At Morton Fraser we have highlighted clarity as our guiding principle.
This directs the way we communicate, the way we advise, the way we conduct relationships with our clients and the way we are totally transparent and upfront about our charges. This applies to all our services from the straightforward to the more complex.
A charity in Scotland is an organisation registered with the Office of the Scottish Charity Regulator (OSCR).
In setting up a charity, the following points should be considered:
1 Type of charitable organisation
If you wish to apply for charitable status you first have to decide on a legal structure. For example, your charity could be a company, a trust, a Scottish Charitable Incorporated Organisation (SCIO), a Community Interest Company or an Unincorporated Association. Having a legal structure provides you with an identity, credibility and a means of establishing common objectives. There are various forms of legal structures and it is helpful to understand the pros and cons of each to identify which is appropriate for your organisation. For more information on legal structures, see our section on What are the differences between SCIOs, CICs and companies?
2 Who will run the charity?
It is important to decide who will run the charity. The people who manage and control the charity are the ‘charity trustees’. Depending upon the legal structure they may also be known as directors, office holders or committee members. The charity trustees have legal responsibilities to act in certain ways and provide certain information to OSCR as well as the public.
Certain people are automatically disqualified from being appointed as charity trustees, such as those with unspent convictions for dishonesty or an offence under theCharities and Trustee Investment (Scotland) Act 2005, someone who is an undischarged bankrupt or has a Protected Trust Deed to pay off debts with creditors, someone who has been removed from acting as a charity trustee in Scotland or England or is a disqualified company director. However, the automatic disqualification can be overturned by way of an application to OSCR. For more information on charity trustees, see our section on What are the legal duties of charity trustees?
3 Prepare a governing document
This is the legal document that sets out the way in which the charitable organisation will operate. Depending upon the legal structure of your charity, it may be referred to as a constitution, trust deed or articles of association.
It's primary purpose is to set out what the charity is set up to achieve (the charity's purposes) and what it will do to achieve those purposes. It is also common for governing documents to dictate on other matters such as the general management of the charity, the powers of the charity trustees, how to deal with the appointment and removal of charity trustees and how the charity should deal with winding up.
4 The Charity Test.
In order for OSCR to grant charitable status, an organisation must meet the charity test. To meet the charity test, an organisation must have only charitable purposes and must provide a public benefit in Scotland or elsewhere. In addition, an organisation must not allow its assets to be distributed or applied for non-charitable purposes, permit government Ministers to direct or control its activities, and it must not be a political party or serve the purpose of advancing a political party.
5 What's in a name?
Your charity will need a name so that it's easily identified on the charity register. The name must not be the same as, or similar to, an existing charity, it should not mislead the public as to what your charity does, it must not be offensive and must not give the impression that it is connected to another charity. It is always helpful to search the charity register when deciding on the name.
6 Applying for charitable status
Once you have decided on and prepared the above points, you are set to apply to OSCR to obtain charitable status. You can do this by completing the 'Application for Charitable Status', unless you are a SCIO, in which case you should complete the 'Application for incorporation as a Scottish Charitable Incorporated Organisation (SCIO)'.
Your application should accompany a copy of your governing document, a description of your organisation's proposed activities and signed charity trustee declaration forms which confirm that the trustees are aware of their responsibilities and are not disqualified from acting.
OSCR will acknowledge your application within 10 days of receipt and assess it within 90 days.