Strengthening Scottish charity law: analysis of engagement responses

8. Proposal 6

Context

8.1 Proposal 6: All charities in the Scottish Charity Register to have and retain a connection in Scotland.

8.2 Proposal summary: To be a registered charity in Scotland a body must have wholly charitable purposes and provide public benefit, but there is no requirement for the body to have any connection to Scotland (with the exception of SCIOs). This means that OSCR might be compelled to register a charity that meets the charity test but has no activities in Scotland and no trustee connection with Scotland.

8.3 The proposed option would be to require all charities in the Scottish Charity Register to have, and retain, a connection to Scotland. This would not preclude the registration of cross-border charities, which could continue to register with both the Charity Commission for England and Wales and OSCR. However, this option would mean that charities established under the law of a country or territory other than Scotland, which are managed or controlled wholly or mainly out with Scotland, do not occupy land or premises in Scotland and do not carry out activities in any shop or similar premises in Scotland, would no longer be able to be entered on the Register.

8.4 2019 Consultation response summary: The vast majority of respondents supported the proposal that all charities registered in Scotland should be required to have and retain a connection with Scotland (82%).

8.5 A strong message from the consultation responses was that what is meant by "to have, and retain, a connection with Scotland" would need to be clearly and sufficiently defined. While some respondents went on to suggest that the connection needed to be "strong" or "substantial", others called for more detail on what would be regarded as "enough connection". There was strong support for a "sufficiently broad" rather than narrow definition of connection to be used.

8.6 Concerns were raised around the implication this proposal might have for charities with a registered base in Scotland but where the area of benefit is overseas.

Question 14

What factors should be considered when defining what 'have and retain a connection to Scotland' means? Does this have to require a physical presence in Scotland, such as an office address or trustee address?

Strong support for the proposal made by the Scottish Government

8.7 Based on a review of the online survey responses, a vast majority made explicit agreement with the Scottish Government proposal that a physical presence in Scotland, such as an office address or trustee address, were important factors when defining what "have and retain a connection to Scotland" means (around 88%). A demonstrable relationship with Scotland was considered vital. This is based on a total of 77 responses where there was explicit reference in the response regarding agreement or disagreement with the proposal.

Alternative viewpoint

8.8 Few respondents disagreed (12%), including churches and charities with an international remit. These respondents considered that factors such as an office address or trustee address were not important considerations. Points raised are reflected in the following respondent quotes.

"However as an international organisation, this depends on its having Trustees from Scotland willing to serve as Trustees and those Trustees voted by our membership. This may not always be possible. Nor practical. This amendment, if approved would necessitate a change in our constitution meaning we always have one trustee from Scotland, which would give Scotland a disproportionate place on our global board of 18, which is finely balanced with equal representation from all regions of the world. Essentially our European Director would always have to be Scottish. And although our office base is in Scotland, in reality, our work could be carried out remotely, globally. Currently our one staff member if based in Scotland. But this may not always be the case, with the advent of remote working". International Association for Community Development

"..the Church of Scotland has congregations and presbyteries outside Scotland which are registered with OSCR. Although they do not hold property, operate in Scotland or have a trustee connection in Scotland their governing body is a Scottish charity. All these component elements of the Church of Scotland participate in the General Assembly of the Church of Scotland, which sits in Scotland, and is the Church's Supreme Court. Any definition would have to be sufficiently wide to enable such congregations and Presbyteries to retain charitable status in Scotland. All of these congregations have 'Scotland' in their name as there is a strong connection with the Church of Scotland". The Church of Scotland

"The charity must always be carrying out activities within Scotland not just fundraising in the area. A physical presence, apart from a SCIO, does not need to be required". Individual

"It is not our intention to exclude cross border charities (those registered in England, Wales and Northern Ireland) from the Register. The definition would therefore need to be broad enough to ensure these bodies could continue to be dual registered. Factors which could be considered when considering 'have and retain a connection with Scotland' would not necessarily require the charity to have a physical presence in Scotland such as an office or trustee address. In light of COVID there will be more homeworking and charities may decide to give up their office premises. A possible test could be: charities established under the law of a country or territory other than Scotland, are managed or controlled wholly or mainly outside of Scotland, do not occupy land or premises in Scotland and do not carry out any activities in Scotland would no longer be able to be entered on the Register". OSCR

Additional suggestions for factors that should be considered when defining what 'have and retain a connection to Scotland' means

8.9 Almost half of respondents noted wider factors that could help to provide evidence of an "active presence" in Scotland. The main factors were reported as:

• Charitable work, operations, services, activities and fundraising undertaken in Scotland. Albeit, it was reported that charitable activity does not need to be exclusively in Scotland and that a charity might have a broader remit.
• That such charitable work, etc has a public benefit or impact on the people of Scotland.

8.10 Additional factors mentioned included, but to a lesser degree:

• Proportion of trustees normally resident in Scotland.
• Charity's constitution should clearly stipulate its objectives relating to Scotland.
• Senior staff member or workforce in Scotland.
• In the case of a charity with a membership at least five members in Scotland (or 1% of total membership if fewer).
• In the case of a charity which receives donations, it has received at least one donation from a Scottish donor or a Scottish-based company or organisation in the last year (or expects to do so in the year ahead).
• The charity has organised at least one activity in Scotland in the last three years (or, in the case of a new charity, plans to do so within the three years after registration).
• In the case of a charity that makes grants (or plans to do so) it awarded at least one grant in Scotland in the last three years (or plans to do so in the three years ahead).
• Proportion of funding should come from Scotland.

8.11 Finally, in the current and evolving climate (i.e. Covid-19) there was some reference to "physical presence is a changing notion" (e.g. increased home-working, some charities may decide to give up office premises), and that the Scottish Government would need to reflect on this when defining what 'have and retain a connection to Scotland' means in practice.