Current Charity Legislation and Future Implementation
The Charities and Trustee Investment (Scotland) Act 2005 provides a modern, proportionate regulatory framework designed to support and encourage charitable activity in Scotland, while reassuring the public that their money is being well used. The Act modernises charity law in Scotland and sets out a new Scottish definition of charity, with a requirement for all charities to demonstrate public benefit.
The following list contains details of all the sets of secondary legislation made under the 2005 Act, with the most recently made listed first. The Act received Royal Assent on 14 July 2005 and most of it was commenced in April 2006, in particular the creation of the Scottish Charity Register and most of supervisory powers of the Office of the Scottish Charity Regulator (OSCR), which became a Non-Ministerial Department in April 2006. The Act sets out a framework for charity legislation in Scotland, with the detail being set out in a number of pieces of secondary legislation. The development of this secondary legislation continues but many of these Regulations are already in force.
The Charities and Benevolent Fundraising (Scotland) Regulations 2009 were laid before Parliament on 25 March 2009 and come into force on 1 July 2009. These Regulations further regulate benevolent fundraising, in addition to the requirements already in force in Part 2 of the Charities and Trustee Investment (Scotland) Act 2005. These additional provisions will include a requirement for professional fundraisers to make a statement to potential donors setting out whether they are being paid to collect, and for commercial participators to indicate how much money will go to the charity.
The Further and Higher Education (Scotland) Act 1992 Modification Order 2009 was made on 30 January 2009 and came into force on 9 March 2009. The order amends the power of the Scottish Ministers under section 18(5) of the Further and Higher Education (Scotland) Act 1992 ("the 1992 Act"). This will now require the portion of the proceeds of a disposal of property from a college of further education, determined by Ministers in such circumstances, to be paid to an educational charity. The instrument has been made in accordance with the policy of Ministers that colleges should comply with the requirements of section 7(4)(a) of the 2005 Act in order to retain their charitable status.
The Protection of Charities Assets (Exemption) and the Charity Test (Specified Bodies) (Scotland) Amendment Order 2008 was made on 12 December 2008 and came into force on 1 January 2009 and 25 January 2009. This order amends The Protection of Charities Assets (Exemption) (Scotland) Order 2006 ("the 2006 Order") and The Charity Test (Specified Bodies) (Scotland) Order 2008 ("the 2008 Order") to reflect changes to the names of some of the institutions covered by those orders.
The Charity Test (Specified Bodies) (Scotland) Order 2008 was made on 26 June 2008 and came into force 27 June 2008. This allowed the incorporated Further Education colleges to retain their charitable status, despite being subject to Ministerial powers of direction, because of their unique governance structure; the distinctive role they play in Scottish society; the significant amount of public funding invested in them; and the importance of Scottish Ministers' retaining control over college powers and constitutions to ensure that they continue to operate within a framework which reflects the policies and priorities of the government of the day. Investment (Scotland) Act 2005 (the Act). This order exempted named bodies from the independence test set out in section 7(4)(b) of the Charities and Trustee.
The Further and Higher Education (Scotland) Act 1992 Modification Order 2008 was made on 24 June 2008 and came into force on 1 August 2008. This Order amends section 47(1) of the 1992 Act so that Scottish Ministers are required to obtain the consent of the governing body of the institution prior to exercising powers under the terms of section 47(1) of the Further and Higher Education (Scotland) Act 1992. This amendment to the 1992 Act provides sufficient mitigation of Ministers' powers and should ensure that designated Scottish higher education institutions meet the Ministerial independence requirement of the charity test.
The Charities References in Documents (Scotland) Amendment Regulations 2008 were made on 21 February 2008 and came into force on 1 April 2008. The Regulations amend the requirements of the Charities References in Documents (Scotland) Regulations 2007 to specifically exclude cheques, in all occasions, from the list of documents on which charities must include the required information.
The Protection of Charities Assets (Exemption) (Scotland) Amendment Order 2007 was made on 19 November 2007 and came into force on 30 November 2007 This Order updates and adds to the list of bodies by amending the Schedule to the Protection of Charities Assets (Exemption) (Scotland) Order 2006.
The Charities Reorganisation (Scotland) Regulations 2007 were laid before Parliament on 2 April 2007 and came into force on 31 May 2007. These Regulations provide for the application procedures that charities must follow in applying to the Scottish Charity Regulator ("OSCR") for approval to reorganise. The Consultation Paper on the Proposals for Charities Reorganisation (Scotland) Regulations 2007 was published on 23 October 2006. The responses to the Consultation that we had permission to publish were made available on 15 February 2007 . The Consultation Report was published on 13 March 2007.
The Charities Reference in Documents (Scotland) Regulations 2007 were laid before Parliament on 30 March 2007 and came into force on 1 April 2007. These Regulations set out the information that charities must include on certain documents. The Consultation Paper on the Proposals for Regulations Under Section 15 on Charity References in Documents was published on 20 September 2005. The responses to the Consultation that we had permission to publish were made available on 16 January 2006. The Consultation Report was published on 25 July 2006.
The Charities Accounts (Scotland) Amendment Regulations 2007 were laid before Parliament on 1 March 2007 and came into force on 14 March 2007. These Regulations amend the Charities Accounts (Scotland) Regulations 2006, to allow auditors and independent examiners appointed by the Accounts Commission for Scotland to audit or examine a charity's statement of account.
The Charities and Trustee Investment (Scotland) Act 2005 (Commencement No. 4) Order 2007 was made on 26 February 2007. This Order brought into force on 27 February 2007 , allowing for participation in common investment schemes and common deposit schemes. Section 39 so far as not already in force and sections 40, 41 and 42 of the Act, concerning charity reorganisation came into force on 31 May 2007. This Order also brought into force section 96 of the 2005 Act.
The Scottish Charity Appeals Panel Rules 2006 were laid before Parliament on 30 November 2006 and came into force 31 December 2006. These Rules make provision for the procedure in relation to an appeal brought before the Scottish Charity Appeals Panel ("the Panel") under section 76 of the Act. The Consultation Paper on the Scottish Charity Appeals Panel Rules was published on 15 December 2005. The responses to the Consultation, for which permission was granted to publish, were made available in April 2006. The Consultation Report was published in November 2006.
The Charities Accounts (Scotland) Regulations 2006 were laid before Parliament on 25 April 2006 and came in to force on 17 May 2006. These Regulations provide for the detailed accounting and scrutiny requirements that a charity registered in the Scottish charity register must follow. They apply to charities with a financial year which begins on or after 1st April 2006. The Consultation Paper on The Accounting Regulations for the Charities and Trustee Investment (Scotland) Bill was published on 11 April 2005. The responses to the Consultation that we had permission to publish were made available on 1 August 2005. The Consultation Report was published on 21 October 2005
The Charity Test (Specified Bodies) (Scotland) Order 2006 was made on 21 April 2006 and came into force on 24 April 2006. This Order disapplied section 7(4)(a) (providing that if a body's constitution allows it to distribute or otherwise apply any of its property for a non charitable purpose, it will not meet the charity test) and section 7(4)(b) (providing that if a body's constitution expressly permits the Scottish Ministers or a Minister of the Crown to direct or otherwise control its activities, it will not meet the charity test) in relation to the National Library of Scotland, the National Galleries of Scotland, the National Museums of Scotland, the Royal Commission of Ancient and Historical Monuments of Scotland and the Royal Botanic Garden, Edinburgh.
The Protection of Charities Assets (Exemption) (Scotland) Order 2006 was made on 21 April 2006 and came into force 24 April 2006. This Order disapplied section 19(1) to (7) of the Act in relation to the property and income owned by the bodies listed in the Schedule to the Order. Section 19(1) provides that when a body is removed from the Scottish Charity Register, it remains under a duty to apply property and income held by it before it was removed, in accordance with its purposes as set out on the register. Section 19(2) to (7) protects such assets and ensures that OSCR can continue to oversee the use of the property and income even though the body holding that property and income is no longer a charity, by ensuring that several provisions of the Act continue to apply to the body in so far as they relate to property and income.
The Scottish Charity Register (Transitional) Order 2006 was made on 31 March 2006 and came into force on 1 April 2006. This Order made transitional provisions for the purposes of commencement of section 99 of the Act, disapplying section 3(3) of the Act until 23rd August 2007 and providing that an unregistered charitable body could continue to refer to itself as a charity until 23rd February 2007.
The Charities and Trustee Investment (Scotland) Act 2005 (Commencement No. 3, Transitional and Savings Provision) Order 2006 was made on 31 March 2006 and commenced the majority of the remainder of the Act (with the exception of sections 39 to 42, 49 to 64, 84 to 92, 96 and paragraphs 5(b) and (c), 8 and 11 of Schedule 4). It commenced the Register and most of supervisory powers of OSCR on 1 April 2006, and commenced the Charity Test and OSCR powers to grant charity status on 24 April 2006.
The Charities and Trustee Investment (Scotland) Act 2005 (Commencement No. 2) Order 2006 and brought various provisions into force, allowing Ministers to appoint the OSCR board and the Scottish Charity Appeals Panel (SCAP) members. This Order commenced sections 1(1) to (4) and (6) to (10), 9 and Schedule 1 (relating to the establishment and some functions of OSCR); section 75 and Schedule 2 (concerning the constitution and operation of SCAP); and section 99(3) and (4) (allowing Scottish Ministers to disapply section 3(3) of the Act, by order for up to 18 months to give OSCR time to gather the necessary information on each charity before having to enter details on the Scottish Charity Register).
The Charities and Trustee Investment (Scotland) Act 2005 (Consequential Provisions and Modifications) Order 2006 was made on 14 February 2006. This Order makes provision in consequence of the Act: adding OSCR to those offices which are not ministerial offices in the Scottish Administration; making provision to permit the Commissioners for Her Majesty's Revenue and Customs (HMRC) to disclose information to OSCR; concerning action to be taken by the registrar of companies or the Financial Services Authority on receipt of information from OSCR relating to the conversion of a company or a registered society (under the Industrial and Provident Societies Act 1965 (c.12)) into a Scottish charitable incorporated organisation (SCIO); and makes consequential modifications of primary and secondary legislation.
The Charities and Trustee Investment (Scotland) Act 2005 (Commencement No. 1) Order 2005 was made on 14 December 2005 . This Order commenced various regulation and order making powers contained in the Act. It also commenced provisions of the Act dealing with investment powers of trustees (Part 3), a power to provide financial assistance to benevolent bodies (section 97)and provisions for registered community amateur sports clubs to receive rates relief for (section 98) on 1 January 2006 and 1 April 2006.
The Public Appointments and Public Bodies etc. (Scotland) Act 2003 (Treatment of Office or Body as Specified Authority) Order 2005 was made on 25 October 2005. This Order adds OSCR, amongst others, to the list of specified authorities in schedule 2 to the Public Appointments and Public Bodies etc. (Scotland) Act 2003 (asp 4).
Future Implementation
While most sections of the Act have come into force, the following sections remain to be commenced:
(i) sections 49 to 64 of the Act which relate to Scottish Charitable Incorporated Organisations,
(ii) sections 84 to 92 which relate to public benevolent collections,
(iii) schedule 4 paragraphs 5(b) and (c), and 11 which make consequential amendments following from the above.
The sections above will be commenced with the introduction of secondary legislation, which is necessary to set out the detail of how these provisions will operate. Further commencement orders as necessary will cover the remaining provisions in the Act when these are ready to be commenced. We will be drafting and consulting on these Regulations, after which the relevant sections of the Act will come into force.
Also provided are some indicative target dates to which we will focus delivery; however, these could be subject to change if Ministers' policy or legislative priorities necessitate a different course or if consultation and stakeholder engagement requirements exceed those currently envisaged.Work on the following pieces of subordinate legislation will commence within this Parliamentary session.
Charities Accounts (Scotland) Amendment Regulations (No 2.)
Purpose: to amend the Charities Accounts (Scotland) Regulations 2006 to update some technical references and make other changes, depending on the outcome of a planned consultation exercise. The 2006 Regulations need to be updated to reflect the publication of new Statements of Recommended Practice (SORPs) for the Registered Social Landlord (RSL) and Higher and Further Education (HE/FE) sectors and to remove redundant references to audit requirements in the Companies Act 1985. It is also our intention to clarify requirements for the audit of annual reports but there are a number of other issues, including proposals to require the audit or examination of consolidated accounts, which we were the subject of consultation in spring 2009.
- Consultation issued 27 April 2009 and closed on 24 July 2009.
- Anticipate Regulations will be in force by late 2009/early 2010.
Charities Transfer Schemes (Scotland) Regulations
Purpose: to provide a detailed framework for the preparation of transfer schemes by OSCR to submit to the Court of Session seeking approval for the transfer of assets of a charity, where it appears there has been misconduct, or a body representing itself as a charity, to another charity.
- Spring 2010 - issue Consultation (3 months)
- Late 2010 - publish Consultation Report and finalise Regulations
- Early 2011 - lay Regulations
- Spring 2011 - Regulations in force
Scottish Charitable Incorporated Organisations Regulations (SCIOs)
Purpose: to provide the detailed regulatory framework for the operation of a new, more straightforward, corporate vehicle for charities created under chapter 7 of the Act. The SCIOs Working Group is a short-life panel of stakeholders set up to Ministers on how best to implement a regime for SCIOs that is cost-effective, as straightforward as possible and tailored to the needs of charities in Scotland. More details on the development of the SCIO can be seen on Scottish Charitable Incorporated Organisations (SCIOs) Working Group webpages. We expect the development to take longer and involve more extensive consultation than most other Regulations. The following draft timetable includes a number of assumptions on the way the policy development process will proceed and will be subject to Ministerial decision. A consultation on policy options for the SCIOs regulatory framework, developed by the SCIOs Working Group was published on 16 November 2009 and will close on 26 February 2010. Charities and Trustee Investment (Scotland) Act 2005: Consultation on Options for the Implementation of the Scottish Charitable Incorporated Organisation (SCIO)
- 16 November 2009 - launch of policy consultation
- Early 2010 -publication of Consultation Report
- Spring/Summer 2010 - stakeholder engagement on draft SCIO Regulations
- Winter 2010 - Commencement Order 5 to commence SCIO sections & - laying of Regulations
- End 2010/Early 2011 - Regulations come into force
Public Benevolent Collections (Scotland) Regulations
Purpose: to set out the detail surrounding the operation of the new local authority licensing system to regulate collections of money, promises of money or goods from the public for charitable, benevolent or philanthropic purposes. We anticipate the development of these Regulations to be quite a lengthy process and we will engage with all the local authorities throughout Scotland, as well as representatives from the fundraising sector and OSCR, in their development.
- Mid 2010 - launch of policy consultation
- End 2010 -publication of Consultation Report, in liaison with OSCR
- Spring 2011 - launch of consultation on Regulations
- Mid 2011 - publication of Consultation Report
- End 2011 - Regulations come into force
Dormant Accounts
Purpose: To provide the detailed procedures which OSCR must follow when informed by a bank or building society that they hold a dormant charity account. Timetable still to be determined.