The Scottish charity regulator has recommended that all charities set up by local authorities should further separate themselves from the influence of their sponsoring councils.
OSCR began investigating a select number of arm's length external organisations (ALEOs), often leisure and culture charities that have been set up by a local authority, in the summer of 2014. The charities were investigated to ensure that they were being well governed and that the relationship between the trustee board and the local authority did not negatively impact their charitable activities.
In many cases, the regulator found that most ALEOs are set up to provide leisure and cultural facilities, as well as housing, urban regeneration and employment. ALEOs often have access to funding and rates relief that aren’t available to local authority bodies.
Ten of the 11 ALEOs reviewed by OSCR were found to be governed “adequately” and by a suitably diverse board.
Only the North Ayrshire Ventures Trust – a regeneration charity with an annual income of £32,241 – was singled out in the report as failing to meet the regulator's standards. According to the report the charity in question has now applied to revise its purpose in order to meet the charity test.
In the process of compiling the report, OSCR found that Fife and Aberdeen had the highest density of the 64 registered ALEOs in Scotland and that those operating in Glasgow generated the greatest income.
Martin Tyson, OSCR’s head of registration, said that the findings of the review have gone a long way to assuaging the regulator's fears surrounding ALEOs.
He said: “We hope that today’s report helps compliance and good practice in the sector and demonstrates the more targeted approach to regulation and monitoring that we are currently developing.”
Recommendations for moving forward
Even with the generally pleasing findings from the review, the regulator’s report still made a number of recommendations for all ALEOs moving forward. Alongside increased separation of the trsutee board from the local authority, these include regular reviews, the appointing of sub-committees and the application of more robust induction procedures.
The report also promised to “continue to monitor” all of the ALEOs operating within Scotland.
