- Exempt charities
- HEFCE as funder and principal regulator
- Principles of good regulation
- Information requirements
- Periodic monitoring of exempt charity HEIs' compliance with charity law
- Investigating concerns about HEIs' compliance with charity law
- Advising HEIs or their professional advisers
- Developing regulatory policy and practice
In terms of their general operations as charities, there is no material difference between exempt and registered charities. Exempt charities must have charitable purposes and apply them for the public benefit. They must comply with the general law of charity. They have trustees (in the higher education sector the trustees are usually the members of the governing body) who are responsible for 'the control and management of the administration' of their charities. They benefit from the same tax advantages as registered charities, and have the same obligations to comply with tax law.
Under the 2011 Act, exempt charities are monitored as charities by a principal regulator. They are also subject to the enabling, investigation and enforcement powers of the Charity Commission, although the Commission may only exercise those powers following consultation with the principal regulator.
Since 1 June 2010 HEFCE has been the principal regulator of HEIs that are exempt charities.
All principal regulators have dual responsibilities as funder and principal regulator. Parliament considered the risk of conflict of interest but concluded it was lower than that of over-regulation. We agree, believing that we accommodate both roles in our work with little risk of a significant conflict.
Most of our dealings with HEIs will be in our role as funder and as regulator of that funding. We will try to make it clear when we are dealing with an HEI as principal charity regulator, or when we need to engage with an HEI in both roles.
Our combined role will apply in the following circumstances:
- cyclical monitoring of HEIs as charities (which will be incorporated into our existing accountability processes)
- financial loss or fraud (where both public funding and charitable assets are involved).
It is also possible that something we are dealing with as, say, the funding body leads to an issue we need to consider as principal regulator.
In our role as principal regulator we will follow the five principles of good regulation: proportionality, accountability, consistency, transparency and targeting. We will therefore act:
- in accordance with public law.
As charity regulator for HEIs, we have undertaken a formal assessment of the impact it is likely to have on the HE sector in terms of regulatory burden, equality and diversity, and sustainable development.
Sector impact assessment: HEFCE as charity regulator
Following consultation in early 2011, we introduced rules intended to ensure clear disclosure by HEIs of information about their charitable status and achievements. Details of these requirements can be found here.
As the main funder of HEIs, during each AAR we review HEIs' financial performance as shown in their annual financial statements. As principal regulator we now also review whether HEIs have adequately reported information about themselves as exempt charities.
We also check that each institution has a 'gateway' page on its own website that is updated by 31 January every year. These gateway pages ensure that information about their governance and financial performance as charities is available to the public.
In the HAR we discuss with senior officials and trustees their awareness of charity law compliance and good practice, and their sources of assurance about this.
There are occasions when we need to investigate concerns about an HEI's compliance with charity law. This may be something we have identified through our own monitoring or something brought to our attention by someone else, including an HEI itself or its external auditors.
Unless the matter is first raised with us by the HEI, we normally write to the accountable officer of the HEI setting out the concern and inviting a response. In all cases, our further actions will depend both on the nature of that response and on the seriousness of the issue. We would hope to be able to resolve the matter through correspondence but may need to arrange for audit or other independent review. It is possible that we will share information with the Charity Commission to ensure that our conclusion is consistent with any similar cases that they have dealt with. We handle the investigation according to our public interest disclosure policy which has been updated to include our work as principal regulator.
In particularly serious cases, we may need to ask the Commission to assist us in the investigation. The Commission has published guidance about its regulatory approach.
In essence, the Commission seeks to agree actions with the charity concerned. If that is not possible, the Commission might decide to open a formal inquiry using its powers under section 46 of the Charities Act 2011. In turn, this might lead to the use of its other powers. The Commission has published guidance on its approach to statutory inquiries.
We have not received additional income to support our work as principal regulator and have limited technical expertise in charity law. But we see it as a proper part of our duty to promote compliance with charity law to try to assist HEIs and their professional advisers.
This section of our website includes information and guidance that we think will be of particular relevance to HEIs and their professional advisers. We also use the mail-group charityreg-hefce to update the sector on new issues. HEIs and their advisers may also email email@example.com or contact Julian Knight, tel 0117 931 7423.
As well as adapting our own processes in the light of experience, we will work with the Charity Commission and other UK charity regulators to develop policy and practice.
We have issued guidance to exempt charities about their responsibilities when undertaking fundraising and have signed a Memorandum of Understanding with the Fundraising Regulator that outlines our respective responsibilities and how we will work together.
Memorandum of understanding with the Fundraising Regulator
If HEIs or their advisers have comments on HEFCE's processes or suggestions to improve charity regulation generally, please contact us at firstname.lastname@example.org.
- Memorandum of assurance and accountability
- The Commission's regulatory approach
- The Commission's guidance on its approach to statutory inquiries