Reporting on the delivery of public benefit

Why report on public benefit?

We consider that, beyond their legal obligation to report, HEIs have an opportunity to use their annual operating and financial review (OFR) and/or other narrative reports to demonstrate the many ways that their activities deliver public benefit. Public benefit reporting is an increasingly important aspect of HEIs' transparency and accountability, and will help the public to appreciate what HEIs deliver in return for both public funding and tax exemptions.

What to report

The Charities Act 2011 requires trustees of registered charities, including HEIs, to include in their trustees' annual report:

• a statement that they have had due regard to the Charity Commission's public benefit guidance
• information about how they have delivered their charitable purposes for the public benefit.

The principle that exempt charity HEIs should publish information equivalent to that available about registered charities was supported by 99 per cent of the respondents to our 2010 consultation. That principle applies to public benefit reporting. Use of the existing  Operating and Financial Review (OFR) as the framework for reporting on public benefit received 96 per cent support. We have therefore made this a mandatory requirement, set out in Annex H of the Model Financial Memorandum between HEFCE and institutions.

Where and how much to report

Regard to guidance

HEIs should publish a simple statement to say that their trustees have had regard to the Charity Commission's guidance on public benefit. The Commission has produced a range of publications on the subject, including a number of example reports.

This statement might well appear in the corporate governance section of the financial statements and related reports. Alternatively, it might be included in the OFR or in a separate public benefit section of the financial statements and related reports.

Public benefit delivery

We do not prescribe how institutions integrate their reporting on public benefit delivery with other narrative sections of their audited financial statements. The main options are:

• ensuring the OFR draws out the public benefit aspects of particular activities
• a new section of the narrative to report separately on public benefit.

Institutions use both of these approaches. While either is acceptable, if a separate section is used there is a risk that material is duplicated elsewhere.

Length and detail

We do not specify either a minimum or maximum number of words for public benefit reports. Length will depend on HEIs' individual constitutional objectives, missions, beneficiaries and programmes. HEIs are large charities, and their reports should focus on significant activities carried out for the public benefit. It is for the trustees to judge what is significant.

Content of the report

Although we do not wish to specify the detailed content of public benefit reports, we highlight below some key issues of principle that institutions need to consider. We also draw attention to the 'dos and don’ts' for HEIs included in the report of our review of 2009-10 public benefit reporting (see the link below).

Core and secondary activities

HEIs have diverse strategies and priorities for their work, and different approaches to their delivery of public benefit. But we expect the report to focus on the HEI's core charitable objects of delivering higher education (teaching and research) and to place these in the context of the key principles of public benefit. It is likely that each main strand of activity will provide public benefit to different groups or classes of beneficiary.

Activities that encourage students from non-traditional backgrounds into higher education might be used to show how an HEI has delivered against public benefit principle 2b. Research assessment ratings might be used as evidence of delivery of principle 1. The award of teaching fellowships to academics would reflect external recognition of the HEI’s ability to deliver the core benefit of good higher education.

In contrast, visitors to an HEI's ancient buildings or attendances at on-campus concerts, theatres, galleries or museums do not necessarily reflect activity related to the HEI's core objects as a charity. (Although that might be the case for specialist colleges, or for institutions where drama, music or fine art represent a significant part of the curriculum.) Creditable, desirable and charitable as these activities may be, they are of secondary relevance in terms of public benefit reporting by most HEIs. An HEI may well wish to report on such actions to demonstrate its wider corporate social responsibility but, for charity regulation purposes, they will carry less weight than actions more central to higher education delivery.

Data and performance indicators

There is no requirement for HEIs to provide data to underpin the report, but there may be circumstances where key indicators and/or trend data emphasise the scale and reach of the HEI's activities. It is also helpful to report achievements relative to targets and to indicate areas where improvements are planned. Similarly, it is reasonable to refer to longer reports or analyses available elsewhere and in which detailed data might be presented. But a single sentence referring a reader to a separate report - such as a 'review of the year' - would be inadequate.

Monitoring by HEFCE

We now monitor HEIs' public benefit reports as part of our annual assurance review process (see paragraphs 40 to 44 of the Model Financial Memorandum between HEFCE and institutions). We will report non-compliance in the annual risk and compliance letter that we send to each HEI at the end of the process.

In addition to compliance monitoring, we will review the quality of a sample of HEIs' public benefit reports each year and issue further guidance if required. 

In September 2011, we published the results of a detailed qualitative review of public benefit reporting by all higher education institutions (HEIs) in September 2011. The report of that review is available below. It includes guidance on the scope, content and style of public benefit reports, and a list of 'dos and don'ts' for HEIs to consider when preparing future reports.