Scottish charity regulator warning on independence of arm's length external organisations

The Office of the Scottish Charity Regulator reviewed eleven of the 64 such bodies constituted as charities in Scotland

Office of the Scottish Charity Regulator
Office of the Scottish Charity Regulator

A review by Scotland’s charity regulator of 11 arm’s-length external organisations – charities subject to council control or influence – has found that one was not sufficiently independent from its local authority.

The Office of the Scottish Charity Regulator yesterday published its review of Aleos, noting that 64 of them are constituted as charities in Scotland, with annual incomes ranging from £15,000 to more than £110m. These 64 have a combined annual income of £550m, or 3 per cent of the total income reported to the OSCR. The majority operate leisure and culture trusts.

The regulator said it had previously been told of concerns about the independence of Aleos and that, in the cases of the Glasgow East Regeneration Agency and the Shetland Charitable Trust, had carried out inquiries into the matter.

From this previous work, according to the report, the OSCR determined that there were three main risk areas for Aleos: third parties having control over a charity, the lack of an adequate trustee board and non-charitable activities.

The OSCR reviewed the governance of a sample of 11 Aleos based on this, but found that in all but one case these charities were governed adequately. The exception to this was the North Ayrshire Venture Trusts, a regeneration charity with an income of £34,241 in the year to March 2013. The regulator found that the charity had no trustees independent of the council, that the charity’s constitution allowed for appointment and removal of trustees by the local authority, and that its charitable purposes needed revision to meet the charity test.

The report says that the charity’s trustees told the regulator it had been going through a period of change and that, since the meeting, the charity has applied to change its purpose and informed the OSCR that it will appoint independent trustees to its board later this year.

The other 10 Aleos were all found to have independent trustees, and in seven cases they were in the majority on the board, the report says – and there were specific reasons why this was not the case for the other three. In all 10 cases, the trustees of the charity took charge of trustee recruitment; the report says that there has been no occasion in which the local authority has stepped in to remove independent trustees. It says the OSCR was satisfied that all 10 had exclusively charitable purposes.

The report concludes: "We are satisfied that, overall, the charitable Aleos are operating well within their unique environment. We will continue to monitor them under our usual monitoring regime and ask that they consider the recommendations below."

These recommendations include more clarity in memoranda of understanding between the Aleos and local authorities, that Aleos should consider asking the regulator’s permission to amend their purposes if they want to change or expand their services, that trustee boards contain an appropriate mix of skills and that the councillors acting as trustees do not also sit on the council committees that deal with the Aleo.

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