Redress Scheme: information for organisations

Charity Law

Charity Law (Scotland)

Section 17 of the Act is designed to overcome potential barriers to charities registered in Scotland being able to contribute to the redress scheme, should they choose to do so.

The Act includes provision at section 17 that the making of a financial contribution to the redress scheme will be treated for all purposes as:

• being in furtherance of the charity’s charitable purposes and consistent with its constitution
• providing public benefit
• not being contrary to the interests of the charity
• being within the powers exercisable by the charity trustees of the charity

The charity trustees’ duties in terms of the Charities and Trustee Investment (Scotland) Act 2005 to act in the interests of the charity and with due care and diligence still applies to the charity trustees’ decision whether to contribute to the scheme. More information is contained in the Considerations for Charities section below. No changes have been made to the current list of charitable purposes or the charity test in the 2005 Act. Below are links to relevant guidance on the Scottish Charity Regulator (OSCR) website.

Scottish Charity Regulator Guidance for Charity Trustees

Scottish Charity Regulator Guidance on charitable purposes

Section 17 of the Act came into force on 28 June 2021 through the Redress for Survivors (Historical Child Abuse in Care) (Scotland) Act 2021 (Commencement No. 1) Regulations 2021.

Charity Law (England and Wales)

A number of charities who may wish to contribute to the redress scheme are registered in England and Wales. We are seeking to remove technical barriers to charities registered in England and Wales from being able to make financial contributions to the redress scheme, should they wish to do so. Through an Order under section 104 of the Scotland Act 1998, we seek to ensure the proper cross-border operation of the provisions of the Act, including in relation to charities.

Article 2 of the Redress for Survivors (Historical Child Abuse in Care) (Scotland) Act 2021 (Consequential Provisions) Order 2021 provides that the making of a financial contribution to the redress scheme will be treated for all purposes as:

• being in furtherance of the charity’s charitable purposes and consistent with its constitution
• providing public benefit
• not being contrary to the interests of the charity
• being within the powers exercisable by the charity trustees of the charity

In this article, “charity” has the meaning given by section 1 of the Charities Act 2011.

Charity trustees should take all of the relevant considerations into account before deciding whether or not it would be in the best interests of their charity to contribute to the redress scheme, taking advice where appropriate. The Charity Commission for England and Wales has published guidance for trustees on the principles that trustees should follow to make sound decisions (“It’s your decision: charity trustees and decision making (CC27)”). Trustees must also abide by their general trustee duties (see “The essential trustee: what you need to know, what you need to do”). 

Charity Law (Northern Ireland)

There may also be charities established in Northern Ireland, who wish to make a contribution to the scheme. Section 46 and 47 of the Charities Act (Northern Ireland) 2008 (“The 2008 Act”) give the Charity Commission for Northern Ireland (CCNI) the powers to sanction by order, any action proposed or contemplated in the administration of the charity, where it is considered to be in the best interests of the charity. Section 47 of the 2008 Act provides CCNI with the power to by order, exercise the same power as is exercisable by the Attorney General, to authorise the charity trustees to apply charity property or waive its entitlement to receive property, where the charity trustees have no power to, but where in all the circumstances they regard themselves as being under a moral obligation to do so.

Therefore, if charity trustees decide that it would be within the best interest of their charity to make a contribution to the redress scheme or if they regard themselves as being under a moral obligation, but have no power to do so, they may apply to the CCNI for permission to do so, pursuant to sections 46 and 47 of the 2008 Act respectively. CCNI have published guidance on the steps trustees should follow to get authorisation for certain types of transactions.

Tax implications of contributing to the scheme

HM Revenue and Customs considers that any contribution made by a registered UK charity to the redress scheme will be viewed as charitable expenditure, provided the section 104 order is also passed by the UK Parliament. 

Considerations for charities

Where the potential contributing body is a charity registered with the Scottish Charity Regulator it is important to note that its charity trustees are still required to comply with the charity trustee duties as set out in the Charities and Trustee Investment (Scotland) Act 2005. See the Scottish Charity Regulator guidance and good practice for Charity Trustees.

Similarly, where the potential contributing organisation is a charity registered with the Charity Commission for England and Wales, the trustees of the charity still need to comply with the general trustee duties when making a decision about whether to contribute to the Redress Scheme or not. See the Charity Commission for England and Wales guidance: The essential trustee: what you need to know, what you need to do.

In particular charity trustees must be able to demonstrate that they have acted in the best interests of the charity and with due care and diligence in deciding whether to contribute to the scheme. Trustees are also under a duty to manage their charity’s resources responsibly. This includes taking advice where they need to, and avoiding exposing the charity’s assets, beneficiaries or reputation to undue risk. Trustees must make balanced and adequately informed decisions, thinking about the long term as well as the short term.

In coming to the decision charity trustees should take into account:

• what is the charity’s current and long-term financial situation?
• have you considered any limitations, contractual or otherwise on how the charity’s funds may be spent? (e.g. are any of the funds restricted[1]?)
• are the available unrestricted[2] funds sufficient to allow you to make a contribution?
• if you decide to make a contribution to the scheme by instalment payments over a number of years, have you assessed whether these payments would be achievable now and in future years?
• how would your charity’s current and future beneficiaries and services be affected if you made a contribution?
• how will the contribution impact on the charity’s cashflow; will the charity still be able to manage this effectively?
• would it still be possible to pay staff and other costs?
• would there need to be cuts to services now or in the future?
• would the contributions impact on any agreements with funders or lenders? 
• what are the reputational implications for the charity if it does (or does not) contribute?

Charity trustees will have to consider the advantages and disadvantages of  participating in the scheme, taking appropriate professional advice where necessary. They will then be in a position to decide whether it is in the charity’s best interests to contribute to the scheme. This decision should be documented, and detail the charity trustees considerations.

If charity trustees, acting with care and due diligence, decide that it is in the interests of their charity to contribute to the redress scheme, section 17 of the Act provides that any contributions made to the scheme from charitable funds will be treated in the manner as described at paragraphs 108 (for those registered in Scotland) and 112 (for those registered in England and Wales) above.