This article highlights the key updates and underscores why it is essential for trustees to familiarise themselves with the changes and cooperate with the Office of the Scottish Charity Regulator (OSCR). The 2023 Act grants OSCR enhanced powers, strengthening its role as a regulator and requiring trustees to be more transparent and engaged in charity governance.
New OSCR powers: Positive directions and investigations
- OSCR’s investigative powers have been strengthened. OSCR can now investigate not only current charities but also former charities and trustees. This increased reach ensures that charities remain compliant and accountable, even after trustees have stepped down or a charity has been dissolved.
- Following an investigation, OSCR has the power to issue positive directions, not only to charities but also a body which appears to represent itself as a charity and individuals who appear to represent such a charity or body. A direction from OSCR can require charities, bodies or individuals to take specific actions if OSCR identifies compliance issues or risks. This marks a shift from the past, where OSCR could only advise or recommend changes or actions. Now, charities, charitable bodies and representing individuals must adhere to OSCR’s directions to rectify problems, or risk further action.
- OSCR can now remove a charity from the register where the charity can no longer demonstrate it has a connection to Scotland. Charities should continue to ensure they are acting within their powers in relation to their established community within Scotland if they wish to remain registered in Scotland.
Publication of charity accounts and trustee information
- From late 2025, every charity will be required to make its accounts, trustee annual reports, and external scrutiny reports publicly available on the Scottish Charity Register for at least five years. These documents will be published in full, without redactions of personal information, which previously applied to certain data, such as trustee names. Charities should carefully consider the inclusion of personal details, such as names and images of volunteers or beneficiaries, as these will be publicly available.
- From mid-2025, OSCR will require charities to submit detailed information about each trustee, including names, addresses, contact information and dates of birth. The names of trustees will be published on the Scottish Charity Register, increasing transparency and helping the public and donors identify who is responsible for a charity’s governance.
Removal of charities for non-compliance
The 2023 Act grants OSCR the power to remove charities from the Scottish Charity Register if they fail to submit their accounts on time or do not engage with OSCR to address breaches. Please see the second article in this series for further information on charity governance and non-compliance here. This change reinforces the importance of complying with reporting requirements. If a charity does not submit its accounts or fails to resolve compliance issues, OSCR can remove the charity from the Register, making it difficult for the charity to regain its status.
Trustees are responsible for ensuring that the charity complies with these requirements and must act promptly if any issues arise. Regular engagement with OSCR will help prevent charities from falling into non-compliance and facing removal from the Register.
Automatic disqualification of trustees
The 2023 Act expands the criteria for automatic disqualification of charity trustees. Trustees are now disqualified if they are convicted of serious crimes. This expanded list now also applies to senior management staff and volunteers in key decision-making roles within charities. For further information on trustee disqualification, please see the first article in this series here.
OSCR will maintain a public, searchable list of individuals who are disqualified from being trustees, which will assist charities in performing due diligence when appointing new trustees. Trustees should ensure they check the eligibility of potential trustees and staff, as failure to do so could result in legal issues.
Power to appoint interim trustees
In cases where a charity is unable to function due to an insufficient number of trustees, OSCR can now appoint interim trustees. Such an interim appointment can be at the request of the charity or of OSCR's own accord if there are no charity trustees or charity trustees are unable to act. OSCR will use this power in cases where charities cannot function and is a temporary appointment to allow the charity to appoint its own trustees in terms of its constitution. This reinforces the need for trustees to maintain active involvement and ensure proper succession planning within the charity.
Increased flexibility
Previously, charities were required to give OSCR 42 days' notice for certain changes, such as altering a charity’s name or purposes. This 42-day notice period has now been removed. Charities must still apply to OSCR for approval prior to making such changes and OSCR aims to provide a decision within 28 days. This shortened timescale will allow charities more flexibility in their planning.
The Scottish Government recently set out its plans to further improve charity regulation, in particular, ensuring that regulation and monitoring of charity accounts remains proportionate and reasonable. Due to the issues with availability and affordability of auditors, the Scottish Government is proposing new regulations in the autumn to increase the audit income threshold from £500,000 to £1 million following recommendation from OSCR.
Releasing dormant funds
OSCR is aware of the amount of charitable funds that are locked in dormant funds held by charitable trusts (i.e. trusts which have been set up, usually with an endowment, to issue grants to specific persons or parts of the community). As these are usually historic in nature the original purpose of the funds no longer exists or charity trustees struggle to find or make appropriate awards. In order to release funds and revitalise communities OSCR has been working with Foundation Scotland to deliver the Revitalising Trusts Project. The Project will be contacting hundreds of underactive or dormant charitable trusts to help them release funds back into local communities. This can involve making changes to the governing document, help with finding new trustees or allocating funds and winding up the trust. This is a great initiative that recognises the difficulties faced by charities.
Regulator and facilitator
The 2023 Act brings substantial changes to charity governance in Scotland. With enhanced powers for OSCR to direct charities, investigate operations, and enforce compliance, trustees must be diligent in ensuring their charity remains fully compliant with charity law. This means working proactively and transparently with OSCR to address potential issues before they become serious problems.
OSCR’s role is also to support charities and their trustees in understanding their role and achieving legal compliance. Cooperation with OSCR is not just about avoiding penalties, it is about maintaining the charity’s ability to operate and fulfil its charitable purposes.
By understanding and adapting to these new regulatory requirements, trustees can protect their charity, safeguard its assets, and help maintain public trust. The OSCR is aware of the current challenges faced by charities and offer a wide range of guidance to support improvement within the charity sector.
This article was co-authored by Sasha Fothergill, Trainee Solicitor in MFMac's Charities & Third Sector team.
