Almost four years after the public consultation began, the Charities Bill has been published, but what are the real implications for the Scottish sector, and will the Government’s proposals go far enough in terms of reform?
Following a series of consultations and delays as a result of the pandemic, the Scottish Government published the Charities (Regulation & Administration) (Scotland) Bill on 15 November. The Bill is intended to update charity law, with the expressed aim of increasing ‘transparency and accountability’. While we are in the early stages of this new legislation, there are a number of areas which warrant further examination and we have included some analysis below.
Setting the scene
With a title including ‘regulation and administration’, this Bill is not intended to set the heather on fire as it were, but rather serve as an update of the administrative issues faced, predominantly by the Regulator, the Office of the Scottish Charity Regulator (OSCR). It does not therefore make sweeping changes in terms of the charity sector itself. While many of the changes are administrative, for example providing the Regulator the ability to investigate charities that have been struck-off of the register, there are some key points of interest which we have highlighted below.
Publishing names of Charity Trustees
The first point of note is the intention for OSCR to publish the names of all charity Trustees in a publicly searchable register. While Trustees’ names could be redacted if there were security or safety reasons for doing so, the default position would be that all Trustees names would be published and linked to the charities on whose Board they sit. While transparency is ordinarily a good thing and something to be promoted within the sector, there are concerns about the practical implications of this. For example, some philanthropists may not necessarily welcome the public having access to details of the particular organisations they are involved with, nor that they have sufficient wealth in order to provide such generous donations. As such there is a concern that some grant giving charities may be negatively affected. While there are alternatives, for example donor advised funds, this could be a loss of revenue for the sector.
Furthermore, these proposals may affect the recruitment of charity Trustees as it can be challenging to attract those with the requisite skills. Would Trustees be willing to join the Board of a charity that is struggling and requires assistance, if their name is going to be publicly associated with it, should it fail? While the spirit of the Bill is to encourage public faith in the sector, the practicalities are such that some Trustees may be discouraged, which may not be to the benefit of the public. It seems that the quest for transparency has outweighed this, however, an option would be for OSCR to hold details for all charity trustees to allow them to contact the trustees when appropriate rather than being open to public view and potential scrutiny.
Register of Merged Charities
A positive update identified in the Bill is the intention to create a register of merged charities. This would include charities which have wound up and transferred their operations to another organisation in its entirety. This will help charities who receive a legacy notification unexpectedly, which may only be payable to the named charity and may not transfer to its successors. These newly proposed laws will assist in avoiding this issue with charities benefiting from these detailed historic records.
A connection to Scotland
One of the proposals which attracted significant attention during the consultation, was the need for charities to have a connection to Scotland. The Bill has covered this in more detail, which is helpful to unravel. The intention is not to stop charities based in Scotland provide charitable benefit outside the UK. Indeed, Scotland has a rich nature of philanthropy throughout the world, and this is to be applauded rather than curtailed. The proposal is merely an administrative point where if there is no link to Scotland i.e. no Trustees in Scotland, no base in Scotland, no operations in Scotland and no benefit in Scotland then the Regulator will have no way of administering or indeed regulating that charity and under the current rules it would have to stay on the register. In reality, this change is likely to only apply to a handful of charities on the Register and it seems a sensible safeguard to put in place to protect the good reputation that Scottish charity law has throughout the world.
Increasing power for OSCR
On the wish list of the Bill, the Scottish Government includes increasing the power for OSCR to make positive direction i.e. enforcing Trustees to make particular decisions. While this could be viewed as a slippery slope in terms of the Regulator overreaching their powers, our experience of OSCR has been that they are eminently reasonable and pragmatic. We do not have concerns at this stage that this power would be used/abused in such a way that the Regulator would overtake a charity unless it was an absolute last resort.
The Bill suggests a number of changes to be implemented, bringing with it transparency concerns for some, while on the whole introducing positive improvements to registers and safeguards for the sector. We have highlighted the key themes to be aware of, although there are various other provisions contained in the Bill which I would encourage you to look at it in more detail – you can do so by clicking here.
The Bill, as it currently stands, represents a missed opportunity for the Scottish Government to make more substantial changes that could make a tangible and positive difference to charities. It is currently at Bill stage and while we do not anticipate major changes being introduced as it progresses through the parliamentary process, it may still evolve.
We will continue to monitor updates on the legislation and will communicate any further important changes. If you would like to discuss any of the points raised above, please get in touch.
A more in-depth review of the Charities Bill provided by Lianne featured in The Journal April 2023 – read the full article here.