If you are considering becoming a charity, you must ensure you pass the charity test. If you are a company limited by guarantee, an unincorporated association, or a community benefit society you may be able to acquire charitable status.
To acquire charitable status it is necessary to prove to the charity regulator (OSCR) that the activities:
- are purely charitable
- for public benefit
- independent of government
- non-party political
- are not for private gain
- further a purpose
The proposed charity must pass the charity test:
- You must meet the charity test to become and remain a charity
- The people in control and management of the charity (its charity trustees) must meet their general trustee duties – essentially to act in the interests of the charity at all times
- The charity trustees must comply with the other requirements of charity law, including the conditions on payments to trustees and people who are connected to them.
Public benefit is a fundamental part of the charity test. OSCR will look for the applicant to demonstrate that public benefit will result from the proposed activities.
Scottish Charitable Incorporated Organisation (SCIO)
A SCIO is the newest type of charitable legal form, established in 2010. The SCIO may only be set up if the application passes the charity test.
The key features of a SCIO are:
- Purely charitable
- Limited Liability without being a company (in the traditional sense)
- Separate legal personality
- Single regulation with OSCR only
- Usually Two-tier (can also be single-tier)
- Duties for BOTH charity trustees and Members
- Register of Members necessary
- Simpler and easier to operate (good for smaller charities)
- Regular members & Trustees meetings
- Transparency for members/outside world
- When SCIO winds up it ceases to exist entirely
- Must keep register of members as well as trustees – could be onerous if large membership
- Cannot convert to another legal form
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