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The voice of Scotland’s vibrant voluntary sector

Published by Scottish Council for Voluntary Organisations

TFN is published by the Scottish Council for Voluntary Organisations, Mansfield Traquair Centre, 15 Mansfield Place, Edinburgh, EH3 6BB. The Scottish Council for Voluntary Organisations (SCVO) is a Scottish Charitable Incorporated Organisation. Registration number SC003558.

Legislation to be created in Scotland to protect NHS charity funds

This news post is about 1 year old

Follows outcry after NHS Tayside took charity cash to pay for core expenditure

New legislation will prevent health boards raiding NHS charity coffers, it has been announced.

It follows controversy over NHS Tayside's decision to use £2.7 million of donations to bankroll various IT projects after it ran out of money in 2018.

It led NHS Tayside's then chief executive Lesley McLay to stand down but not before a huge public outcry.

Health Secretary Humza Yousaf moved to reassure the public after unprecedented levels of funds were donated to NHS charities during the pandemic.  

An independent review has called for the creation of separate, independent bodies to oversee NHS endowment funds and will be backed by new legislation.   

Current legislation covering endowment funds was created in the 1970s but was proven to be unfit for purpose after the NHS Tayside debacle.

These funds were created to finance enhancements to NHS assets such as the refurbishment of hospital day rooms, pieces of equipment not routinely available on the NHS, or research placements for staff.

Significant conflicts of interest were unearthed at NHS Tayside where the endowment funds’ trustees also doubled up as its executive and non-executive board members overseeing health board budgets.

These trustees were found to have rubber stamped the transfer of £3.6m from the charity funds into core spending.

In February 2019 an OSCR investigation found that NHS Tayside had not broken any rules, but called for tighter governance of charity and health board decision-making.

There is currently no legal requirement for health boards to separate core and non-core spending.

Announcing the new legislation Yousaf said: "There are significant sums held in these funds and it's not just the money we must protect, it's of course the intent behind these funds.

"Since their establishment many people have donated to these funds, often friends and family members of loved ones who have received care from their related health board or indeed the recipients of that care themselves.

"They've donated in order to give back and to improve the experience of others in future."

He added: “Let me be clear, it was not the finding of OSCR or the review that there were widespread issues in the decisions being made on the use of charitable funds.

"Rather it is the case, as reflected in their findings, that the current situation puts health boards in a difficult position and open to criticism when making spending decisions on behalf of NHS charities."

The Scottish Government will put the proposed legislation out for consultation but said it will look at what can be done in the meantime to ensure health boards can raid charity cash.

How OSCR pushed for new legislation in the wake of the NHS Tayside furore

NHS Tayside repaid the cash it took from the endowment funds with loans from the Scottish Government after the health board's top management team was replaced.

The cash was used to pay for projects including a new IT system.

Although accounts from the time state that the sum spent was £2.7m, it subsequently emerged that the final amount taken was £3.6m.

The revelations sparked an outcry which saw NHS Tayside's chief executive Lesley McLay ousted from her post.

However OSCR ruled out any formal sanctions against anyone involved in the management of Tayside's endowment fund.

Nonetheless, the regulator said that the decision-making process around the use of charity funds was "rushed and reflects poor practice".

OSCR wrote to the Scottish Government warning that the current governance structure, whereby the management of NHS health boards and endowment funds overlap, constitutes a risk to the ability of the charity trustee to act in the charity’s interests.

It recommended that at least a majority of those in management and control of the endowment funds are “independent of the relevant health board, thereby resolving our concerns about governance".


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