In Context: Charities (Regulation and Administration) Bill

After almost 20 years, the Scottish Government's Charities (Regulation and Administration) Bill aims to improve and update transparency and accountability in the third sector.

WHAT IS IT?

Introduced in mid-November, this bill contains measures that will “maintain public trust and confidence” in charities and their regulator, according to social justice secretary Shona Robison.

The rules in this area haven’t been overhauled in almost 20 years, and the Scottish Government argues that it’s now time to bring in key changes, giving more power to the Office of the Scottish Charity Regulator (OSCR) and making more information publicly accessible.

The independent watchdog oversees more than 25,000 community groups, universities, faith organisations, care providers and more. Based in Dundee, it was established in 2003 following recommendations from the Scottish Executive’s McFadden Commission on the regulation of charities, and gained full powers three years later. 

Robison has said there have been “significant” changes in the sector since that time and the bill, which is currently out to consultation, is a response to that.

WHAT’S IN THE BILL?

Currently at stage one in the legislative process, the bill seeks to have OSCR publish annual accounts for every charity and include the names of all charity trustees in the Scottish Charity Register, which is searched around 100,000 times every month. Its provisions also give OSCR the power to remove charities that fail to provide accounts and ignore its messages, and to create a publicly searchable record of charity trustees who have been removed from their positions.

“Charities play a vital role in our society,” said Robison, “from supporting individuals and communities to informing policy at a national level. Current charity law is now 17 years old, the charity sector has changed significantly in that time and the legislation needs to be updated to reflect that.”

The Scottish Government committed to this in its 2022-23 Programme for Government, and all charities on the Scottish Charity Register will, under the proposals, be required to “have and retain a connection to Scotland”. The watchdog will also gain new powers to issue positive directions to a charity to take action when issues like a conflict of interest arise.

WHY DOES IT MATTER?

Charities work at every level in our society. From grassroots local initiatives to big-money, professional organisations with high-powered chief executives, they collectively draw in £13bn in income every year. As well as taking monies from bequests, monthly giving and individual donations, many charities count the Scottish Government as a key funder, while others draw grants from local authorities – so it’s not just the public’s cash that is at stake when decisions are taken, it’s also public money. 

Currently, while all charities registered in Scotland are under a legal duty to submit annual reports and accounts, there’s no such requirement for these to be published on the Scottish Charity Register. And though OSCR does publish the paperwork for some organisations, such as those bringing in more than £25,000, many details, such as the names of trustees, are redacted. This will change under the terms of the legislation, though certain information can still be kept private where its inclusion is “likely to jeopardise the safety or security of any person or premises”.

According to the latest Scottish Charity Survey, which was published in April, one in 10 members of the public sought help from charities with access to goods like food and clothing during the previous year. Meanwhile, one quarter of those asked thought charities had become less trustworthy since 2018, with negative publicity, mismanagement, and “the perception of inappropriately large salaries” given as the most common reasons for this. Fewer than four in 10 people agreed that “most charities can be trusted to run themselves well, without the need for monitoring”.

“Charities have told us that they want these changes to help strengthen existing charity law and update their system of regulation,” Robison said of the bill. “In order to maintain public trust and confidence in this important sector and its regulator in the years ahead, we are taking the required steps to increase transparency and to extend OSCR’s enforcement powers.”

WHAT IS THE REACTION TO THE BILL?

With the public consultation open until 3 February, it’ll be some time before the full picture emerges. However, more than 300 responses were submitted to a previous consultation on Scottish charity law. Analysis published in summer 2019 found most respondents supported the proposals, which are now incorporated into the bill.

Anna Fowlie, chief executive of third sector umbrella body, the Scottish Council for Voluntary Organisations, has welcomed the bill, saying that “charity regulation is vital to public trust and confidence in the sector, and it needs to be fit for purpose”.

The proposals are “an opportunity to modernise regulation”, she said, and ensure OSCR can fulfil its functions “as effectively as possible”. 

Meanwhile, OSCR chair Marieke Dwarshuis said she was “pleased to see this bill start its progress through the Scottish Parliament”. There are, she says, a “very small minority of charities who don’t follow the rules”.