In August 2014, the Office of the Scottish Charity Regulator ("OSCR") launched a consultation on proposed changes to the way it regulates charities.
At the time, OSCR said "the time is right for change that will positively influence [our] decisions and actions, help [us] support charities more effectively and further enhance the levels of trust and confidence that the public have in the charity sector".
The consultation covered the following proposals:
- changing the content of the Annual Return that all charities complete and file with OSCR;
- publishing charity accounts on the Scottish Charity Register;
- developing a database of all charity trustees; and
- introducing a regime of Serious Incident Reporting where charities would be required to actively report such incidents to OSCR.
The consultation received nearly 400 written responses and 360 people participated in focus groups to consider the issues raised before it closed in October. So, it has been the most successful consultation OSCR has ever undertaken. Since then, OSCR have been considering the proposals in the light of those responses.
In its Targeted Regulation of Scottish Charities report published in March 2015, OSCR has revealed its plans on how it will regulate charities in the future. The focus of this will be what the regulator describes as "a more targeted approach" with OSCR Chief Executive David Robb claiming the changes would "make us more risk-based and proactive and will help to focus our own resources more effectively".
The Annual Return will change, with new questions being asked which OSCR feels will "better add to our knowledge about how charities are operating". However, it is not yet clear which of the new questions proposed in the consultation will make it into the Return.
As well as the questions themselves, OSCR's analysis of the information received from the Annual Return will also change to a more flexible approach, based on risk areas in the sector. At the same time, OSCR will be getting tough on charities persistently failing to submit the Annual Return.
Unsurprisingly, OSCR will be pushing for all charities to make their filings online and will commit resources to supporting charities to do so. This is part of a wider project to make more and more services available online which will also see OSCR invest in a new IT system.
Annual Reports and Accounts
OSCR is still committed to having annual reports and accounts available online. However, rather than going ahead and publishing these documents online itself, at least initially the regulator will encourage charities themselves to make this information available on their own websites, with links from the Scottish Charity Register (the "Register"). To assist with this, OSCR will issue good practice guidance for smaller charities on preparing and publishing annual reports.
The plan to publish accounts on the Register has not been entirely abandoned and it possible that in the future OSCR will publish the accounts of some or all charities on the Register.
Like the Annual Return, OSCR will be devoting more resources to tackling charities which repeatedly fail to submit their annual reports and accounts. At the same time, instead of carrying out an annual check on the accounts of all charities, OSCR will move to a "more holistic" approach. This will see the Regulator focus on specific groups of charities which it feels pose more risk to public trust in the sector than others.
The consultation contained OSCR's proposal to create a database of charity trustees rather than simply recording one trustee as principal contact. OSCR has decided to implement this proposal, which will require additional information to be provided by charities.
However, the database will remain an internal one for now and the information won't be available on the Register.
Serious incident reporting
The Regulator will be implementing a serious incident reporting regime similar to that set out in the consultation. However, it has acknowledged further work is needed in order to ensure charities are clear about which incidents are serious and which must be reported to OSCR.
Scottish charities should start to see changes in the way they are regulated during 2015/16. However, the more significant changes will not be implemented until the following financial year. OSCR intends to publish advance warnings and suitable guidance to ensure charities are prepared for the changes as they arrive.
We will keep you up to date on the implementation of these changes but if you have any questions please contact us.