Turcan Connell and Chiene + Tait Chartered Accountants, held a joint seminar this autumn to look at the latest developments in charity law and financial reporting, plus the impact that Scottish independence may have on the charity sector. As part of the seminar, the results of a jointly commissioned survey on how Scottish charities felt about the potential impact of the Scottish Referendum were released.
The results of the survey show that the vast majority of organisations have not considered the impact of the referendum on their activities. Only 24% of those responding said that their charity had considered the impact of the referendum on their activities and 29% said that they expected the outcome of the referendum to impact on service delivery.
Respondents said that the political attitude of a newly independent Scottish Parliament towards particular sections of the charity sector is very difficult to predict. Some parts of the charity sector receive very little support of any kind at present and many in the third sector assume that this will continue. However, concerns were expressed about new legislation or regulation from an independent Scottish Parliament, particularly where it would result in a threat to available funding from local or central government. Uncertainties around funding and therefore service delivery meant that the full implications of Scotland becoming independent were difficult to assess.
A massive 88% of those responding to the survey said that they did not feel well informed on the implications of independence, although the same proportion (88%) was aware that the Office of the Scottish Charity Regulator (OSCR) had issued guidance for charity trustees in relation to the referendum. Remarkably, 100% of respondents said that they did not know about the impact of devolved taxes on the charity sector, regardless of the outcome of the referendum, despite the fact that Land and Buildings Transaction Tax legislation has already been passed by the Scottish Parliament, legislation for the Scottish rate of income tax is in place and other devolved taxes are being worked on.
Kenneth McDowell, Partner and Head of Chiene + Tait's Charity and Education Sector Group, said that it was interesting that only 24% of organisations had considered the impact of the referendum and only 12% felt well informed about the implications, which corroborates other sector surveys. "Charitable organisations in Scotland do appear to be unclear about what the future holds when it comes to referendum outcomes for the sector and the impact of devolved taxes," he said. "Without an open debate from our current MSPs, the impact of uncertainty will be felt not only by charities that provide key services, but also those who rely upon services to meet essential needs."
Commenting on the ability of charities to engage in the debate on the Scottish independence referendum, Gavin McEwan, Partner and Deputy Head of Charities at Turcan Connell said"OSCR is very clear in its guidance that charities can and should take part in the debate on Scottish independence, provided that they have the powers to do so. However, charities need to be clear that in engaging in the debate they are acting in the best interests of the charity and are furthering its aims and objectives. Otherwise, there is a risk that charities are acting outwith their powers. It is also critical that charities are not party political, since this is specifically prohibited in the Scottish charity legislation".
Full details of the survey outcomes can be found here.