Change of purpose made easier

The Office of the Scottish Charity Regulator has started to help charities change their constitutions without going to court in a process that could free up millions of pounds of charitable funds.

A number of charities do not have the power to allow trustees to change their constitutions; in the past they had no choice but to go to court to do so. But under section 39 of the Charities and Trustee Investment (Scotland) Act 2005, Scottish charities can now seek permission from the OSCR to make these changes.

The provision is aimed at charities with purposes that can no longer be fulfilled or are obsolete, such as the support of widows of soldiers who fought in the Crimean War, or the provision of coal to the poor. This would also apply to charities wishing to transfer some of their property or amalgamate with other charities but are unable to do so under their existing governance arrangements.

In such cases, funds are unusable and remain dormant until the charities' constitutions can be updated or amended.

The OSCR said that the provision had been keenly awaited because it was likely to release millions of pounds of charitable funds. The regulator is currently processing its first two applications after a period of consultation, but it estimates that more than a thousand charities could benefit from reorganisations.

"We anticipate a steady build-up rather than a large number at first," a spokesman for the OSCR said. "This will increase over time."

All proposed reorganisations must be advertised on the OSCR website and charities with incomes of more than £250,000 must also advertise in a Scottish newspaper. This will allow members of the public to object to proposals they don't like.

ALSO ...

The Office of the Scottish Charity Regulator has announced a list of 'designated religious charities' that meet the charity test introduced by the Charities and Trustee Investment (Scotland) Act 2005. The organisations benefit from exemptions that allow them to retain their own governance systems. On the list are some Roman Catholic dioceses and the Church of Scotland.

"The 2005 Act provides for exemptions where we are satisfied internal control processes are in place," said Kirsty Gray, head of monitoring and investigation at the OSCR. The exemptions restrict the OSCR's regulatory powers. The Charity Commission is yet to release guidance on how the public benefit test brought in by the Charities Act 2006 will affect faith-based charities in England and Wales.

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