A dramatic new development for charities in Scotland

A dramatic new development for charities in Scotland
By Nancy Fancott, Third Force News
31.03.11

The new Scottish Charitable Incorporated Organisation is set to make running a charity much simpler: Nancy Fancott give an overview of what it is about.

You might be forgiven for thinking this is another 1 April gag, but news of the arrival of the new Scottish Charitable Incorporated Organisation (SCIO) has been verified by the highest authorities. After years of sector lobbying and development, the Office of the Scottish Charity Regulator (OSCR) is open for SCIO business.

What is the SCIO?

The SCIO is a new legal form that has been purpose built for the charity sector in Scotland. It provides limited liability and separate legal identity to organisations that want to become charities but do not want or need the complex structure of company law. SCIOs will be regulated by OSCR and do not need to register with Companies House.

When is the SCIO available?

The new legal form will be available as of 1 April to groups that have not already incorporated under company law. Incorporated groups will be able to convert to the SCIO form in 2012.

How do I apply?

For those groups that are not already registered charities in Scotland, OSCR has developed an application process, very similar to the process for registering a new charity.
For those unincorporated associations already registered as charities with OSCR, the process will involve a change of legal form, which parallels the existing change of legal form application process that OSCR uses.

Where can I get advice?

OSCR has produced guidance on the application process. This guidance includes information that helps to compare the SCIO against other possible legal forms. 

The Scottish Council for Voluntary Organisations (SCVO) in collaboration with Burness Solicitors, has also produced guidance to help groups decide if the SCIO is the right form, along with a model SCIO constitution. These are available on the information section at www.scvo.org.uk/SCIO

What are the key features of a SCIO?

It is important to remember that the SCIO is based on charity law. Most of the principles contained in Scotland’s charity law apply to SCIOs. There are some exceptions and additional new elements – the main ones are:
*a SCIO’s legal existence is directly linked to its charitable status and registration with OSCR – in other words, if it comes off the register, it will cease to exist
*the new regulations require certain minimum requirements in a SCIO constitution
*a SCIO needs two initial members and three trustees (they can be the same)
*there is a new duty to keep both a register of trustees and members
*some of the duties of charity trustees also apply to members
*a SCIO must hold an AGM every calendar year
*there are specific rules about dissolving a SCIO at the end of its life
*there are specific rules about references to charitable status, but they are similar to the existing rules for charities.

SCIOs are subject to charity accounting regulations thresholds – in other words, small SCIOs with incomes below £250,000 are not obliged to prepared accrued accounts (unless their governing document requires it).

We know many groups have been waiting for the SCIO and are keen to take up the form. It is going to be very useful for many groups, but may not be appropriate for all. If you are thinking of becoming a SCIO, you should:
*contact OSCR for more information on the application process 01382 220446
*contact your local council for voluntary service for advice on whether the SCIO is right for you
*read the SCVO guidance on becoming a SCIO and refer to our model constitution
*contact the SCVO advice line: 0800 169 0022.