Charity

The results are in! In our October 2014 blog we summarised the four main categories which OSCR presented to Scottish charities and the general public which were under review through the “Targeted Regulation” consultation process.Image of the word charity spelt out in pebbles

As part of inputting in various forms to the consultation process, Brodies attended the Glasgow OSCR-led session on 15 October 2014 and were delighted to be engaged in the process, along with many other local charity trustees, charity employees and those who benefit from charity’s services. This was a lively and engaged session, where every voice was heard by OSCR.

OSCR has now considered the responses to the consultation and has issued a follow up document indicating what will happen next in the process.

Articulating your organisation’s work and governance- annual reporting

For us this is a really important part of the changing and targeted regulatory landscape.

Tell the world!

Between the SORP update (see our blog on “It’s not all about the numbers!”) and “Targeted Regulation”, there is clear requirement and encouragement to better and more openly articulate a charity’s work, objectives and challenges as well as express the governance of the organisation.

It is clear that there will be a future focus on the Trustee Annual Report- moving beyond just the numbers contained in Annual Accounts to the narrative in the Trustee Annual Report underpinning what the charity is doing and how it is doing it.

Keeping governance under review- what are your purposes?

In the original consultation paper OSCR included proposed questions for a new Annual Return. The draft questions included “when did the charity trustees last review the charity’s governing document?” Whether or not the Annual Return is amended in this way, it is a feature of OSCR guidance and other updates that charity trustees should ask themselves whether or not the charity’s purposes and the activities undertaken to further those purposes are consistent and up-to-date.

It can be a great thing in some cases where purposes and activities develop from those originally set out. However, it must be done in a considered way and not accidentally or as part of “mission creep”.

Trustees should also consider whether or not their legal form remains the “right” governing document. We have blogged on this before and the issue is of particular importance for trusts and unincorporated associations to actively consider.

Practice (helps) make perfect- the value of genuine trustee training

This is a feature of Inquiry Reports carried out by OSCR into charities where there have been matters of potential concern. It also appears in the proposed questions for the Annual Return. It is fundamental that trustees understand what it is to be a charity trustee generally and what it is to be a charity trustee in the context of their charity’s purposes and activities. This is the seed of strong governance.

Training should be more than a reference to the statutory duties which can be abstract and not spark the interest of many (including charity lawyers)! Rather, it must be engaging and provided in an accessible manner having regard to the issues that will affect that particular charity.

We can help charity trustees create effective trustee training sessions as well as deliver this to trustees across the country and across all types of charity. For more information contact any of Alan Eccles, Brenda Scott or Fiona Beal- details below.

Consultation comments: In terms of annual reporting by charities to OSCR, a majority of written respondents felt the new questions for the Annual Return were clear and understandable. There appeared to be less clear conclusions as to whether or not the new style return would be easier or more difficult to complete. 62% answered ‘yes’ to the proposal of keeping the £25,000 threshold, above which more information is collected from charities.

OSCR’s action point: The Annual Return will be changed so that OSCR asks questions which better add to OSCR’s knowledge of how charities are operating. Guidance on these changes will be issued in due course.

OSCR also will look to initiating a more “holistic” approach to charity review. Moving away from more “routine” checks to a more integrated system using information gathered from a variety of resources. In other words targeted regulation based on risk issues arising from the answers to the Annual Return questions, the Trustee Annual Report and other sources.

Publishing charity accounts

A majority of respondents (70%) agreed that OSCR should publish accounts for charities with incomes of £25,000 or more and all Scottish Charitable Incorporated Organisations to increase levels of transparency and accountability to other in the charities sector and the general public.

OSCR’s action point: OSCR will take forward its project to publish charity accounts, initially by encouraging charities to publish links to their accounts on the online register.

Charity trustee database

This particular initiative resulted in almost an even split between those who felt it was a positive move and those who were against the idea of collating a trustee database for internal OSCR purposes, with the ultimate aim of publishing charity trustee names (only) on the charity register. Perhaps understandably, a high level of concern surrounded the privacy of such data. It should be noted that OSCR made clear it was not its intention to publish personal addresses and dates of birth.

OSCR’s action point: Further work will be carried out in terms of clarifying the information requested. At this stage OSCR do not intend to publish trustee details on the register.

Serious Incident Reporting

Again, a majority of respondents (64%) thought that the proposal were a good idea, with some commentary that OSCR could perhaps better articulate the definitions of ‘incident’ and ‘risk’. Many of those who inputted commented that SIR would assist OSCR in better fulfilling its regulator function by ensuring issues were dealt with in a timely fashion. As with comments on the charity trustee database, some were concerned with the cost/time benefits of the work required to properly implement this- questioning whether the regulatory benefit expected to be gained was worth the input energy that would be required.

OSCR’s action point: OSCR will look to introduce a reporting regime similar to serious incident reporting. Further work will be required to clarify actual incidents they wish to target and in doing so developing a benchmarking system and detailed guidance for charity trustees and the public.

What next?

Changes look likely to be brought in in late 2015/ early 2016, with some of the larger changes happening in 2016/17 when redesigned IT systems should be operational. OSCR will communicate in advance regarding these changes, particular where such changes will require proactive action of charities and their trustees.

This blog was written by:-

Alan Eccles – 0141 245 6255 or alan.eccles@brodies.com

and

Helen Nelson – 0141 428 3353 or helen.nelson@brodies.com

For more information on the consultation outcomes, please contact our charities team – Christine O’Neill, Brenda Scott, Eric Galbraith, Alan Eccles, Paul McMahon, Charles Livingstone, Fiona Beal, Charles Hay, Helen Nelson or Ruth Saunders.

You can now also follow our new charity law updates at @BCharitable on Twitter.

 

 

Alan Eccles

Partner at Brodies LLP
Alan is a Partner specialising in private client (succession, incapacity and asset protection) matters as well as the charities, third and impact sectors.
Alan Eccles