Posted: Wednesday 30 November 2011
In order to become a registered charity in Scotland, the charitable purposes test which is set out in Sections 7 and 8 of the Charities and Trustee Investment (Scotland) Act 2005 (the “2005 Act”) must be met. The Office of the Scottish Charity Regulator (“OSCR”) must consider whether the charity’s purposes consist only of one (or more) of the “charitable purposes” and whether the organisation provides public benefit in Scotland. The charitable purposes are listed in the 2005 Act and examples include: the advancement of education, the promotion of equality and diversity, and the advancement of animal welfare. In tackling this question, OSCR must have regard to whether any conditions placed on obtaining the benefit by the public, or a section of the public, are unduly restrictive. This includes considering whether any fees which must be paid to the charity before the benefit can be obtained.
It was this final consideration which proved a problem for four independent schools – Hutcheson’s Educational Trust in Glasgow (charity number SC002922), Lomond School in Helensburgh (charity number SC007957), Merchiston Castle School in Edinburgh (charity number SC016580) and St Leonard’s School in St Andrews (charity number SC010904). Each of these organisations was registered as a charity with OSCR but in 2008, as part of an on-going review of charitable status, the Regulator identified them as charities which were failing to meet the charitable purposes test. In each case OSCR felt that “due to the fees that were in place, the absence of sufficient mitigation of the impact of these fees and the lack of other benefit for which it made no fee or charge being provided in furtherance of its charitable purposes” the schools were failing to provide a public benefit as required under the 2005 Act.
Now, after three years of work by the schools in collaboration with OSCR, all four have had their charitable status confirmed by the Regulator. In order to receive this approval all four schools have had to make significant changes to the way in which they operate in order to increase the public benefit from their activities. A long term plan had to be put in place, OSCR’s approval had to be obtained and the objectives contained in the plan had to be met.
Changes made by the schools include:-
This is a good reminder that the charitable purposes test is not merely concerned with a snapshot of the charity at the time it applies to OSCR. As the schools found out to their cost, OSCR will continue to monitor all registered charities to ensure public benefit of the required level is being provided. This is why charities should consider not only their current activities when applying to OSCR but also their long term plans. Most importantly, charities should always consider whether what they are doing is providing a sufficient level of public benefit.
In the past we have reported on the long-running saga of the English independent schools and their fight against the Charity Commission’s guidance which sets out what the Commission considers such schools must do in order to deliver “public benefit” click here to find out more.