New MoU for the Charity Commission & DfE
A new Memorandum of Understanding (MoU) has been entered into between the Charity Commission and the Department for Education (DfE). Many education providers are exempt charities - meaning that they have charitable status and are required to comply with most aspects of charity law, but are not required to register with the Charity Commission. Exempt charities are therefore subject to reduced regulation by the Commission and have principal regulators appointed to oversee their compliance with charity law.
The MoU covers the relationship between the Charity Commission and the DfE in respect of the DfE's role as principal regulator for the governing bodies of foundation and voluntary schools, academy trusts, sixth form colleges, further education corporations as well as their relevant associated charities.
The new MoU seeks to create a structure to enable the DfE to work more effectively with the Charity Commission and to ultimately increase public trust and confidence in the system. As principal regulator, the DfE must take every reasonable step to ensure charity trustees (e.g. governors) are compliant with charity law in managing the administration of the charity. The MoU is intended to cover the full range of the DfE's regulatory interest in charities carrying out educational activities.
In addition to the DfE retaining its own regulatory powers, if the DfE identifies a concern about an educational charity it may invite the Charity Commission to use its powers of investigation and intervention under the Charities Act 2011. The Charity Commission can then use any of its regulatory powers including power to open a statutory enquiry or indicate that those powers may be required at some stage during the conduct of a case. Where either the Charity Commission or the DfE identifies potentially serious concerns about the administration of a relevant exempt charity, it will notify the other in writing as soon as possible, setting out any charity law issues it has identified.
The Charity Commission may also intervene where it identifies a significant and urgent risk to an educational charity's property, beneficiaries and/or representation, but must consult the DfE before exercising its regulatory powers. All charities, including exempt charities can also ask the Charity Commission to exercise its support powers such as seeking its advice on charity law issues. This will not however authorise a relevant exempt charity to act contrary to education legislation.
Separately, the DfE may also exercise statutory powers in other areas to take action which impacts on the operation of charities for which it is not the principal regulator. For example, the intervention power in section 56A of the Further and Higher Education Act 1992 covers designated institutions, which are currently all registered charities.
Furthermore, as a regulatory authority for independent schools in England, the DfE is legally obliged to prescribe standards, made under section 94 of the Education and Skills Act 2008 with which independent schools must comply. The DfE may work with the Charity Commission if it has any concerns relating to an independent school that is a charity and which is failing to comply with any of the Independent School Standards. The DfE has committed to keep the Charity Commission informed of any regulatory or enforcement action which is being taken against a school which is a charity and that is not meeting the Independent School Standards, so that the Charity Commission can consider the implications of that for assessing compliance with charity law. The Charity Commission also has powers to remove trustees, officers, agents or employees, and disqualify trustees, which the DfE does not.
The MoU affirms the DfE's commitment to promoting good governance and ensuring that exempt charities providing education observe best practice and charity law requirements. This is in part to try to help avoid damaging news stories (e.g. about mismanagement of conflicts of interest and excessive rates of pay for executives) which can discredit education providers and destroy public confidence in the Government's education policy. Good governance is at the core of successful education providers and trustee/governor training is essential to ensure that those occupying such roles understand their legal duties and responsibilities and how to effectively discharge these.
This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.