Charity Commission questions proposal to allow universities to change their legal status

Watchdog seeks clarification on whether white paper from Department for Business, Innovation and Skills means universities could stop being charities

Higher education institutions
Higher education institutions

The Charity Commission has voiced concerns over a government white paper that appears to raise the possibility of allowing universities to stop being charities.

The Students at the Heart of the System white paper, published by the Department for Business, Innovation and Skills in June, says the department will consider whether to make legal changes that would make it easier for higher education institutions to "convert to a legal status of their choosing – for example, to make it easier for them to attract private investment". Most higher education institutions are either registered charities or exempt charities.

The document says: "We would ensure that, as the assets of a university have been acquired over time, partly as a result of direct public funding, the wider public interest will be protected in any such change of status."

It does not make it clear whether these changes would include allowing universities to adopt a non-charitable legal form, but a Charity Commission spokeswoman said the regulator wanted to make sure this did not happen.

The commission’s spokeswoman said: "We will be seeking clarification from BIS as to whether the white paper is proposing that higher education institutions may stop being charities or whether it is proposing to allow them to change constitutional form – for example, from charter body to higher education corporation.

"A charity’s assets are charitable and must remain so. For example, if a charity closes, any remaining assets have to be applied for charitable purposes and cannot be given to a non-charitable organisation.

"We are not aware of any reasons why higher education institutions might need to stop being charities in order to attract independent funding, which they are already successfully doing."

She said the commission would raise the concerns in its response to the BIS white paper.

A BIS spokeswoman said the department would consider the consultation responses and would publish its response to these within three months. She said she was unable to comment further.

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