OSCR for directing

She took a first in mediaeval history, practised in shipping law for a dozen years and convened the Insurance Committee while serving on the Society’s Council. She switched to directing the Scottish Museums Council and from there was seconded to the Office of the Scottish Charities Regulator (OSCR), set up late last year in the wake of the Moonbeams and Breast Cancer Research affairs. But Jane Ryder sees all her past roles as equipping her for her current post.

“Shipping law was where I started but I always maintained an interest in the academic and the charitable so I was doing both in parallel. There is absolutely no doubt that a legal training is fantastic preparation for all the other jobs I’ve done”, she asserts. Similarly her Council work: “First of all it gave me an interest in regulation and the operation of public law even though I was primarily practising in private and commercial law, so that combined was very good preparation for the Museums Council. I wanted a change, I wanted a new challenge and I was very lucky that the Museums Council job came up.”

That in turn brought experience of regulation and dealing with the Executive. She combined this with various management roles – on the board of various charities, chairing the Scottish Refugee Council when it went from dealing with 300 refugees a year to 8,000, vice chair of a further education college. “I’ve sat at a lot of different places at the table. I think all of that has been enormously helpful and an excellent background for this job.”

During last year’s scandal the media made much play of Executive inaction in the face of inadequate legislation. So has she been given a job but no tools? “You can do a lot within the current legislation with enhanced resources.” Taking over from the Scottish Charities Office within Crown Office, a unit of just three and support staff, OSCR has been given “a much wider, more proactive remit including developing a monitoring programme, and critically we’ve been given additional resources”.

“A lot of the work we’re doing at the moment is an educative process. Part of monitoring and regulation is about education, enabling people to understand what the current parameters are, what the current requirements for charities are and what the powers of the regulator are. These powers are more extensive than perhaps people have recognised.”

Will we see OSCR adopting the model of the Charity Commission in England and Wales? “We’ve been talking to the Charity Commission and we’ve had some very helpful discussions with them. There are some things we will adopt and adapt, and others where it is unnecessary or simply impractical for us to go down the Charity Commission route” – like site visits.

One alignment with the Commission will give the new regulator rather than the Inland Revenue the function of recognising charitable status in Scotland. “That’s an area of very particular interest for a number of solicitors and their clients because there is an entirely legitimate concern lest the definitions of charity diverge in England and Scotland.” But cross-border organisations need not worry: “The intention is to align the Scottish definition with the new and modernised definition being introduced in England, based on the Strategy Unit report ‘Private Action, Public Benefit’.”

Still with a staff of only 12, Jane faces the challenge of engaging key intermediaries to bring about some of the benefits which the Charity Commission achieves through working more directly, without abdicating OSCR’s responsibility as regulator. “For example, we are working with ICAS on improving, or making available, appropriately qualified advice for charities on the complexity of the accounts regulations. We are also working with the Society so that solicitors advising charities can give informed advice, and it doesn’t all have to come from OSCR.”

Asked what she still needs from the Executive’s bill, due to be published in draft in early June, she points to the separate areas of charity law reform and regulation. “The bill is looking at some really important charity law reform areas, which includes setting out a new list of charitable purposes. Perhaps even more importantly, legislation in both England and Scotland would remove any presumption of public benefit. All charities will have to demonstrate continuous public benefit in order to retain charitable status. That’s obviously attracted a lot of public interest, as it might impact for example on private schools, and religious bodies.”

“On the regulatory side I think one of the most positive and helpful things the bill is looking to do is introduce a statement of trustee duties. I don’t think this introduces new principles but it does emphasise the increased importance of governance rather than the 1990 Act’s concentration on management. A statement of duties puts the focus on the trustees and makes it clear that the primary responsibility lies with them. The bill provides that any organisation operating in Scotland will have to register with the regulator so that we have an idea of the totality of operations in Scotland. It will make it easier to reorganise small trusts and extend trustee investment powers as recommended jointly by the English and Scottish Law Commissions and already implemented in England. The Bill will incorporate a cost effective appeals process against OSCR decisions, without ousting the court’s powers of judicial review. And we’re looking at the possibility that OSCR will be able to exercise more power at its own hand rather than having to apply to the Court of Session for interim powers, though the appointment of a permanent judicial factor would still be a matter for the court. All of these introductions will be enormously helpful in enabling trustees to understand and undertake their responsibilities.”

Jane recognises the balancing job to be achieved in bolstering public confidence in the sector without developing too restrictive a regime. “No regulator is a guarantor of the probity or performance of individual organisations”, she points out. “What we need to do is put in place a regime which recognises what the risks are but allows charities to flourish.” She stresses that despite last year’s high media profile, “we want people to understand that really fraud is relatively rare; the high profile cases involved only two out of 18,000 active charities, and although fraud is of huge public interest and concern – and of interest and concern to OSCR – on the whole the problems with charities are more in the area of governance and operations”.

Did a lot of the public concern not relate to whether funds raised were actually going to the charity? “Certainly it is an area of great interest. But that is not necessarily easy to regulate, in the sense that the current regulator only has responsibility for charities, not for fundraising. One of the things the bill is going to look at is whether we can regulate the relationship between charities and fundraisers.”

Again, it is hard to tell which charities are currently active. “That’s very much one of the operational issues we’re looking at. We’ve published the Inland Revenue’s index of active charities on our website, but we recognise that that’s not complete and one of our first tasks is to update the index. There is currently no provision for striking a dormant charity off the register in the way that there is for striking a company off, so that’s another innovation for the bill.”

Would it make sense to introduce a separate accounting regime for charities that rely heavily on public appeals and donations? “I think there may be scope to look not exactly at different regimes but how do you tailor particular regulations or requirements to different types of charities. You can do it in two ways, either asking charities for additional reporting or doing some investigation, some thematic survey of particular types of charity. Our techniques will develop over time and become more sophisticated, taking into account the basic data we hold and therefore the additional information which we can require.” The monitoring programme is made very simple for very small charities, with a £10,000 or possibly £20,000 threshold: “all we’re asking for is name and address, contact details, a copy of the accounts and the constitution”.

Will solicitors have any yardsticks by which to advise clients what is a sound charity? “The Charity Commission has just published a rather good publication called ‘The Hallmarks of an Effective Charity’. Perhaps it’s more about internal management but you come right back to the issue of public confidence, the importance of the regulator and charities in general working to restore what’s admittedly had a bit of a battering. We need to enhance public confidence in charities, because they are such a crucially important part of Scottish society, not just in employment but in terms of the values that they represent. ... There isn’t a kitemark for charities and I think we’re some way away from that. For example on fundraising, Government policy is that they want fundraisers to develop a self-regulatory regime and only if that fails will Government both in Westminster and here step in to regulate fundraising as such. Law Society members are very familiar with the concept of self-regulation!”

One new creature to look out for in the bill is the charitable incorporated organisation. “This is not a company and therefore it is competent within a Scottish Charities Bill – companies are a reserved matter – it will be easier administratively than a company but still offer the benefit of limited liability, which makes it in some ways more attractive than a trust.”

She sums up the three key challenges for OSCR as “the balance between being proportionate and making sure that we extract meaningful information; working with others but accepting that we can’t delegate responsibility; and one that we haven’t touched on, and I’m quite keen to get people thinking about what exactly we mean, the burden of dual regulation. What is often given this label is not in fact dual regulation at all, but information requirements of major funders. The nature of these requirements isn’t consistent because there’s such a variety of different funders, and it is in nature contractual. We need a much better understanding of the relationship between regulation and funding provision.”

Taking the long term view, Jane recognises that not every charity can achieve best practice, “but what is best practice in one generation becomes good practice in another and mandatory in another. A good example is attitudes to racial and sex discrimination which started as extreme and are now completely mainstream. In the same way, I think you can expect to see standards for charities evolve over time.”