Scottish Charity Law Consultation

The Scottish Government recently consulted about their proposals to try and improve charity law in Scotland. The proposed options would change the current regulatory system with a view to increasing transparency, accountability & public trust in charities. At West Dunbartonshire CVS we wanted to submit a response to the consultation that represented the views of local charities. To do so, we held two consultation sessions at our offices to gain feedback. A summary of the submitted response is available below:

1. On the Scottish Charity Register, should OSCR be able to publish charity annual reports and accounts in full for all charities?

We believe publishing charity reports and accounts is important as it allows the public to be able to see how charities are being run. It also presents a good opportunity to show off the successes of charities and their achievements to the public. This measure could increase public trust as it would allow donators to see exactly how their money is being spent. Another option suggested by one organisation is for OSCR to indicate that each account has been submitted and approved on the register and then have hyperlinks directing to the accounts on charities’ websites. However, if this is not feasible, then there is agreement that all accounts & reports should be published by OSCR for public viewing. 


2. Do you think there is any information in charity annual reports and accounts that should not be published on the Scottish Charity Register?

We believe there is no information that should not be published as a lot of the information will already be available as it comes from fundraising/ grants etc. There was a consensus that it is a positive thing for the public to be able to see where charities are spending their money in order to improve trust and accountability this data should be freely available and also complete for all charities on the register. 


3. Do you think charities should be allowed to apply for a dispensation (exemption) from having their annual reports and accounts published in full on the Scottish Charity Register? 

A belief that dispensations should not be allowed was clearly captured in our consultation sessions. There was a consensus that this could decrease public trust in charities and make individuals question where their money is going. By having complete records for all charities it demonstrates transparency. No justifiable reasons for exemption could be thought of amongst respondents.  


4. Should OSCR be able to collect the trustee information noted above for use in an internal database? 

We believe that OSCR should be able keep an internal database of trustee information. Respondents emphasised that this information must be purely for OSCR’s use and must be held securely. As a regulatory body, it is vital that OSCR holds accurate and up-to-date information about charities and a complete database would aid this.  


5. Should the names of trustees be published on the external public register? 

We feel that names of trustees should be published on an external register as respondents believed that this would help to increase transparency and accountability within the third sector. Although there are arguments to be made regarding privacy issues, these concerns were mitigated as it is limited information that would be publicly available. There was a consensus that it would be beneficial to the public for every charity to have a contact that they can clearly associate with the individual charity. As this is a measure taken in the rest of the UK, it may also be beneficial to identify whether it has brought about any issues and learn from them before implementing such a strategy in Scotland. 


6. Should the names of trustees who have been removed following an inquiry by OSCR, be published on the external public register? 

We believe that this measure would be beneficial if it helps people identify individuals who have irresponsible trustees in the past. Participants in our consultation sessions suggested that a list of removed former trustees that were clearly identifiable as such, could serve as a warning to other charities not to get certain individuals as trustees who could potentially cause harm. A concern raised from one of our respondents highlighted that measures must be taken to avoid cases of mistaken identity with these people. Overall, there was a belief that the public had a right to know about removed trustees.  


7. Do you think trustees should be allowed to apply for a dispensation (exemption) from having their name published on the external public register? 

We believe that dispensations should not be allowed and that each charity should have one contact listed to make the list complete. If people start to take up on an exemption option it would begin to defeat the point of having a register which should be a complete list for public viewing.  


8. Should the criteria for disqualification and removal of charity trustees be extended to match the criteria in England and Wales? 

A clear view from our consultation sessions was that the disqualification criteria should be extended to match that of England and Wales. Firstly, it makes sense to be uniform with the rest of the UK as several charities will operate UK-wide so this would allow for continuity in policy across all countries. It makes no sense that a former trustee guilty of these crimes in England and Wales could still be a trustee in Scotland. Furthermore, the proposed additional disqualification criteria were all crimes that respondents believed should definitely lead to disqualification. We believe that the proposed criteria seems comprehensive but it should also be subject to future addition. 


9. Should the criteria for disqualification and removal also be extended to those in certain senior management positions? 

We believe it is vital that the disqualification criteria is also extended to include those in senior management positions. The consensus among respondents was that senior managers were often in a position of potential misconduct and if there isn’t an authoritative board then individuals could be in a position of relatively unchecked power. Individuals found guilty of the crimes listed are not people that should be senior managers in charities and this change would stop that from being a possibility.  


10. Should OSCR be given a power to issue positive directions? 

Based on the information we gathered in our consultation sessions, OSCR should have the power to issue positive directions. The views of participants were that sometimes it is not enough for a regulatory body to be able to say to organisations not to do something, but instead they need to be able to issue positive directions. This would be particularly important in circumstances where charities were breaking the law or going against their own constitution and OSCR should have the power to remedy such issues. 


11. If you answered Yes to question 10, should a power to issue positive directions be wide ranging or a specific power? 

Wide Ranging- OSCR is a regulatory body so needs to make sure that all charities are working correctly and following the same rules and this would maintain consistency across the board and makes sure all laws are being upheld. However, we believe a positive direction should be limited its use to address issues of non-compliance. 


12. If a charity failed to comply with a positive direction that OSCR had issued, should this be classed as trustee misconduct? 

We believe that failure to comply with a positive direction should be classed as misconduct but only if there is evidence of repeated wrongdoing. Whilst there needs to be a punishment for non-compliance, it is also vital that the individual circumstances of charities are taken into account. It could be more beneficial to question why a charity is failing to comply with a positive direction and using it as an opportunity to provide support to struggling charities. If a charity cannot prove they are trying their best to comply then enforcement action must be taken. Furthermore, more information is needed as to whether such developments would be public knowledge or if they would be internal between OSCR and the charity.  


13. Should OSCR be able to remove charities from the Scottish Charity Register if they have persistently failed to submit annual reports and accounts? 

We believe that charities should be removed from the register for repeated failure to submit reports and accounts. It was suggested that one instance of failure should act as a signal to OSCR that the charity in question might be in need of assistance. All respondents were of the view that persistent failure should result in being taken off the register and there was a consensus that it is vital that the register is kept up-to-date and accurate. By consistently failing to submit reports and accounts the charity would not be complying with procedures they should be carrying out and as a result there must be consequences. This measure would mean only charities that are still in existence and following procedure are on the register and the public can see exactly where their money is going.  


14. Should OSCR be given a positive power of direction to direct a charity to prepare annual reports and accounts? 

Respondents were all of the opinion that OSCR should be able to direct charities to prepare annual reports and accounts. As the regulatory body for charities, OSCR should have the power to tell charities what to do in circumstances where a charity is not complying with duties it needs to legally carry out. It might be the case that there is a small issue preventing the charity submitting their accounts and they may just require a small amount of guidance from OSCR.  


15. If a charity failed to comply with a positive direction to prepare annual reports and accounts, do you think this should be classed as trustee misconduct? 

Yes, if a charity is ignoring demands from OSCR then there must be some form of punishment given out. 


17. Should all charities registered in Scotland be required to have and retain a connection with Scotland? 

Yes, charities with no connection to Scotland and no activity in Scotland should not be required to be registered with OSCR unless they accept financial contributions from Scotland, whether promoted here or not.  


18. Should OSCR be able to make inquiries into former trustees of a body which is no longer a charity, a charity which has ceased to exist and individuals who were in management and control of a body which is no longer controlled by a charity? 

We believe OSCR should have these powers as it will give them greater scope to investigate potential wrongdoing. There was a belief among respondents that such measures would prevent former trustees who have previously caused harm being able to jump ship to another charity to continue with any wrongdoing.  


19. Should bodies that have de-registered as charities be required to continue to use the assets held at the time of removal from the Scottish Charity Register to provide public benefit? 

It is vital that these assets are used to provide public benefit as donors would have made contributions to a charity on the basis that they would have been used for public benefit. By allowing these assets to be used for other purposes risks public distrust in the voluntary sector. 


20. Should OSCR be given the power to give the required notice of a request for information to a body or individual that is misrepresenting themselves as a charity, that is no longer charity, and to former trustees of a charity which has ceased to exist? 

Yes, if the information is required, whether or not the organisation is charitable or not is irrelevant. The need for information is vital to support and not undermine the role of OSCR. 


 21. Should it be clarified that the notice periods to charities that are subject to a request for information can overlap?

Yes, this should allow for a quicker and more efficient process when submissions are made before each time period has elapsed.