Regulation: the Scottish way – David Robb
The Third Sector Magazine
Ten years after the Office of the Scottish Charity Regulator was created, Rebecca Cooney talks to its chief executive
In the 10 years since the Charities and Trustee Investment (Scotland) Act brought the Office of the Scottish Charity Regulator into being, it might be fair to say it has enjoyed a warmer relationship with the charities it regulates than its older cousin in England and Wales, the Charity Commission.
David Robb, chief executive of the OSCR for the past four years, is understandably cautious in his assessment of why that might be.
"When I first started at the OSCR, people use to ask me whether it was the charity police or charities’ friend – but that’s a false choice.
"Yes, we’re the charity police and we’re there to underpin public trust and confidence – but if you’re policing a community you can adopt different styles of policing.
"You could be doing community policing – the bobby on the beat – or you could be the CID."
As the bobby on the beat, he says, the job of a regulator should be to offer support and guidance, and to give charities "a fighting chance of staying on the right side of the law".
Of course, he says, there are times when charities wilfully abuse the system – and these will call for "Old Testament, CID-style" enforcement. But most of the time that’s not really appropriate.
"There are 180,000 trustees in Scotland, almost all of them voluntary, giving up their dark winter nights to sit in committees and do fantastic things," Robb says. "It’s not my job to make their job more difficult, but to find the rotten apples
before they infect the rest of the barrel."
One of the most striking differences between the Scottish sector and that in England and Wales is the average size of the charities: there are 24,000 charities in Scotland; but in financial terms, just 1,000 large cross-border charities account for half the value of the charitable activity.
And this quirk could be what allows the OSCR to take a different regulatory approach to that of the Charity Commission, Robb says, with the English regulator drawn into "the more serious work" by the larger charities.
And he’s quick to say he has a lot of sympathy for the commission, particularly in the face of the recently imposed cuts that have seen its budget slashed in half. And, as the relatively "new kid on the block", the OSCR has benefited from advice from the commission, he says.
"The Charity Commission has been going for, some say, hundreds of years, but certainly in its current form since the 1960s so it’s well-established and the model for everything else," Robb says. "But part of the challenge for the OSCR was that, before it was established, if you wanted to be a charity you applied to the Inland Revenue, got a charity number and off you went.
"I wouldn’t say charities were suspicious or resistant, but they suddenly had to submit annual returns and engage with this mysterious beast. We had to make sure everything we’d inherited on the register was genuine and we’ve had to find the best ways to do that as a relatively small organisation."
Over the past decade, new charities have sprung up and old ones have closed down, but the total number of registered charities in Scotland has always hovered at about 23,500 – it’s risen to 24,000 in the past couple of years, but Robb expects it to drop back again.
Beneath this picture of apparent consistency, however, the story of the OSCR has been one of development, change and the need to move with the times.
In the early days, Robb says, everything was paper-based. Even when he arrived four years ago, annual returns from all 23,500 charities were submitted in hard copy, arriving in bulging mail bags just before Christmas.
"Now we’re 80 per cent online, so we’re still getting the same volume but the postman doesn’t need the same back support, and we’re committed to moving as far online as we can," he says.
"The world is much more 24/7, more localised, less formal, and we’re trying to operate in that way."
Change outstrips public understanding
The sector itself has been in a process of change, even upheaval, he says, as contract working and charities increasingly take on public sector work, a fact that sometimes outstrips public understanding.
"I think people have an idea of the charity sector as not very dynamic, quite conservative, traditional," he says. "That’s not my experience at all – it’s a very vibrant, agile, responsive sector, and if you go back 10 years a lot is different now."
For one thing, there’s been the rise of the SCIO – the Scottish Charitable Incorporated Organisation, a legal structure designed specifically for charities that allows them to conduct business in their own names and shields trustees from financial liability, and which does not require them to be registered at Companies House as well as with the charity regulator. It was developed before its English cousin, the charitable incorporated organisation, and has required the regulator to turn educator.
"The financial community kind of knew what a trust was and knew what a company was, but it had never heard of an SCIO," says Robb. "So we’ve had to work a lot with the banks to build confidence in that as a model."
The OSCR has had to deal with some major challenges in recent years. In 2012 it ordered a review of all independent schools to establish whether they were doing enough to fulfil their public benefit requirement. The regulator had to balance public benefit against the Scottish legal requirement for charities to act without undue restriction.
"We devoted quite a lot of resources to it and we found some of them weren’t doing enough," Robb says. "But some do provide public benefit without undue restriction – and that engagement resulted in supportive outcomes."
And in 2013, an adoption service, the Saint Margaret’s Children and Family Care Society, appealed against an OSCR ruling that it should be removed from the charity register for refusing to sanction adoptions by same-sex couples.
The Scottish Charity Appeals Panel overturned the OSCR decision, but Robb decided not to fight the ruling.
The case was a rarity for Scap, which has seen only six cases in the past 10 years, but was also much more complex than anything the OSCR had dealt with before. It was, Robb says, "quite a journey for our board and for our staff to go through".
There have been occasions when the OSCR has had to get tough. For example, in 2014 it suspended the trustees of the Alfred Stewart Trust, a charity that supports good causes in Dunfermline and medical research projects, because of concerns about alleged financial mismanagement. However, some of the suspensions were later lifted.
The regulator now wants to become a more risk-based organisation, which, Robb says, means becoming proactive and problem-solving, rather than reactive and process-driven, streamlining issues that can be dealt with simply and leaving more time for the OSCR to focus on dealing with and preventing larger issues.
"It’s a direction of travel that most regulatory organisations are on," he says. "It’s not an easy journey for us, but it’s an important one and I think we’re making good progress.
"I think we’ve built our confidence as a regulator over 10 years. We kind of know what matters more and what we can be a bit more relaxed about."
And he’s open to an enhanced role for the regulator in the future, as the Scottish sector tries to determine how it will react to fundraising reforms. Options under consideration include whether to engage with the Fundraising Regulator as part of a UK-wide model, whether to establish its own version, or what Robb calls "an interesting third option". In this last option, charities would improve their own internal complaint handling, with the OSCR as a backstop.
"We’ve tried to be a bit agnostic about this – a good outcome would be something that was clearer, simpler, easier to understand and easier to access," he says. But "there’s a certain logic" to allowing the OSCR to oversee the regulation, according to Robb, perhaps influenced by his own past as director of policy and development at the Scottish Public Services Ombudsman.
"I think some of this debate about regulation has focused on the wrong end of things, because when there’s disquiet the best way to keep your customer happy is to fix that problem early on and use that intelligence to improve operations," he says. "Charities should want to fix it themselves. That doesn’t always work, which is why there are ombudsmen, but I think that pushing the resolution of grievances down to the service level is the right model."
In England, the idea of a statutory fundraising regulator has made some in the sector nervous, but Robb says he does not believe there is the same level of resistance in Scotland.
"I don’t know how that’s come about," he says. "But we take it as a compliment that, as a regulator, we’re not seen as a terrifying negative force and that people would actually be comfortable if the OSCR had a slightly enhanced role in fundraising regulation."
He acknowledges that the debate isn’t finished yet, but one thing he is clear on is that any discussion of fundraising and wider charity practices has to include the public.
"I think we need to keep modernising our story and explain what it is to be a modern charity," he says.
"We’ve got to show the public what’s going on in the charity sector, and they’ll make their minds up – whether it’s around fundraising or chief executive salaries or whatever, the answer is to be open and frank and show people what’s going on."
One area where he admits the OSCR has been "behind the pace on this" is publishing charities’ accounts, something that is set to change in the coming weeks – part of what he sees as OSCR’s mission to provide "positive regulation".
"People say to me, how can you have positive regulation," he says. "And, OK, it can’t always be positive – sometimes we have to bare our teeth and sometimes we even have to use our teeth.
"But I honestly believe that 10 years ago the sector recognised that regulation would be helpful to them, would allow them to demonstrate they were well governed and properly looked after, and would raise standards.
"By and large I think as a regulator we do see ourselves as adding value. That’s the challenge in the next 10 years, as the sector continues to evolve and adapt."