Despite being codified as charities as early as the 16th century, a lot has changed for universities and the world in which they are situated. And it’s worth asking whether the identity of a charity is one that still holds relevance for the higher education sector.
There will be those who feel that the scandals the wider charity sector has grappled with in recent years – with the high profile cases of Oxfam, Save the Children, and Kids Company – put it worlds apart from higher education. But dig a little deeper and we find that universities continue to have more in common with conventional charities than not. Dig even further and one realises that there are important lessons to be learned for university governors from the trials and tribulations faced by their charity counterparts.
Both conventional charities and universities face a crisis of confidence. Research highlights that trust in charities is the lowest in over a decade – a figure that remains unchanged since 2016. And while no comparative studies exist for universities, public scrutiny over vice chancellor remuneration and about bullying and harassment within institutions provides an instructive parallel.
Overhaul of regulation
A 2016 inquiry following the Kids Company scandal concluded that “no system of regulation can substitute effective governance by trustees”, and went so far as to say that, “trustees were either incompetent or wilfully blind to what was being done in their names.” At the time, the Charity Commission as the sector’s regulator also came under fire for being slow to act on these issues.
A change in leadership with a new CEO and Chair and new legal powers from government through the Charities Act 2016 saw the commission respond with a number of measures in quick succession, including the development of a stricter charity governance code. This code is a non-binding framework for how governing bodies of charities ought to behave and outlines recommended practices on matters such as receiving gifts, and benchmarking performance.
The revised Charities Act affords the commission explicit powers to suspend or remove a trustee for a variety of reasons – ranging from the trustee having been previously made bankrupt through to if they have been absent or if their failure to act “impedes the proper administration of the charity.” The Act also allows the commission to appoint interim officers in the case of trustees being removed on the grounds of protecting the charity.
The commission regularly publishes when it enforces these powers, including for example, with the recent case of Worldwide Ummah Aid, a charity which operates to relieve poverty in Eastern Europe and the Middle East. Following evidence of misconduct in the charity’s administration by the trustees, the commission took steps to remove two of the trustees. It has also very recently handed down its long awaited statutory inquiry into Oxfam’s handling of events in Haiti – issuing the charity with an official warning which will stay on its corporate record – and characterising its governance and leadership as failing to safeguard vulnerable people.
In its most recent annual report of the dealing with wrongdoing and harm, the commission documents that it opened 552 new safeguarding cases in 2017-18, compared to 302 in 2016-17 and 163 in 2015/16. In total, the number of serious incidents by charities the commission dealt with in 2017-18 was at 2,819 reports, up from 2,181 during the previous year. The report demonstrates that the commission is dealing with more cases of serious incidents than ever before and is holding to account the charities where governing bodies have fallen short of expected standards. But what it also highlights is an increasing willingness by charities to be transparent with the regulator in the moments where things go wrong. After all, one of the primary criticisms of the Oxfam safeguarding scandal was its failure to report to the regulator in a timely way.
Leading from within
Parallel to the regulatory reforms, the charity sector as a collective has also stepped up in a significant way. They came together to self initiate a review of fundraising self-regulation and commissioned research on the breakdown in public trust of charities. Both activities were subsequently endorsed enthusiastically by the commission. These initiatives also serve as publicly visible commitments of charitable organisations valuing good governance as a business imperative and demonstrate an aspiration to go beyond a baseline compliance approach.
Muddy waters in higher education
Meanwhile in higher education, the controversies of De Montfort University and Swansea University among other examples in recent years have passed by with little explanation (so far) from OfS or HEFCW about whether there was evidence of governor misconduct and actions taken to remedy.
In England there is no direct reference to the role and duties of university governing bodies in the Higher Education and Research Act (HERA) 2017. However, it should be pointed out that institutions that are charities are governed by the Charities Act. As a consequence, the Charity Commission does have powers to investigate governance mismanagement if the Office for Students or HEFCW, as the sector’s principal regulators in England and Wales, request an investigation. The point still remains though that the Office for Students (so far) and HEFCE previously have been far less public and open about investigating governance misconduct than the Charity Commission appears to be. In England where the responsibility of the Office for Students stops and the Charity Commission kicks in is another grey area clarified in the new MOU from the bodies (the HEFCW and Charity Commission MOU was agreed back in 2011).
Further, though HERA references the Office for Students’ Regulatory Framework – which details broad principles of the regulator’s expectations of governing bodies – it may be time to explicitly set out responsibilities and outcomes to be achieved by governors and consequences for failing to do so. Similar to the aforementioned Charity Governance Code, the non-binding Higher Education Code of Governance that is developed by the Committee of University Chairs does this to some effect, but could go so much further.
By not codifying more clearly what is expected of university governing bodies they have both become everything and nothing. There is a delicate art between holding the executive to account and empowering them to run the organisation with a clear strategy. Recent examples suggests that for some institutions these bodies have become a rubber stamp for decisions made by the executive, forgoing their critical “check and balance” function. In other cases they play a role that is perceived as far too operational, verging on competing with management. The consequences for when their roles are not discharged appropriately also remain ill defined and not well understood.
This is not to say that these issues aren’t still present in the charity sector. But where there is a spotlight on these matters in the charity sector, the volume is dialled right down in higher education. The clearest example of this is the intense scrutiny faced by the chairs of charity governing boards during times of controversy. They are the first in the firing line. Meanwhile, their university counterparts are nearly always invisible leading some to ask the question: “have university boards fallen asleep at the wheel?”
Limits to the analogy
There is also the need to answer the question of what makes higher education distinct from charities and here it is important to consider the purpose of academic governance, and the impact of the market.
The legal framework of university statutes and the decision making bodies of academic senates are distinctive to universities. The combination of these instruments play a critical role in matters such as academic freedom, academic and research misconduct, awarding of degrees, and in preserving institutional autonomy. Akin to governing boards, academic senates also hold the executive accountable in ensuring that the development of new courses, policies and revenue streams don’t compromise academic integrity.
The uncapping of student numbers, the increasing focus on internationalisation, and the commercialisation of research activities have reshaped the profile and drivers of a modern university. They are playing a business game, which is also reflected in who makes up the corporate governance of a university with a growing emphasis on attracting individuals from the worlds of business and banking. This in and of itself is not a concern. However, how these forces may shift the motivations and behaviour of what’s important to a university is also worth further grappling with.
Where to next
In looking to the future of the charity sector, the Chair of the Charity Commission, Tina Stowell recently said: “there is no premium, in terms of public trust, on being a charity,” and points to new evidence of the growing gap between the public expectations of charity and the behaviours the public observes in some charities as institutions on the other. In particular, she highlights when those running charities – namely its governors and senior leaders – do not acknowledge when things go wrong, they “betray the meaning of charity.” These words should also carry weight for the higher education sector albeit with some caution. I’d argue that some expectations are well meaning but uninformed, making it all the more important to engage regularly with constituencies on matters of governance.
It is no longer enough for leaders and governing boards in universities to prosecute noble aims. They need to practice this behaviour in all the things they do, the decisions they make and ensure they always act in the public interest. A culture of increased scrutiny of a governing body’s decisions, particularly in relation to commercial activities and executive remuneration can only strengthen the trust that is placed in the sector. Sector agencies including Universities UK and the Committee of University Chairs have a critical role to play in not only building the governance capability of the sector and those that govern within it, but in communicating outwardly about the responsibilities of these groups. Most especially, governing bodies need to face serious consequences for wrongdoing by the regulator. Measures that go beyond “paper-tiger” memos, and that require these leaders of institutions to provide frank and honest explanations to the people they exist to serve.
With thanks to Smita Jamdar, Partner, Higher Education, Shakespeare-Martineau, Dan Francis, Lead Consultant, National Council of Voluntary Organisations, Michael Shattock & Aniko Horvath, UCL Institute of Education