The Office of the Scottish Charity Regulator's recent publication of its decisions regarding the first 30 charities in its 'rolling review' created a flurry of media interest.
The headlines concentrated on the verdict that four independent schools imposed unduly restrictive conditions on access to their benefits. However, the rolling review report also raises a number of other issues that have so far been overlooked and have implications for all Scottish charities.
Seven charities were found to have problems with their constitutions, six of them because they had documents that defined 'charity' or 'charitable purposes' by reference to the taxes acts. Prior to the 2005 Scottish charities legislation, it was common for charities to refer to the taxes acts when defining charitable purposes in their constitutions. However, the new legal landscape makes such references not only obsolete but also actively problematic. References to the taxes acts are deemed by the OSCR to be references to charity as defined in English law. The definition of charity is different in Scottish law. Consequently, such references are no longer acceptable and all six charities have been directed by the OSCR to alter their constitutions accordingly. This problem is so widespread that the regulator has referred the matter to the Scottish Government.
In addition, one charity was found to have a constitution that included charitable purposes that did not meet the new definition of charity brought in by the Charities and Trustee Investment (Scotland) Act 2005. This organisation has also been directed by the OSCR to make suitable amendments.
So the central message for the majority of charities is to focus on the detail of compliance. The OSCR makes a general recommendation to all charities to ensure that their constitutions are up to date, in keeping with the requirements of the legislation and accurately reflect their activities. In other words, put your house in order before the OSCR comes to call.