New rules from Scotland's charity regulator will mean charities wishing to ensure more protection for their trustees will have to set up a new body
Charities that are currently registered as unincorporated associations but want to become a SCIO or company will have to set up a new organisations from November this year.
The Office of the Scottish Charity Regulators (OSCR) has said it is removing one of two existing options for charities to change from being an unincorporated body to a SCIO (Scottish Charitable Incorporated Organisation) or company.
Nearly 12,000 charities in Scotland are unincorporated, which usually means they are small, local voluntary-run groups. Organisations decide to change their legal structure as they get bigger and handle more money because trustees of unincorporated associations can be liable if something goes wrong.
This will create a level of clarity that will be better for the charity and its relationships with other organisations - OSCR spokesperson
Becoming incorporated can also be important in terms of receiving funding, or being able to enter into particular contracts.
However, charities converting into SCIOs or companies have been running into difficulties with other regulators, banks, insurance companies and HMRC.
OSCR has also found the process has caused internal confusion and been administratively cumbersome.
Therefore, from November charities will no longer be able to convert an existing organisation into an incorporated organisation. Instead, they will have to applying for charity status as a new charity and seek consent to wind up the existing charity.
A spokesperson for OSCR said: “This will create a level of clarity that will be better for the charity and its relationships with other organisations. It will allow us to be effective in our dealings with charities, and should help charities clarify their status with other regulators and organisations. It will also give charities time to transfer any assets or liabilities.
“We have heard some serious concerns about the fact that charities will have to change their name and charity number during the process because we cannot have two charities with the same name on the register at any one time. However, it will be possible for an organisation who is becoming a SCIO to continue having a very similar name. For instance, Save the Porpoise might become Save the Porpoise SCIO.”
OSCR is now working with third sector support agencies to create a step-by-step toolkit for trustees to support them through the process. This toolkit won't be available until early 2017, but interim guidance will be available on its website until then.
