Four considerations for Scottish charities in 2026

Scottish charities enter 2026 facing a number of challenges including financial pressures, heightened regulatory expectations and an evolving investment landscape. Against this backdrop trustees must be proactive in addressing these matters. Below are four key considerations relevant for those involved in the sector.

1. OSCR’s new transparency rules: trustee details made public

Since 30 June 2025, all Scottish charities are required to submit full trustee details (including name, address, email, telephone and date of birth) through the Scottish charity regulator, OSCR.

Importantly from early 2026, OSCR will publish the first and last names of all trustees on the Scottish Charity Register and will begin publishing full annual reports without redaction. This marks a shift from previous practice, where personal details were removed. 

An exemption process will be available for trustees in special circumstances, but only on application via OSCR. Trustee boards should prepare for increased personal transparency and be mindful of greater disclosure in annual reports. 

2. Inflation: operational pressures and the case for investing idle cash. 

Whilst inflation has moderated in the UK from the extreme highs of 2022/23, it remains a significant concern for charities. Inflation continues to stretch resources for organisations by making funding environments more competitive and increasing operational costs, forcing charities to do more with less. 

Inflation also erodes the real value of reserves held in cash. Persistent inflation over the past five years means that £100 held in a bank account in the UK over that timeframe would have its purchasing power eroded in real terms to the value of £88.71 today – even if it had attracted annual interest at 2% for the entire period. Analysis conducted by Broadstone using data from the charities commission shows that charities held over £31 billion in cash in 2024. 

Charities with substantial excess cash should consider strategies for managing their reserves, potentially considering whether a portion of their funds could be invested to preserve the long-term purchasing power of their assets. 

3. Responsible investment and the new SORP 2026: increased reporting expectations

The charities Statement of Recommended Practice (SORP) published on 31 October 2025 provided detailed guidance on requirements for UK charities preparing their annual reports. 

For charities holding investment portfolios, the guidance included specific recommendations on consideration of responsible investment:

“Where the charity holds material financial investments, the report must explain the policies adopted by the charity trustees for the selection, retention and realisation of investments including the extent (if any) to which it takes social, environmental or ethical considerations into account.” 

Trustees overseeing investment portfolios may wish to ensure their portfolios align with the purpose of the charity and their beneficiaries. They may wish to do this through updating their investment policy statement, although this isn’t a formal OSCR requirement.

4. Total return approach to investing: relevant in an era of share buybacks

Charities with investment portfolios have traditionally relied only on the income from their investments. Often in the form of dividends and interest to payout to beneficiaries or spend on projects each year. In the case of endowments, this may be codified in the charity trust deed which may prevent a charity from drawing upon its invested capital. 

Recently many companies have been favouring share buybacks – instead of dividends – as a means of returning capital to shareholders. Share buybacks are where the company buys back its own shares from the open market, reducing the number of shares available, which can increase the value of the remaining shares in circulation. 

The value of dividends paid out by FTSE100 companies grew steadily throughout the 2010s but has remained roughly flat since the pandemic with many companies instead opting for share buybacks. Data from the FCA's review into share buybacks in the UK highlighted this trend. Buybacks represented 20% of the capital returned to shareholders by FTSE 350 issuers in the 3 years before COVID of 2017-2019. For the 2022-2024 period, 42% of the capital returned to FTSE 350 shareholders was via buybacks. In 2024, FTSE 350 companies brought back a whopping £109bn of shares.

Trustees relying on income only strategies may find this restrictive, and adopting a total return approach, of combining investment income and capital gains, may provide greater flexibility and better align charities’ investments to funding their long term aims and objectives.