The first five years of OSCR

Martin Tyson, the Scottish charity regulator's head of charity services, says one concern has been private benefit

OSCR HQ
OSCR HQ

It's been nearly five years since the Office of the Scottish Charity Regulator started work and a lot has happened in that time.

We have removed more than 12,000 largely defunct charities from the list of 36,000 that we inherited from HM Revenue & Customs when we were set up. We've also granted charitable status to 3,728 new charities.

Of those removed, some requested removal themselves, but others were dissolved or amalgamated with other charities. We also removed charities that we found to be no longer active, or, in a few cases, non-compliant with the Charities and Trustee Investment (Scotland) Act 2005.

We have implemented a new monitoring programme and fulfilled our other statutory functions, such as encouraging compliance with the act, investigating apparent misconduct and advising government ministers on relevant matters.

We have noticed a number of trends since we were set up. For instance, the OSCR continues to see an increasing number of applications for charitable status in which private benefit, often to individuals connected with the establishment of the charity, is an issue of concern.

Last year, we received an application for charitable status from an organisation linked to a professional football club. It intended to carry out development work in youth teams.

We identified there was a potential private benefit to the club from the youth team activities, by offsetting its costs and providing financial value to the club from the transfer value of players developed. This outweighed the public benefit provided and we refused the application.

Another trend we've noticed is a lack of awareness among some charity trustees about their potential liabilities. In one case, the trustees of a small charity, which was an unincorporated association, faced liability for £1,500 in redundancy costs and debts when the charity failed. They were unaware that they were personally responsible for this.

We believe this point is particularly relevant, given the economic climate, and is an issue that charity trustees should carefully consider.

We see a number of applications that are withdrawn by the applicant, or which peter out when applicants fail to respond to correspondence from us. Insufficient information supplied with the application, or unfamiliarity with the requirements of charitable status, are often an issue, so we have issued a leaflet, called Becoming a Charity, to help with this. We are also reviewing our application forms to make our requirements easier to understand.

In the past year, there has been an increase in the number of charities requesting our authorisation to reorganise, from 94 in 2008/09 to 121 in 2009/10. We expect the level of reorganisations to rise, particularly as local authorities seek to reorganise the trusts they administer and release charitable assets.

Next year will be another busy one for us. The Scottish government has put out for discussion its draft regulations for implementing the Scottish Charitable Incorporated Organisation, the new legal form provided for in the 2005 act. This might help address some of the aforementioned liability issues. We expect this to be a major new area of work during 2011.

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