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Circular letter number 16/2005
For further information contact Will Naylor, tel 0117 931 7471, e-mail w.naylor@hefce.ac.uk
Dear Vice-Chancellor or Principal
New support element for charities research income
1. This letter announces the creation of a new support element for charities research income within the Council's block grant for research from 2006-07. It is for information only.
2. Charities are an integral part of the research landscape in English higher education. They provide significant levels of funding for people, projects and infrastructure - altogether some £575 million in 2003-04. The work supported by these grants is of great benefit to the general public and to the national research base. This is reflected in the established convention that research grants paid by charities generally cover only a proportion of the work to be done, with institutions finding the remainder from other funding sources and in particular from HEFCE's quality-related (QR) research funding grant. Over recent years this arrangement has come under some strain as the increasing amount of funding provided by the charities has put more pressure on QR funding to support HEIs' share, especially in medical and science subjects.
3. The HEFCE Board has therefore agreed to introduce a new support element for charities research income within our block grant for research from 2006-07. This implements a commitment made by the Government in its Science and innovation framework 2004-2014.
4. The value of the new element will be £135 million in 2006-07, and £180 million in 2007-08. In each year £90 million of that funding will come from the element within our mainstream QR grant currently driven by charity income. From 2006-07 the Council will therefore cease counting research charity income as one of the minor volume measures in allocating mainstream QR. The Government intends to invest further in the new element in the period 2008-2010 subject to continued progress by the sector towards financial sustainability.
5. Allocations from the new element will be made by reference to the total eligible charity research income awarded to institutions:
- in units of assessment rated 4 or above at the 2001 Research Assessment Exercise (RAE).
- in units of assessment rated 3a and 3b receiving funding for Research Capability.
Allocations will not be weighted to reflect RAE ratings above these thresholds.
6. Three eligibility criteria apply to these allocations:
- Research income which is awarded through open competition, excellence and priority using a method of external peer review.
- Research income which is awarded by a charity registered in the United Kingdom or an overseas body with exclusively charitable purposes, consistent with the definition set out by the Charity Commission for England and Wales.
- In any one year, only the first £500,000 of the annual release from the deferred capital grant account of each capital grant is eligible. This is to avoid unhelpful volatility in allocating the new element. There will be no threshold for recurrent income.
Further guidance on these eligibility criteria is at Annex A.
7. The primary data source for the new element will be the annual Research Activity Survey (RAS) returned by HEIs to HEFCE, which will be revised this year to take account of the criteria outlined above.
8. Starting from the allocations for 2007-08, to be announced in the spring of 2007, we will base allocations on the mean income reported in the two most recent RAS returns. For the allocations for 2006-07 to be announced in 2006 we will use the data from the 2005 RAS only.
9. It is our intention to review the new charities support element within three years.
10. Further information is available on the HEFCE web-site under Research.
Yours sincerely
Sir Howard Newby
Chief Executive
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Annex A - Further guidance on the eligibility of research income from charities for HEFCE support
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