Should a trustee of a charity be required to engage with the local community?

On 2 June 2015, I spoke at a conference organised by The Scotsman about land reform. I rustled together a Storify of proceedings and there was a special report in the print edition of The Scotsman on 4 June 2015.

Those resources provide a complete overview of the topics covered. This blog is about one point raised there, namely the “duty of community engagement” for charities that the Scottish Government raised in the most recent land reform consultation.

The relevant questions asked in that consultation were as follows:

Do you think a trustee of a charity should be required to engage with the local community before taking a decision on the management, use or transfer of land under the charity’s control?

What do you think the advantages or disadvantages would be?

For my part, I answered “Yes” to the first question, before noting the advantage of “Greater community involvement” offset by a disadvantage of “Greater administration burden, but that should be minimal“. Robert Scott-Dempster of Gillespie Macandrew LLP (Solicitors, and sponsor of the event) has made me realise I should have provided a bit more detail in my answers.

In the Scotsman, he wrote the following.

The fact that charities have been singled out from other landowners suggests that it is implicit in the duty to consult that the local community has real power to influence the day to day management of the charity.

Legally, however, a charity has to obey its own constitution, and is not entitled to give favours to other people who are not beneficiaries, even if they happen to be neighbours.

He makes a good point. To elaborate on that, a charity’s own constitution is invariably fortified by statute and perhaps even common law, with legislation requiring certain steps before a charity can be registered with the Office of the Scottish Charity Regulator. Depending on a charity’s structure, other rules might apply: a trust is regulated by the Trusts (Scotland) Acts 1921 and 1961; a company is regulated by the Companies Act 2006.

In terms of why charities have been singled out, Scott-Dempster identifies the ability to influence charity landowners as implicit in the reasoning behind this proposal. That may be so, but it may also be slightly related to a campaign called Land Action Scotland. That related to two large areas of land owned by charities, in Applecross (see note below) and Bute. For whatever reason, it seems people felt so disenfranchised with the land management practises in those situations as to apply en masse for membership of the appropriate charity body.

No comment is made here as to the merit of that campaign. What will be noted is that a charity which exists primarily for landownership purposes (those purposes being likely to accord with those of the charity founder(s), subject to the law) is probably the model that springs to mind when the Scottish Government’s consultation question is considered. As ever, there is more to it than that, and this is a point that was raised in Scott-Dempster’s presentation on the day.

The example he gave was of Cancer Research UK, perhaps considering how best to deal with an asset it owns or leases after it is no longer needed. As someone who has been concerned with cancer a bit more than land reform of late, it would be an understatement to say the example resonated with me. After a five second mind wander, I came back to consider the core point that a charity will have purposes that are important and donors will have given hard-earned funds for those core purposes: sure, might think community empowerment is important, but other donors to Cancer Research UK are more concerned with the development of improved diagnostic or treatment measures, and probably have views that average at somewhere near complete ambivalence about other matters.

There is a legal trope that “hard cases make bad law”. If Land Action Scotland was a campaign about an easy case, Cancer Research UK would be the proverbial hard case. CRUK would, apparently, be caught by a broad brush reforming measure that applies to all charities. Is that appropriate?

Arguably it is appropriate. Looking to UK company law, directors are under a whole raft of duties in terms of the Companies Act 2006 (I blogged on this previously, in relation fitba and a Scottish Cup match). Directors must seek to balance the environment, employee interests and the community, even when these might not be completely in alignment. Of course, a duty to “have regard” is short of a duty to engage, but this example does at least show that there are situations where people have to consider a whole variety of things before making a decision. Sure, CRUK will think about the money, money, money when selling an old research site before moving to a new one, or when seeking an assignee of a charity shop lease, but it does not seem horribly onerous to suggest it should, at least, have some concern as to what might be best for the community in making those decisions. That should not put it in a position that is utterly unmanageable.

The Telegraph recently reported on another potential example, in this case involving the RSPB wishing to dispose of land (in England & Wales, in that case, but the organisation also owns land in Scotland). There are many land reform and inheritance law issues that could be explored here, not least in relation to matters not mentioned by the Telegraph, including your testamentary freedom to: a) leave your land to whoever you want (which you can do in Scotland); and b) direct what must be done with that land after your death (which you can do in Scotland, subject to certain restrictions if your directions are unreasonable or overtaken by supervening circumstances).

For the sake of argument, let us imagine the RSPB was also under a duty to engage with the community before selling off the land (at the best possible price, presumably to maximise its ability to protect birds elsewhere in the UK). Would that be a good thing? To fall back on a handy word that should be every law student’s best friend, arguably it would be a good thing. It would certainly give the “angry” residents more involvement in a process that they feel excluded from.

Now for some more hard questions.

  1. What should the engagement entail?
  2. What happens if the community are actually just NIMBYs, can the process be robust enough to flush that out?
  3. What is the sanction for non-engagement?
  4. What happens to a party who has contracted with a charity either in ignorance of the duty of engagement, or after being assured engagement had taken place when it had not?
  5. What happens when Registers of Scotland is asked to register a transfer to such a party?

I could go on, but I will stop there. All I will note by way of conclusion is that law reform, never mind land law reform, is not always easy. This one aspect gave me a lot to think about and others may be able to add to those thoughts. As ever, please feel free to comment below, failing which feel free to contact an MSP near you before the Land Reform Bill passes Stage 3 in the legislative process at Holyrood.

NOTE: in a welcome display of transparancy, the Applecross Trust makes it known that Gillespie Macandrew provides its legal advice. As such, I would not expect anyone working at that firm to raise anything about that particular solicitor/client relationship, nor should this blog be seen as an attempt by me to trigger any specific comment from them about that.

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About basedrones

Bachelor of Laws. Scots lawyer working at the University of Aberdeen. English law qualified. Took far too long to write this bio. Blogs on legal issues, with occasional veering into other purportedly intellectual stuff from time to time. Tweets about legal issues, education, law clinics, fitba, music, rogue cell division and not at all about politics at @MalcolmCombe.
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One Response to Should a trustee of a charity be required to engage with the local community?

  1. Peter Brown says:

    Laing Trust are endeavouring to sell agricultural land adjacent to Blackford Hill in Edinburgh, presumably with a view to the possibility of house building. Naturally there is a certain amount of local resistance to this as the land is currently de facto an extension to the public park. Some kind of social obligation would be an interesting possibility as other uses are feasible for the land (Gorgie City Farm, Braids Tennis Club, local bowling club) Indeed there is even the theoretical possibility of a land swap for building land but in the absence of any incentive or obligation on the Trust presumably they are likely to dispose of the asset to the highest bidder.

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