Stephen Maxwell
TFN News
31st October 2008

OSCR made the headlines this week with its decision to challenge the charitable status of four leading Scottish fee paying schools.  But while the headlines gave an impression of a Charities Regulator eager to impose a robust test of charitable status the detail of its decisions reveal a continuing reluctance by the Regulator to apply the provisions and the intentions of the Scottish Charities Act 2005.

The principal ground on which OSCR has challenged the charitable credentials of Merchiston Castle School  –  secondary day fees of £16,395 – and its three comparably high charging counterparts is that they fail to mitigate the excluding effects of this level of fees by sufficient provision for access by people unable to meet them.

OSCR’s yardstick for measuring sufficiency is the proportion of their total income which the schools spend on means tested help for people unable to pay the full fees.  It notes that Merchiston Castle spends only 1.5% of its total income with the three other offending schools spending between 0.5%and 2% .

OSCR declines to define what proportion of total income a charity charging high fees should devote to helping people unable to afford the fees to get access to its benefits.  But some indication can be gained from the figures provided for those fee paying schools whose charitable status has been endorsed by OSCR.  George Heriot’s School for example devotes 7% of its income to providing means tested help and Gordonstoun provides 8.8%.

How has OSCR come to believe that the allocation of such modest shares of a would- be charity’s resources are sufficient to earn charitable status?.  The Scottish Charities Act stipulates that to qualify as a Scottish Charity an organisation should provide access for the public to its charitable benefits without ‘unduly restrictive’ conditions including any fees or charges.  The records of the Scottish Parliament show that Parliament intended this to be a substantive test.   Indeed in Committee it was made explicit in the words of John Home Robertson MSP that this provision was to prevent organisations which provided services mainly to people able to afford high fees to qualify as a charity.  Yet the standard of sufficiency which OSCR is applying allows an organisation which reserves access to 90% of its resources to people able to afford fees ranging from 40-70% of the average Scottish household’s disposable income to qualify as a charity.  

OSCR also continues to disregard the provision of the Act that requires it to balance the public benefit provided by a charity with any public disbenefit produced.   Its reports on the individual schools under review omit any reference to public disbenefit  even though the competitive advantage gained by pupils of fee paying schools in gaining access to top universities and jobs and in perpetuating social division is a constant topic of both academic research and public contention.

Scotland’s charities have reason to regret OSCR’s failure on public benefit.  They looked to OSCR to use the Charities Act to strengthen public confidence that organisations bearing the title of charity really were producing public benefit.  Instead OSCR’s floor scraping threshold for charitable status will sow confusion.  If a school such as Gordonstoun  which reserves 70% of its places  to people able to pay £20,000 – £25,000 for boarders – can qualify what is the Scottish Charity brand worth?.

This week’s decisions were the second of OSCR’s reviews.  They confirm that OSCR is entrenching itself behind an interpretation of the Act which defies both the Parliament’s and the wider public’s understanding of charity.   In the absence of any third party right of appeal it is time for the Scottish Parliament through its Communities Committee to review the implementation of its own charities legislation.