If an organisation’s governing document says that government Ministers can control what the organisation does or tell it what to do, then usually that organisation cannot be a charity, even if it has charitable purposes and provides public benefit.
This applies to both Scottish and UK Ministers, but Scottish Ministers may disapply this exception (see full detail).
The 2005 Act says that an organisation can’t be a charity if its governing document allows government Ministers to control, direct or stop it from carrying out its activities. This means Scottish or UK Ministers cannot instruct or order the organisation to do something which the organisation must then obey.
When looking at the powers that a governing document gives Ministers, we will consider whether, taken as a whole, it allows Ministers to direct or control the organisation’s activities. In particular:
The more important, active and open-ended the powers given to Ministers are, the more likely they are to be a problem for the organisation’s charitable status. If the powers in the governing document allow a Minister to actively control the organisation in important ways so that the organisation is not independent, then the organisation is likely to fail the charity test.
This part of the charity test applies only to powers given to government Ministers in an organisation’s governing document. It does not apply to:
It is open to charities to enter into contracts or agreements with government Ministers, though charity trustees must make sure that they are acting in the interests of the charity when doing so.
Note:
The 2005 Act allows Scottish Ministers to disapply this exception for a particular organisation by making an order in the Scottish Parliament. They have done so in a number of cases, for example in relation to colleges of further education.