Part 1: The background and matters to consider
There are over 500 village halls registered as charities in Scotland.
Most manage, maintain and sometimes own (or hold heritable title to) a hall or building which may be used for a variety of educational and recreational purposes for the benefit of the local community.
Many of these charities have decided that that they want their charity to be incorporated as a company or a Scottish Charitable Incorporated Organisation (SCIO), as this limits the liability on individual trustees which could arise from managing a village hall. Others have decided they’d like to amend their governing document, which has become outdated.
It is good practice for charity trustees to explore these possibilities. However, the complicated way in which many village hall charities are constituted often means that the charity trustees do not have the power to make the changes they want and therefore have to apply to OSCR for a reorganisation scheme. This can be a complex process and most charity trustees will need some support and advice to be able to do it.
How are village halls set up?
Different types of charities have different legal structures, and the type of legal structure which is right for a particular organisation depends on the activities and the level of risk involved.
Unincorporated association or trust?
The majority of village hall charities were originally established by a Deed of Trust. Many are constituted by a Model Trust Deed drawn up in the 1950’s or 60’s by the Scottish Council of Social Services (a forerunner of today’s SCVO).
Typically, the deed vests the hall property in named trustees (the ‘property trustees’) and also allows for the establishment of a Management Committee which is responsible for the general management and control of the Trust subjects (usually the hall).
In such cases, although the Management Committee is permitted to make Rules and Regulations, the Deed will usually state that no Rules and Regulations may be made which are inconsistent with Trust Deed.
Often, this has resulted in a scenario where the ‘property trustees’ and the Management Committee operate quite independently. In some cases the Management Committee are unaware that there are ‘property trustees’ or that the Committee of Management was originally established under the terms of a Trust Deed.
In such cases, OSCR regards the charity trustees as being the trustees who hold title to the property together with the Committee of Management who are responsible for the general management and control of the Trust subjects and the arrangements for their use. The original Trust Deed sees ‘the property trustees’ and ‘the Management Committee’ having a dual role in the management of the charity.
When we refer to the ‘charity trustees’ from this point forward in the guidance, we are referring to both the property trustees and the management committee, who in some cases may be the same people.
The legal form of such a charity is a trust although in some cases errors may have been made at the time of first registration of the charity by the Inland Revenue, and its Register entry may be ‘unincorporated association’.