Charitable Status

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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