Scottish charity law: consultation analysis

Section 11

Wider Issues Raised

This final Section outlines wider issues raised by respondents. 

It should be noted that several consultation responses contained extensive lists of proposed amendments to the 2005 Act, with the main themes summarised below.

The consultation was very much welcomed, and some respondents reported that it was long overdue, and that the environment in which charities operate had changed significantly over the last decade or so.

However, it was felt that an opportunity had been missed for a comprehensive and wider review of Scottish charity law.  Others were disappointed that there was not an explicit opportunity within the consultation questions for respondents to provide additional suggestions/changes that could be considered.

The main issue raised related to the scope of the Consultation on Scottish Charity Law, and that the consultation was “very narrowly framed” or “of limited scope”. 

Here, respondents felt that a much wider review of Scottish charity law was required which went beyond the suggestions outlined by OSCR in its “Proposal for Modernisation of the 2005 Act” – “it would be appropriate to conduct a more thorough review of the legislative framework to ensure it is entirely fit for purpose and reflects the modern requirements of charity law, how modern charities are run, governed and want to report, now and in the foreseeable future”.  In addition, it was felt that there should have been consideration of how the Scottish Charity sector fits within the wider UK legislative framework.  

Taken together, the feedback was that a wider review would have been of more value to ensure that Scottish charity law is appropriately updated and future-proofed – this would have provided an opportunity to “bring legislation into line with current and future developments in the sector” and ensured that the “legislative framework is fit for purpose and is protecting and serving the public interest”.

Some specific areas of the 2005 Act highlighted by respondents which were said to require further review (as well as wider issues raised) included:

• It was considered important that the statutory definition of the Scottish Charity Test be reviewed to ensure it remains fit for purpose, reflects
  wider changes in the charity sector, and meets current and future aspirations of the sector.  For example, review the sixteen charitable purposes to determine whether they are still relevant or whether there
  is there a need for any further amendments/additions.  

Other examples put forward included the following: “the charity sector is continually transforming” and the Charity Test needs to be reviewed to ensure a strong fit with the growth of social enterprises in Scotland.

• It was also felt that there should be a review of Scottish charity law to clarify the issues around the charitable status of public authorities with a view to ensuring that all such charities operate in the public interest.  ALEOs (where councillors might make up a significant proportion of trustees) and Non-Departmental Public Bodies (which need to comply with directions given by Scottish Ministers) were specifically referenced.   This was in response to a previous OSCR report that raised potential risks associated with charities that operate within the control of another body.  

• The definition of “public benefit” should be reviewed - to re-define what is meant by public benefit and redefine the modern charity.

• The transformational nature of the sector was highlighted, including growth in the social enterprise model.  Issues to consider included a lack of legal definition of social enterprise in Scotland, and a need to introduce an appropriate regulatory regime for such organisations.

• There were various points raised regarding SCIOs which included greater clarification of SCIO members’ responsibilities and duties (including guidance from OSCR) and a review of regulations about winding up, insolvency and dissolution of SCIOs.

• There requires to be greater clarity on the role and duties of trustees as there is “still much to be done to ensure existing trustees understand and fulfil their current general and specific duties”.  It was felt that trustees’ duties should be reviewed and updated, as well as greater clarity provided on the current statutory provisions of trustee remuneration at section 67 of the Act (2005). 

• It was reported that there was no statutory duty or framework for notifiable events, despite OSCR stating that “failure to meet expectations surrounding notifiable events could be regarded as misconduct”.  It was further highlighted there was no “express provision in the 2005 Act for the Notifiable Event regime”.

• It was stated that increased consistency of approach across the UK would have a significantly positive impact on cross-border charities. The benefit would be seen in “reducing the cost of compliance” removing an “extra layer of administrative burden” for cross-border charities.

• “The impact of changing technology on the Scottish charity legislation has not really been considered in this review, but had it been the review could have created legislation that would allow charities to not only operate effectively but also be governed effectively and report effectively with appropriately designed legislation and regulation, well into the future”.

• The structure of OSCR should be reviewed, with some suggestions that it should be independent of government and report to the Scottish Parliament rather than to Scottish Ministers.