THE new version of a Memorandum of Understanding between the Charity Commission for England and Wales and the Department for Education (DfE) is, in the main, good news for church schools, including academies.
All church schools are charities, as are all church-school site trusts. Many clergy, churchwardens, and other members of congregations act as trustees, directors, and governors of these. So I very much welcome the new material provided by the Charity Commission, and the clarifications that it contains.
The section of the Memorandum devoted to the part played by the Commission has been much expanded, and emphasises:
• the fundamentally charitable nature of all educational charities; that they must act “independently of private, governmental or political interests”;
• the independence of the Commission itself from the Government and its ministers; the accountability of all educational charities to the Commission;
• and the limited nature of the position of the Secretary of State as Principal Regulator of those educational charities that are technically “exempt charities”.
ALL of this is good news for site trustees, school governors, and academy directors. It emphasises their autonomy, and their duty to act independently for the good of their charity and its beneficiaries: the schools and their pupils.
The section produced by the Charity Commission now strongly highlights the independence of the charity and, therefore, the duty of the directors/trustees to act in the Trust’s interests, even if they conflict with the views and requirements of the Secretary of State.
A practical example of this in recent times has been the clear advice from the Charity Commission that site trustees should not voluntarily accept publicly funded land status for their property as a condition of funding for capital expenditure. In consequence, this requirement was withdrawn by the Government.
The Memorandum states that charities must be “independent from the state”; it cannot, therefore, be a proper use of private charitable funds to support the ordinary revenue requirements of an academy, or to wholly fund capital works that would normally be subject to state grant.
The DfE part of the Memorandum has also been substantially revised — along with much material in the appendices — but it remains disappointing, overall. I have long felt that there was a confusion within the minds of ministers and some officials about the distinction between the powers that the Secretary of State has as Principal Regulator of educational “exempt charities”, her powers under various other statutory provisions in the Education Acts, and the rights that she has in consequence of the contracts she enters into with academy trust companies (the Funding Agreements).
These are, in my view, very much separate, but I see their confusion continuing in the DfE section of this Memorandum.
THE Memorandum is also disappointing because it fails to address three main issues about academies which urgently need clarification. First, how do charity law and educational law (and, indeed, the DfE’s policies) fit together? For example, the requirements in the Academies Financial Handbook in respect of dealing with “connected parties” (for example, paying trustees or their companies for professional services or supplies that they might provide) go beyond those required by the Charities Act.
Why is there this difference, and what justification does the Secretary of State have for refusing to academy directors what the Charities Act gives to all other charity trustees? Also, some sections of the current academy-model articles are contrary to Charity Commission guidance, but have not yet been corrected.
In matters such as this, the Charity Commission and the DfE must agree on what good governance looks like so that they do not add to the burdens of the school governor or the director of the academy trust company.
Second, is it still felt appropriate and effective for academy trust companies to be companies under the Companies Act contracted to the Secretary of State and at the same time exempt charities regulated by the Secretary of State? There are, I believe, tensions and potentially serious conflicts of interest here that need addressing.
And, third, what is the fundamental position of academies (and other educational bodies) that are subject to both the Charities Act and to detailed contracts with the Secretary of State, and therefore to statutory and extra-statutory requirements that enable the Secretary of State to have significant controls over what are supposed to be independent charities?
Are education exempt charities funded by the state actually able to behave in an independent way in the interests of their charity, as the Commission’s part of the Memorandum requires. Or is the whole system fundamentally flawed?
Howard Dellar is a partner in, and head of, the Education, Ecclesiastical and Charities Department at Lee Bolton Monier-Williams. He writes in a personal capacity.