Are There Holes in Charity Law?

After the Charities and Trustee Investment (Scotland) Act 2005, which increases regulation within charities, greater faith has been placed in non-profit organisations. It’s been six years since the first charity act changed the way we regulate Scottish charities. The public can feel safer in the knowledge that their money directly goes towards a good cause than in the pockets of the undeserving.

The Office of the Scottish Charity Regulatory (OSCR) is quite happy with the way charities are proceeding in Scotland. However, seeing as the charity act is still in its infancy, there are a few cracks beginning to show.

But let’s begin before the act fell into place. In 2003, the outmoded charity laws were thrown into poor light, when two charities came under fire for misconduct.

Breast Cancer Research (Scotland)

Fundraising company for Breast Cancer Research (Scotland), Solutions RMC, had its bank accounts frozen, when it came to light that less than 10% of the multi-million pound income was used for charitable actions. The rest of the money was frittered away on fundraisers.

£5m of Breast Cancer Research (Scotland)’s £13.2m income was paid to Solutions RMC. Only £1.5m was spent on cancer research. This news will be crushing for cancer sufferers and their loved ones.

Solutions RMC had no other clients, so became insolvent. How could charities get away with such monetary mismanagement?

Charity Law

Moonbeam Children’s Cancer Charity

With more than 40% of people contracting cancer at some point in their lives, it’s unsurprising that cancer charities are widely supported. Unfortunately, the hard work of people who raise money for cancer charities wasn’t always spent well.

Moonbeam Children’s Cancer Charity, which organises holidays for young cancer sufferers, is yet another case of charities abusing the system, before higher levels of regulation were established.

Out of almost £3m, Moonbeam spent as little as £70,000 on the children. Even a holiday home in America was reserved by one director, William Power, meaning that children suffering from cancer couldn’t access the building.

Are We Doing Enough?

OSCR recently denounced the Glasgow East Regeneration Agency (GERA), after it was revealed that the then head executive, Ronnie Saez, received a public salary package and was given an ex-gratia payment of £232,000 for no legitimate reason.

With three city councillors on a board of seven, it appeared that GERA was a council agency. According to OSCR’s report, the board member got away with such payments, because they ‘suited themselves.’

Massive pay-outs to senior staff members should have us all worried. The watchdog has no way now to recover the money, which leaves the community suffering a loss of nearly one-quarter of a million pounds. Surely, stronger legislation and reputable charity law solicitors could have prevented this.

In the future, we’ll have to consider if council trusts can be considered a charity in its own right. For now, we welcome moves by OSCR to take down GERA trustees and reclaim what they can from the cash that was lost.

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