This section describes the framework for the regulation of exempt charities (as charities, rather than other regulatory oversight to which they may be subject).
Information about how HEFCE works as the principal regulator of HEIs as charities is also available.
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.
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:
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.
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.
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 and other charity regulators in the UK and Ireland have established the Charity Regulator’s Forum. The Forum meets to:
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.
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:
Other principal regulators will be added to this list as they are appointed.
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.
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.
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 will be required to register with the new Charity Commission for Northern Ireland (CCNI). Northern Ireland has no concept of exempt charity. CCNI began its work in spring 2009 and its first main task was a consultation on a public benefit test for charities in Northern Ireland. This revealed a need to amend the legislation – a process that has delayed the registration of charities – probably until late 2012.
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. All but one have completed their registration.
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:
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.