Newcastle University

The University’s charitable status: a report to Council 2012-13

Charity status

Newcastle University is an exempt charity under the terms of the Charities Act 2011. The Higher Education Funding Council for England (HEFCE) is the principal regulator for most English higher education institutions and is our principal regulator.

The University has a number of obligations under Charity Law and this report has been prepared to assure Council, who are legally the trustees of the University, of the University’s compliance with these obligations.

Public benefit statement

HEFCE requires HEI to publish an annual statement to say that their trustees have had regard to the Charity Commission's guidance on public benefit. HEFCE’s guidance is that this statement could appear in the corporate governance section of the financial statements and related reports. Alternatively, it could be included in the Operating and Financial Review (OFR) or in a separate public benefit section of the financial statements and related reports.

The required disclosures have been made in a separate public benefit statement in the OFR (pages 8-9).

Transactions with trustees

HEFCE's requires exempt-charity HEIs to include in their audited financial statements 'information about payments to or on behalf of trustees, including expenses; payments to trustees for serving as trustees (and waivers of such payments); and related party transactions involving trustees.' HEFCE consider that these disclosures will enable HEIs' trustees to demonstrate transparency and reduce reputational risk and are consistent with HEFCE’s duty to promote compliance by trustees with their obligations under charity law.

The required disclosures are included in Note 31 of the financial statements.

Serious incidents

HEIs must report serious incidents to HEFCE at the time when they are identified. A serious incident is one which has resulted in, or could result in, a significant loss of funds or a significant risk to a charity's property, work, beneficiaries or reputation.

Executive Board considers no reportable serious incidents occurred during 2012-13.

Connected charities (previously linked charities)

The University is required to consider whether there are any connected charities (as defined by Charities Act 2011, Schedule 3, paragraph 28) and, if so, to disclose them to HEFCE, as principal regulator, and to include appropriate disclosures in its annual accounts. Students’ unions are explicitly excluded from needing to be considered. There is only one potential connected charity which should be considered which is The University of Newcastle upon Tyne Development Trust, registered charity: 528066.

Charity Commission operational guidance indicates two tests which need to be applied:

•Is the charity established for the general purposes of, or for any special purpose of or in connection with, the University?

•Is the charity administered by or on behalf of the University?

and the charity should only be considered a connected charity if both tests are passed.

In the case of the University of Newcastle upon Tyne Development Trust, the first test is probably passed. The Trust’s aim is “To receive and invest donations to support the work of the University” and the beneficiaries are listed as “Newcastle University and its students, through funding for staff and student scholarships; the general public, through funding for certain public lectures and concerts”. However we believe the second test is failed. The Trust manages its own affairs, produces and files its own audited accounts, is separately registered with the Charities Commission and the University only nominates a minority of its trustees. Although the University provides some administrative support, this is on an arm’s length (and fully charged) basis. Investment management is a Trustee responsibility and the University is required to account to the Trust that it has used the funds given for the purpose for which it was intended.

The required disclosure that the University does not have any connected charities is included in Note 31 of the financial statements.

Web information

HEFCE requires the University to publish information about its charitable status similar to that published by the Commission in respect of the charities that it regulates.

The required informationis at

Non primary purpose activity

The University statutes which included define the object of the University as “for the public benefit, to advance education, learning and research”. This is the University’s primary purpose. We are not prohibited from doing activity outside of our primary purpose but this must be a small proportion of the activity relative to that undertaken within primary purpose.

The main mechanism for judging that research is within primary purpose is that publication is not hindered significantly.Under present guidelines from HMRC and the Charity Commission research could potentially be classified as being non-primary purpose where publication is delayed beyond 12 months from the point at which publication could be made.

Research and Enterprise Services considers whether the funding is consistent with our charitable purpose for all externally funded research activity.This is then notified to the Contract Financial Management Team in Finance as part of the set up procedure and recorded in SAP to aid future reporting.

Since August 1st 2012 there have been a total of 715 externally funded projects running in the University of which 11 projects have been recorded as having significant publication restrictions which may have the potential to render the project non-primary purpose. It is not intended to disseminate any results from 4 projects, 5 projects require explicit permission from the funder for publication and 2 projects have a publication restriction of greater than 12 months. Under present guidelines agreed with the Charity Commission and HMRC these would render the activity 'a private good' and therefore likely to be outside of primary purpose. Of those 11 projects, 10 are funded by industrial companies, who have requested the restriction.

On the basis of this analysis the vast majority of externally funded research falls within our charitable aims.

John Hogan

Registrar

September 2013

1