As at 1 November 2012, the Charities Restricted Funds Re-organisation (Scotland) Regulations 2012 came into effect. Do you know what a restricted fund is and what it means for your charitable organisation?

The Regulations define 'restricted fund' 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?.

Examples as provided by the Office of the Scottish Charity Regulator (OSCR) of such restricted funds are:-

• A charity receiving a sum of money for the purchase of books: the donation is a restricted fund
• A charity holding a?collection to raise funds to buy a stair lift: all funds received as part of this?collection would be restricted to this purchase

Restricted funds, as described in the Regulations, are a common feature in the charities sector. However, many charities currently have assets that effectively cannot be used because the restrictions are outdated or the restriction cannot otherwise be complied with.

Previously, the only way for a charity to reorganise and make changes to restricted funds was by specific application to the courts.

The Regulations will apply where the original donor of the funds is unavailable to consider a request to vary the restriction and will allow charities to apply to OSCR for permission to vary such restrictions.

Applicants must satisfy OSCR that their proposal meets one of the reorganisation conditions and reorganisation outcomes specified in the Regulations.

A restricted funds reorganisation can do either or both of:-

• Change the purpose for which the funds may be used
• Change or remove the conditions imposed on the charity on how it can use the funds

OSCR has issued guidance on the Regulations and application forms. Click here for further information

If you feel this may be something that may be beneficial to your charity please feel free to get in touch with our charities team?for additional information.