Policy responses and statements

Name of organisation:

OSCR (Office of the Charity Regulator)

Name of policy document:

Meeting the Charity Test: Consultation on initial guidance, the new applications process, and the rolling review of existing charities

Deadline for response:

27 January 2006

Background: This consultation paper sets out proposed initial guidance on how OSCR will determine whether a body meets the charity test, and outlines how OSCR proposes to deal with new applications for entry on the Charity Register. Initial proposals for undertaking a rolling review of existing charities will also be given. A further round of consultation on full guidance and the rolling review process will be undertaken by OSCR's statutory successor during the summer of 2006.

COMMENTS ON
OFFICE OF THE CHARITY REGULATOR - OSCR
MEETING THE CHARITY TEST: CONSULTATION ON INITIAL GUIDANCE, THE NEW APPLICATIONS PROCESS, AND THE ROLLING REVIEW OF EXISTING CHARITIES

The Royal College of Physicians of Edinburgh is pleased to respond to the Office of the Charity Regulator on its consultation on Meeting the Charity Test.

GENERAL

The College agrees with the proposal to seek explicit descriptions of purposes with reference to the listed approved charitable purposes for all new applicants, and welcomes the recognition that a judgement will be required to assess the relevance of purposes for existing charities.

The College also welcomes the commitment to considering the four aspects of public benefit listed collectively to arrive at a judgement of the public benefit status of an existing charity or applicant. It would be important to have an explicit OSCR appeal mechanism to test judgements in difficult cases, perhaps as an initial step before recourse to the courts.

ANSWERS TO DETAILED QUESTIONS

Question 1 – What are your views on the proposed approach to considering tangible and intangible benefit, and to giving greater weight to direct benefit over any indirect or ancillary benefit that may be provided?

The College is concerned that the impact of intangible, indirect and ancillary benefits may be underestimated through the proposed hierarchy of benefits. To do so risks undervaluing that which cannot be readily measured. Whilst this creates a significant challenge to maintain a fair and equitable approach to the assessment of public benefit, it is nonetheless fundamental to many charitable organisations whose purposes serve the public good. There should be no automatic presumption that direct and tangible benefits carry greater weight.

Question 2 – The concept of ‘disbenefit’ reflects social circumstances and values and at present is primarily a philosophical and ethical concept rather than a conventional legal concept. It is likely that there are parallels to be drawn from areas such as medical ethics and this is an area where we are particularly interested to have comments on what should be included in OSCR guidance on what may constitute ‘disbenefit’.

‘Disbenefit’ is a new concept and, in the absence of legal definition, decisions based on ‘disbenefit’ are likely to be challenged. The test to establish ‘disbenefit’ should be rigorous and the proposal to focus on public harm seems sensible.

Question 3 – We are aware that it may not always be the beneficiary who pays for the services provided by a (prospective) charity. For example a local authority may pay for the cost of accommodation or for care costs on behalf of an individual, or a close relative may pay on behalf of the beneficiary.

We would welcome your views on whether, in deciding whether charges or fees are unduly restrictive, we should take into account who would usually pay the fees, or whether we should only relate these to the circumstances of the actual beneficiary?

The College is unclear about the need to consider whether charges are met by the direct beneficiary. Surely the important issue is whether the individual circumstances of charging (whoever actually pays) exclude sections of the public from the benefit. However, it is important to note that potential beneficiaries may exclude themselves for reasons other than cost.

Question 4 – We would also welcome your views on how relevant the particular route of access to sources of alternative funding for the fees in determining whether charges are unduly restrictive.

See response to question 3 above.

Question 5 - We would welcome your views on how OSCR should consider the equal opportunities requirements of the various anti-discrimination legislation (or any other legislation) in relation to any restrictive conditions that may exist on obtaining benefit from a specific charity

OSCR should consider the prevailing legislative framework when assessing whether the charity or applicant is placing any restrictive conditions on access to its benefits. Failure to comply with equal opportunities legislation could be considered as a public ‘disbenefit’.

Answer 6 – Do you agree that OSCR should respect a statement of activity and any supporting documentation in order to assess the (intended) activities of a (prospective) charity? If not, on what other basis do you suggest OSCR should assess whether the public benefit is provided or intended to be provided (in the case of an applicant)?

Agreed – but see response to Question 7 below.

Question 7 – Do you agree with the proposed approach of OSCR requesting a statement in relation to possible restrictions or conditions on obtaining the benefit from the charity? If not, what alternative approach do you suggest?

The decision regarding whether a charity or applicant meets the charity test is so fundamental that it is vital that trustees or potential trustees are fully advised about the nature of the information, and the level of detail required to allow them to present their case fully and effectively. This either requires a series of detailed questions from OSCR or very specific guidance as to what would be expected within such a statement. It would also help to limit the appeals that may arise if information presented leads to a rejection or refusal.

Question 8 – We would welcome your views on whether asking for identity information, charity trustee declaration and spot-checks are reasonable and adequate requirements and measures on first registration.

A charity trustee declaration and spot-checks would be reasonable and adequate requirements on first registration.

Question 9 – We would welcome views on how OSCR may best be assured of the identity of prospective charity trustees.

See response to Question 8 above. The College considers spot checks and publication of trustee lists in annual reports to be sufficient protection. Ensuring eligibility of purpose and completeness of the register should be priority tasks unless there is real reason to believe identity confirmation is a necessary control measure.

Question 10 – Finally, we would welcome views on whether OSCR should require a Disclosure Scotland certificate for every prospective charity trustee, whether this should only be required in relation to specific types of charity, or whether OSCR should not require this at all.

This appears to be excessive, other than where services delivered by a charity might demand certification eg services for children.

Question 11 – We would welcome your views on how OSCR should approach the rolling review programme and in particular on how OSCR should prioritise the selection.

The rolling review should take account of the risk profile of the Register and the balance of available resources for supporting application and review activities. Public cash collection charities have experienced some high profile scandals, and this section of the register may benefit most from the public reassurance that review brings. The cycle of review should also be proportionate to the risk and nature of the individual charities.

Question 12 – As discussed under 9.4 “Information in relation to prospective charity trustees” above, we propose that OSCR requests certain information in relation to the identity and possible disqualifications of prospective charity trustees. We do not propose OSCR keep such information or carry out checks on new charity trustees after the point of registration. However the rolling review process could provide an opportunity for checking the status of current trustees, in particular in relation to any disqualifications.

We would welcome your views on whether the rolling review process should include a check on current charity trustees, similar to that for new charity trustees

See response to Question 9 above. The checking of trustee declarations should not necessarily be a routine part of the review process unless there are good reasons for further investigation.

Question 13 – We would welcome views on what you consider to be a reasonable cycle for the rolling review process, that strikes a balance between the burden on charities, the protection of the public and the charitable sector and the most appropriate use of OSCR resources. For example should it be every 5 years, 10 years, 15 years? And should there be any differentiation in the frequency of review according to the size or type of charity.

The principle of proportionality was deemed important in the initial consultations on OSCR, and it may be acceptable to take a risk based approach to frequency of review according to the type of charity. However, size is not necessarily an indicator of greater likelihood of change of purpose or public benefit and, indeed, any significant change (eg mergers) will be evident for high profile charitable organisations. The standard review cycle will depend on the resources available to OSCR and the numbers involved, but a maximum 10 year review free period may be helpful, with the option for triggered earlier reviews according to available information.

Copies of this response are available from:

Lesley Lockhart,
Royal College of Physicians of Edinburgh,
9 Queen Street,
Edinburgh,
EH2 1JQ.

Tel: 0131 225 7324    ext 608
Fax: 0131 220 3939

[26 January 2006]