The Charities Restricted Funds Reorganisation (Scotland) Regulations 2012 came into force on 1 November 2012. This means that Scottish charities can now apply to release funds which have been historically restricted.
"Restricted funds" are defined as "property (including money) given to a charity for a specific purpose and in respect of which conditions have been imposed as to its use". An example of restricted funds would be if a music charity held a collection to purchase piano then all funds received as part of that collection would be restricted for the purchase of the piano.
The new restricted funds legislation allows charities to:-
- amend the purpose for which the restricted funds may be used; and/or
- amend or delete any conditions imposed on how the charity can use the restricted funds.
A charity must satisfy certain conditions in order to benefit from these changes. It must show (i) that some or all of the purposes of the restricted funds have been fulfilled as far as possible or adequately provided for by other means or can no longer be given effect to (whether or not accordance with the directions or spirit of the restricted funds' purposes) or have ceased to be charitable purposes or have ceased in any other way to provide a suitable and effective method of using the funds, having regard to the spirit of the restricted funds' purpose and (ii) that the purposes of the restricted funds provide a use for only part of its property.
OSCRs guidance can be found here.