SCVO response: OSCR - Targeted Regulation of Scottish Charities

Our response

We welcome the opportunity to respond to this consultation. Our response is drawn from discussions with a number of third sector organisations, including a formal discussion on the topic with the National Intermediaries group.

Annual reporting by charities to the Scottish Charity Regulator

Question 1: We welcome comments on the new questions being posed specifically: a. Are the questions clear and understandable? b. Is more guidance needed to help understand what the questions mean? – if so, please explain which questions need this c. Will the new questions affect the ease of use of the Annual Return? The new questions around charity governance and training are straightforward, but the purpose of OSCR collecting this information and how it will use the data are unclear. We question how gathering this data will improve the public accountability and transparency of charities. If the intention is to get charity trustees to think about measures to improve their governance, issuing best practice guidance on governance could be a better route to adopt, than asking questions in an annual return. Given the role of Third Sector Interfaces, SCVO and other intermediary bodies in promoting good governance in charities, we question whether this should be a focus for OSCR. In question A6 information is sought from charities on the type of activity they undertake. ‘Campaigning’ is listed as one of the activities and while we have no concerns about the question as it stands, we would not wish this to be broadened out in future years to request levels of campaigning spend. The Charity Commission moves in this direction are deeply unpopular and are seen as part of the attack on charity campaigning. We welcome the encouraging and positive approach to charity campaigning taken by OSCR’s recent FAQs on the subject. The consultation suggests that in the future OSCR will be streamlining the requirements for cross-border charities. We welcome this proposal, provided that the content of the additional question on charitable activities in Scotland is developed in consultation with stakeholders. Question 2: As some of the questions are quite different from those previously asked, is there more that the Scottish Charity Regulator could do to support charities in terms of producing guidance or self-help resources? The new questions being proposed are mainly straightforward and will be of minimal burden to the majority of charities. The exception to this is B6 and B7 which will require further guidance and explanation. We welcome OSCR’s commitment to provide that additional guidance but suggest that it goes beyond the simple explanation of ‘persons connected’ to a set of examples of the type of information sought.

Charity annual reports and accounts

We welcome the change to OSCR looking at accounts on a targeted and sample basis, rather than reviewing every set of accounts submitted. This is a sensible approach and will ensure resources are targeted in the most effective way. Question 5: Would it be helpful for the Scottish Charity Regulator to provide specific guidance on Trustees’ Annual Reports for smaller charities? We support the introduction of specific guidance on Trustee Annual Reports for smaller charities. This is a request we have received on a number of occasions though the SCVO Information Service and it would be beneficial to charities to have additional guidance in this area. Question 6: Do you agree with the proposal to publish accounts for all charities, beginning with SCIOs and charities with income of £25,000 or more? We support the publication of accounts for all charities. This will improve transparency, reduce the burden on charities and aid research. Question 7: We have given examples of the benefits we expect to achieve from publishing accounts. Are there any others you would highlight or any risks that we should consider? Section 5.4 states that for data protection reasons OSCR must redact the signatures of charity trustees and names and addresses of independent examiners/auditors for all the accounts published. Redacting signatures is understandable but no explanation is given for the redaction of examiners/auditors names and addresses. In the interests of transparency, it would be beneficial to know at the names of auditors/examiners. Question 8: Would you view published accounts? If yes, for what purpose? SCVO would mainly view published charity accounts for research purposes. It would assist with the work we undertake to assess the state of the sector and monitor trends.

Development of a trustee database

Question 9: What benefits and risks would you highlight to OSCR when considering the development of a trustee database? We agree with the need for OSCR to be in contact with more than one trustee for the reasons outlined in the consultation document. As well as ensuring contact with charities is not lost, it would allow greater engagement and interaction between trustees and OSCR. This would be beneficial in keeping trustees up to date with changes to regulation and guidance as well as ensuring responsibility for complying with regulation does not fall to one individual. However, there are a number of risks in developing a database of trustees. Our principle concern is that requiring trustees to submit personal data to OSCR will discourage volunteering. This will be particularly problematic if trustee names are published online. These problems will affect some organisations more than others but consideration should be given to charities who work on sensitive areas or where prejudice exists around their activity. Trustees for charities working in areas such as sexual health, women’s refuges or on LGBT issues may be especially concerned about their trustees’ names being easily available. Question 10: Do you think the information stated above is appropriate for OSCR to collect and use for the purposes stated? We question whether this approach is the most appropriate to achieve the objectives outlined in 6.2. Creating a large database of 180,000 charity trustees is a significant undertaking with significant costs associated with its establishment and maintenance. As charity accounts are increasingly being filed online and more charities are providing email addresses, a more proportionate approach could be to simply ask charities for additional email contacts from trustees on a voluntary basis. In instances where these are not available a second postal contact address could be sought. This would help address the need for improved contact with charities without necessitating a large, expensive and intrusive database. The other argument given for a trustee database is that it would assist with ensuring disqualified trustees can be tracked. Our understanding is that the number of individuals who are disqualified from becoming a charity trustees is small. In addition, a disqualified trustee who attempted to join another charity would be aware that they are breaking the law. If they are prepared to undertake this step, we see no reason why they would not falsify their identity, rendering the database ineffective. Question 11: Do you foresee any difficulties with collecting this information? If so, please explain. We are concerned about the additional bureaucratic burden associated with collecting this information, particularly for small charities without staffing support. Turnover of trustees can be high and collecting information from them can be difficult, especially where there are concerns about confidentiality. Question 12: Do you agree that the Scottish Charity Regulator should publish charity trustee names on the Scottish Charity Register? We support the principle of openness and transparency for charity trustees but see little benefit to be gained by the publication of trustees names on the charity register. It is our view that consideration should also be given to the sensitivities which arise around some charitable activity and the effect that publication of trustees names could have on those individuals.

Reporting serious incidents to the Scottish Charity Regulator

Question 13: Do you think OSCR should introduce Serious Incident Reporting? We have some concerns about this mechanism but on balance we would support the introduction of serious incident reporting. The main benefit, as we see it, is providing trustees with clarity about when they need to report a serious incident to OSCR. This should help charities get help at the earliest opportunity and limit damage to their reputation and the sector as a whole. For this to be successful, it is vital that OSCR adopts a positive approach, is able to support the charity through the incident and has the capacity and resources to do this in a productive way.

Conclusion

We welcome the changes which will see OSCR looking at charity accounts on a targeted basis and proactively publishing accounts online for all charities. However, it is our view that creating a charity trustee database which captures personal data would be an unnecessarily expensive and intrusive way to maintain contact with trustees.Provided it is adequately resourced and adopts a positive approach to resolving problems, we support the introduction of a serious incident reporting mechanism.

Contact

Felix Spittal Policy Officer Scottish Council for Voluntary Organisations Fairways House, Fairways Business Park Inverness, IV2 6AA Email: felix.spittal@scvo.scot Tel: 01463 251 724 Web: www.scvo.scot

About us

The Scottish Council for Voluntary Organisations (SCVO) is the national body representing the third sector.There are over 45,000 voluntary organisations in Scotland involving around 137,000 paid staff and approximately 1.2 million volunteers. The sector manages an income of £4.4 billion. SCVO works in partnership with the third sector in Scotland to advance our shared values and interests. We have over 1500 members who range from individuals and grassroots groups, to Scotland-wide organisations and intermediary bodies. As the only inclusive representative umbrella organisation for the sector SCVO:

• has the largest Scotland-wide membership from the sector – our 1500 members include charities, community groups, social enterprises and voluntary organisations of all shapes and sizes
• our governance and membership structures are democratic and accountable - with an elected board and policy committee from the sector, we are managed by the sector, for the sector
• brings together organisations and networks connecting across the whole of Scotland

SCVO works to support people to take voluntary action to help themselves and others, and to bring about social change. Our policy is determined by a policy committee elected by our members. Further details about SCVO can be found at www.scvo.scot.