Coming soon: changes to charity law and the way we regulate

Legislation was laid in the Scottish Parliament today to bring into effect (or ‘commence’) some of the changes contained in the Charities (Regulation and Administration) (Scotland) Act 2023. These changes will take effect on 1 April 2024. OSCR has been working hard to make sure charities and the public get maximum benefit from the improvements these changes will bring. 

While there is no immediate action required on the part of charities or charity trustees, we want to make sure that the sector and those who advise it know what changes are coming up. Any relevant guidance on our website will be updated once the changes take effect.

Increased inquiry powers

Part of OSCR’s role is to conduct inquiries into a charity when we identify that there is possible misconduct or a risk to assets.

From 1 April 2024, we should have a number of new powers to help us work more effectively to protect charities and their assets. They include:

• Power to direct charities to take particular actions: This will allow us to compel changes and improvements that need to be made in a charity. Our current powers only allow us to instruct a charity not to do certain things. This positive power will allow us to respond flexibly and appropriately to the wide range of situations we encounter. 

• Power to appoint interim trustees: Using this power, we will be able to help charities that cannot function due to a lack of charity trustees. Specific criteria must be met to allow us to do this. In using this power, we will seek good outcomes for the charity, which are likely to vary depending on the charity’s situation.     

• Power to inquire into former charities and former charity trustees: This will extend the reach we have to make inquiries into organisations that are no longer charities and individuals who were previously charity trustees.

• Changes to OSCR’s powers to require charities and others to provide information: The timescales involved here will be clarified and the process streamlined, providing benefit to the progress of our inquiries.

Removing charities that fail to submit accounts and to respond to OSCR

Every year, charities must submit accounts to OSCR within 9 months of their financial year end.

The 2023 Act will give us the power to remove charities from the Scottish Charity Register that have failed to submit accounts on time and failed to engage with OSCR about putting this breach of trustee duties right. 

From 1 April 2024, we will be using these new powers to notify charities of our intent to remove them from the Register. This follows up on the recent removals of charities under existing legislation. 

While it is disappointing to remove charities from the Register, the duty to report to the Regulator underpins our regulatory framework in Scotland – without information on the finances and activities of charities, OSCR cannot assure the public and funders that those charities are effectively using charity resources for charitable purposes. This will be even more important in the future when the upcoming duty on OSCR to publish all charity accounts is commenced.

A charity’s connection to Scotland

From 1 April 2024, OSCR must refuse an application to be registered as a charity from organisations that have no or a negligible connection with Scotland. To decide on this, we will need to look at factors including whether the organisation has a principal office in Scotland, occupies premises or carries out activities here. Our experience indicates that this will not be an issue for the overwhelming majority of applicants, but the new measure will ensure that we can deal with issues where they arise.

Other changes

In addition to the changes above, there will be several minor changes aimed at simplifying and enhancing the flexibility of interactions between charities and OSCR. For example:

• Charities will no longer be required to give OSCR 42 days’ notice of changes which require our consent (like changes to charity name, purposes in the constitution or dissolution).

• We will be able to enter two charities on the Scottish Charity Register with the same name when there is a merger of charities – for instance, when an unincorporated charity is winding up and transferring its assets to a new SCIO, the new SCIO can be registered under the same name as the unincorporated one.

We will also be able to take action where the working or ‘known as’ name of a charity or an applicant for registration is misleading, offensive or too similar to another charity’s name, as we do now for charities’ legal names.

The future

Scottish Ministers intend to commence some further measures on 1 October 2024.  This includes the creation of a publicly searchable record of individuals who have been permanently disqualified by the Courts from being a charity trustee so that charities can carry out due diligence on prospective new trustees.

The remaining parts of the 2023 Act are planned to come into force in summer 2025. This should give charities and OSCR the time needed to prepare for these changes, which include:

• a schedule of charity trustees

• publication of trustee names

• a record of charity mergers; and

• updates to the disqualification criteria for charity trustees.

OSCR | Coming soon: changes to charity law and the way we regulate