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GUIDANCE AND GOOD PRACTICEfor Charity Trustees

June 2016Scottish Charity Regulator

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GUIDANCE AND GOOD PRACTICE FOR CHARITY TRUSTEES

CHARITY TRUSTEE GUIDANCECharity Trustee Duties

June 2016Scottish Charity Regulator

1 Introduction2 Charity Trustee Duties

1. You must act in the interests of the charity1.1 You must seek in good faith to ensure the charity operates in a

manner consistent with its purposes1.2 You must act with care and diligence�� <RX�PXVW�PDQDJH�DQ\�FRQÁLFW�RI�LQWHUHVW�EHWZHHQ�WKH�FKDULW\�DQG�DQ\

person or organisation who appoints trustees2. You must comply with the 2005 Act 2.1 Charity details on the Scottish Charity Register

2.2 Reporting to OSCR: Making changes to your charity2.3 Financial records and reporting

2.4 Fundraising�� 3URYLGLQJ�LQIRUPDWLRQ�WR�WKH�SXEOLF

3 Governing Documents and Meetings3.1 Governing documents3.2 Charity Trustee Meetings

�� &RQÁLFW�RI�,QWHUHVW5 Charity Finances

5.1 Financial records and accounts5.2 Financial controls

6 Remuneration (Paying charity trustees and connected persons)7 Publicising that you are a charity�� *ORVVDU\�RI�WHUPV

4-78-17

18-21

22-26 27-32

33-3738-4041-50

CONTENTS

3CONTENTSGUIDANCE AND GOOD PRACTICE FOR CHARITY TRUSTEES

INTRODUCTION

7KH�JXLGDQFH�GRHV�QRW�FRYHU�DOO�WKH�ODZV�WKDW�PLJKW�EH�DSSOLFDEOH�to your charity. It covers the legal duties of charity trustees set out in the 2005 Act, with good practice recommendations and links to sources of advice.

As charities come in all different shapes and sizes, not everything in this guidance will apply to all charities registered in Scotland. In addition, many charities have to comply with other legislation and UHJXODWLRQ��IRU�H[DPSOH��FKDULWDEOH�FRPSDQLHV�PXVW�DOVR�FRPSO\�with company law.

:KR�LV�WKH�JXLGDQFH�IRU"This guidance is for:

Anyone who is a trustee of a charity registered in Scotland.$Q\RQH�WKLQNLQJ�RI�EHFRPLQJ�D�FKDULW\�WUXVWHH�People working with, or advising, charity trustees.

How to use the guidanceIn this guidance, we explore the general duties and specificduties of charity trustees in the 2005 Act. We give you examples of how these might work and share good practice from our experience as Regulator and from organisations in the charity sector.

SUMMARY

&KDULWLHV�PDNH�D�ELJ�GLIIHUHQFH�LQ�DOO�DVSHFWV�RI�RXU�VRFLHW\��$FKLHYLQJ�WKLV�UHTXLUHV�WKH�KDUG�ZRUN�DQG�FRPPLWPHQW�RI�WKRXVDQGV�RI�charity trustees who give their time and energy WR�6FRWODQG·V�FKDULWLHV�

Charity trustees are the people who have general control and management of the charity�DQG�DUH�UHVSRQVLEOH�IRU�PDNLQJ�VXUH�that the charity works to achieve its charity’s purposes (the reasons the charity exists).

7KH�UROH�RI�D�FKDULW\�WUXVWHH�LV�H[WUHPHO\�LPSRUWDQW�DQG�FDQ�EH�YHU\�UHZDUGLQJ��,W�LV�LPSRUWDQW�IRU�ERWK�\RX�DQG�\RXU�FKDULW\��WKDW�\RX�NQRZ�ZKDW�\RXU�UHVSRQVLELOLWLHV�DUH��DQG�XQGHUVWDQG�ZKDW�\RX�DUH�expected to do. This guidance will help you do this.

What this guidance coversThe charity trustee duties are set out in The Charities and TrusteeInvestment (Scotland) Act 2005, referred to in this guidance as the 2005 Act. We, the Scottish Charity Regulator��DUH�UHVSRQVLEOH�IRU�regulating charities registered in Scotland and their charity trustees. This guidance explains what the 2005 Act says charity trustees must do or must not do.

4INTRODUCTIONGUIDANCE AND GOOD PRACTICE FOR CHARITY TRUSTEES

5

MORE DETAIL

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There is no minimum age for charity trustees stated in the 2005 $FW��KRZHYHU��ZH�ZRXOG�H[SHFW�FKDULW\�WUXVWHHV�WR�EH�RYHU�WKH�DJH�RI��,I�DQ\�FKDULW\�WUXVWHHV�DUH�XQGHU�WKH�DJH�RI��LW�ZRXOG�EH�EHVW�WR�JHW�SURIHVVLRQDO�DGYLFH�WR�GHWHUPLQH�LI�WKLV�LV�VXLWDEOH�DQG�LI�there are any legal implications. Some model governing documents RU�VSHFLÀF�OHJDO�IRUPV��VXFK�DV�D�FRPSDQ\��VWDWH�WKH�PLQLPXP�DJH�of a charity trustee.

The 2005 Act states that charity trustees are the people who have “the general control and management” of a charity. However, there FDQ�EH�VLWXDWLRQV�ZKHUH�SHRSOH�ZKR�DUH�QRW�IRUPDOO\�DSSRLQWHG�DV�FKDULW\�WUXVWHHV�FDQ�H[HUFLVH�LQÁXHQFH�DQG�HYHQ�FRQWURO�RYHU�D�FKDULW\��)RU�H[DPSOH��DQ�HOHFWHG�PHPEHU�RU�HPSOR\HH�RI�D�ORFDO�authority attends meetings of the charity trustees. The 2005 Act makes the following two points clear:�� &KDULW\�WUXVWHHV�DUH�UHVSRQVLEOH�IRU�WKH�FKDULW\�DQG�PD\�QRW

SDVV�WKLV�UHVSRQVLELOLW\�RQWR�DQ\RQH�HOVH�DV�ORQJ�DV�WKH\�UHPDLQa charity trustee.

2. Any person who, though not formally elected or appointed as acharity trustee, exercises some degree of control over a charity,PD\�VWLOO�EH�KHOG�OHJDOO\�OLDEOH�DV�D�FKDULW\�WUXVWHH�

Legal requirements are something that the law says you must do DQG�DUH�KLJKOLJKWHG�E\�WKH�¶/HJDO�'XW\·�LFRQ�

*RRG�SUDFWLFH�LV�QRW�UHTXLUHG�E\�ODZ�EXW�LV�VRPHWKLQJ�\RX�could do�WR�KHOS�WR�PDNH�VXUH�WKDW�\RXU�FKDULW\�LV�GRLQJ�LWV�EHVW�WR�comply. What is good practice for your charity might depend on the size or type of charity you are. In this guidance, we try to give H[DPSOHV�RI�JRRG�SUDFWLFH�WKDW�ZLOO�EH�DSSOLFDEOH�WR�PDQ\�6FRWWLVK�FKDULWLHV��([DPSOHV�RI�JRRG�SUDFWLFH�DUH�KLJKOLJKWHG�ZLWK�WKH�¶*RRG�3UDFWLFH·�LFRQ�

The glossary�SURYLGHV�\RX�ZLWK�IXUWKHU�LQIRUPDWLRQ��GHÀQLWLRQV�DQG�descriptions of some key terms. We have highlighted these key terms in bold purple type. Clicking on these terms will take you straight to the glossary or the relevant section of the guidance.

7KH�JXLGDQFH�LV�VSOLW�LQWR�VHFWLRQV�WR�KHOS�\RX�ÀQG�WKH�LQIRUPDWLRQ�most relevant to you and your charity.

Charity trustees are the people who control and manage a FKDULW\��7KH\�DUH�UHVSRQVLEOH�IRU�FRPSO\LQJ�ZLWK�WKH�ODZ�

INTRODUCTIONGUIDANCE AND GOOD PRACTICE FOR CHARITY TRUSTEES

Good practice is to:*HW�SURVSHFWLYH�FKDULW\�WUXVWHHV�WR�VLJQ�D�GHFODUDWLRQ�EHIRUH�WKHLU�HOHFWLRQ�RU�DSSRLQWPHQW�WR�FRQÀUP�WKH\�DUH�QRW�GLVTXDOLÀHG�IURP�acting as a charity trustee.&RQVLGHU�ZKHWKHU�DQ\�RWKHU�FKHFNV�QHHG�WR�EH�FDUULHG�RXW��For example, a Disclosure Scotland check for charity trustees ZRUNLQJ�ZLWK�YXOQHUDEOH�EHQHÀFLDULHV�

,Q�VRPH�FDVHV�D�FKDULW\·V�JRYHUQLQJ�GRFXPHQW�PLJKW�VD\�ZKR�FDQ�DQG�FDQQRW�EH�D�FKDULW\�WUXVWHH��IRU�H[DPSOH�VRPH�FKDULW\�WUXVWHHV�FDQ�RQO\�EH�FKRVHQ�IURP�WKH�PHPEHUVKLS�RI�WKH�FKDULW\�

Waivers$�GLVTXDOLÀHG�SHUVRQ�FDQ�DSSO\�WR�XV�IRU�D�ZDLYHU�WR�OLIW�WKH�GLVTXDOLÀFDWLRQ��<RX�FDQ�GR�WKLV�LQ�UHODWLRQ�WR�D�VSHFLÀF�FKDULW\��type of charity or for charities in general. We will take into account all the circumstances when deciding if we can grant a waiver of GLVTXDOLÀFDWLRQ��,I�\RX�ZDQW�WR�DSSO\�IRU�D�ZDLYHU�SOHDVH�contact us.

:KDW�GRHV�EHLQJ�D�FKDULW\�WUXVWHH�PHDQ"%HLQJ�D�FKDULW\�WUXVWHH�PHDQV�\RX�DUH�IXOO\�UHVSRQVLEOH�IRU�KRZ�your charity is run and what it does. It does not necessarily mean UXQQLQJ�WKH�FKDULW\�RQ�D�GD\�WR�GD\�EDVLV�DQG�PDNLQJ�RSHUDWLRQDO�decisions. Your charity might have volunteers or staff that do this.

All the charity trustees share responsibilityAll of the group of charity trustees have charity trustee duties – no matter how small your charity is. A duty is something that\RX�PXVW�GR��7KH�JURXS�VKDUHV�WKH�UHVSRQVLELOLW\�HTXDOO\��1Rindividual charity trustee, for example the Chair or Treasurer, hasPRUH�UHVSRQVLELOLW\�WKDQ�WKH�RWKHU�FKDULW\�WUXVWHHV�GR��:H�FDOO�WKLVcollective responsibility.

:KR�FDQQRW�EH�D�FKDULW\�WUXVWHH"6RPH�SHRSOH�DUH�QRW�DOORZHG�E\�ODZ�WR�EH�D�FKDULW\�WUXVWHH��(YHU\�FKDULW\�WUXVWHH�PXVW�PDNH�VXUH�WKDW�KH�RU�VKH�LV�QRW�EUHDNLQJ�WKH�ODZ�E\�EHLQJ�D�FKDULW\�WUXVWHH�

&HUWDLQ�SHRSOH�DUH�GLVTXDOLÀHG�IURP�DFWLQJ�DV�FKDULW\�WUXVWHHV�Someone with an unspent conviction for an offence involving dishonesty or an offence under the 2005 Act.6RPHRQH�ZKR�LV�DQ�XQGLVFKDUJHG�EDQNUXSW�RU�KDV�D�Protected Trust Deed.6RPHRQH�ZKR�KDV�EHHQ�UHPRYHG�XQGHU�HLWKHU�6FRWWLVK�RU�(QJOLVK�/DZ�RU�WKH�FRXUWV�IURP�EHLQJ�D�FKDULW\�WUXVWHH�6RPHRQH�ZKR�LV�GLVTXDOLILHG�IURP�EHLQJ�D�FRPSDQ\�GLUHFWRU�

,W�LV�WKH�UHVSRQVLELOLW\�RI�LQGLYLGXDOV�WR�PDNH�VXUH�WKH\�DUH�QRW�GLVTXDOLÀHG�IURP�EHLQJ�D�FKDULW\�WUXVWHH��$Q\RQH�ZKR�DFWV�DV�D�FKDULW\�WUXVWHH�ZKLOVW�GLVTXDOLÀHG�LV�JXLOW\�RI�DQ�RIIHQFH�SXQLVKDEOH�E\�D�ÀQH�RU�LPSULVRQPHQW��RU�ERWK�

,W�LV�DOVR�WKH�FROOHFWLYH�UHVSRQVLELOLW\�RI�DOO�WKH�FKDULW\�WUXVWHHV�WR�PDNH�VXUH�WKDW�QRQH�RI�WKHP�DUH�GLVTXDOLÀHG��,I�\RX�NQRZ�WKDW�RQH�RI�\RXU�IHOORZ�FKDULW\�WUXVWHHV�LV�GLVTXDOLÀHG�DQG�\RX�GR�QRW�GR�DQ\WKLQJ�DERXW�LW��\RX�FRXOG�EH�LQ�EUHDFK�RI�\RXU�FKDULW\�WUXVWHH�duties.

,I�\RX�DUH�QRW�VXUH�LI�\RX�FDQ�EH�D�FKDULW\�WUXVWHH��\RX�FDQ�ask us.


LEGAL NOTE

+HUH�ZH�VHW�RXW�WKH�VSHFLÀF�VHFWLRQV�RI�FKDULW\�ODZ�LQ�6FRWODQG�relevant to each part of the guidance.

Charity trustee general duties: section 66 of the 2005 Act'LVTXDOLÀFDWLRQ�IURP�EHLQJ�D�FKDULW\�WUXVWHH�DQG�ZDLYHUV��sections 69 and 70 of the 2005 ActSCIO provisions: the Scottish Charitable IncorporatedOrganisations General Regulations 2011

See the section on charity trustee duties for more details.

+RZ�PDQ\�FKDULW\�WUXVWHHV�VKRXOG�\RXU�FKDULW\�KDYH"<RXU�FKDULW\·V�JRYHUQLQJ�GRFXPHQW�PD\�VHW�D�PLQLPXP�DQG�RU�PD[LPXP�QXPEHU�RI�FKDULW\�WUXVWHHV�QHHGHG�DQG�WKH�PLQLPXP�QXPEHU�UHTXLUHG�IRU�D�quorum. A Scottish CharitableIncorporated Organisation (SCIO) must have at least three charity trustees as stated in the SCIO Regulations. For other legalforms WKH�ODZ�GRHV�QRW�VHW�D�PLQLPXP�QXPEHU�RI�FKDULW\�WUXVWHHV��EXW�LW�LV�JRRG�SUDFWLFH�WR�KDYH�DW�OHDVW�WKUHH�

EXAMPLES

For case studies and advice please see our Good Governancepages.

SOURCES OF HELP, ADVICE AND BEST PRACTICE

6RXUFHV�RI�KHOS��DGYLFH�DQG�EHVW�SUDFWLFH� Local Third Sector Interfaces offer support to voluntary

organisations. The Scottish Council for Voluntary Organisations (SCVO).

You may also wish to consult a professional advisor. The LawSociety of Scotland and the Institute of Chartered Accountantsin Scotland�PD\�EH�DEOH�WR�KHOS�\RX�WR�LGHQWLI\�D�SURIHVVLRQDO�ÀUP�ZLWK�H[SHUWLVH�LQ�FKDULW\�ODZ�DQG�DFFRXQWLQJ�

The Association of Charity Independent Examiners can help you ÀQG�D�TXDOLÀHG�,QGHSHQGHQW�([DPLQHU�HMRC�ZLOO�EH�DEOH�WR�KHOS�\RX�ZLWK�DQ\�TXHVWLRQV�\RX�PD\�KDYH�DERXW�WD[�


CHARITY TRUSTEE DUTIES

We, the Scottish Charity Regulator, work with charity trustees to make sure these duties are understood and complied with. We DOVR�KDYH�SRZHUV�WR�WDNH�DFWLRQ�ZKHUH�ZH�KDYH�FRQFHUQV�DERXW�particular charities and their trustees. See our Inquiry Policy for more details.

In this section we explain what the duties are, what the law says you must do and ways that you can meet the duties.

SUMMARY

All charity trustees have legal duties and responsibilities under the 2005 Act��$�GXW\�LV�VRPHWKLQJ�WKDW�\RX�PXVW�GR��DQG�DOO�WKH�GXWLHV�PXVW�EH�PHW��7KHVH�GXWLHV�DUH�VHSDUDWHG�RXW�LQWR�JHQHUDO�GXWLHV��WKDW�VHW�RXW�D�EURDG�IUDPHZRUN�WKDW�DOO�FKDULW\�WUXVWHHV�PXVW�ZRUN�ZLWKLQ��DQG�VSHFLÀF�GXWLHV�GHWDLOHG�LQ�WKH��$FW�

7KH�JHQHUDO�DQG�VSHFLÀF�GXWLHV�DSSO\�HTXDOO\�WR�all charity trustees and to all�FKDULWLHV�UHJLVWHUHG�LQ�6FRWODQG��$OO�RI�WKH�FKDULW\·V�trustees should work together to make sure that these duties are met.

8CHARIT Y TRUSTEE DUTIESGUIDANCE AND GOOD PRACTICE FOR CHARITY TRUSTEES

General duties for all trustees

GENERAL DUTIES

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��&KDULW\�GHWDLOV�RQ�WKH�Scottish Charity Register

��<RX�PXVW�FRPSO\�ZLWK�WKH��$FW�7KH�6SHFLÀF�GXWLHV

��5HSRUWLQJ�WR�26&5��PDNLQJ�changes to your charity

��)LQDQFLDO�UHFRUGV�DQG�UHSRUWLQJ

��)XQGUDLVLQJ

��3URYLGLQJ�LQIRUPDWLRQ�WR�WKH�SXEOLF

��<RX�PXVW�RSHUDWH�LQ�D�PDQQHU�FRQVLVWHQW�ZLWK�WKH�FKDULW\·V�SXUSRVH

��<RX�PXVW�DFW�ZLWK�FDUH�DQG�GLOLJHQFH

��<RX�PXVW�PDQDJH�DQ\�FRQÁLFW�RI�LQWHUHVW�between the charity and any person or

organisation who appoints charity trustees

MORE DETAIL:KDW�DUH�D�FKDULW\�WUXVWHH·V�GXWLHV"$V�D�FKDULW\�WUXVWHH��\RX�DUH�WUXVWHG�WR�ORRN�DIWHU�WKH�FKDULW\·V�assets DQG�UHVSRQVLEOH�IRU�PDNLQJ�VXUH�WKDW�WKH�FKDULW\�IXOÀOV�LWV�charitable purpose(s).


The charity has the power in its governing document to UHPRYH�FKDULW\�WUXVWHHV�LI�WKH\�DUH�LQ�VHULRXV�RU�SHUVLVWHQW�EUHDFK�RI�WKH�FKDULW\�WUXVWHH�GXWLHV��RU�D�EUHDFK�RI�WKH�UHTXLUHPHQWV�RI�that governing document.

,I�\RX�DUH�DW�DOO�XQVXUH��\RX�VKRXOG�GHFODUH�D�SRWHQWLDO�FRQÁLFW�DQG�WKH�RWKHU�FKDULW\�WUXVWHHV�FDQ�GHFLGH�ZKHWKHU�LW�SRVHV�D�FRQÁLFW�

��<RX�PXVW�VHHN�LQ�JRRG�IDLWK�WR�HQVXUH�WKH�charity operates in a manner consistent with its purposes

<RXU�FKDULW\·V�SXUSRVHV�DUH�VHW�RXW�LQ�\RXU�JRYHUQLQJ�GRFXPHQW�(often called a constitution, trust deed or articles of association).$�FKDULW\·V�SXUSRVHV�DUH�ZKDW�\RXU�FKDULW\�KDV�EHHQ�VHW�XS�WR�achieve and are the reason your charity exists.<RX�PXVW�DOZD\V�DFW�KRQHVWO\�DQG�UHDVRQDEO\��´LQ�JRRG�IDLWKµ��when acting for the charity and make sure that the activities DGYDQFH�LWV�FKDULWDEOH�SXUSRVHV�<RX�PXVW�PDNH�VXUH�WKDW�WKH�FKDULW\·V�DVVHWV�DUH�XVHG�WR�DGYDQFH�LWV�FKDULWDEOH�SXUSRVHV��7KLV�FDQ�EH�GRQH�GLUHFWO\�E\�XVLQJ�DQ�DVVHW�WR�XQGHUWDNH�DFWLYLWLHV�RU�LQGLUHFWO\�E\�LQYHVWLQJ�assets to generate funds for the charity.You should understand what the governing document says and means.You must make sure that the other charity trustees and people working at the charity follow the rules in the governing document.When the charity makes plans, the charity trustees must make VXUH�WKDW�DQ\�GHFLVLRQV�RU�DFWLRQV�ÀW�ZLWK�WKH�SXUSRVHV�DQG�powers set out in the governing document.

�� <28�0867�$&7�,1�7+(�,17(5(676�2)�7+(�&+$5,7<<RX�PXVW�GR�ZKDW�LV�EHVW�IRU�WKH�FKDULW\�DQG�LWV�beneficiaries,QRW�ZKDW�LV�EHVW�IRU�\RX��\RXU�IULHQGV�RU�IDPLO\�RU�\RXU�EXVLQHVVinterests.<RX�PXVW�SXW�WKH�QHHGV�RI�WKH�FKDULW\�EHIRUH�WKH�QHHGV�RI�DQ\other organisation that you are involved with, either in a personalor professional capacity.

Where you are faced with a decision where one option would EH�LQ�\RXU�LQWHUHVW�DQG�WKH�RWKHU�LQ�WKH�LQWHUHVW�RI�WKH�FKDULW\�\RX�PXVW�FKRRVH�WKH�RSWLRQ�WKDW�LV�LQ�WKH�FKDULW\·V�LQWHUHVW��7R�GR�WKLV�properly, you must declare what your interests are, know when it ZRXOG�EH�EHWWHU�WKDW�\RX�GLG�QRW�WDNH�SDUW�LQ�FHUWDLQ�GHFLVLRQV�DQG�take appropriate action.

Good practice The charity has an up to date list (register of interests) detailing where charity trustees work and any other organisations they are involved with.7KH�FKDULW\�KDV�D�FRQÁLFW�RI�LQWHUHVW�SROLF\�WKDW�VD\V�ZKDW�FKDULW\�WUXVWHHV�VKRXOG�GR�LI�WKHUH�LV�D�FRQÁLFW�RI�LQWHUHVW�DQG�ZKDW�happens if a charity trustee does something wrong. See the conflict of interest section for more details.There is a policy that makes it clear when a charity trustee, their IDPLO\�RU�WKH�RUJDQLVDWLRQ�WKH\�ZRUN�IRU�FDQ�EH�SDLG��IRU�VHUYLFHV�provided to the charity. See the remuneration (payment) section for more details.

The charity trustee duties under the 2005 Act VHW�RXW�D�EURDG�framework that all charity trustees must work within.


:KHQ�\RX�DUH�GHDOLQJ�ZLWK�WKH�FKDULW\·V�DIIDLUV��\RX�VKRXOG�GR�VR�DV�FDUHIXOO\�DV�\RX�ZRXOG�LI�\RX�ZHUH�ORRNLQJ�DIWHU�VRPHRQH�HOVH·V�affairs, for example a relative or a friend.

As charity trustees, you must all work together to advance the FKDULWDEOH�SXUSRVHV��LQFOXGLQJ�PDNLQJ�VXUH�WKH�FKDULW\�LV�UXQ�SURSHUO\��UHVSRQVLEO\�DQG�ODZIXOO\�<RX�KDYH�WR�SURWHFW�\RXU�FKDULW\�LQFOXGLQJ�LWV�EHQHÀFLDULHV��assets and reputation. This means understanding and assessing SRWHQWLDO�ULVNV�WR�PDNH�VXUH�GHFLVLRQV�DUH�DV�UREXVW�DV�SRVVLEOH�You should have a clear, up-to-date picture of how the charity LV�GRLQJ�ÀQDQFLDOO\��DQG�WKH�FKDULW\�VKRXOG�KDYH�SURFHGXUHV�LQ�place to reduce any risks. All the charity trustees should know what assets the charity has and understand any restrictions on KRZ�PRQH\�FDQ�EH�VSHQW��7KH�FKDULW\�PXVW�NHHS�FOHDU�ÀQDQFLDO�records and share them with all the charity trustees. See the charity finances section for more details.<RX�FDQ�XVH�WKH�FKDULW\·V�PRQH\�WR�JHW�SURIHVVLRQDO�DGYLFH�IRU�the charity if needed.

Good practice Every charity trustee has the most recent copy of WKH�FKDULW\·V�governing document.Every charity trustee gets an induction into the charity and their role when they start.

See the governing document and meetings section for more details.

��<RX�PXVW�DFW�ZLWK�FDUH�DQG�GLOLJHQFHThe role of a charity trustee will vary from charity to charity. Some FKDULWLHV�KDYH�VWDII�ZKR�DUH�UHVSRQVLEOH�IRU�GDLO\�RSHUDWLRQV��ZLWK�the charity trustees providing strategic oversight and governance. 2WKHU�FKDULWLHV�DUH�UXQ�VROHO\�E\�FKDULW\�WUXVWHHV�RQ�D�YROXQWDU\�EDVLV��:KDWHYHU�\RXU�FKDULW\�WUXVWHH�UROH�LQYROYHV�²�KDQGV�RQ�RU�VWUDWHJLF�RYHUVLJKW�²�WKH�GHFLVLRQV�\RX�PDNH�DERXW�WKH�FKDULW\�should show that you are acting with care and diligence that is UHDVRQDEOH�WR�H[SHFW�RI�D�SHUVRQ�ZKR�LV�PDQDJLQJ�WKH�DIIDLUV�RI�another person.

)RU�H[DPSOH� You might decide to invest some of your own money on a high ULVN�LQYHVWPHQW�ZLWK�SRWHQWLDOO\�ODUJH�UHWXUQV��<RX�ZRXOG�QRW�EH�DEOH�WR�GR�WKDW�ZLWK�WKH�FKDULW\·V�PRQH\�

)RU�H[DPSOH� ,I�WKH�FKDULW\�ZDV�WKLQNLQJ�DERXW�XQGHUWDNLQJ�WUDGLQJ�DFWLYLWLHV��LW�ZRXOG�EH�DSSURSULDWH�WR�VHHN�SURIHVVLRQDO�DGYLFH�DURXQG�VHWWLQJ�XS�D�VXEVLGLDU\�FRPSDQ\�WR�FDUU\�RXW�WKDW�WUDGLQJ�OrIf the charity employs staff, some professional advice on HR PDWWHUV�PLJKW�EH�QHHGHG��


Provide charity trustee induction packs and review the training needs of the charity trustees every year.$JUHH�H[SHFWDWLRQV�RI�FKDULW\�WUXVWHHV·�DWWHQGDQFH�DW�PHHWLQJV�and what to do if these are not met.Keep up to date with changes in the law that might affect your charity, and make changes when necessary.If your charity employs staff make sure there are rules in place to GHDO�ZLWK�DQ\�JULHYDQFHV�UDLVHG�E\�WKH�FKDULW\·V�VWDII� DQG�RU�YROXQWHHUV��)RU�H[DPSOH��DQ�LQWHUQDO�FRPSODLQWV� procedure.Treat volunteers properly and fairly.Report any noti!able events to OSCR��DQG�RU�RWKHU�UHOHYDQW�regulators.

<RX�GR�QRW�QHHG�WR�EH�D�OHJDO�H[SHUW�\RXUVHOI�EXW�\RX�VKRXOG�NQRZ�WKH�EDVLFV�DQG�WKH�ODZV�WKDW�DSSO\�WR�\RXU�FKDULW\·V�DFWLYLWLHV�DQG�where to get help if you need it. See the 6RXUFHV�RI�KHOS��DGYLFH�and best practice for details of organisations that can help.

As charity trustees: You must make sure that the charity has enough money to pay staff and other costs.You must make sure that any staff are treated properly and fairly.<RX�PXVW�PDNH�VXUH�WKDW�WKH�FKDULW\·V�QDPH�DQG�DQ\�ORJR�DUH�QRW�XVHG�ZLWKRXW�WKH�FKDULW\·V�SHUPLVVLRQ�<RX�DUH�UHVSRQVLEOH�IRU�PDNLQJ�VXUH�\RXU�FKDULW\�FRPSOLHV�ZLWK�any relevant laws. For example, health and safety, employment, data protection and equality laws.

Good practice As charity trustees, you should:5HYLHZ�DQG�XSGDWH�WKH�FKDULW\·V�SODQV�UHJXODUO\�$JUHH�ÀQDQFLDO�EXGJHWV�DQG�PRQLWRU�ÀQDQFLDO�SHUIRUPDQFH�Review the performance of the charity and, where necessary, agree steps to improve performance.Regularly compare what the charity proposes to do with the JRYHUQLQJ�GRFXPHQW�WR�VHH�LI�DQ\WKLQJ�QHHGV�WR�EH�FKDQJHG�RU�updated. See our Making Changes to Your Charity guidance if WKH�JRYHUQLQJ�GRFXPHQW�QHHGV�WR�EH�DPHQGHG�Make sure there are rules in place which set out what happens if the charity trustees cannot agree with each other. For example, set out in a FRGH�RI�FRQGXFW.


�� <28�0867�&203/<�:,7+�7+(��$&7<RX�PXVW�XQGHUVWDQG�WKH�OHJDO�UHTXLUHPHQWV�RI�EHLQJa charity.<RX�PXVW�FRPSO\�ZLWK�WKH�VSHFLÀF�GXWLHV�RI�WKH��$FW�

See the VSHFLÀF�GXWLHV�VHFWLRQ�EHORZ�IRU�PRUH�LQIRUPDWLRQ�

6SHFLÀF�GXWLHV�IRU�DOO�FKDULW\�WUXVWHHV

There are VSHFLÀF�GXWLHV in the 2005 Act that all charity trustees must meet. You might delegate the practical details of these duties WR�\RXU�FKDULW\·V�VWDII��YROXQWHHUV�RU�SURIHVVLRQDO�DGYLVHUV��LI�\RX�KDYH�WKHP��EXW�\RX��DV�FKDULW\�WUXVWHHV��DUH�UHVSRQVLEOH�IRU�PDNLQJ�VXUH�WKH�VSHFLÀF�GXWLHV�DUH�PHW�

��<RX�PXVW�PDQDJH�DQ\�FRQÁLFW�RI�LQWHUHVW�EHWZHHQ�the charity and any person or organisation who appoints trustees

As a charity trustee, you are required to act in the interests of the charity.

$�FRQÁLFW�RI�LQWHUHVW�ZKLFK�DULVHV�EHWZHHQ�D�FKDULW\�WUXVWHH�and a person or organisation that appointed them is called an ¶DSSRLQWPHQW�FRQÁLFW·��:KHUH�VXFK�D�FRQÁLFW�DULVHV��WKH�FKDULW\�WUXVWHH�PXVW�SXW�WKH�LQWHUHVWV�RI�WKH�FKDULW\�ÀUVW��+RZHYHU��ZKHUH�another duty prevents the charity trustee from putting the interests RI�WKH�FKDULW\�ÀUVW�WKH\�PXVW�'LVFORVH�WKH�FRQÁLFW�WR�WKH�FKDULW\�DQGnot participate in any discussion or decision on the matter.

&RQÁLFWV�RI�LQWHUHVW�FDQ�DQG�GR�KDSSHQ�LQ�DOO�VKDSHV�DQG�VL]HV�of charity, so we have a separate section of the guidance for how to manage them. See the conflict of interest section for more details.

&KDULWDEOH�FRPSDQLHV�DOVR�QHHG�WR�EH�DZDUH�RI�ZKDW�Company law VD\V�DERXW�FRQÁLFWV�RI�LQWHUHVW�

)RU�H[DPSOH�$�FKDULW\�WUXVWHH�DSSRLQWHG�WR�WKH�FKDULW\�E\�D�/RFDO�$XWKRULW\�ZRXOG�QHHG�WR�SXW�WKH�LQWHUHVWV�RI�WKH�FKDULW\�ÀUVW��DERYH�WKRVH�of the Local Authority.

Charity details on the Scottish Charity Register

Providing ,QIRUPDWLRQ�WR

the publicReporting to

OSCR

FundraisingFinancial

records and reporting

CHARIT Y TRUSTEE DUTIESGUIDANCE AND GOOD PRACTICE FOR CHARITY TRUSTEES 13

Changes that need our consent are:Changing the name of the charity.Winding up or dissolving the charity.Amending the objects and purposes of the charity.$PDOJDPDWLQJ�WKH�FKDULW\�ZLWK�DQRWKHU�ERG\�Applying to the court to change purposes, amalgamate or wind-up.&KDQJLQJ�\RXU�FKDULW\·V�legal form.

If we consent to the change you must notify us (tell us in writing) once you have made the change. Where a change to the governing GRFXPHQW�KDV�EHHQ�PDGH�\RX�VKRXOG�VHQG�XV�WKH�XSGDWHG�YHUVLRQ�

If you have the power to make other changes to your governing document (that do not need our consent) you must tell us what the changes are and send an updated version of your governing document within 3 months RI�WKH�FKDQJHV�EHLQJ�PDGH�

��&KDULW\�GHWDLOV�RQ�WKH�6FRWWLVK�&KDULW\�5HJLVWHUYour charity must give us the information we need to keep the Scottish Charity Register accurate and up to date.

7KLV�PHDQV�PDNLQJ�VXUH�WKDW�ZH�KROG�WKH�ODWHVW�LQIRUPDWLRQ�DERXW�your charity:

The name of the charity.7KH�SULQFLSDO�RIÀFH�RU�WKH�QDPH�DQG�DGGUHVV�RI�RQH�RI�WKH�charity trustees.7KH�FKDULW\·V�SXUSRVHV�

Your charity must tell us�DV�VRRQ�DV�SRVVLEOH�DERXW�DQ\�FKDQJHV�to the principal contact for the charity.

��5HSRUWLQJ�WR�26&5��0DNLQJ�FKDQJHV�WR�your charity ,I�\RX�ZDQW�WR�PDNH�DQ\�FKDQJHV�WR�\RXU�FKDULW\��ÀUVW�FKHFN�ZKDW�the rules set out in your governing document say. If you do not IROORZ�WKHVH�UXOHV�WKHQ�DQ\�GHFLVLRQV�\RX�PDNH�FRXOG�EH�LQYDOLG�and we may refuse our consent to make the changes if it is required.

8QGHU�WKH��$FW�\RX�PXVW�VHHN�RXU�FRQVHQW�EHIRUH�PDNLQJ�DQ\�RI�WKH�FKDQJHV�OLVWHG�EHORZ��<RX�QHHG�WR�DVN�IRU�RXU�consentDW�OHDVW��ZHHNV��GD\V��EHIRUH�\RX�SODQ�WR�PDNH�WKH�SURSRVHG�change.


��)LQDQFLDO�UHFRUGV�DQG�UHSRUWLQJ�Every year, every charity must:

Keep proper accounting records.Prepare a statement of account, including a report on its DFWLYLWLHV��DW�WKH�HQG�RI�HDFK�ÀQDQFLDO�\HDU�Have the statement of account independently examined or audited.Send a copy of the accounts, along with the annual return, to us, the Scottish Charity Regulator.

You must keep a copy of the accounting records for at least 6 years. Other laws or funding arrangements might require you to keep records for longer.

See our charity finance section and Charity Accounting page for more details.

��)XQGUDLVLQJ�$V�FKDULW\�WUXVWHHV�\RX�DUH�UHVSRQVLEOH�IRU�WDNLQJ�FRQWURO�RI�KRZ�your charity raises funds.

You must make sure that anyone who professionally raises funds for the charity has an agreement that says how much they will get paid to do it.

See our Fundraising page for more details.

6HH�WKH�ÁRZ�FKDUW�EHORZ�WR�GHFLGH�LI�\RX�FDQ�PDNH�FKDQJHV�DQG��if so, how. See our Making Changes to Your Charity page for more details.

DOES YOUR GOVERNING DOCUMENT HAVE THE POWER

72�0$.(�&+$1*(6"

1(('�285�&216(17"

APPLY TO US FOR CONSENT TO MAKE CHANGES (42 DAYS BEFORE)

MAKE CHANGES IN LINE WITH GOVERNING DOCUMENTS AND

OSCR CONSENT (IF GIVEN)

MAKE CHANGES IN LINE WITH GOVERNING DOCUMENT

'21·7�0$.(�$1<�&+$1*(6

NOTIFY (TELL US IN WRITING) WITHIN 3 MONTHS

1(('�72�5(25*$1,6("

NO

NO

CONSENT NOT GIVEN

YES

YES

CONSENT GIVEN


7KH�H[DPSOHV�EHORZ�DUH�ZKHQ�D�UHTXHVW�PLJKW�EH�XQUHDVRQDEOH�$�UHTXHVW�IRU�FRSLHV�RI�DFFRXQWV�DQG�RU�JRYHUQLQJ�GRFXPHQW�WKDW�DUH�DOUHDG\�SXEOLFO\�DYDLODEOH��LQ�ZKLFK�FDVH�\RX�VKRXOG�WHOO�WKH�SHUVRQ�ZKHUH�WR�JHW�WKH�LQIRUPDWLRQ��IRU�H[DPSOH�RQ�WKH�FKDULW\·V�ZHEVLWH�A request for documents that the person already has.$�UHTXHVW�IRU�WKH�GRFXPHQWV�ZLWKLQ�DQ�XQUHDVRQDEOH�WLPHVFDOH��IRU�H[DPSOH�ZLWKLQ��KRXUV��RU�LQ�DQ�XQUHDVRQDEOH�IRUPDW�

,I�\RX�GHFLGH�D�UHTXHVW�LV�XQUHDVRQDEOH�\RX�VKRXOG�EH�DEOH�WR�MXVWLI\�\RXU�GHFLVLRQ��EHDULQJ�LQ�PLQG�WKDW�D�FRQFHUQ�FRXOG�EH�UDLVHG�ZLWK�XV�DERXW�LW��:KHUH�DSSURSULDWH��\RX�VKRXOG�ZRUN�ZLWK�WKH�UHTXHVWHU�WR�IXOÀO�WKHLU�UHTXHVW�

&DQ�\RX�FKDUJH�D�IHH�IRU�WKH�UHTXHVW"<HV��\RX�FDQ��EXW�RQO\�IRU�DQ\�DGPLQLVWUDWLYH�FRVWV�LQ�SURGXFLQJ�and sending a copy of the document, for example, the cost of photocopying and postage. You cannot charge for the costs associated with preparing the accounts or staff time taken to copy and post the documents.

0DQ\�FKDULWLHV�SXEOLVK�WKHLU�JRYHUQLQJ�GRFXPHQW�DQG�DQQXDO�DFFRXQWV�RQ�WKHLU�RZQ�ZHEVLWHV��<RX�FDQ�SXW�D�OLQN�WR�\RXU�accounts on your entry in the Scottish Charity Register E\�HPDLOLQJ�XV�WKH�OLQN�DQG�\RXU�FKDULW\·V�GHWDLOV�

:KDW�KDSSHQV�LI�\RX�IDLO�LQ�\RXU�GXWLHV"If you fail to comply with these duties then this is misconduct and we do have powers to take action against charity trustees, where DSSURSULDWH��2XU�UHVSRQVH�ZLOO�EH�SURSRUWLRQDWH�GHSHQGLQJ�RQ�WKH�situation.

��3URYLGLQJ�LQIRUPDWLRQ�WR�WKH�SXEOLF��7KHUH�LV�LQIRUPDWLRQ�WKDW�\RX�PXVW�WR�JLYH�WR�WKH�SXEOLF�1. <RX�PXVW�VWDWH�\RXU�FKDULW\·V�QDPH�DQG�6FRWWLVK�FKDULW\�QXPEHU�6&�>]HUR@[[[[[��RQ�\RXU�FKDULW\·V�ZHEVLWH�KRPH�SDJH�DQGall external documents, like letters, emails, adverts, posters,LQYRLFHV�DQG�RWKHU�SXEOLFDWLRQV��6HH�WKH�publicising that youare a charity section for more details.

2. You must give a copy of your governing document�DQG�RU�WKHlatest examined or audited accounts to anyone that asks forthem. The reason a person asks for a copy of these documentsGRHV�QRW�PDWWHU��SURYLGHG�LW�LV�D�UHDVRQDEOH�UHTXHVW��\RX�PXVWgive them a copy.

*RRG�SUDFWLFH�LV�WR�SXEOLVK�\RXU�JRYHUQLQJ�GRFXPHQW�DQG�DFFRXQWV�RQ�WKH�FKDULW\·V�ZHEVLWH��LI�\RX�KDYH�RQH�

:KDW�LV�DQ�XQUHDVRQDEOH�UHTXHVW":KDW�LV�UHDVRQDEOH�RU�XQUHDVRQDEOH�ZLOO�GHSHQG�RQ�WKH�circumstances of each case. It is important to understand that it LV�WKH�UHTXHVW�WKDW�PXVW�EH�XQUHDVRQDEOH�QRW�WKH�UHDVRQV�IRU�WKH�request or the identity of the requester.


LEGAL NOTE


6SHFLÀF�GXWLHV�Charity details: section 3 of the 2005 Act Reporting changes:

sections 10 – 12 (consent for change of name)sections 16 – 17 (consent for changes including purposes)sections 39 – 43D (reorganisation)

Financial reporting: sections 44 – 45 of the 2005 Act and TheCharities Accounts (Scotland) Regulations 2006 as amended

Fundraising: sections 79 – 83 of the 2005 ActCharity trustee general duties: section 66 of the 2005 Act26&5·V�SRZHUV�DQG�GXWLHV�IROORZLQJ�LQTXLULHV��Sections 29 – 35of the 2005 Act

:KHUH�D�FKDULW\�WUXVWHH�KDV�DFWHG�UHDVRQDEO\�DQG�KRQHVWO\�LW�LV�XQOLNHO\�WR�EH�WUHDWHG�DV�PLVFRQGXFW�

)LQG�RXW�PRUH�DERXW�ZKDW�ZH�FDQ�DQG�FDQQRW�GR�DQG�ZKDW�WR�expect if we have a concern about your charity.

EXAMPLES



These organisations can help with some or all of the duties. Local Third Sector Interfaces offer support to voluntary

organisations. The Scottish Council for Voluntary Organisations (SCVO).

You may also wish to consult a professional advisor. The LawSociety of Scotland and the Institute of Chartered Accountantsin Scotland�PD\�EH�DEOH�WR�KHOS�\RX�WR�LGHQWLI\�D�SURIHVVLRQDO�ÀUP�ZLWK�H[SHUWLVH�LQ�FKDULW\�ODZ�DQG�DFFRXQWLQJ�

The Association of Charity Independent Examiners can help you ÀQG�D�TXDOLÀHG�,QGHSHQGHQW�([DPLQHUHMRC�ZLOO�EH�DEOH�WR�KHOS�\RX�ZLWK�DQ\�TXHVWLRQV�\RX�PD\�KDYH�DERXW�WD[�Consent Flowchart pdf


GOVERNING DOCUMENTS AND MEETINGS

6RPH�JRYHUQLQJ�GRFXPHQWV�DUH�PDGH�XS�RI�D�FRPELQDWLRQ�RI�items, such as standing orders, rules or supplemental deeds. The key to any governing document and to the overall governance of WKH�FKDULW\�DUH�WKH�FKDULW\·V�SXUSRVHV��ZKLFK�DUH�WKH�UHDVRQ�WKH�charity exists.

Charity trustees must make sure that:The activities of the charity advance the charitable purposes set out in the governing document. The charity follows the rules of its governing document.7KH�FKDULW\·V�assets�DUH�RQO\�XVHG�WR�DGYDQFH�WKH�FKDULWDEOH�purposes set out in the governing document.

SUMMARY

Knowing what your governing document says and understanding what it means, having well-run charity meetings and keeping good records of the meetings are all important factors in making sure that you are carrying out your general charity trustee duties set out in the 2005 Act.

MORE DETAILGoverning documents$�FKDULW\·V�JRYHUQLQJ�GRFXPHQW�LV�WKH�ZULWWHQ�VWDWHPHQW�WKDW�VHWV�RXW�LWV�SXUSRVH��VWUXFWXUH�DQG�GHVFULEHV�KRZ�LW�ZLOO�RSHUDWH��The trustees must make sure that the charity complies with its JRYHUQLQJ�GRFXPHQW��ZKLFK�XVXDOO\�FRQWDLQV�NH\�LQIRUPDWLRQ�DERXW�:KDW�WKH�FKDULW\�H[LVWV�WR�GR��LWV�FKDULWDEOH�SXUSRVHV��:KDW�SRZHUV�LW�KDV�WR�IXUWKHU�LWV�FKDULWDEOH�SXUSRVHV�:KR�WKH�WUXVWHHV�DUH��KRZ�PDQ\�FKDULW\�WUXVWHHV�WKHUH�VKRXOG�EH�and how they are appointed and removed.:KHWKHU�WKH�FKDULW\�KDV�DQ\�PHPEHUV�DQG�LI�VR�ZKR�FDQ�EH�D�PHPEHU�5XOHV�DERXW�FKDULW\�WUXVWHHV·�DQG�PHPEHUV·��LI�DQ\��PHHWLQJV��how they are arranged and conducted and how decisions are made and recorded, etc.How to change the governing document.How to close the charity down.

7KH�QDPH�JLYHQ�WR�\RX�FKDULW\·V�JRYHUQLQJ�GRFXPHQW�ZLOO�GHSHQG�on its legal form.

LEGAL FORM

Company

Unincorporated association

Trust

Scottish Charitable Incorporated Organisation (SCIO)

&RPPXQLW\�%HQHÀW�6RFLHW\

TYPE OF CONSTITUTION OR GOVERNING DOCUMENT

$UWLFOHV�RI�DVVRFLDWLRQ

Constitution

Trust deed

SCIO constitution

Rules

The most common legal forms for charities are:

18GOVERNING DOCUMENTS AND MEETINGSGUIDANCE AND GOOD PRACTICE FOR CHARITY TRUSTEES

GOVERNING DOCUMENTS AND MEETINGS

Some charities do not have the power in their governing document to make changes. If you are not sure whether you have the power to make changes you should get professional advice.

If you do not have the power to make changes you can apply to us to reorganise your charity. See our Charity reorganisation page for more details.

Charity Trustee Meetings&KDULW\�WUXVWHHV�KDYH�FROOHFWLYH�UHVSRQVLELOLW\�IRU�UXQQLQJ�WKH�FKDULW\��0HHWLQJV�DUH�RIWHQ�WKH�EHVW�ZD\�WR�PDNH�GHFLVLRQV�DQG�make sure that you keep all of the charity trustees informed.

:KHQ�DQG�KRZ�PHHWLQJV�ZLOO�EH�KHOG�ZLOO�XVXDOO\�EH�VHW�RXW�LQ�\RXU�governing document. You must follow the rules set out in your JRYHUQLQJ�GRFXPHQW�DERXW�PHHWLQJV��,I�\RX�GR�QRW��DQ\�GHFLVLRQV�\RX�PDNH�FRXOG�EH�LQYDOLG�DQG�\RX�ZLOO�QRW�EH�DFWLQJ�LQ�DFFRUGDQFH�with your charity trustee duties.

Good practice Every charity trustee has an up-to-date copy of the

governing document. You should know what it says and understand what it means.

All new charity trustees get an induction pack which includes WKH�JRYHUQLQJ�GRFXPHQW�DQG�XS�WR�GDWH�LQIRUPDWLRQ�DERXW�WKH�activities of the charity.

When planning what the charity will do, you make sure the plans ÀW�ZLWK�ZKDW�WKH�JRYHUQLQJ�GRFXPHQW�VD\V�\RX�FDQ�GR�

You read and review the governing document regularly to make VXUH�LW�LV�VWLOO�ÀW�IRU�SXUSRVH��<RX�VKRXOG�GR�WKLV�DW�OHDVW�RQFH�D�year.

&DQ�\RX�FKDQJH�\RXU�JRYHUQLQJ�GRFXPHQW"�If you do want to make changes to your governing document, \RX�QHHG�WR�IROORZ�DQ\�UXOHV�DERXW�FKDQJHV�VHW�RXW�LQ�\RXU�GRFXPHQW��7KLV�ÁRZV�IURP�WKH�JHQHUDO�SULQFLSOH�WKDW�FKDULWLHV�KDYH�WR�IROORZ�WKH�VSHFLÀF�WHUPV�RI�WKHLU�JRYHUQLQJ�GRFXPHQW�

If you want to make any changes to your governing document see our Making Changes to Your Charity page. You must tell us of any changes that you make and in some cases ask for our consent ÀUVW�

)RU�H[DPSOH�,I�\RX�ZDQW�WR�FKDQJH�WKH�ZRUGLQJ�RI�FKDULWDEOH�SXUSRVHV�LQ�\RXU�JRYHUQLQJ�GRFXPHQW��\RX�ZLOO�QHHG�WR�JHW�RXU�FRQVHQW�ÀUVW��7KLV�LV�EHFDXVH�DQ\�FKDQJHV�WR�WKH�FKDULWDEOH�SXUSRVHV�FRXOG�DIIHFW�\RXU�DELOLW\�WR�PHHW�WKH�FKDULW\�WHVW�DQG�WR�FRQWLQXH�WR�EH�a charity.

19GUIDANCE AND GOOD PRACTICE FOR CHARITY TRUSTEES

What you do if charity trustees have a conflict of interest. How you minute meetings and how long you keep records of the

meetings. It is a good idea to decide how long you will keep records

RI�PHHWLQJV�DQG�GHFLVLRQV��EHDULQJ�LQ�PLQG�DQ\�RWKHU�OHJDO�UHTXLUHPHQWV�\RX�KDYH�WR�IROORZ��)RU�H[DPSOH��ÀQDQFLDO�UHFRUGV�PXVW�EH�NHSW�IRU��\HDUV�

� :KDW�WR�GR�LI�D�FKDULW\�WUXVWHH�PLVVHV�WRR�PDQ\�PHHWLQJV�DQG�RU�does not follow the rules.

� :KDW�\RXU�JRYHUQLQJ�GRFXPHQW�VD\V�DERXW�UHPRYLQJ�FKDULW\�trustees.

:KDW�HOVH�GR�\RX�QHHG�WR�WKLQN�DERXW�IRU�PHHWLQJV"� 0DNH�VXUH�HYHU\RQH�NQRZV�DERXW�WKH�PHHWLQJ�²�ZKHQ�DQG�

where it is. Make sure you know who should or can attend the meeting. Make sure everyone has the agenda and relevant papers – know ZKDW�\RX�DUH�JRLQJ�WR�EH�WDONLQJ�DERXW�

� 'R�QRW�EH�DIUDLG�WR�DVN�TXHVWLRQV�LI�\RX�GR�QRW�XQGHUVWDQG�RU�VRPHWKLQJ�LV�QRW�FOHDU�²�\RX�DOO�KDYH�UHVSRQVLELOLW\��QRW�MXVW�WKH�chair or the treasurer.

Follow the voting rules in your governing document – if you do QRW��DQ\�GHFLVLRQV�\RX�PDNH�FRXOG�EH�LQYDOLG�

Assign someone to prepare minutes of the meeting – note the decisions taken and the reasons for them.

Make sure the minutes are agreed and approved at the next meeting.

� +DYH�FOHDU�DFWLRQ�SRLQWV�²�NQRZ�ZKR�LV�UHVSRQVLEOH�IRU�WKHP�DQG�for following up on them.

See 6RXUFHV�RI�KHOS��DGYLFH�DQG�EHVW�SUDFWLFH for agenda and minutes templates.

What should a governing document say DERXW�PHHWLQJV"�If your governing document does not mention meetings RU�LV�QRW�FOHDU�DERXW�KRZ�PHHWLQJV�VKRXOG�EH�UXQ��WKHQ�\RX�PD\�ZDQW�WR�DGG�VRPH�UXOHV�DERXW� When you have meetings and how often you have them.

Plan your charity trustee meetings so you can meet at the right time to look at the charity’s accounts�EHIRUH�VXEPLWWLQJ�WKHP�WR�26&5�

What type of meetings you have. For example charity trustee meetings, annual general

PHHWLQJV��$*0V��PHPEHUVKLS�PHHWLQJV� Who is entitled to vote at meetings and how proxies�FDQ�EH�

appointed. Who can attend the meetings (just the charity trustees or PHPEHUV�WRR"��DQG�KRZ�PDQ\�SHRSOH�KDYH�WR�EH�WKHUH�WR�IRUP�D�quorum.

127(��LI�\RX�DUH�D�6&,2�RU�D�FRPSDQ\�DQG�ZDQW�WR�XVH�WHOHSKRQH�RU�YLGHR�FRQIHUHQFLQJ�\RX�PXVW�VWDWH�WKLV�LQ�\RXU�JRYHUQLQJ�GRFXPHQW�

$�6&,2·V�JRYHUQLQJ�GRFXPHQW�LV�D�FRQVWLWXWLRQ�

$�FRPSDQ\·V�JRYHUQLQJ�GRFXPHQW�LV�LWV�$UWLFOH�RI�$VVRFLDWLRQ��)RU�PRUH�LQIRUPDWLRQ�RQ�WKH�UXOHV�DERXW�meetings in company law, see the Companies House ZHEVLWH�


EXAMPLES



Trustee Meetings: Agenda templateTrustee Meetings: Minutes templateSCVO model governing documentsSCVO guide to Board meetings

OSCR: Who’s in charge

The Charity Commission for England and Wales:Charity trustee meetings: 15 questions you should askCharities and meetings (CC48)

LEGAL NOTE


Charity trustee general duties and misconduct: section 66 of the2005 Act.26&5·V�SRZHUV�DQG�GXWLHV�IROORZLQJ�LQTXLU\��sections 29 to 35 ofthe 2005 Act.

Quorum7KLV�LV�WKH�PLQLPXP�QXPEHU�RU�SURSRUWLRQ�RI�SHRSOH��PHPEHUV��FKDULW\�WUXVWHHV�RU�WKHLU�SUR[LHV��WKDW�FDQ�YRWH�DQG�PXVW�EH�SUHVHQW�or represented at a meeting to make the proceedings and any decisions taken valid.

,I�\RX�DUH�KDYLQJ�WURXEOH�DOZD\V�JHWWLQJ�HQRXJK�FKDULW\�WUXVWHHV�WR�form a quorum then you may need to recruit more charity trustees or look at alternative ways of holding meetings such as telephone or video conferencing. You may need to amend your governing document to do so.




)RU�H[DPSOH� Your governing document says that 50% of trustees must EH�SUHVHQW�DW�D�PHHWLQJ��,I�\RX�KDYH��WUXVWHHV�LQ�WRWDO�EXW�only four are present at the meeting, then you will not have D�TXRUXP�DQG�WKH�PHHWLQJ�ZLOO�QRW�EH�YDOLG�


CONFLICT OF INTEREST

MORE DETAIL:KDW�LV�D�FRQÁLFW�RI�LQWHUHVW"$�FRQÁLFW�RI�LQWHUHVW�LV�DQ\�VLWXDWLRQ�ZKHUH�WKHUH�LV�D�SRWHQWLDO�IRU�D�charity trustee’s�SHUVRQDO�RU�EXVLQHVV�LQWHUHVWV��RU�WKH�LQWHUHVWV�RI�VRPHRQH�WKH\�DUH�FRQQHFWHG�ZLWK��WR�EH�GLIIHUHQW�IURP�WKH�LQWHUHVWV�of the charity��,Q�WKLV�VLWXDWLRQ��LW�PD\�VRPHWLPHV�EH�GLIÀFXOW�IRU�WKH�charity trustee to make an impartial decision. However, with proper KDQGOLQJ�FKDULW\�WUXVWHHV�FDQ�RYHUFRPH�WKHVH�GLIÀFXOWLHV�

7KHUH�DUH�WZR�PDLQ�W\SHV�RI�FRQÁLFW�RI�LQWHUHVW�� $SSRLQWPHQW�FRQÁLFW��7KLV�LV�D�FRQÁLFW�RI�LQWHUHVW�

ZKLFK�FDQ�DULVH�EHWZHHQ�D�FKDULW\�WUXVWHH�DQG�WKH� person or organisation which appointed them.

SUMMARY

As a charity trustee��\RX�PXVW�SXW�WKH�LQWHUHVWV�RI�WKH�charity�EHIRUH�\RXU�RZQ�LQWHUHVWV�RU�WKRVH�RI�DQ\�RWKHU�SHUVRQ�RU�RUJDQLVDWLRQ�LQFOXGLQJ�WKRVH�UHVSRQVLEOH�IRU�\RXU�DSSRLQWPHQW��:KHUH�\RX�FDQQRW�GR�WKDW��WKHUH�PD\�EH�D�FRQÁLFW�RI�LQWHUHVW�

$�FRQÁLFW�RI�LQWHUHVW�H[LVWV�ZKHQ�\RXU�GXW\�WR�DFW�LQ�WKH�LQWHUHVWV�RI�WKH�FKDULW\�FRQÁLFWV�ZLWK� The interest of the person or organisation that appointed you as D�FKDULW\�WUXVWHH��DQ�´DSSRLQWPHQW�FRQÁLFWµ��RU

� &RQÁLFWV�ZLWK�\RXU�RZQ�SHUVRQDO�RU�EXVLQHVV�LQWHUHVW�LQ�UHODWLRQ�WR�WKDW�PDWWHU��D�´SHUVRQDO�FRQÁLFWµ��

&RQÁLFWV�RI�LQWHUHVW�FDQ�DQG�GR�FRPH�XS��LW�LV�KRZ�\RX�manage them that is importantIn this section we explain how you as a charity trustee can prepare IRU�SRWHQWLDO�FRQÁLFWV�RI�LQWHUHVW��ZKDW�\RX�FRXOG�GR�LI�D�FRQÁLFW�DULVHV��DQG�KLJKOLJKW�FRPPRQ�H[DPSOHV�RI�FRQÁLFWV�RI�LQWHUHVW�

)RU�H[DPSOH� $�FKDULW\�WUXVWHH�DSSRLQWHG�E\�D�ORFDO�VFKRRO��FKXUFK�RU�Local Authority and a decision is required on a matter ZKLFK�DIIHFWV�ERWK�WKH�FKDULW\�DQG�WKH�RWKHU�RUJDQLVDWLRQ��

22CONFLICT OF INTERESTGUIDANCE AND GOOD PRACTICE FOR CHARITY TRUSTEES

)RU�H[DPSOH�� D�FKDULW\�WUXVWHH�FRXOG�JHW�GLUHFW�ÀQDQFLDO�EHQHÀW�IURP�D�

decision the charity has to make� D�FKDULW\�WUXVWHH�LV�GLVFXVVLQJ�D�FRQWUDFW�RU�EXVLQHVV�

arrangement with an organisation their family have links to a charity trustee is also an employee of a company that the FKDULW\�LV�GRLQJ�EXVLQHVV�ZLWK

an employee, or potential employee, of the charity is connected to one of the charity trustees.

� EHLQJ�D�WUXVWHH�RI�WZR�RU�PRUH�FKDULWLHV�WKDW�DUH�FRPSHWLQJ�with each other for the same grant(s) or funding

� EHLQJ�D�WUXVWHH�RI�D�FKDULW\�WKDW�JLYHV�RXW�JUDQWV�DQG�D�WUXVWHH�of another charity applying for one of these grants

� EHLQJ�D�WUXVWHH�RI�D�FKDULW\�WKDW�LV�SDUW�RI�D�JURXS�VWUXFWXUH�DQG�EHLQJ�RQ�WKH�ERDUG�RI�WKH�SDUHQW�FKDULW\

� �EHLQJ�D�WUXVWHH�RI�D�FKDULW\�ZKHUH�\RX�DUH�DOVR�D�VHUYLFH�XVHU�or customer

� �D�FKDULW\�WUXVWHH�DSSO\LQJ�IRU�D�MRE�LQ�WKH�FKDULW\� ([DPSOHV�RI�ZKDW�LV�QRW�D�FRQÁLFW�RI�LQWHUHVW�� EHLQJ�D�FKDULW\�WUXVWHH�DQG�GRQDWLQJ�IXQGV�WR�WKH�FKDULW\� EHLQJ�ERWK�D�YROXQWHHU�DQG�D�WUXVWHH�RI�FKDULW\��

�� 3HUVRQDO�FRQÁLFW��:KHQ�\RX�PLJKW�QRW�EH�DEOH�WR�GR�ZKDW�LV�EHVW�IRU�WKH�FKDULW\�EHFDXVH�LW�FRQÁLFWV�ZLWK�\RXU�RZQ�SHUVRQDO�RU�EXVLQHVV�LQWHUHVW�LQ�UHODWLRQ�WR�WKDW�PDWWHU�

,Q�ERWK�FDVHV��WKH�charity trustee duties require you to act in the interests of the charity.

:KHUH�WKHUH�LV�DQ�¶DSSRLQWPHQW�FRQÁLFW·�WKH�FKDULW\�WUXVWHH�PXVW�SXW�WKH�LQWHUHVWV�RI�WKH�FKDULW\�ÀUVW��+RZHYHU��ZKHUH�DQRWKHU�GXW\�prevents the charity trustee from putting the interests of the charity ÀUVW�WKH\�PXVW�� GLVFORVH�WKH�FRQÁLFW�WR�WKH�FKDULW\��DQG not participate in any discussion or decision making on the

matter.

,W�LV�LPSRUWDQW�WKDW�HYHQ�ZKHUH�WKHUH�DSSHDUV�WR�EH�D�FRQÁLFW�of interest, whether it materialises or not, you take appropriate VWHSV�WR�PDQDJH�WKH�FRQÁLFW�DQG�EH�VHHQ�WR�EH�DFWLQJ�LQ�WKH�EHVW�interests of the charity.

7KH�WHUP�¶FRQÁLFW�RI�LQWHUHVW·�FDQ�FRYHU�D�UDQJH�RI�VLWXDWLRQV�DQG�PD\�DOVR�EH�FDOOHG�D�¶FRQÁLFW�RI�UROHV·�RU�¶FRQÁLFW�RI�GXW\·�

)RU�H[DPSOH� :KHQ�D�FKDULW\�LV�FRQVLGHULQJ�D�FRQWUDFW�ZLWK�D�EXVLQHVV�and one of the charity trustees is also a director of that EXVLQHVV��


'HFLGH�LI�WKH�SHUVRQ�V��ZLWK�D�FRQÁLFW�RI�LQWHUHVW�VKRXOG�EH�LQYROYHG�LQ�DQ\�GLVFXVVLRQV�RU�GHFLVLRQV�DERXW�WKH�VLWXDWLRQ�²�LI�LW�LV�GHFLGHG�WKH\�VKRXOG�EH�LQYROYHG�EH�SUHSDUHG�WR�MXVWLI\�WKDW�decision.:KHUH�WKHUH�LV�D�FRQÁLFW��PDNH�VXUH�WKDW�GHFLVLRQV�DUH�WDNHQ�LQ�WKH�FKDULW\·V�LQWHUHVWV�0DNH�VXUH�WKDW�\RXU�FKDULW\�FDQ�VWLOO�FDUU\�RQ�LWV�EXVLQHVV�DQG�VWLOO�IRUP�D�TXRUXP�HYHQ�LI�D�QXPEHU�RI�FKDULW\�WUXVWHHV�KDYH�WR�withdraw.

�� 5HFRUG�Keep a written record of the situation and what the charity didDERXW�LW��LQFOXGLQJ�5HFRUGLQJ�ZKR�WKH�FRQÁLFW�DIIHFWHG�5HFRUGLQJ�ZKHQ�WKH�FRQÁLFW�ZDV�LGHQWLÀHG�DQG�GHFODUHG�Recording what was discussed and decided. Recording who withdrew from the decisions and how the UHPDLQLQJ�FKDULW\�WUXVWHHV�PDGH�D�GHFLVLRQ�LQ�WKH�EHVW�interests of the charity.0DLQWDLQLQJ�WKH�FKDULW\·V�UHJLVWHU�RI�LQWHUHVWV�

�� /HDUQ�/HDUQ�IURP�WKH�H[SHULHQFH��PDNH�LPSURYHPHQWV�WR�WKH�FKDULW\·Vpolicy and procedures and where necessary seek professionaladvice.:KHUH�FRQÁLFWV�RI�LQWHUHVW�DULVH�IUHTXHQWO\�DQG�D�QXPEHU�RIcharity trustees must withdraw from discussion, the charityshould consider whether the make up of the Board is preventingthe effective management of the charity.0DNH�VXUH�WKH�FKDULW\·V�JRYHUQLQJ�GRFXPHQW�KDV�WKH�SRZHU�WRUHPRYH�FKDULW\�WUXVWHHV�ZKR�DUH�LQ�VHULRXV�RU�SHUVLVWHQW�EUHDFKof the 2005 Act.

:KDW�VKRXOG�\RX�GR�LI�WKHUH�LV�D�FRQÁLFW�RI�LQWHUHVW"�+DYLQJ�D�FRQÁLFW�RI�LQWHUHVW�GRHV�QRW�QHFHVVDULO\�PHDQ�WKDW�DQ\RQH�has acted improperly. As charity trustees you all have a collectiveresponsibility�WR�PDQDJH�FRQÁLFWV�RI�LQWHUHVW�DQG�WR�DFW�FOHDUO\�LQ�WKH�FKDULW\·V�EHVW�LQWHUHVWV�

7KHUH�DUH�IRXU�NH\�VWHSV�WR�GHDOLQJ�ZLWK�FRQÁLFW�RI�LQWHUHVW�

�� ,GHQWLI\�+DYH�D�FRQÁLFW�RI�LQWHUHVW�SROLF\�VR�WKDW�DOO�WKH�FKDULW\�WUXVWHHV�DQG�SRWHQWLDO�FKDULW\�WUXVWHHV��XQGHUVWDQG�ZKDW�FRXOG�EH�DFRQÁLFW�RI�LQWHUHVW�.QRZ�ZKDW�WKH�FKDULW\·V�governing document�VD\V�DERXWFRQÁLFWV�RI�LQWHUHVW�Set up a register of interests for all charity trustees and makesure it is kept up to date.+DYH�FRQÁLFW�RI�LQWHUHVW�DV�D�UHJXODU�DJHQGD�LWHP�DW�WKHEHJLQQLQJ�RI�WKH�FKDULW\�WUXVWHH�PHHWLQJV�'HFODUH�DQ\�SRWHQWLDO�FRQÁLFW�RI�LQWHUHVW�DV�VRRQ�DV�\RX�EHFRPHaware of them.

�� 0DQDJH�Have clear procedures in place that state what should happen ifWKHUH�LV�D�FRQÁLFW�RI�LQWHUHVW�DQG�KRZ�WKH�FKDULW\�WUXVWHHV�ZLOO�GHDOZLWK�LW��)RU�H[DPSOH��WKH�FRQÁLFWHG�FKDULW\�WUXVWHH�PLJKW�ZLWKGUDZfrom the meeting or part of the meeting.If the charity has a conflict of interest policy make sure itLV�DSSOLHG�LQ�DOO�VLWXDWLRQV�ZKHUH�WKHUH�LV�D�FRQÁLFW�RU�SRWHQWLDOFRQÁLFW��7KH�SROLF\�VKRXOG�DOVR�GLVWLQJXLVK�EHWZHHQ�WKH�WZRGLIIHUHQW�W\SHV�RI�FRQÁLFW��¶DSSRLQWPHQW�FRQÁLFWV·�DQG�¶SHUVRQDOFRQÁLFWV·�


The charity trustees should make sure there is a record of who WRRN�SDUW�LQ�WKH�GLVFXVVLRQV�DQG�GHFLVLRQV��:KHUH�WKHUH�LV�D�FRQÁLFW�DQG�WKH�FRQÁLFWHG�FKDULW\�WUXVWHH�VWLOO�WDNHV�SDUW��KRZ�WKLV�LV�LQ�WKH�EHVW�LQWHUHVWV�RI�WKH�FKDULW\�QHHGV�WR�EH�H[SODLQHG�

:KDW�VKRXOG�\RX�GR�LI�DQRWKHU�FKDULW\�WUXVWHH�KDV� D�FRQÁLFW�RI�LQWHUHVW"�All charity trustees must act in line with the duty to protect the interests of the charity. This means that you and the other FKDULW\�WUXVWHHV�PXVW�WDNH�FROOHFWLYH�UHVSRQVLELOLW\�WR�PDNH�VXUH�WKDW�D�EUHDFK�RI�FKDULW\�WUXVWHH�GXWLHV�LV�FRUUHFWHG�DQG�QRW�UHSHDWHG�

,I�\RX�NQRZ�DQRWKHU�FKDULW\�WUXVWHH�LV�FRQÁLFWHG��DQG�LW�LV�QRW�declared, it is your duty to speak up.

,I�PHPEHUV�IURP�D�OLQNHG�RUJDQLVDWLRQ�GRPLQDWH�WKH�PDNH�XS�RI�your Board of charity trustees this can lead to a risk of recurrent FRQÁLFW�RI�LQWHUHVW��+RZ�\RX�PDQDJH�WKLV�ULVN�LV�YHU\�LPSRUWDQW��

:KDW�VKRXOG�EH�LQFOXGHG�LQ�D�FRQÁLFW�RI�LQWHUHVW�SROLF\"�$�FRQÁLFW�RI�LQWHUHVW�SROLF\�VKRXOG�VHW�RXW�� :KDW�D�FRQÁLFW�RI�LQWHUHVW�LV�DQG�WKH�FRQÁLFWV�WKDW�DUH�OLNHO\�WR�EH�

relevant to your charity.� 7KH�GLVWLQFWLRQ�EHWZHHQ�D�´SHUVRQDOµ�FRQÁLFW�DQG�DQ�´DSSRLQWPHQWµ�FRQÁLFW�

When and how the charity trustees should declare a potential FRQÁLFW�RI�LQWHUHVW�

� :KDW�WKH�FKDULW\·V�JRYHUQLQJ�GRFXPHQW�VD\V��LI�DQ\WKLQJ��DERXW�FRQÁLFWV�RI�LQWHUHVW�

� :KHQ�D�FRQÁLFWHG�FKDULW\�WUXVWHH�VKRXOG�ZLWKGUDZ�IURP�GHFLVLRQ�making and the procedures for making decisions in those circumstances.

See the VRXUFHV�RI�KHOS��DGYLFH�DQG�EHVW�SUDFWLFH section for OLQNV�WR�H[DPSOH�FRQÁLFW�RI�LQWHUHVW�SROLFLHV�

:KHQ�VKRXOG�D�FKDULW\�WUXVWHH�ZLWKGUDZ�IURP�D�PHHWLQJ":KHQ�D�FKDULW\�WUXVWHH�LV�DZDUH�RI�D�FRQÁLFW�RI�LQWHUHVW�DQG�WKH\�IHHO�XQDEOH�WR�SXW�WKH�LQWHUHVWV�RI�WKH�FKDULW\�ÀUVW��WKH\�PXVW�withdraw from the discussion or decision concerned.

,W�PD\�DOVR�EH�DSSURSULDWH�IRU�FKDULW\�WUXVWHHV�WR�ZLWKGUDZ�IURP�GLVFXVVLRQV�LQ�RWKHU�FLUFXPVWDQFHV�RI�FRQÁLFW�RI�LQWHUHVW��:KHUH�WKH\�GR�QRW��WKH\�VKRXOG�EH�DEOH�WR�GHPRQVWUDWH�WKDW�WKH\�KDYH�acted in the interests of the charity.

SCIOs�PXVW�KDYH�SURFHGXUHV�IRU�GHDOLQJ�ZLWK�DQ\�FRQÁLFW�of interest within their SCIO constitution.

)RU�H[DPSOH� A Board made up mainly of service users is asked to vote on an increase to the fees that service users pay to the charity. It is not practical for all the service XVHU�WUXVWHHV�WR�ZLWKGUDZ�DV�WKHUH�ZRXOGQ·W�EH�HQRXJK�trustees to form a quorum and make a valid decision.

The trustees need to put their own interests to one side DQG�FKRRVH�ZKDW�LV�EHVW�IRU�WKH�FKDULW\��$�FOHDU�UHFRUG�VKRXOG�EH�WDNHQ�RI�WKH�GHFLVLRQ�DQG�ZK\�LW�ZDV�PDGH�

However, if there is only one service user on the Board WKHQ�LW�PLJKW�EH�IHOW�WKDW�WKH\�VKRXOG�ZLWKGUDZ��ZKLFK�ZRXOG�EH�HDVLHU�IRU�WKH�SHUVRQ�FRQFHUQHG�DQG�GRHV�QRW�affect the quorum.


EXAMPLES

For case studies and advice please see our Good Governance pages.


OSCR: Who’s in charge? SCVO: how to avoid con"icts of interest

LEGAL NOTE

+HUH�ZH�VHW�RXW�WKH�VSHFLÀF�VHFWLRQV�RI�FKDULW\�ODZ�LQ�6FRWODQG�relevant to each part of the guidance. Charity trustee general duties and misconduct: section 66 of the

2005 Act.� 6&,2�FRQÁLFW�RI�LQWHUHVW�SURYLVLRQ�LQ�FRQVWLWXWLRQ��The Scottish

Charitable Incorporated Organisations General Regulations 2011.

,I�WKHUH�LV�VHULRXV�RU�SHUVLVWHQW�EUHDFK�RI�GXW\�E\�DQ�LQGLYLGXDO��the other charity trustees should look at whether the governing document has the power to remove the charity trustee. :KDW�KDSSHQV�LI�D�FRQÁLFW�RI�LQWHUHVW�LV�QRW�PDQDJHG�SURSHUO\"$V�FKDULW\�WUXVWHHV�\RX�PXVW�WU\�WR�PDNH�VXUH�WKDW�DQ\�EUHDFK�RI�GXW\�UHJDUGLQJ�FRQÁLFW�RI�LQWHUHVW�LV�FRUUHFWHG�DQG�QRW�UHSHDWHG��:KHUH�WKHUH�LV�D�VHULRXV�RU�SHUVLVWHQW�EUHDFK�WKH�FKDULW\�WUXVWHH�VKRXOG�EH�UHPRYHG��SURYLGLQJ�WKH�JRYHUQLQJ�GRFXPHQW�DOORZV��,I�WKH�RWKHU�FKDULW\�WUXVWHHV�IDLO�WR�GR�VR��WKLV�FRXOG�EH�FRQVLGHUHG�mismanagement or misconduct in the administration of the charity.

As regulator, we are required to identify and investigate any apparent misconduct and, where appropriate can take protective action. See our Inquiry Policy for more details. Our response will EH�SURSRUWLRQDWH��ZKHUH�D�FKDULW\�WUXVWHH�KDV�DFWHG�KRQHVWO\�DQG�UHDVRQDEO\�





CHARITY FINANCES

MORE DETAIL

Financial records and accounts The 2005 Act requires that as charity trustees, you must:

keep proper accounting recordsprepare a statement of accounts, including a report on the FKDULW\·V�DFWLYLWLHV��HDFK�ÀQDQFLDO�\HDUhave the accounts independently examined or auditedsend a copy of the accounts to uskeep the accounting records for 6 years.

SUMMARY

In this section, we explain the legal requirements and good practice IRU�SURWHFWLQJ�\RXU�FKDULW\·V�ÀQDQFHV��7KH�VHFWLRQ�VSOLWV�LQWR�WZR�DUHDV�RI�FKDULW\�ÀQDQFH�� )LQDQFLDO�5HFRUGV��&KDULWLHV�KDYH�VSHFLÀF�GXWLHV�XQGHU

the 2005 Act�WR�PDLQWDLQ�ÀQDQFLDO�UHFRUGV��SUHSDUH�DQQXDOaccounts�DQG�VXEPLW�WKHVH�DFFRXQWV�WR�XV��,W�LV�WKHUHVSRQVLELOLW\�RI�DOO�WKH�FKDULW\�WUXVWHHV�WR�PDNH�VXUH�WKDW�WKHVHrequirements are met.

��)LQDQFLDO�&RQWUROV� The 2005 Act requires you, as charitytrustees, to act with care and dilligence when managing theaffairs of the charity. This means that you must make sure youKDYH�VXLWDEOH�FRQWUROV�RYHU�ÀQDQFLDO�SURFHGXUHV�WR�SURWHFW�WKHassets of the charity.

CharityÀQDQFHV

Financialrecords

Acting with care and diligence

Annualaccounts

Financialcontrols

27CHARIT Y FINANCESGUIDANCE AND GOOD PRACTICE FOR CHARITY TRUSTEES

([WHUQDO�VFUXWLQ\�RI�WKH�DFFRXQWV$OO�VHWV�RI�FKDULW\�DFFRXQWV�PXVW�EH�VFUXWLQLVHG�E\�VRPHRQH�outside of the charity. This means that an independent person FKHFNV�WKDW�WKH�LQIRUPDWLRQ�LQ�WKH�DFFRXQWV�LV�D�IDLU�UHÁHFWLRQ�RI�WKH�FKDULW\·V�ÀQDQFLDO�SRVLWLRQ�

7KH�W\SH�RI�VFUXWLQ\�UHTXLUHG�LV�GHSHQGHQW�RQ�WKH�FKDULW\·V�WXUQRYHU��government document and the requirements of any funders.

For more details, please see our Independent Examination: Guidance for Charities and Independent Examiners.

:KDW�ÀQDQFLDO�LQIRUPDWLRQ�GR�\RX�QHHG�WR�VXEPLW"�Every year you need to send us: 1. the Annual Return2. statement of accounts3. trustees’ annual report and4. external scrutiny report

:H�XVH�WKH�DQQXDO�UHWXUQ�WR�JDWKHU�LQIRUPDWLRQ�DERXW�\RXU�FKDULW\��Depending on the income of your charity, we may ask more TXHVWLRQV�DERXW�WKH�FKDULW\·V�ÀQDQFHV�DQG�KRZ�LW�RSHUDWHV��

Anyone who has given time or money to a charity will have an interest in seeing its resources used properly. A well prepared and LQIRUPDWLYH�VHW�RI�DFFRXQWV�ZLOO�JLYH�PHPEHUV��IXQGHUV��GRQRUV�DQG�anyone else with an interest in your charity a good picture of the activities and how well you are using the resources.

:KDW�DUH�SURSHU�DFFRXQWLQJ�UHFRUGV"3URSHU�DFFRXQWLQJ�UHFRUGV�PXVW�GHWDLO�GD\�E\�GD\�WKH�PRQH\�UHFHLYHG�DQG�VSHQW�E\�WKH�FKDULW\��WKH�DVVHWV�DQG�OLDELOLWLHV�RI�WKH�FKDULW\�DQG�VKRZ�WKH�ÀQDQFLDO�SRVLWLRQ�RI�WKH�FKDULW\�DW�DQ\�WLPH�

How you keep the records will depend on the size and complexity of your charity. For small charities, a manual record or simple VSUHDGVKHHW�PD\�EH�HQRXJK��/DUJHU�FKDULWLHV�PD\�QHHG�VSHFLDOLVW�accounting software.

+RZHYHU�\RX�NHHS�WKH�UHFRUGV�WKH\�VKRXOG�EH�HDV\�WR�IROORZ�DQG�NHSW�XS�WR�GDWH�VR�WKDW�WKH�ÀQDQFLDO�SRVLWLRQ�RI�WKH�FKDULW\�LV�FOHDU�DW�all times.

:KDW�GR�,�QHHG�WR�LQFOXGH�LQ�WKH�DFFRXQWV"What you need to put in the accounts is set out in the Charities Accounts (Scotland) Regulations 2006 (as amended). These 5HJXODWLRQV�GHWDLO�WKH�GLIIHUHQW�W\SHV�RI�DFFRXQWV�WKDW�FDQ�EH�prepared and what you must include in them.

7KH�5HJXODWLRQV�DOVR�FRQWDLQ�VSHFLÀF�UXOHV�IRU�UHSRUWLQJ�RQ�WKH�DFWLYLWLHV�RI�WKH�FKDULW\��DV�ZHOO�DV�WKH�ÀQDQFLDO�LQIRUPDWLRQ��7KLV�activities report is called the Trustees’ Annual Report.

For more details, please see our guide to the accounts Regulations.

1RWH��&KDULWDEOH�&RPSDQLHV��&KDULWLHV�UHJLVWHUHG�LQ�(QJODQG�DQG�:DOHV�DQG�5HJLVWHUHG�6RFLDO�/DQGORUGV�

You will also need to follow the accounting requirements of the other regulators. See our accounts guidance for more information.


CHAPTER T ITLE 29

,Q�D�VPDOO�RUJDQLVDWLRQ�LW�PD\�EH�DSSURSULDWH�MXVW�WR�FRPSDUH�WKH�expenditure of one period with that of the corresponding previous SHULRG��IRU�H[DPSOH�WKH�PRQWK�EHIRUH�

&RQWUROV�RIIHU�SURWHFWLRQ,W�LV�LPSRUWDQW�WR�UHPHPEHU�WKDW�EHLQJ�D�FKDULW\�WUXVWHH�LV�D�VLJQLÀFDQW�UHVSRQVLELOLW\��:KHUH�FRQWUROV�DUH�FRUUHFWO\�VHW�XS�DQG�XVHG�WKH\�ZLOO�ERWK�SURWHFW�WKH�DVVHWV�RI�WKH�FKDULW\�DQG�\RX�DV�D�charity trustee.

:KDW�DUHDV�GR�\RX�QHHG�WR�FRQVLGHU"

Collective responsibility$OO�RI�WKH�FKDULW\�WUXVWHHV�KDYH�UHVSRQVLELOLW\�IRU�WKH�ÀQDQFLDO�records, not just the treasurer. As charity trustees, it is important WKDW�\RX�DOO�KDYH�D�EDVLF�XQGHUVWDQGLQJ�RI�WKH�ÀQDQFHV�RI�\RXU�FKDULW\�DQG�FDQ�TXLFNO\�LGHQWLI\�LI�WKHUH�DUH�DQ\�SUREOHPV�

7KH�ÀQDQFLDO�LQIRUPDWLRQ�VKRXOG�EH�GLVFXVVHG�DW�PHHWLQJV�WR�PDNH�VXUH�WKDW�HYHU\RQH�NQRZV�WKH�FKDULW\·V�ÀQDQFLDO�VLWXDWLRQ��)RU�H[DPSOH��ÀQDQFH�VKRXOG�EH�D�UHFXUULQJ�LWHP�RQ�WKH�DJHQGD�RI�HYHU\�ERDUG�PHHWLQJ��,W�LV�JRRG�SUDFWLFH�WKDW�VRPHRQH�RWKHU�WKDQ�WKH�WUHDVXUHU�DOVR�KDV�DQ�XQGHUVWDQGLQJ�RI�KRZ�WKH�FKDULW\·V�ÀQDQFLDO�UHFRUGV�DUH�NHSW�

Finance Committee6RPH�RUJDQLVDWLRQV�ÀQG�LW�KHOSIXO�WR�VHW�XS�D�ÀQDQFH�VXE�FRPPLWWHH�RI�FKDULW\�WUXVWHHV�DQG�DGYLVRUV�ZLWK�ÀQDQFLDO�RU�accounting knowledge. They have additional meetings to spend H[WUD�WLPH�RQ�GHWDLOHG�ÀQDQFH�PDWWHUV��OLNH�EXGJHW�SUHSDUDWLRQ��DQG�WKHQ�UHSRUW�EDFN�WR�WKH�FKDULW\�WUXVWHH�ERDUG��+DYLQJ�D�FRPPLWWHH�GRHV�QRW�DEVROYH�WKH�RWKHU�FKDULW\�WUXVWHHV�RI�WKHLU�FROOHFWLYH�UHVSRQVLELOLW\�EXW�FDQ�EH�KHOSIXO�LQ�FODULI\LQJ�PDWWHUV�WKDW�DUH�VXEPLWWHG�WR�WKH�IXOO�FKDULW\�WUXVWHH�ERDUG�

Financial controlsAs a charity trustee, you have a duty under the 2005 Act to act with WKH�FDUH�DQG�GLOLJHQFH�WKDW�LW�LV�UHDVRQDEOH�WR�H[SHFW�RI�D�SHUVRQ�who is managing the affairs of another person.

This means that you must act with a higher level of care than you GR�ZLWK�\RXU�RZQ�ÀQDQFHV�DQG�DIIDLUV��<RX�PXVW�PDNH�VXUH�WKDW�\RX�SURWHFW�WKH�FKDULW\·V�UHVRXUFHV�DQG�WKDW�\RX�GR�QRW�SXW�WKH�assets of the charity at risk. One way of doing this is to make sure that there are proper ÀQDQFLDO�FRQWUROV in place.

:KDW�GR�ZH�PHDQ�E\�ÀQDQFLDO�FRQWUROV"*RRG�ÀQDQFLDO�FRQWUROV�DUH�WRROV�IRU�PDNLQJ�VXUH�WKDW�\RX�PDQDJH�the charity effectively and meet your legal duty to act with care and diligence.

Financial controls are the systems you have in place to make sure that you protect the assets of the charity. The controls aim to identify and manage the risks of theft or fraud, loss and conflicts of interest.

Reviewing accounts$�PDMRU�SDUW�RI�ÀQDQFLDO�FRQWURO�LV�WR�UHYLHZ�WKH�DFFRXQWV��$�XVHIXO�way to do this is to compare the amounts spent on individual expense categories since they were last reviewed with what ZDV�H[SHFWHG�WR�EH�VSHQW�LQ�WKDW�SHULRG��,GHDOO\��D�EXGJHW�ZLOO�EH�SUHSDUHG�DQG�DSSURYHG�E\�WKH�FKDULW\�WUXVWHH�ERDUG�EHIRUH�WKH�EHJLQQLQJ�RI�WKH�ÀQDQFLDO�\HDU��7KHQ�WKH�DFWXDO�UHVXOWV�FDQ�EH�FRPSDUHG�WR�WKH�H[SHFWHG�RU�EXGJHWHG�UHVXOWV��PDNLQJ�LW�HDVLHU�WR�LQYHVWLJDWH�DQ\�GLIIHUHQFHV�RU�¶YDULDQFHV·�


<RX�VKRXOG�NHHS�SHWW\�FDVK�WR�D�PLQLPXP��5HFHLSWV�VKRXOG�EH�UHTXLUHG�IRU�DOO�LWHPV�RI�SHWW\�FDVK��$FFHVV�WR�WKH�SHWW\�FDVK�ER[�VKRXOG�EH�UHVWULFWHG��,W�VKRXOG�EH�KHOG�LQ�D�VHFXUH�SODFH��FRXQWHG�DQG�DJUHHG��$�FDVK�ERRN�VKRXOG�EH�NHSW�WR�UHFRUG�ZKDW�JRHV�LQWR�the petty cash and what is paid out of it. Each time there is money DGGHG�WR�RU�WDNHQ�RXW�RI�WKH�SHWW\�FDVK�LW�VKRXOG�EH�UHFRUGHG�LQ�WKH�FDVK�ERRN�ZLWK�VXSSRUWLQJ�GRFXPHQWDWLRQ��VXFK�DV�D�FRS\�of a donation receipt or expenditure receipt. The amount in the SHWW\�FDVK�ER[�VKRXOG�EH�UHJXODUO\�FRXQWHG�DQG�FRPSDUHG�WR�WKH�EDODQFH�LQ�WKH�FDVKERRN�WR�PDNH�VXUH�WKDW�DOO�PRQH\�LV�SURSHUO\�recorded and accounted for.

Banking%DQNLQJ�LV�DQ�LPSRUWDQW�SDUW�RI�WKH�ÀQDQFLDO�FRQWUROV��:KHQ�FRQVLGHULQJ�\RXU�FKDULW\·V�EDQNLQJ�DUUDQJHPHQWV��\RX�VKRXOG�WKLQN�DERXW�WKH�IXOO�UDQJH�RI�VHUYLFHV�WKDW�\RX�QHHG�DQG�ORRN�IRU�D�EDQN�that can provide them.

Banks will ask for details of all signatories and usually all the FKDULW\�WUXVWHHV��VR�EH�SUHSDUHG�WR�KDYH�WKLV�LQIRUPDWLRQ�DYDLODEOH��<RX�VKRXOG�EH�DZDUH�RI�WKH�WHUPV�DQG�FRQGLWLRQV�RI�\RXU�EDQNLQJ�DUUDQJHPHQWV�DQG�DGYLVH�WKH�EDQN�LPPHGLDWHO\�RI�DQ\�FKDQJHV�that may affect these for example, a change of signatories.%DQN�VWDWHPHQWV�VKRXOG�EH�DJUHHG�WR�WKH�DFFRXQWLQJ�UHFRUGV�regularly, at least monthly, and someone other than the person who LV�RWKHUZLVH�LQYROYHG�LQ�WKH�EDQNLQJ�SURFHVV�VKRXOG�UHYLHZ�WKHVH�reconciliations.

%DQN�UHFRQFLOLDWLRQV�VKRXOG�EH�UHYLHZHG�DW�WUXVWHH�PHHWLQJV��,Q�VPDOOHU�FKDULWLHV��EDQN�VWDWHPHQWV�DQG�WUDQVDFWLRQV�PD\�EH�checked at trustee meetings.

6HSDUDWLRQ�RI�GXWLHV:KHUH�SRVVLEOH��\RX�VKRXOG�VHSDUDWH�RXW�WKH�DGPLQLVWUDWLYH�WDVNV�VR�WKDW�QR�RQH�LQGLYLGXDO�KDV�VROH�UHVSRQVLELOLW\�IRU�WKH�ÀQDQFLDO�WUDQVDFWLRQV�RI�\RXU�FKDULW\��:H�FDOO�WKLV�¶VHSDUDWLRQ�RI�GXWLHV·�

For example, when your charity makes a purchase the same individual (whether it is a charity trustee, employee or volunteer) VKRXOG�QRW�EH�UHVSRQVLEOH�IRU�DUUDQJLQJ�WKH�SXUFKDVH��DXWKRULVLQJ�the payment and making the payment. In very small charities, it FDQ�EH�GLIÀFXOW�WR�KDYH�D�VHSDUDWLRQ�RI�GXWLHV��<RX�VKRXOG�PDNH�VXUH�WKDW�FKHFNV�DUH�UHJXODUO\�FDUULHG�RXW�RQ�ÀQDQFLDO�UHFRUGV�DQG�transactions to compensate for this.

Written procedures<RXU�ÀQDQFLDO�SURFHGXUHV�VKRXOG�EH�GRFXPHQWHG��7KLV�ZLOO�help where charity trustees change regularly and if something XQH[SHFWHG�KDSSHQV�VXFK�DV�D�WUHDVXUHU�EHLQJ�WDNHQ�LOO�

You should review your procedures annually to make sure they are VWLOO�ÀW�IRU�SXUSRVH��EHLQJ�IROORZHG�FRUUHFWO\�DQG�XQGHUVWRRG�

Controls over cash:KHUH�SRVVLEOH��LW�LV�EHVW�WR�DYRLG�WKH�XVH�RI�FDVK��DV�LW�LV�KDUGHU�to maintain a trail of cash and much easier for theft or fraud to KDSSHQ��<RX�VKRXOG�HQFRXUDJH�GRQDWLRQV�WR�EH�PDGH�E\�EDQN�transfer, cheques or online and you should make payments in this ZD\�ZKHUHYHU�SRVVLEOH�

If you do receive cash donations, two people should count these DQG�WKHQ�PDNH�VXUH�WKH�PRQH\�LV�EDQNHG�DV�VRRQ�DV�SRVVLEOH��You should issue receipts for the donations and not make any SD\PHQWV�RXW�RI�WKLV�FDVK�EHIRUH�WDNLQJ�LW�WR�WKH�EDQN�


CHAPTER T ITLE 31

,QWHUQHW�EDQNLQJ�DQG�RQOLQH�SD\PHQWV��LW�FDQ�EH�PRUH�GLIÀFXOW�WR�GHYHORS�WLJKW�ÀQDQFLDO�FRQWUROV�IRU�EDQN�WUDQVIHUV�DV�DFFHVV�PD\�EH�restricted to a single log in. You should consider making a rule that WZR�SHRSOH�KDYH�WR�EH�SUHVHQW�ZKHQ�ODUJH�WUDQVDFWLRQV�DUH�EHLQJ�processed.� 6RPH�EDQNV�DOORZ�FKDULWLHV�WR�SURYLGH�PRUH�WKDQ�RQH�SHUVRQ�

to authorise payments (dual authority). You should ask your FKDULW\·V�EDQN�IRU�GHWDLOV�RI�WKHLU�GXDO�DXWKRULW\�RSWLRQV�VR�WKDW�you can consider what is right for your charity.

&UHGLW�FDUGV� credit cards are often required to pay for travel RU�SXUFKDVH�LWHPV�RQOLQH��7KHUH�VKRXOG�EH�LQWHUQDO�FRQWURO�procedures to cover this including credit limits, authorisation procedures and review and authorisation of credit card statements.




Cheque payments Cheques should have a minimum of two signatories to make sure that it is not just one person who can make payments. You should have systems in place to check invoices and authorise payments EHIRUH�WKH\�DUH�PDGH�

You should not sign cheques where the amount and the recipient DUH�QRW�DOUHDG\�ÀOOHG�LQ��EODQN�FKHTXHV��<RX�VKRXOG�HQVXUH�WKDW�WKH�GHWDLOV�RQ�WKH�FKHTXH�VWXE�PDWFK�WKH�FRUUHVSRQGLQJ�FKHTXH��,I�WKLV�LV�QRW�GRQH�WKH�FKHTXHV�PD\�QRW�EH�DFFRXQWHG�IRU�FRUUHFWO\�DQG�might result in lost or stolen money.

Automated payments $XWRPDWHG�SD\PHQWV�IURP�WKH�EDQN�DFFRXQW�VXFK�DV�'LUHFW�'HELWV�DQG�6WDQGLQJ�2UGHUV�VKRXOG�EH�VXEMHFW�WR�WKH�VDPH�FRQWUROV�DV�other payments. A review of all such automated expenditure should take place regularly.


LEGAL NOTE

+HUH�ZH�VHW�RXW�WKH�VSHFLÀF�VHFWLRQV�RI�FKDULW\�ODZ�LQ�6FRWODQG�relevant to each part of the guidance. Financial reporting: sections 44 – 45 of the 2005 Act and The

Charities Accounts (Scotland) Regulations 2006 as amended

EXAMPLES

For case studies and advice please see our Good Governance pages.


Independent Examination: Guidance for Charities and Independent Examiners

Guidance on the Charities Accounts (Scotland) Regulations The Charity Commission for England and Wales have produced

detailed guidance on internal !nancial controls that are DSSOLFDEOH�WR�6FRWWLVK�FKDULWLHV�

Banking for charities


CHAPTER T ITLE 33

REMUNERATION (PAYING CHARITY TRUSTEES AND CONNECTED PERSONS)

MORE DETAIL

:KDW�LV�UHPXQHUDWLRQ"Remuneration in the 2005 Act means any payment received for services provided to the charity either as a charity trustee or under a contract of employment with the charity, and includes peopleconnected with charity trustees. It is any such payment from the FKDULW\·V�IXQGV��3D\PHQW�PD\�EH�UHFHLYHG�LQ�WKH�IRUP�RI�D�VDODU\��SD\PHQW�IRU�VHUYLFHV�RU�LQ�WKH�IRUP�RI�RWKHU�EHQHÀWV�VXFK�DV�D�company car, medical plan or pension plan.

In this guidance, we refer to remuneration�DV�¶SD\PHQW·�RU�¶SD\LQJ�FKDULW\�WUXVWHHV·�

In this guidance, we refer to remuneration�DV�¶SD\PHQW·�RU�¶SD\LQJ�FKDULW\�WUXVWHHV·�

:KDW�DUH�WKH�UXOHV�RQ�SD\LQJ�FKDULW\�WUXVWHHV"�The 2005 Act states that you must not pay a charity trustee, for services provided to the charity, either as a charity trustee or under contract, unless you meet all of these conditions:WKHUH�LV�QR�UHVWULFWLRQ�WR�WKH�SD\PHQW�LQ�WKH�FKDULW\·V�governingdocument

SUMMARY

The 2005 Act sets out when charity trustees (and people who are connected to them) can receive payment from the charity for services provided to it. A charity must not pay charity trustees, and people who are connected to them, unless the charity can satisfy the conditions set out in the 2005 Act.

This section explains what those conditions are and gives examples of when it is and is not appropriate to pay charitytrustees and people connected with them.

The rules on paying charity trustees do not apply to reclaiming expenses, like train fares to get to a charity trustee meeting.

)RU�H[DPSOH� Out of pocket expenses paid to charity trustees, for instance travel expenses to attend meetings, are not considered remuneration, although receipts for expenses are still required.

33REMUNERATION (PAYING CHARIT Y TRUSTEES AND CONNECTED PERSONS)GUIDANCE AND GOOD PRACTICE FOR CHARITY TRUSTEES

YesNoNoNoNo

OHVV�WKDQ�KDOI�WKH�WRWDO�QXPEHU�RI�FKDULW\�WUXVWHHV�DUH�JHWWLQJ�SDLG�(directly or indirectly) from the charityWKHUH�LV�D�ZULWWHQ�DJUHHPHQW�EHWZHHQ�WKH�FKDULW\�DQG�WKH�FKDULW\�trusteeWKH�ZULWWHQ�DJUHHPHQW�VHWV�RXW�WKH�PD[LPXP�DPRXQW�WR�EH�SDLG��andWKH�FKDULW\�WUXVWHHV�DUH�VDWLVÀHG�LW�LV�LQ�WKH�LQWHUHVW�RI�WKH�FKDULW\�IRU�WKH�VHUYLFHV�WR�EH�SURYLGHG�E\�WKH�FKDULW\�WUXVWHH�IRU�WKDW�maximum amount.

If your governing document says that the charity trustees cannot EH�SDLG��WKHQ�HYHQ�LI�WKH�RWKHU�UXOHV�IURP�WKH��$FW�DUH�PHW��\RX�ZLOO�QRW�EH�DEOH�WR�SD\�DQ\�RI�WKH�FKDULW\�WUXVWHHV�

([DPSOHV�RI�ZKHQ�LW�PLJKW�EH�UHDVRQDEOH�WR�SD\�D�FKDULW\�WUXVWHH��SURYLGHG�WKH�FRQGLWLRQV�DERYH�DUH�PHW�

When a local tradesman is a charity trustee and provides services to the charity at a competitive rate.:KHQ�HPSOR\HHV�RI�WKH�FKDULW\�DUH�DOVR�FKDULW\�WUXVWHHV�EHFDXVH�RI�WKHLU�SRVLWLRQ��IRU�H[DPSOH��DV�FKLHI�H[HFXWLYH�RU�EHFDXVH�WKH\�are elected as a staff representative.

An indirect payment to a charity trustee is where two or more FKDULW\�WUXVWHHV�DUH�FRQQHFWHG�DQG�RQH�RI�WKHP�LV�EHLQJ�SDLG�

6HH�WKH�ÁRZFKDUW�RSSRVLWH�WR�VHH�LI�D�SD\PHQW�PHHWV�WKH�conditions.

DOES YOUR GOVERNING DOCUMENT PREVENT

7+(�3$<0(17"

IS THE PAYMENT IN THE BEST ,17(5(676�2)�7+(�&+$5,7<"

IS THE PAYMENT 5($621$%/("

IS THE PAYMENT SET OUT IN $�:5,77(1�$*5((0(17"

CONDITIONS FOR PAYMENT MET

YES

YES

YES

YES

ARE LESS THAN HALF THE TOTAL NUMBER OF CHARITY

75867((6�%(,1*�3$,'"

YES

NO

STOP

NO

NO

NO

NO


CONDITIONSTHAT ALSO APPLY TO

CONNECTED PERSONS

35

You could compare payment amounts with similar roles at other charities or the wider market place.

,I�WKH�SD\PHQW�DSSHDUV�WR�EH�H[FHVVLYH��WKHUH�PD\�KDYH�EHHQ�D�EUHDFK�RI�FKDULW\�WUXVWHH�GXWLHV��ZKLFK�ZRXOG�EH�misconduct.

Good practiceHave a payment policy that makes sure any payments WR�FKDULW\�WUXVWHHV�DQG�RU�FRQQHFWHG�SHRSOH�FRPSOLHV�ZLWK�the conditions set out in the 2005 ActHVWDEOLVK�D�UHJLVWHU�RI�FKDULW\�WUXVWHHV·�LQWHUHVWVREWDLQ�DW�OHDVW�WZR�VHSDUDWH�TXRWHV�IRU�VHUYLFHV�clearly minute the decision that paying a particular charity trustee RU�D�SHUVRQ�FRQQHFWHG�WR�WKHP�IRU�VHUYLFHV��LV�LQ�WKH�FKDULW\·V�interest.

,I�\RX�DUH�QRW�VXUH�LI�D�FKDULW\�WUXVWHH��RU�FRQQHFWHG�SHUVRQ��FDQ�EH�paid for services you should get professional advice.

:KDW�HOVH�GR�\RX�QHHG�WR�FRQVLGHU�DERXW�SD\PHQWV",I�\RX�DUH�WKLQNLQJ�DERXW�HPSOR\LQJ�D�FKDULW\�WUXVWHH�RU�FRQQHFWHG�person, you must make sure that:

there is a genuine need for a paid position or for the services to EH�SURYLGHGas charity trustees, you assess any potential risks, manage any FRQÁLFWV�RI�LQWHUHVW�DQG�DUH�RSHQ�DQG�WUDQVSDUHQW�DERXW�WKH�decisionany charity trustee who has a conflict of interest is not involved in the decisionQR�RQH�LQGLYLGXDO�WDNHV�D�GHFLVLRQ�DERXW�HPSOR\PHQW�RQ�WKHLU�own

:KDW�DUH�WKH�UXOHV�IRU�SD\LQJ�D�FRQQHFWHG�SHUVRQ"The 2005 Act states that you must not pay a person connected to a charity trustee for services provided to the charity, unless you meet all of these conditions:WKHUH�LV�QR�UHVWULFWLRQ�RQ�WKH�SD\PHQW�ZLWKLQ�WKH�FKDULW\·V�governing documentWKH�SD\PHQW�LV�UHDVRQDEOHWKHUH�LV�D�ZULWWHQ�DJUHHPHQW�EHWZHHQ�WKH�FKDULW\�DQG�WKH�connected personWKH�ZULWWHQ�DJUHHPHQW�VHWV�RXW�WKH�PD[LPXP�DPRXQW�WR�EH�SDLGWKH�FKDULW\�WUXVWHHV�DUH�VDWLVÀHG�LW�LV�LQ�WKH�LQWHUHVW�RI�WKH�FKDULW\�IRU�WKH�VHUYLFHV�WR�EH�SURYLGHG�E\�WKH�FRQQHFWHG�SHUVRQ�IRU�WKDW�amount.

:KDW�KDSSHQV�LI�\RX�ZDQW�WR�SD\�FKDULW\�WUXVWHHV�DQG�RU�FRQQHFWHG�SHUVRQV�IRU�VHUYLFHV�SURYLGHG�WR�WKH�FKDULW\"In order to pay a charity trustee or connected person, provided WKH�H[HPSWLRQV�GR�QRW�DSSO\��WKH�FRQGLWLRQV�GHWDLOHG�DERYH�PXVW�EH�PHW��,I�D�GHFLVLRQ�LV�WDNHQ�WR�SD\�D�FKDULW\�WUXVWHH�RU�connected person, you should keep a record of the charity trustees considerations and must enter into a written agreement with them VHWWLQJ�RXW�WKH�PD[LPXP�DPRXQW�WR�EH�SDLG�

:KDW�LV�D�UHDVRQDEOH�DPRXQW":KDW�LV�UHDVRQDEOH�ZLOO�GHSHQG�RQ�WKH�FLUFXPVWDQFHV��7KH�important thing is that whatever the decision is, the interests of the FKDULW\�FRPH�ÀUVW�DQG�\RX�FDQ�GHPRQVWUDWH�WKDW�

7KH�SURFHVV�IRU�GHFLGLQJ�WKH�OHYHO�RI�SD\PHQW�PXVW�EH�RSHQ�DQG�transparent and must not involve the charity trustee who is to receive payment or is connected to the person who will.


any payments to charity trustees are declared in the annualaccounts.

We have particular concerns where the charity trustees of a charity DUH�WKH�SHRSOH�EHQHÀWLQJ�IURP�LW�DV�SULYDWH�LQGLYLGXDOV��RU�ZKHUH�WKRVH�EHQHÀWLQJ�PRVW�DUH�SHRSOH�FRQQHFWHG�ZLWK�WKH�FKDULW\�WUXVWHHV�VXFK�DV�IDPLO\�PHPEHUV�RU�FRPSDQLHV�LQ�ZKLFK�WKH�FKDULW\�trustees have an interest.

Where there is such private benefit we may need to consider whether it causes the charity to fail the charity test. This is the OHJDO�WHVW�DV�WR�ZKHWKHU�RU�QRW�\RXU�RUJDQLVDWLRQ�FDQ�EH��RU�UHPDLQ��a charity.

:KDW�LV�DQ�KRQRUDULXP"An honorarium is generally a small amount of money paid to someone for a service; unlike a fee or salary, an honorarium is not FRQWUDFWXDO�EXW�LV�D�JLIW�

:H�ZRXOG�QRW�H[SHFW�KRQRUDULD�SD\PHQWV�WR�EH�SDLG�RQ�D�UHJXODU�EDVLV�DV�D�PDWWHU�RI�FRXUVH��$V�FKDULW\�WUXVWHHV��\RX�VKRXOG�UHYLHZ�the situation every year and only award a payment if there are exceptional reasons for doing so. We would expect you to clearly explain and record your decision.

In order to make payment of honoraria to a charity trustee or a FRQQHFWHG�SHUVRQ�WKH�UHPXQHUDWLRQ�FRQGLWLRQV�GHWDLOHG�DERYH�ZRXOG�KDYH�WR�EH�PHW�

Charities registered in England and Wales and Registered Social Landlords

If you are also registered with the Charity Commission for England and Wales you will also need to follow theirrules on payments to charity trustees.

,I�\RX�DUH�D�FURVV�ERUGHU�FKDULW\�DQG�\RX�DUH�SD\LQJ�charity trustees in line with the law of England and Wales you will need to take into account the rules under the 2005 Act and whether those rules allow the payment in question.

Registered Social Landlords must follow the rules set RXW�E\�WKH�Scottish Housing Regulator�DERXW�SD\PHQWV�to charity trustees.


CHAPTER T ITLE 37

EXAMPLES



Meeting the Charity Test – Private Bene!t sectionPayment Flowchart pdf

LEGAL NOTE

+HUH�ZH�VHW�RXW�WKH�VSHFLÀF�VHFWLRQV�RI�FKDULW\�ODZ�LQ�6FRWODQG�relevant to each part of the guidance. Remuneration: sections 67 and 68 of the 2005 Act

Trustee indemnity insurance: section 127 of the Public ServicesReform (Scotland) Act 2010

Trustee indemnity insurance<RX�DUH�DOORZHG�WR�XVH�\RXU�FKDULW\·V�IXQGV�WR�SURYLGH�\RXU�FKDULW\�trustees with indemnity insurance.




EXCEPTIONS

These rules for paying charity trustees and connected persons do not apply if:

there is a provision authorising payment of the charity trustees �DQG�RU�FRQQHFWHG�SHUVRQV��LQ�WKH�FKDULW\·V�governingdocument�DQG�WKLV�ZDV�LQ�IRUFH�RQ�RU�EHIRUH�WKH��1RYHPEHU�2004WKHUH�LV�OHJLVODWLRQ�RU�DQ�RUGHU�PDGH�E\�WKH�&RXUW�RI�6HVVLRQ�that allows charity trustees (or connected persons) to receive payment.


PUBLICISING THAT YOU ARE A CHARITY

If you are a Scottish Charitable Incorporated OrganisDtion�(SCIO), you need to tell people:WKH�6&,2·V�QDPH�DV�HQWHUHG�LQ�WKH�6FRWWLVK�&KDULW\�5HJLVWHULI�WKH�QDPH�GRHV�QRW�LQFOXGH�WKH�WHUPV�¶6FRWWLVK�&KDULWDEOH�,QFRUSRUDWHG�2UJDQLVDWLRQ·�RU�¶6&,2·��WKH�IDFW�WKDW�LW�LV�D�6&,2�

As a SCIO, you do not have to include your Scottish Charity 1XPEHU�EXW�ZH�VWURQJO\�UHFRPPHQG�WKDW�\RX�GR�

SUMMARY

Making sure that people know you are a charity is one of the specific charity trustee duties set out in the 2005 Act. You must provide certain charity details in certain external documents (hard copy and electronic). What you need to tell people and how \RX�QHHG�WR�GR�WKLV�DUH�VHW�RXW�LQ�VSHFLÀF�Regulations. This section VXPV�XS�ZKDW�\RX�QHHG�WR�GR��DQG�JLYHV�VXJJHVWLRQV�DERXW�KRZ�EHVW�WR�GR�LW�

MORE DETAIL

$OO�FKDULWLHV�UHJLVWHUHG�LQ�6FRWODQG�PXVW�SXEOLFLVH�WKH�IDFW�WKDW�they are a charity. Charity trustees must make sure that certain charity details�DUH�RQ�DOO�RI�WKH�FKDULW\·V�external documents OLVWHG�EHORZ�

7KHVH�UXOHV�DOVR�DSSO\�WR�DQ\�WKLUG�SDUWLHV�ZKR�SXEOLVK�GRFXPHQWV�RQ�EHKDOI�RI�\RXU�FKDULW\��IRU�H[DPSOH�OHJDO�DGYLVRUV��DFFRXQWDQWV��RU�RUJDQLVDWLRQV�ZRUNLQJ�RQ�\RXU�EHKDOI�

:KDW�GR�\RX�QHHG�WR�WHOO�SHRSOH"You need display your FKDULW\·V�GHWDLOV. This means:\RXU�FKDULW\·V�QDPH��DV�HQWHUHG�LQ�WKH�Scottish Charity RegisterDQ\�RWKHU�QDPH�\RXU�FKDULW\�LV�NQRZQ�DV��WKH�¶NQRZQ�DV·�QDPH�

your Scottish Charity Number (SC0[zero]xxxxx)the fact that you are a charity, if this is not already clear from your name.

)RU�H[DPSOH� ¶0RQNVWRZQ�$IWHU�6FKRRO�&OXE��NQRZQ�DV�0RQNH\�&OXE��LV�D�6FRWWLVK�&KDULW\��6&��UHJXODWHG�E\�WKH�6FRWWLVK�&KDULW\�5HJXODWRU��26&5�·�

)RU�H[DPSOH� ¶0RQNVWRZQ�$IWHU�6FKRRO�&OXE��NQRZQ�DV�0RQNH\�&OXE��LV�D�6FRWWLVK�&KDULWDEOH�,QFRUSRUDWHG�2UJDQLVDWLRQ��6&,2��UHJXODWHG�E\�WKH�6FRWWLVK�&KDULW\�5HJXODWRU��26&5��6FRWWLVK�&KDULW\�QXPEHU��6&��·��

38PUBLICIS ING THAT YOU ARE A CHARIT YGUIDANCE AND GOOD PRACTICE FOR CHARITY TRUSTEES

,W�LV�JRRG�SUDFWLFH�WR�VWDWH�WKDW�WKH�FKDULW\�LV�UHJXODWHG�E\�26&5�

,W�DOVR�JLYHV�SHRSOH�FRQÀGHQFH�LQ�VXSSRUWLQJ�\RXU�charity and knowing that we regulate you.:KHQ�GR�\RX�KDYH�WR�SXW�\RXU�FKDULW\·V�GHWDLOV�RQ�GRFXPHQWV"��If you are a SCIO, you must have the details on your external documents�DV�VRRQ�DV�SRVVLEOH�DIWHU�\RXU�FKDULW\�LV�UHJLVWHUHG��For all other charities, you must put the charity details on your H[WHUQDO�GRFXPHQWV�DV�VRRQ�DV�SRVVLEOH�DQG�QR�ODWHU�WKDQ� 6 months�RI�EHFRPLQJ�D�FKDULW\�

:KDW�KDSSHQV�LI�\RX�GR�QRW�SXW�WKH�FKDULW\�GHWDLOV�RQ�GRFXPHQWV"7KH�UXOHV�DERXW�KDYLQJ�WKHVH�GHWDLOV�RQ�WKH�GRFXPHQWV�DUH�VHW�RXW�in regulations��$OO�FKDULW\�WUXVWHHV�KDYH�UHVSRQVLELOLW\�IRU�PDNLQJ�VXUH�WKDW�WKHLU�FKDULW\�FRPSOLHV�ZLWK�WKHVH�UHJXODWLRQV��$�EUHDFK�RI�WKH�UHJXODWLRQV�LV�D�EUHDFK�RI�\RXU�general duties and is misconduct.

If you are a SCIO it is an offence to issue or sign any of the external documents�ZKLFK�GR�QRW�LQFOXGH�WKH�FKDULW\·V�GHWDLOV��RU�to authorise such actions.

Charitable companiesCharities whose legal form�LV�D�FRPSDQ\�PXVW�FRPSO\�ZLWK�ERWK�FRPSDQ\�ODZ�DQG�FKDULW\�ODZ��&KDULWDEOH�FRPSDQLHV�PXVW�LQFOXGH�charity details�VHW�RXW�DERYH�DQG�WKH�LQIRUPDWLRQ�UHTXLUHG�E\�FRPSDQ\�ODZ��IRU�H[DPSOH�WKH�FRPSDQ\�QXPEHU�

)LQG�RXW�PRUH�DERXW�FRPSDQ\�ODZ�UHTXLUHPHQWV�DW�WKH�CompaniesHouse website.

:KLFK�H[WHUQDO�GRFXPHQWV�QHHG�WR�KDYH�WKHVH�GHWDLOV"<RX�PXVW�SXW�WKH�FKDULW\·V�GHWDLOV�RQ�1. all your external letters and emails�� \RXU�ZHEVLWH·V�KRPH�SDJH�� DOO�\RXU�DGYHUWV��QRWLFHV�DQG�RIÀFLDO�SXEOLFDWLRQV4. documents that ask for donations for your charity�� ELOOV�\RXU�FKDULW\�LVVXHV�� GLUHFW�GHELW�DQ�G�VWDQGLQJ�RUGHU�PDQGDWHV7. all invoices and receipts8. annual accounts9. educational, promotional or campaign materials�� OHJDO�FRQYH\DQFH�GRFXPHQWV�DERXW�ODQG�ULJKWV��EX\LQJ��VHOOLQJ

or transferring land)11. contracts.

In addition to above requirements, it is good SUDFWLFH�WR�SXW�FKDULW\�GHWDLOV�RQ��DOO�\RXU�ZHEVLWH�SDJHV\RXU�FKDULW\·V�VRFLDO�PHGLD�DFFRXQWVcampaigns or adverts that are online, on the radio or televisionEXVLQHVV�FDUGVsigns and displays.

Add the ‘charity registration’ logo WR�\RXU�ZHEVLWH�WR�KHOS�\RX�VKRZ�WKH�SXEOLF�WKDW�\RX·UH�HQWHUHG�LQ�WKH�6FRWWLVK�&KDULW\�5HJLVWHU�

:K\�GR�\RX�QHHG�WR�WHOO�SHRSOH�WKDW�\RX�DUH�D�FKDULW\"It is important that the people you come into contact with, the SXEOLF��IXQGHUV��FRQWUDFWRUV�DQG�RWKHU�RUJDQLVDWLRQV��NQRZ�DQG�FDQ�check that you are a genuine charity.


EXAMPLES



Publicising Charitable StatusThe Charities References in Documents (Scotland) Regulations 2007 and The Charities references in Documents (Scotland)Amendment Regulations 2008: these Regulations set out requirements for charities entered in the Scottish Charity 5HJLVWHU�DQG�RXWOLQHV�WKH�LQIRUPDWLRQ�ZKLFK�PXVW�EH�VWDWHG�RQ�certain documents.SCIO’s: A Guide

LEGAL NOTE


The Charities References in Documents (Scotland) Regulations 2007 and The Charities references in Documents (Scotland)Amendment Regulations 2008: these Regulations set out requirements for charities entered in the Scottish Charity 5HJLVWHU�DQG�RXWOLQHV�WKH�LQIRUPDWLRQ�ZKLFK�PXVW�EH�VWDWHG�RQ�certain documents.





TERMS EXPLANATIONAssets This means everything a charity owns;

property, money, equipment, including KHULWDEOH�SURSHUW\��VXFK�DV�ODQG�DQG�EXLOGLQJV�and rights attached to it).

%HQHÀFLDULHV These are the people your charity is set up to KHOS��WKRVH�ZKR�EHQHÀW�IURP�ZKDW�\RX�GR�

Care and diligence

This means a very high level of care and thoroughness.

This is set out in Section 66 of the 2005 Act.

GLOSSARY OF TERMS

TERMS EXPLANATION2005 Act The Charities and Trustee Investment

(Scotland) Act 2005: the primary piece of charity law in Scotland.

Accounts Accounts represent the organisations ÀQDQFHV�IRU�D�SDUWLFXODU�SHULRG��XVXDOO\�D�year). They show how much money was UHFHLYHG�DQG�KRZ�PXFK�ZDV�VSHQW��EURNHQ�down into different categories. Charities must prepare accounts each year and must send a copy of to us (the Scottish Charity Regulator) each year.

For more information see Charity Accounting.Annual return The online form charities complete each

\HDU�WR�SURYLGH�XV�ZLWK�LQIRUPDWLRQ�DERXW�WKH�charity (in particular for the Scottish Charity 5HJLVWHU��DQG�LQFOXGLQJ�LQIRUPDWLRQ�DERXW�WKH�FKDULW\·V�ÀQDQFHV��

7KLV�FDQ�EH�FRPSOHWHG�LQ�OSCR online.

7KLV�JORVVDU\�SURYLGHV�\RX�ZLWK�IXUWKHU�LQIRUPDWLRQ��GHÀQLWLRQV�DQG�GHVFULSWLRQV�RI�VRPH�NH\�WHUPV��:KHUH�DSSURSULDWH��LW�OLQNV�WR�WKH�relevant sections of law that underpin the terms.

41GLOSSARY OF TERMSGUIDANCE AND GOOD PRACTICE FOR CHARITY TRUSTEES

TERMS EXPLANATION&KDULWDEOH�Purposes

$�FKDULW\·V�SXUSRVHV�DUH�XVXDOO\�VHW�RXW�LQ�WKH�REMHFWV��DLPV�RU�SXUSRVHV�VHFWLRQ�RI�LWV�governing document. The purposes say what \RXU�RUJDQLVDWLRQ�KDV�EHHQ�VHW�XS�WR�DFKLHYH��DQG�VKRXOG�UHÁHFW�LWV�EURDG�DLPV�UDWKHU�WKDQ�the day-to-day activities. Each purpose your FKDULW\�KDV�PXVW�ÀW�ZLWKLQ�DW�OHDVW�RQH�RI�WKH��FKDULWDEOH�SXUSRVHV�VHW�RXW�LQ�section 7(2)of the 2005 Act, that is:

(a) the prevention or relief of poverty,

�E� WKH�DGYDQFHPHQW�RI�HGXFDWLRQ�

(c) the advancement of religion,

(d) the advancement of health,

(e) the saving of lives,

(f) the advancement of citizenship orcommunity development,

(g) the advancement of the arts, heritage,culture or science,

�K� WKH�DGYDQFHPHQW�RI�SXEOLF�SDUWLFLSDWLRQ�LQsport,

(i) the provision of recreational facilities, or theorganisation of recreational activities, with theREMHFW�RI�LPSURYLQJ�WKH�FRQGLWLRQV�RI�OLIH�IRUthe persons for whom the facilities or activitiesare primarily intended,

TERMS EXPLANATION

&KDULWDEOH�Purposes

�M� WKH�DGYDQFHPHQW�RI�KXPDQ�ULJKWV��FRQÁLFWresolution or reconciliation,

(k) the promotion of religious or racialharmony,

(l) the promotion of equality and diversity,

(m) the advancement of environmentalprotection or improvement,

�Q� WKH�UHOLHI�RI�WKRVH�LQ�QHHG�E\�UHDVRQ�RIDJH��LOO�KHDOWK��GLVDELOLW\��ÀQDQFLDO�KDUGVKLSor other disadvantage,

(o) the advancement of animal welfare,

�S� DQ\�RWKHU�SXUSRVH�WKDW�PD\�UHDVRQDEO\EH�UHJDUGHG�DV�DQDORJRXV�WR�DQ\�RI�WKHpreceding purposes.

Charity An organisation is a charity in Scotland when it is entered on the Scottish Charity Register.


TERMS EXPLANATIONConnected person

The term connected person includes: VSRXVHV��FLYLO�SDUWQHUV�DQG�FRKDELWHHV�RI�D�

charity trustee child, stepchild, parent, grandchild, JUDQGSDUHQW��EURWKHU�RU�VLVWHU�RI�D�FKDULW\�trustee (and a spouse of any such person)

DQ�LQVWLWXWLRQ�FRQWUROOHG�E\�D�FKDULW\�WUXVWHH�or a person connected with them or two or PRUH�WUXVWHHV�FRQQHFWHG�SHUVRQV�ZKHQ�taken together

D�ERG\�FRUSRUDWH�RU�FRPSDQ\�LQ�ZKLFK�WKH�charity trustee or a person connected with WKHP�KDV�D�VXEVWDQWLDO�LQWHUHVW��RU

D�6FRWWLVK�SDUWQHUVKLS��EXVLQHVV��LQ�ZKLFK�the charity trustee or, a person connected with them is a partner.

&RQÁLFW�of interest (policy)

$�FRQÁLFW�RI�LQWHUHVW�PD\�DULVH�LQ�D�VLWXDWLRQ�ZKHUH�D�FKDULW\�WUXVWHH�PD\�REWDLQ�SHUVRQDO�EHQHÀW�IURP�D�SDUWLFXODU�GHFLVLRQ�LQ�UHODWLRQ�to the charity. A policy setting out what a FRQÁLFW�RI�LQWHUHVW�LV�DQG�KRZ�\RX�ZLOO�PDQDJH�VLWXDWLRQV�ZKHUH�D�FRQÁLFW�DULVHV�LV�VWURQJO\�recommended. See the Con"ict ofinterest VRXUFHV�RI�KHOS��DGYLFH�DQG�EHVW�practice section for links to example policies.

TERMS EXPLANATIONCharity Test This is the test set out under the Charities

and Trustee Investment (Scotland) Act 2005, which determines whether an organisation FDQ�EH�D�FKDULW\�

The charity test has two main elements:

1. an organisation has to show that it has onlyFKDULWDEOH�SXUSRVHV�DQG

�� WKDW�LW�SURYLGHV�SXEOLF�EHQHÀW�LQ�DFKLHYLQJthose purposes.

This is set out in sections 7 and 8 of the 2005Act.

Charity Trustee

¶&KDULW\�WUXVWHHV·�DUH�GHÀQHG�LQ�section 106of the 2005 Act as people having the general control and management of the administration of a charity. Charity trustees can also VRPHWLPHV�EH�NQRZQ�DV�FRPPLWWHH�PHPEHUV��GLUHFWRUV�RU�ERDUG�PHPEHUV�

Collective UHVSRQVLELOLW\

&KDULW\�WUXVWHHV�DUH�QRW�RQO\�UHVSRQVLEOH�IRU�WKHLU�RZQ�DFWLRQV��WKH\�DUH�DOVR�UHVSRQVLEOH�IRU�WKH�DFWLRQV�DQG�GHFLVLRQV�WDNHQ�E\�WKH�charity trustees when acting together.


TERMS EXPLANATIONConsent Section 16 of the 2005 Act says that you

PXVW�VHHN�26&5·V�FRQVHQW�EHIRUH�PDNLQJ�DQ\�RI�WKH�FKDQJHV�OLVWHG�EHORZ��<RX�QHHG�WR�ask for our consent at least 6 weeks (42 days) EHIRUH�\RX�SODQ�WR�LPSOHPHQW�WKH�SURSRVHG�change.

Changes that need our consent are:changing the name of the charitywinding up the charity

DPHQGLQJ�WKH�REMHFWV�RU�SXUSRVHV�RI�WKH�charity

amalgamating the charity with another ERG\FKDQJLQJ�WKH�FKDULW\·V�OHJDO�IRUP

applying to the court to change purposes, amalgamate or wind-up.

For more information, see Making Changesto Your Charity.

'LVEHQHÀW 7KLV�LV�WKH�RSSRVLWH�RI�EHQHÀW�DQG�LV�equivalent to detriment or harm.

This is set out in section 8 (2) (ii) of the 2005Act.

TERMS EXPLANATIONExternal scrutiny report

<RXU�FKDULW\·V�DFFRXQWV�PXVW�EH�H[WHUQDOO\�scrutinised. That is, someone who is independent of your charity must review the accounts and produce a report, attached to the accounts, that highlights any issues to the reader.

Governing Document

A governing document (or constitution) is the document (or set of documents) that sets up an organisation and says what its purposes are. It will usually deal with other matters, including who will manage and control the organisation, what its powers are, what it can GR�ZLWK�WKH�RUJDQLVDWLRQ·V�PRQH\�DQG�RWKHU�DVVHWV��DQG�PHPEHUVKLS�RI�WKH�RUJDQLVDWLRQ��For more information, see our FAQs.

7KLV�LV�GHÀQHG�LQ�section 106 of the 2005 Act.


TERMS EXPLANATIONMisconduct Misconduct (which includes mismanagement)

PHDQV�DQ\�DFWLRQ�E\�FKDULW\�WUXVWHHV�ZKLFK�PD\�UHVXOW�LQ�D�VLJQLÀFDQW�ORVV�RU�KDUP�WR�the charity (and this includes failing to act). It arises where the general duties are not met DQG�RU�ZKHUH�FKDULW\�WUXVWHHV�IDLO�WR�FRPSO\�with any direction, requirement, notice or duty imposed under the 2005 Act (section 66(2) of the 2005 Act).

Principal contact

The person who will act as the main point of contact for the charity.

7KLV�FDQ�EH�XSGDWHG�LQ�OSCR online.3ULYDWH�%HQHÀW 7KLV�LV�ZKHUH�EHQHÀW�IURP�WKH�FKDULWLHV�

DFWLYLWLHV�LV�SURYLGHG�WR�PHPEHUV�RI�WKH�organisation or other individuals not as a PHPEHU�RI�WKH�SXEOLF�� This is set out in Section 8 (2) (a) (i) of the 2005 Act.

Property %\�¶SURSHUW\·�ZH�PHDQ�DOO�SURSHUW\�DQG�DVVHWV��PRQH\�DQG�RWKHU�DVVHWV��EHORQJLQJ�WR�D�FKDULW\��LQFOXGLQJ�KHULWDEOH�SURSHUW\��VXFK�DV�ODQG�DQG�EXLOGLQJV�DQG�ULJKWV�DWWDFKHG�WR�LW��

INTRODUCTIONTERMS EXPLANATIONLegal Form

&KDULWLHV�FDQ�WDNH�D�QXPEHU�RI�OHJDO�IRUPV��The legal form is the structure or entity, which WKHQ�EHFRPHV�D�FKDULW\��)RU�H[DPSOH� Unincorporated associations Companies 6FRWWLVK�&KDULWDEOH�,QFRUSRUDWHG�

Organisations (SCIO) Trusts &RPPXQLW\�%HQHÀW�6RFLHW\ 6WDWXWRU\�FRUSRUDWLRQ�HVWDEOLVKHG�E\�DQ�$FW�

of Parliament or Royal Charter Educational endowment

Ministerial direction or control

This is where a governing document gives Scottish or UK Ministers the power to direct or RWKHUZLVH�FRQWURO�DQ�RUJDQLVDWLRQ·V�DFWLYLWLHV�� This is set out in section 7 (4) (b) of the 2005 Act.


TERMS EXPLANATIONProtect the interests of the charity

Trustees should put the interests of their FKDULW\�EHIRUH�WKHLU�RZQ�LQWHUHVWV��RU�WKRVH�RI�any other person or organisation. They must actively work towards the achievement of the FKDULW\·V�SXUSRVHV�

This is set out in Section 66 of the 2005 Act.Proxy Someone who is authorised to act as a

VXEVWLWXWH�IRU�DQRWKHU�3XEOLF�%HQHÀW This is the way a charity makes a positive

GLIIHUHQFH�WR�WKH�SXEOLF�WKURXJK�WKH�DFWLYLWLHV�LW�FDUULHV�RXW�ZKHQ�DGYDQFLQJ�LWV�FKDULWDEOH�purposes.

This is set out in Section 8 of the 2005 Act.

Quorum 7KH�PLQLPXP�QXPEHU�RI�SHRSOH�QHFHVVDU\�WR�PDNH�GHFLVLRQV�DQG�FRQGXFW�WKH�FKDULW\·V�EXVLQHVV��$�TXRUXP�FDQ�UHIHU�WR� WKH�QXPEHU�RI�FKDULW\�WUXVWHHV�UHTXLUHG�IRU�ERDUG�PHHWLQJV��RU

WKH�QXPEHU�RI�WKH�FKDULW\·V�PHPEHUV�UHTXLUHG�IRU�PHPEHUVKLS�PHHWLQJV��for example Annual General Meetings (AGMs).

7KLV�QXPEHU�LV�RIWHQ�VHW�RXW�LQ�WKH�FKDULW\·V�governing document.

Register of interests

$�UHFRUG�RI�WKH�SHUVRQDO��EXVLQHVV�DQG�ÀQDQFLDO�LQWHUHVWV�RI�D�FKDULW\�WUXVWHH�WKDW�PD\�SRWHQWLDOO\�OHDG�WR�D�FRQÁLFW�RI�LQWHUHVW�

TERMS EXPLANATIONRemuneration Remuneration in the 2005 Act means any

SD\PHQW�RU�EHQHÀW�LQ�NLQG��Sections 67 and 68 of the 2005 Act state that a charity WUXVWHH�PXVW�QRW�EH�UHPXQHUDWHG�IRU�VHUYLFHV�provided to the charity (including services provided in the capacity as a charity trustee or under a contract of employment) from a FKDULW\·V�IXQGV�XQOHVV�FHUWDLQ�FRQGLWLRQV�DUH�met.

For more information, see Trustee Remuneration guide.

SCIO 7KH�6FRWWLVK�&KDULWDEOH�,QFRUSRUDWHG�Organisation is a legal form unique to Scottish FKDULWLHV�DQG�LV�DEOH�WR�HQWHU�LQWR�FRQWUDFWV��HPSOR\�VWDII��LQFXU�GHEWV��RZQ�SURSHUW\��VXH�DQG�EH�VXHG�

For more information see SCIO guidance.Scottish Charity QXPEHU

7KLV�LV�WKH�XQLTXH�QXPEHU�JLYHQ�WR�DOO�6FRWWLVK�FKDULWLHV��EHJLQQLQJ�ZLWK�6&��]HUR��IROORZHG�E\�ÀYH�QXPEHUV�

Scottish Charity Register

This means the register of all Scottish FKDULWLHV�NHSW�E\�26&5�� For more information, see the Scottish Charity Register.


INTRODUCTIONTERMS EXPLANATIONScottish Charity Regulator

The independent regulator and registrar for RYHU��6FRWWLVK�FKDULWLHV��HVWDEOLVKHG�E\�the 2005 Act.

For more information, see About OSCR.Trustees Annual Report

The Trustees Annual Report is a part of the annual Accounts and contains information DERXW�WKH�FKDULW\�DQG�LWV�DFWLYLWLHV�DQG�achievements in that year.

Undue Restriction

This is a restriction on who can access the EHQHÀW�SURYLGHG�E\�D�FKDULW\��LW�ZLOO�EH�XQGXH�if excessive or unnecessary. It includes fees and charges. This is set out in Section 8 (2) (b) of the 2005 Act.

Wind up To wind up or dissolve a charity means that the charity ceases to exist. Before winding up D�FKDULW\�PXVW�JHW�26&5·V�FRQVHQW�� This is set out in Section 16 of the 2005 Act. For more information, see Making Changes to Your Charity.


APS Scotland421952 5/16

OSCR Contact details:

The Scottish Charity Regulator (OSCR)2nd FloorQuadrant House9 Riverside DriveDundeeDD1 4NY

E: [email protected]: 01382 220446W: www.oscr.org.uk

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