Glossary of Terms
This glossary provides you with further information, definitions and descriptions of some key terms. Where appropriate it links to the relevant sections of law that underpin the terms.
Terms |
Explanation |
The Charities and Trustee Investment (Scotland) Act 2005: the primary piece of charity law in Scotland. |
|
Accounts represent the organisations finances for a particular period (usually a year). They show how much money was received and how much was spent, broken down into different categories. Charities must prepare accounts each year and must send a copy of to us (the Scottish Charity Regulator) each year. |
|
The online form charities complete each year to provide us with information about the charity (in particular for the Scottish Charity Register, and including information about the charity’s finances). This can be completed in OSCR online. |
|
This means everything a charity owns; property, money, equipment, including heritable property (such as land and buildings and rights attached to it). |
|
These are the people your charity is set up to help, those who benefit from what you do. |
|
This means a very high level of care and thoroughness. This is set out in Section 66 of the 2005 Act. |
|
A charity’s purposes are usually set out in the objects, aims or purposes section of its governing document. The purposes say what your organisation has been set up to achieve, and should reflect its broad aims rather than the day-to-day activities. Each purpose your charity has must fit within at least one of the 16 charitable purposes set out in section 7(2) of the 2005 Act, that is: (a) the prevention or relief of poverty, (b) the advancement of education, (c) the advancement of religion, (d) the advancement of health, (e) the saving of lives, (f) the advancement of citizenship or community development, (g) the advancement of the arts, heritage, culture or science, (h) the advancement of public participation in sport, (i) the provision of recreational facilities, or the organisation of recreational activities, with the object of improving the conditions of life for the persons for whom the facilities or activities are primarily intended, (j) the advancement of human rights, conflict resolution or reconciliation, (k) the promotion of religious or racial harmony, (l) the promotion of equality and diversity, (m) the advancement of environmental protection or improvement, (n) the relief of those in need by reason of age, ill-health, disability, financial hardship or other disadvantage, (o) the advancement of animal welfare, (p) any other purpose that may reasonably be regarded as analogous to any of the preceding purposes. |
|
An organisation is a charity in Scotland when it is entered on the Scottish Charity Register. |
|
This is the test set out under the Charities and Trustee Investment (Scotland) Act 2005, which determines whether an organisation can be a charity. The charity test has two main elements:
This is set out in sections 7 and 8 of the 2005 Act. |
|
‘Charity trustees’ are defined in section 106 of the 2005 Act as people having the general control and management of the administration of a charity. Charity trustees can also sometimes be known as committee members, directors or board members. |
|
Charity trustees are not only responsible for their own actions, they are also responsible for the actions and decisions taken by the charity trustees when acting together. |
|
The term connected person includes:
|
|
A conflict of interest may arise in a situation where a charity trustee may obtain personal benefit from a particular decision in relation to the charity. A policy setting out what a conflict of interest is and how you will manage situations where a conflict arises is strongly recommended. See the Conflict of interest sources of help, advice and best practice section for links to example policies. |
|
Section 16 of the 2005 Act says that you must seek OSCR’s consent before making any of the changes listed below. You need to ask for our consent at least 6 weeks (42 days) before you plan to implement the proposed change. Changes that need our consent are:
For more information, see Making Changes to Your Charity. |
|
This is the opposite of benefit and is equivalent to detriment or harm. |
|
An endowment is a fund consisting of property, including cash which is held for the benefit of the charity. The objective is to provide the charity with an income from the fund. There are two forms of endowment fund: » a permanent endowment fund is one that consists of property (which may be heritable or moveable) that has been gifted to the charity with specific conditions attached and where the capital cannot be spent in any circumstances. » an expendable endowment fund is one that consists of property (which may be heritable or moveable) that has been gifted to the charity with specific conditions attached and which cannot be spent except in those circumstances specified in the terms of the endowment document. Normally, the governing document of the charity or the directions of the donor of the endowment will specify how the income from the endowment can be used and therefore whether the income should be included in the accounts as restricted or unrestricted. |
|
Your charity's accounts must be externally scrutinised. That is, someone who is independent of your charity must review the accounts and produce a report, attached to the accounts, that highlights any issues to the reader. |
|
The financial year end date is the date that your charity’s financial year ends and to which accounts are prepared. |
|
A governing document (or constitution) is the document (or set of documents) that sets up an organisation and says what its purposes are. It will usually deal with other matters, including who will manage and control the organisation, what its powers are, what it can do with the organisation's money and other assets, and membership of the organisation. For more information, see our FAQs. This is defined in section 106 of the 2005 Act. |
|
|
Charities can take a number of legal forms. The legal form is the structure or entity, which then becomes a charity. For example:
|
This is where a governing document gives Scottish or UK Ministers the power to direct or otherwise control an organisation’s activities. |
|
Misconduct (which includes mismanagement) means any action by charity trustees which may result in a significant loss or harm to the charity (and this includes failing to act). It arises where the general duties are not met and/or where charity trustees fail to comply with any direction, requirement, notice or duty imposed under the 2005 Act (section 66(2) of the 2005 Act). |
|
The person who will act as the main point of contact for the charity. This can be updated in OSCR online. |
|
This is where benefit from the charities activities is provided to members of the organisation or other individuals not as a member of the public. |
|
By 'property' we mean all property and assets (money and other assets) belonging to a charity, including heritable property (such as land and buildings and rights attached to it). |
|
Trustees should put the interests of their charity before their own interests, or those of any other person or organisation. They must actively work towards the achievement of the charity’s purposes. This is set out in Section 66 of the 2005 Act. |
|
Someone who is authorised to act as a substitute for another. |
|
This is the way a charity makes a positive difference to the public through the activities it carries out when advancing its charitable purposes. |
|
The minimum number of people necessary to make decisions and conduct the charity’s business. A quorum can refer to:
This number is often set out in the charity’s governing document. |
|
A record of the personal, business and financial interests of a charity trustee that may potentially lead to a conflict of interest. |
|
Remuneration in the 2005 Act means any payment or benefit in kind. Sections 67 and 68 of the 2005 Act state that a charity trustee must not be remunerated for services provided to the charity (including services provided in the capacity as a charity trustee or under a contract of employment) from a charity’s funds unless certain conditions are met. For more information, see Trustee Remuneration guide. |
|
By representation we mean any public reference to the organisation being a charity, made by the organisation itself or by a person acting on behalf of the organisation. The representation may be either written or verbal. It could be made to either an individual, a group of individuals or to an external organisation. A letter to another organisation (for example a funding application or a request for rates relief) in which the organisation makes reference to being a charity would be considered to be representing itself as a charity. An internal reference, for example in a letter sent only to the members of the organisation, lacks a public element and would not be treated as being a representation. The representation need not be made in Scotland. |
|
General reserves are funds held by a charity that are freely available to spend on any of the charity’s purposes. This would exclude endowment and restricted funds and tangible fixed assets. |
|
Restricted funds are funds that can only be used for the particular purposes specified by the donor. For example, if a local authority provides a grant to a local charity to refurbish the community hall, the grant is a restricted fund that can only be used for the purpose for which it was given, in this case refurbishing the hall. Another example would be if a charity carries out an appeal for a particular purpose (for example to purchase a minibus). The money raised by the appeal would be a restricted fund and should only be used for the purpose of the appeal. Income from assets held in a restricted fund (for example interest) will be subject to the same restriction as the original fund unless the terms of the original restriction say otherwise. |
|
The Scottish Charitable Incorporated Organisation is a legal form unique to Scottish charities and is able to enter into contracts, employ staff, incur debts, own property, sue and be sued. For more information see SCIO guidance. |
|
This is the unique number given to all Scottish charities, beginning with SC0 (zero) followed by five numbers. |
|
This means the register of all Scottish charities kept by OSCR. |
|
The independent regulator and registrar for over 23,500 Scottish charities, established by the 2005 Act. For more information, see About OSCR. |
|
The Trustees Annual Report is a part of the annual Accounts and contains information about the charity and its activities and achievements in that year. |
|
This is a restriction on who can access the benefit provided by a charity: it will be undue if excessive or unnecessary. It includes fees and charges. |
|
Unrestricted funds are funds that the charity trustees are able to use for any of the charity’s purposes. Donations that are not given for a specific purpose would be an unrestricted fund (for example membership fees). Income from these funds is also unrestricted and can be used for any of the charity’s purposes at the discretion of the charity trustees. Charity trustees may decide to earmark part of a charity’s unrestricted funds for a particular purpose, for example major repair works. These sums are designated for that purpose and should be accounted for as part of the charity’s unrestricted funds. |
|
To wind up or dissolve a charity means that the charity ceases to exist. Before winding up a charity must get OSCR’s consent. |