Scotland Charities

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	Scotland – Charities and Trustee Investment (Scotland) Act 2005 The Act represents the first major reform of charity law in Scotland for over 50 years. It deals with:- Meaning of “charitable” The Act provides a non-exhaustive statutory definition of what is “charitable” in Scottish law. Future development will occur through caselaw, as the provisions are interpreted by the courts and applied to the circumstances of individual cases. There are two elements to the definition. First, an organisation must have purposes falling within one or more of 16 listed categories. Secondly, it will have to demonstrate that it provides public benefit. There is no longer be any automatic presumption of public benefit for particular categories of charitable activities. OSCR monitors all charities on the Scottish Charity Register to ensure they continue to meet these two conditions, which are knowns as the "charity test". It issues guidance on meeting the test. That includes details about providing public benefit.. A new version will be issued in Summer 2008. Summary of the "charity test" in Scotland An organisation based within Scotland, or based elsewhere but having assets or activities in Scotland, can only describe itself as a charity if it meets the charity test. The charity test is a two part test:- 1. The organisation has only one or more of the charitable purposes within the list of purposes set out in the Charities and Trustee Investment (Scotland) Act 2005. and 2. These purposes provide public benefit in Scotland or elsewhere. Principles of public benefit - Scotland The legal principles of charitable public benefit under the 2005 Act are: No particular purpose is presumed to be for the public benefit. These means that every charity must demonstrate it provides benefit. In determining whether a body does (or, for a new organisation, intends to) provide public benefit, regard must be had to these matters: How any benefit gained, or likely to be gained, by members of the body or other persons (other than members of the public) compares to the public benefit; How any disbenefit incurred, or likely to be incurred, by the public compares to the public benefit. The above determination is to be done in relation to the consequences of the body in question exercising its functions. Where benefit is, or is likely to be, provided only to a section of the public, whether any condition on obtaining that benefit (including any charge or fee) is unduly restrictive. The Office of the Scottish Charity Regulator is obliged to issue guidance on how it determines whether a body meets the charity test. That guidance addresses both charitable puposes and the matter of public benefit. OSCR understands the principles to be broadly a restatement of caselaw that pre dates the 2005 Act. It looks to that caselaw to assist it in interpreting and applying the charity test in relation to public benefit. OSCR expects charities to be able to identify and describe the benefits provided but recognises that the nature of the benefit can vary widely from organisation to organisation. Benefits can be tangible or intangible, direct or indirect, but must be identifiable. OSCR makes a judgement on the balance of public benefit versus any private benefit or any disbenefit. It views "disbenefit" as more than a mere absence of benefit and more equivalent to harm. OSCR also makes a judgement on whether any conditions are unduly restrictive. Office of the Scottish Charity Regulator The charity regulator for Scotland, OSCR, has a wide role and significant powers. Its functions are to keep the Scottish Charity Register, to register new Scottish charities. This includes "policing" charities to ensure they meet the Scottish "charity test" and deliver public benefit. It also involves removing defunct charities from the Register and ensuring that active charities comply with their obligations under charity law, especially in relation to public accountability and reporting. Controversially, charities registered in England and Wales or other territories but operating in Scotland are obliged to register with OSCR. Scottish Charitable Incorporated Organisation A new optional corporate form for Scottish charities is to be introduced, the Scottish Charitable Incorporated Organisation (“SCIO”). The SCIO is to be a corporate body with independent legal identity which gives its members the protection of limited liability. The SCIO legal form will only be available to charities registered by OSCR and it is to be optional, not mandatory. Other familiar legal forms, such as the company limited by guarantee, will still be available to charities. Registration of the SCIO itself will be with OSCR, not with Companies House, and OSCR will be the sole regulator for SCIOs. There will be a model constitution, which can be adapted or altered and detailed regulations will impose further requirements. Miscellaneous A number of other reforms have been or will be introduced, including some new statutory duties for trustees, regulation of public benevolent collections through a licensing system, new rules on relationships between charities and professional fundraisers and on relationships between charities and commercial participators. Statutory investment powers for trustees of all Scottish trusts, whether they are private trusts, public trusts or charities, have been provided. There is a revised annual accounting and reporting regime for all charities on the Scottish Charity Register. They have a legal duty to prepare accounts and reports meeting detailed regulatory requirements and to file those accounts with OSCR every year. Charities also have to observe rules on publicising their charitable status on documents and stationery. more Courses Jordans provide professional training courses to assist clients in dealing with the new law and its practical implications find out more and have a range of charity law publications find out more

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	Click contact name to email Cecile Gillard 0117 918 1319

			Charity News
	Public benefit guidance issued for charities The Charity Commission has issued its long awaited guidance on public benefit. Find out more Activation of the Charities Act 2006 (England and Wales). Find out more New rules on the assessment of public benefit. Find out more New charity law for Northen Ireland is expected during 2008. Find out more

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