Governance of Charities in Scotland

This paper examines the governance and accountability of third sector organizations, particularly charities, contrasting their corporate social responsibility (CSR) practices with those of private sector entities. While CSR is widely debated in profit-driven contexts, charitable organizations’ responsibilities toward their communities are not often discussed by lawyers or academics. Charity trustees’ decision-making processes is seldom scrutinised (let alone regulated), which raises critical questions: should this decision-making process be regulated under the same principles of for-profit institutions? Who should oversee these decisions? In Portugal, for example, charity governance lacks legal guidance and is deemed private. This contracts with Scotland’s regulatory framework, where charities are intensely scrutinised and regulated. In Scotland, the Office of the Scottish Charity Regulator (OSCR), established in 2005, actively supervises trustees, ensuring decisions align with charitable missions, therefore aiming to enhance decision-making efficiency, and enhancing public trust in the third sector. Aiming to shed light on the need for accountability, this article advocates for improved regulatory frameworks which promote efficacy and community benefit in the third sector, proposing Scotland’s model for jurisdictions like Portugal, which will promote public confidence and optimise the societal impact of not-for-profit entities such as charities, foundations or associations, among others.