“With over 23,000 registered charities in Scotland, it is not surprising that we are increasingly being approached by charitable organisations looking for legal advice” says Sheena West, Partner in the Jedburgh office of law firm, Lindsays. With over 20 years’ legal experience, Sheena has advised a wide variety of clients from individuals to large organisations, but in recent years she has also provided advice to a growing number of local charities in relation to a range of legal issues, not merely limited to questions of charity law. “Charities, like individuals, business and other organisations, have property to buy and sell, funds to invest and staff to employ and require legal advice to carry out such activities”.
Partner and charity law expert, Alastair Keatinge, is based in Lindsays’ Edinburgh office but is regular visitor to Jedburgh and works closely with Sheena in advising charities in the Borders. “When advising charitable organisations, it is important to bear in mind the duties charity trustees are subject to in terms of charities legislation. Such duties ought to be considered when carrying out any activities such as those outlined above”.
Whatever legal form a charity adopts, its trustees will be subject to the duties contained in the Charities and Trustee Investment (Scotland) Act 2005 (the “Act”) and any other duties which may be contained in the charity’s own governing document. Consequently, trustees should be familiar with their charity’s governing document and should also be aware of the following general duties in section 66 of the Act:
- to ensure that the charity acts in a manner consistent with its purposes;
- to act with the same level of care and diligence as is reasonable to expect of a person managing the affairs of another;
- to avoid conflicts of interest and to put the interests of the charity before those of another person. In the event that any such conflict should arise, trustees should disclose the conflicting interest to the charity and refrain from taking part in any discussions in relation thereto;
- to ensure that the charity complies with any direction or requirement imposed by the Office of the Scottish Charity Regulator (“OSCR”);
- to take professional advice where appropriate to do so;
- to devote sufficient time to the charity’s affairs;
- to observe the general
- to keep accounts.
These duties set the basic standards expected by OSCR, but individual charities may wish to place additional obligations upon their trustees via the charity’s governing document, for example, a duty to refrain from bringing the charity into disrepute.
Any breach of the duties set out in the Act by charity trustees may be treated as misconduct in the administration of a charity and OSCR may invoke its powers under the Act. These include the power to suspend the trustees, to direct the charity to cease representing itself as a charity and other related powers. In reality, OSCR is unlikely to suspend a charity trustee under these powers if it considers the trustee has acted honestly and reasonably in relation to the misconduct and in fairness ought to be excused.
A charity can take steps to limit the potential for breaches of duty by its trustees by having a full induction process and robust governance practices in place and the ability for the charity to call its trustees to account. Procedures should be put in place to deal with any trustee in breach of his or her duties and the trustees themselves should take responsibility for taking action against an errant trustee in serious or persistent breach of his or her duties.
If you would like to discuss any of the issues raised in this article please contact either Sheena or Alastair.
This article was published in the Southern Reporter on the 19th January 2012.
