Managing my Organisation Well
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Governance
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Governance
Financial Examination
It is a legal requirement for your organisation’s financial records to be inspected annually by the Charity Regulator.
The 2005 Act requires you, as board members, to act with care and diligence when managing the affairs of the charity.
This means that you must make sure you have suitable controls over financial procedures to protect the assets of the charity, for example when preparing a statement of accounts, getting the accounts independently examined and then submitted to OSCR. Records must be kept for six years.
A charities board members must be in control of the management and administration of their charity and act with appropriate care and diligence in the interests of their charity and not of any third party. They are collectively responsible for ensuring that the charity complies with the law. The following checklist covers some of the key areas that charity board members should consider both in view of legislative and regulatory requirements, but also as a matter of good practice.
General
Do we review the charity, its constitution, activities and governance arrangements, on a regular basis as a matter of good practice?
Governing Document
Are our charity’s purposes up to date and consistent with its current activities?
Are our charity’s purposes charitable according to the 2005 Act? (If we want to update our purposes, we must seek OSCR’s consent first)
Does the charity’s constitution make it clear what charitable purposes it is pursing, or do these have to be inferred?
Have we accounted for differences in legislation between Scotland and other parts of the UK? Does the charity’s constitution allow charitable assets to be used for purposes that are not charitable in Scotland?
Governance and Administrative Arrangements
Does the way that our charity is set up, including any founding legislation, inhibit us as board members from carrying out our duties? If so, we should seek ways to enable this to be changed.
Can we, as board members, make decisions solely in the interests of the charity?
Do we have a robust conflict of interest policy and clear lines of authority?
Public Benefit
Is there any undue restriction on accessing the charity’s benefit? If so, what are we doing to facilitate access, for instance by mitigating fees and offering other forms of accessing our services and facilities?
Does the public benefit that the charity provides fit with its charitable purposes?
Do the charity’s activities give private benefit to individuals and how does this private benefit compare to the public benefit it provides?
Activities
Can we provide evidence that the charity’s activities advance its charitable purposes, for instance, if we are aiming to advance health?
Does our board members’ annual report describe the charity’s activities and explain how the charity delivers public benefit?
Are we sure that our charity will carry out the planned activities?
If the charity is not active, should we wind up? (If so, we must obtain consent form OSCR before winding up)
Is there a reason why the charity is inactive yet still passes the charity test?
Umbrella Bodies
If our charity is part of a group structure, have we considered establishing or updating a model governing document, and working with the umbrella body to do so?
What further support can we seek from an umbrella body, such as advice on
Key points
Trustees have a legal responsibility to manage the charity’s financial records
This means they are equally responsible for ensuring accounts are independently examined and submitted to OSCR for inspection.
Links for more information
Charity Finances
For further details on protecting your charity’s finances.