as it was reported that this would potentially save these charities time and money (and save the use of parliamentary time too) if it dispensed with the need for private bills.  

Some felt that the “current system is a misuse of parliamentary time and charities funds which would be better employed on public benefit”.  It was felt that it was not an appropriate use of charitable resources to resolve such issues, where legislation could clarify the matter for the benefit of everyone.

Making the process streamlined, faster and more efficient was also referenced by many respondents, and that it would enable such charities to adapt to changing circumstances.  

There was also considered to be value in OSCR having the same level of authority over all charities, regardless of the how they were established, and that this should be brought into line with standard OSCR processes - “The regulatory basis for all charities in Scotland (and by virtue, England and Wales and Northern Ireland) should be the same - whether a charity was established by royal charter, warrant or enactment”.

It was reported by some respondents that affording OSCR the ability to approve reorganisation schemes for such charities would provide a simpler route for organisations wishing to modernise their aims and objectives.  As highlighted above, comments included that this proposal should expedite and rationalise the process for those involved.

However, a few of these respondents mentioned that charities governed by a Royal Charter have obligations to the Privy Council to seek approvals in certain circumstances (e.g. amending a Royal Charter), and that the views of such organisations would need to be listened to regarding the proposals outlined in the consultation.

Some wider points of note included that “there may be a need to consider how OSCR's jurisdiction and any revisions of the 2005 Act will sit alongside the rights and duties of the Privy Council or of Parliament to ensure that those rights and duties are not totally elided. Presumably any revisions to the rules would be made in full consultation with the relevant bodies and office-holders”.

Further, a few respondents felt that the 42-day notice period for OSCR’s consent for reorganisation schemes for charities generally (rather than a specific issue for Royal Charters, etc.) was too long and caused unnecessary delays.  There were some calls for the notice period to be reduced.

Only 4% of respondents DID NOT SUPPORT the proposal that the legislation should be clarified to make clear whether OSCR can approve reorganisation schemes for certain charities established by royal charter, warrant or enactment.

The main feedback (i.e. from charities established under royal charter, warrant or enactment) was that it was considered important that such charities “retain and respect their long and privileged connections” with, for example, the Scottish Parliament or Privy Council – and that any changes might undermine existing legislative frameworks and processes.  

Such charities therefore felt it was not appropriate for OSCR to have the ability to approve reorganisation schemes for certain charities established by royal charter, warrant or enactment.

Wider feedback reported, but in a handful of cases, included that:

• There was not considered to be any ambiguity in the legislation, that existing arrangements were considered appropriate and should not be amended.
• There was felt to be no need for clarification given that the legislation affects such a small number of charities.
• It was proposed that further consultation on the proposal would be required and/or the potential for some exemptions to the rule.