With over 23,000 registered charities in Scotland, it is not surprising that we at Lindsays are increasingly being approached by charitable organisations looking for legal advice.
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”.
My colleague, Alastair Keatinge, adds: “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 and any other duties that may be contained in the charity’s governing document.
Consequently, trustees should be familiar with their charity’s governing document and should also be aware of a number of general duties given 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. If 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 law.
To keep accounts.
These duties set the basic standards expected by OSCR, but individual charities may wish to place additional obligations on their trustees via the charity’s governing document, for example, a duty to refrain from bringing the charity into disrepute.
Any breach by charity trustees of the duties set out in the act 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.
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 issues raised in this article please contact me (01835 86239; firstname.lastname@example.org) or Alastair (0131 656574; email@example.com
Sheena West is a partner in the Jedburgh office of law firm, Lindsays with over 20 years’ legal experience. She has advised a wide variety of clients but in recent years she has provided advice to a growing number of local charities on a range of issues, not merely limited to questions o.
Partner and charity law expert Alastair Keatinge is based in Lindsays’ Edinburgh office and works closely with Sheena in advising charities.