Table of contents
The Charity Commission
The Charities Act 2011 (2011 Act) created the Charity Commission for England and Wales as a corporate body. It is a non-Ministerial Government Department and part of the Civil Service.
By law, the Commission is independent of Ministerial influence. The 2011 Act underlines this by stating:
‘in the exercise of its functions, the Commission shall not be subject to the direction or control of any Minister of the Crown or other Government Department’.
The Commission is also independent from the sector it regulates. It has some powers similar to those of the High Court. Its decisions may be the subject of appeal to the Charity Tribunal, a new body established by the Charities Act 2006.
Objectives, functions and duties
The 2011 Act sets out the Commission’s five objectives, six general functions and six general duties.
Of the objectives, the compliance objective is of most direct interest to the higher education sector because it is also that of principal regulators. It is:
'to promote compliance by charity trustees with their legal obligations in exercising control and management of the administration of their charities.'
Of the general functions, those of particular interest to the higher education sector are:
- encouraging and facilitating the better administration of charities
- identifying and investigating apparent misconduct or mismanagement in the administration of charities and taking remedial or protective action.
The first of these mirrors HEFCE’s existing interest in the effectiveness and development of leadership, governance and management of higher education institutions. The second is an important, but occasional, element in the joint working of HEFCE and the Commission.
Powers of the Charity Commission
The Commission has many statutory powers to enable it to carry out its work. With effect from 1 June 2010 most of those powers were extended to exempt charities. Section 28 of the 2011 Act requires the Commission to consult a charity's principal regulator before exercising any of its powers in relation to an exempt charity.
Summary of the Commission's powers
Principles of regulation
The Commission has set out and seeks to follow seven principles of regulation. Principal regulators will also have regard to these principles, although they may be tailored to ensure compatibility with existing ways of working with the charities in their sector.
The seven principles are summarised below:
The Commission is accountable to Parliament and to people or charities affected by Commission decisions.
Although it will work in partnership with charities, Government and other bodies, the Commission will arrive at its own decisions.
Actions will be proportionate to the issue and to the risk of harm involved, and will take account of the capacity of an organisation to change.
The Commission will follow the rules of natural justice and act with impartiality, fairness and honesty.
Decisions or actions will be accurate and consistent with the law, published policies and previous decisions.
- Diversity and equality
The Commission will work to promote diversity and equality both internally and in its dealings with charities.
The Commission will use plain language, publish the criteria for decision-making, set out its expectations of good practice by charities, and draw attention to appeal processes.
Work with other regulators
The Commission and other charity regulators in the UK and Ireland have established the Charity Regulator’s Forum. The Forum meets to:
- encourage co-ordination of, and consistency in, regulatory approaches in the UK and Ireland, accepting that regulators work within different legislative frameworks
- share information and best practice on charity regulation
- encourage effective working relationships between the devolved administrations responsible for the regulation of charities.
The Commission expects to agree a memorandum of understanding (MoU) with each of the designated principal regulators. It has already done so with HEFCE. The MoUs will describe how the Commission and principal regulators will work together; they will take account of existing processes and powers available to each regulator, and will be subject to periodic review.
MoU between the Commission and HEFCE
Section 25 of the Charities Act 2011 enables the Minister of State at the Office for Civil Society to prescribe 'principal regulators' for exempt charities. Principal regulators are likely to be existing bodies or government departments that already oversee a number of exempt charities.
Principal regulators already appointed are:
- HEFCE, responsible for regulating most English higher education institutions (HEIs)
- Secretary of State for Culture, Media and Sport, responsible for regulating certain museums and galleries and the British Library
- Secretary of State for the Environment, Food and Rural Affairs, responsible for regulating Royal Botanic Gardens, Kew.
- Secretary of State for Education, responsible for regulating academy trusts; foundation, voluntary and foundation special schools in England; sixth form college corporations
Other principal regulators will be added to this list as they are appointed.
Duty and objective
Principal regulators must do all they reasonably can to meet the compliance objective in relation to charities within their remit.
The compliance objective is:
'to promote compliance by charity trustees with their legal obligations in exercising control and management of the administration of the charity.'
Principal regulators do not have any of the other objectives of the Charity Commission.
Higher education institutions
Since 1 June 2010 HEFCE has been the principal regulator of 112 English HEIs that are exempt charities, and which we also fund either directly or ‘indirectly’. We are also the regulator of charities connected to exempt charities under the terms of Schedule 3, paragraph 28 of the Charities Act 2011.
In future other HEIs – which are currently registered charities – may become exempt charities within HEFCE's remit. Until then, they will be regulated as charities by the Charity Commission.
Arrangements in Scotland, Wales and Northern Ireland
The arrangements for the regulation of higher education institutions (HEIs) as charities in Scotland, Wales and Northern Ireland are set out below.
The Charities and Trustee Investment (Scotland) Act 2005 (2005 Act) has been in force for some time. All charities that operate (that is, have property interests and employ staff) in Scotland are required to register with the Office of the Scottish Charity Regulator (OSCR). This includes a small number of English exempt charity HEIs. There is no concept of an exempt charity.
OSCR and the Scottish Funding Council (SFC) have agreed a policy statement on working together. It covers the exchange of information and some limited joint working in the event of complaints about an HEI that might fall within the purview of either body. Scottish HEIs are required to submit annual returns to OSCR in addition to the information they provide to the SFC.
Unlike the legislation in England and Wales, the definition of public benefit is contained in the 2005 Act. OSCR included one university in the sample of charities selected to pilot its 'rolling review' of charities' public benefit delivery.
The Charities Act (Northern Ireland) 2008 received royal assent in September that year. All charities in Northern Ireland are required to register with the Charity Commission for Northern Ireland (CCNI). Northern Ireland has no concept of an exempt charity. CCNI began its work in spring 2009 and is managing the registration of charities in stages. The registration process began in December 2013.
Charities in Wales are subject to the same legislation and case law as those in England.
The Welsh Assembly Government decided that the HEIs in Wales that were exempt charities should register with, and be regulated (as charities) by, the Charity Commission.
Public benefit obligations are the same as for English HEIs, including reporting requirements.
The Charities Act 2006 created the Charity Tribunal as a new body intended to simplify the process of appealing against decisions of the Charity Commission. It forms part of the Tribunals Service, a government agency that provides a unified administration for the tribunals system.
The Charity Tribunal has powers to:
- hear appeals against decisions of the Charity Commission made since 18 March 2008
- hear applications for review of decisions of the Charity Commission
- consider references from the Attorney General or the Charity Commission on points of law.
Broadly speaking, appeals can be made by: the trustees, the charity itself (if it has a corporate form) and / or anyone affected by the decision. The Tribunals Service publication ‘Charity Reviews, Appeals and References’ tabulates the types of decision about which there can be an appeal, and the people who can appeal against each type of decision.
- Charity law and regulation (Office for Civil Society)
- About the Charity Commission
- The Charity Commission's regulatory approach
- More about HEFCE’s role, powers and processes as principal regulator
- Statutory Inquiries into Charities: Guidance for charities
- Results of the Commission's compliance work
- Office of the Scottish Charity Regulator
- Charity Commission For Northern Ireland
- The Charity Tribunal
- Charity Reviews, Appeals and References (Adobe PDF)