The Scottish Government

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Main findings

• There was widespread awareness of recent bad publicity and unanimous agreement that personal confidence in charities had been severely reduced, with around half stating that they had reduced the amount of donations which they made as a result.
• Almost all stated that they were much more selective in which charities to support and there was widespread suspicion of major, "household name" charities in terms of the proportion of funds raised which went to the ultimate beneficiaries .
• There was a unanimous view that new regulation was needed and that the Executive's introduction of the Bill was timeous and could rightly be regarded as a priority.
• The rebuilding of public trust in charities was seen as the primary function of the Regulator with an emphasis on ensuring the maintenance of a public register and ensuring charities produce annual accounts clearly stating how funds raised were spent. The need for disciplinary powers and legal sanctions was also agreed unanimously.
• There was very little concern over the definition of charitable purposes with the majority taking the view that the critical test was that of public benefit.
• There was unanimous agreement that public benefit should be defined within the legislation to avoid the regulatory mechanism becoming bogged down with appeals. There was also general agreement that applicants for charitable status should be able to quantify such benefit and be required, periodically, to prove they had generated it.
• A small majority took the view that the definitions should be wide, leaving the public to decide what causes to support. A substantial minority felt that public benefit should be defined rigorously with the onus on applicants to prove that they were satisfying a genuine need among the deprived and oppressed.
• The concept of a common title and code of practice for all individuals involved in the governance of charities was unanimously agreed. There was also a consensus that charities should be allowed to pay reasonable remuneration but that this should be clearly identified in their published accounts.
• Street collections should be restricted to registered charities and individual collectors should carry both official identification from the charity and display a license. Numbers and locations of collectors should be more rigorously controlled and only passive collecting should be allowed with aggressive collectors subject to prosecution.
• Licensing should remain a local authority responsibility to reflect differing local conditions.

Introduction

The Scotland Act devolved the regulation of charities in Scotland to the Scottish Executive which published a draft Charities Bill and consultation paper on 2nd June 2004 to take forward its Partnership Agreement commitment to reform Scottish charity law. This project formed a part of the consultation process and sought the viewpoint of the "general public" i.e. those not directly working or involved in charities.

Background

The purpose of the charity legislation is to provide a robust, effective and proportionate regulatory system for Scottish charities which will secure the widespread support and confidence of both the public and the charities sector. The draft Bill:

• sets out a Scottish definition of charity based on a list of charitable purposes and the principle of public benefit
• empowers the Office of the Scottish Charity Regulator (OSCR) to:-
• maintain a publicly accessible statutory register of all charities
• monitor charity activities and accounts
• take action to safeguard charity funds where misconduct is suspected
• sets out a number of improvements in the regulation of fundraising

The draft Bill sets out a Scottish definition of charity based on a list of charitable purposes and the principle of public benefit compatible with the definition being adopted by the UK Government. It empowers the Office of the Scottish Charity Regulator (OSCR), a new agency set up in December 2003, to maintain a publicly accessible statutory register of all charities operating in Scotland, to monitor charity activities and accounts and to take speedy action to safeguard charity funds where misconduct is suspected. It also sets out a number of improvements in the regulation of fundraising for charities.

Aims of Research

The overall aims of the consultation process were to explore:-

• General public attitudes towards charities
• Effects of recent negative media coverage
• Levels of confidence in charitable donations
• Views on proposed changes contained within the draft Bill

Methodology

Five focus groups were organised of between 7 and 10 participants. These were selected randomly from the general public at a range of locations, including shopping centres, community centres and office complexes to represent a broad cross-section of the Scottish population. Sessions were held in of the following locations to reflect possible geographic differences:

• Suburban Edinburgh (Barnton)
• Central Glasgow
• Inverness
• Galashiels

An Asian focus group was also organised in Edinburgh to include views from a wider selection of Scottish society. Each session lasted 11/2 hours and was led by a facilitator supported by an observer. Sessions were taped on the understanding that the tapes would be destroyed after use.

General public attitudes towards charities

While participants were all aware of the importance of charities to society, the majority expressed growing mistrust of their operations, particularly over the proportion of funds raised which reached the ultimate beneficiaries. As a result, support for a rigorous and transparent regulatory process was unanimous and viewed as an essential step towards restoring public confidence.

Effects of recent negative media coverage

All participants were aware of recent negative publicity with the majority able to name one charity involved. This, itself, was an indication of the level of public awareness of and interest in the sector. Participants all reported that their confidence in the sector had diminished as a result. Around half stated that they had reduced their level of donation with the majority stating that they were increasingly selective about which charities to support.

Levels of confidence in charitable donations

No participants doubted that the majority of charities were bona fide organisations but all expressed concern over a perceived lack of transparency in their use of donations. To remedy this, it was seen as highly desirable for charities registered under the proposed legislation to be required to produce detailed, public accounts specifying the proportion of income reaching the ultimate beneficiaries and the level of salaries and expenses paid to staff and board members. Confidence in street collectors was particularly low, with the majority feeling that they should be licensed both by their charitable organisation and local authority and state clearly what proportion of the funds collected would go to the charitable purpose stated. A substantial minority of participants believed that all street collections should be banned.

Views on proposed changes contained within the draft Bill

The proposals contained within the draft Bill were generally welcomed as necessary and timely. The function of Regulator (OSCR) was seen as critical to the restoration of public confidence. Specifically, it was strongly felt that the Regulator should have few powers of discretion and that the regulations governing the definitions of charity and public benefit and the conduct of charitable organisations should be clearly defined.

There was little concern expressed over the formal definition of charitable purpose with the majority agreeing that the definition of public benefit was the critical test. There were, however, considerable differences in views on how rigorous the latter should be with a slight majority in favour of a wide, generous definition leaving the public to decide what causes to support. A substantial minority felt that the onus should be on applicants for charitable status to prove genuine need and that their activities would be significant in alleviating it. The concept of a new, enforceable code of conduct for individuals involved in the governance of charities was strongly supported as was that of a common title for the function irrespective of the legal structure of the organisation. The proposed term for this -"charity steward"- was almost unanimously rejected as unsuitable as having low status connotations.

The need to license and control street collections was unanimously agreed with the majority of participants supporting stricter measures than those proposed within the draft Bill.