3. Proposal 1
3.1 Proposal 1: Publishing annual reports and accounts in full for all charities on the Scottish Charity Register.
3.2 Proposal summary: All charities registered in Scotland are under a legal duty to prepare annual reports and accounts, and submit them to OSCR. There is currently no legal requirement for reports and accounts to be published on the Scottish Charity Register. Currently OSCR publishes the accounts of charities with an income over £25,000 and all Scottish Charitable Incorporated Organisations (SCIOs). OSCR redacts all personal information before publishing to comply with data protection legislation (i.e. charity trustee names and signatures, photographs, and the signatures and personal details of independent examiners and auditors). The proposal is for OSCR to publish all annual reports and accounts in full on the Register.
3.3 2019 Consultation response summary: The vast majority of respondents SUPPORTED giving OSCR an explicit power to publish annual reports and accounts in full for all charities (82%), and felt that it was a sensible proposal. Concerns were raised that publication should be compliant with data protection legislation and that charities SHOULD be allowed to apply for a dispensation from having their annual reports and accounts published in full in "exceptional circumstances".
In what circumstances should there be a dispensation to full annual reports and accounts publication?
3.4 Mixed views were provided to Question 1.
Main themes expressed by those not in support of a dispensation
3.5 More than half of online survey respondents reported that there should be no dispensation to full annual reports and accounts publication (circa 54%). The main feedback was that:
- This would improve transparency and accountability across the sector, and increase public trust and confidence in the governance of charities.
- The general public can already access full annual reports and accounts by contacting a charity directly.
- The process currently undertaken by OSCR to redact all personal information before publishing annual reports and accounts to comply with data protection legislation was broadly considered sufficient (e.g. it helps prevent fraudulent use, it protects identities, any sensitive information and data is withheld).
3.6 Further, strong support was expressed by these respondents for publishing annual reports and accounts in full for all charities on the Scottish Charity Register to be the default position i.e. a presumption towards full disclosure for all charities, with all information in the public domain.
Main themes expressed by those in support of a dispensation
3.7 A relatively large proportion of survey respondents reported that there should be a dispensation to full annual reports and accounts publication (circa 45%).
3.8 It was considered important that there was provision for, and a process or mechanism put in place for, requesting a dispensation to full annual reports and accounts publication (e.g. similar to the Charity Commission for England and Wales). Aligned to this were requests for a clear definition to be provided of the reasons for applying for, and granting of, a dispensation (i.e. parameters and safeguards specified).
3.9 There was, however, broad support within these responses that the granting of a dispensation to full annual reports and accounts publication should only be in exceptional circumstances. This aligns with the feedback to the 2019 consultation.
3.10 Where "by exception" was further defined within consultation responses, the main circumstance noted was to prevent putting a person or people (or premises) in personal physical or mental danger (i.e. risk from a health and wellbeing, safety or security perspective) due to type of activity. Individual/personal safety and the security of premises were by far the top reasons identified for dispensation (e.g. charities working with individuals with protected characteristics; those dealing with sensitive issues and/or vulnerable groups such as women's refuge; those operating in politically sensitive geographies).
3.11 Wider circumstances mentioned, but to a lesser degree, included:
- Charities with a small annual income (but greater than the current £25,000).
- During a national crisis or global pandemic.
- Formal financial investigation or legal disputes.
- Release of a Statutory Auditor.
If dispensations are made, should some form of annual reports and accounts always be published, for example in a redacted or abbreviated form?
Majority support some form of annual reports and accounts always being published
3.12 A majority of online survey respondents agreed with the proposal that if dispensations are made, then some form of annual reports and accounts should always be published (circa 72%).
3.13 Much of the wider feedback in support of the proposal fell into two categories: that adopting such an approach would support openness and transparency within the charity sector; and that it was of vital importance that the work of charities and financial information was published and readily available in the public domain.
3.14 It should be noted that a relatively large proportion of these respondents simply stated "yes" in their response to Question 2 – i.e. not all went on to provide a view on whether these annual reports and accounts should be published in a redacted or abbreviated form. This equates to almost one-third of respondents referred to at Section 3.12 above. Where further commentary was provided, it shows very strong support for:
- Personal or sensitive information, data and photographs to be redacted. Redaction should focus on information which may create risk, and upholding rights to privacy and safety. Further, it was noted that consideration could be given to permitting typed signatures on annual reports and accounts, rather than having to redact handwritten signatures.
- Ensuring that redacted or abbreviated reports and accounts remained meaningful for the reader and aided their understanding. Here, the main points raised were around:
- Avoiding the risk of abbreviating published information to the extent that it was then hard for the public and stakeholders to follow what a charity was doing.
- Avoiding a perception that something was being hidden by a charity.
- Giving consideration to abbreviating reports and accounts in line with company law.
3.15 A wider point raised, but not by many, was around aligning arrangements in Scotland with that of the Charity Commission for England and Wales.
Alternative viewpoints expressed
3.16 Almost one-fifth (20%) of online survey respondents simply reiterated points raised at Question 1. Namely that there should be no dispensation to full annual reports and accounts publication from a public interest perspective.
3.17 Finally, a small handful of online survey respondents explicitly answered "no" to Question 2 (four). Namely that if dispensations were to be made, then redacted or abbreviated annual reports and accounts did not always require to be published.