Memorandum from the Colleges of Cambridge
University (DCH 88)
1. The Cambridge Colleges generally welcome
the draft Bill as a fair and balanced attempt to modify charity
law. Their comments on the detail of the Bill are as follows.
2. The definitions of the public confidence
objective ("to increase public trust and confidence in charities"),
in clause 5 of the Bill, and of the compliance objective ("to
increase compliance by charity trustees with their legal obligations
in exercising control and management of the administration of
their charities"), in clauses 5 and 11(3), use the word "increase"
where "maintain" and "promote" would be more
accurate and less tendentious words.
3. The removal, by clause 9(3), of the Cambridge
Colleges from paragraph (b) of Schedule 2 to the Charities Act
1993 would require them to be registered charities and would thus
subject them to the accounting requirements of section 42(1) of
the 1993 Act (as detailed by the Charities (Accounts and Reports)
Regulations 1995 (5,1. 1995, No. 2724) and 2000 (S.I. 2000,
No. 2868)). The form of accounts of the Colleges is prescribed
by University Statute (made under the Universities of Oxford and
Cambridge Act 1923 and having the force of delegated legislation)
which provides for a modem form of accounts adapted to financial
circumstances of the Colleges and in conformity with U.K. Accounting
Standards. The 1993 Act itself recognises (in the case of companies
registered under the Companies Acts) that, where other regulatory
requirements made under statutory powers apply, section 42 should
be displaced. At the very least the Bill should clarify the position
for the Cambridge Colleges.
4. Clause 27 of the Bill (inserting new
sections 73A and 73B into the 1993 Act) provides, by section 73A(7).
that section 73A will not apply to remuneration for services provided
by a person under a contract of employment. The exception should
be extended to apply to remuneration for services performed as
an office-holder, in order to remove doubt in the case of Heads
of Colleges and other office-holders who are not necessarily employed
under a contract of employment.
5. The Colleges are disappointed with the
restricted nature of the power to spend capital contained in the
proposed new section 75A of the 1993 Act, introduced by clause
33 of the draft Bill. What is needed is a comprehensive general
provision to permit charity trustees of whatever sort to adopt
a total return investment policy which defines appropriate safeguards
to protect the real value of the endowments of a charity and,
so far as appropriate, the wishes of donors. The reason for the
exclusion of corporate bodies such as the Cambridge Colleges from
the ambit of the proposed new section 75A is not stated in the
Explanatory Notes to the Bill and is entirely unclear. Moreover,
the Bill might profitably have clarified the current uncertainty
of the power of the Charity Commission to act m that area under
section 26 of the 1993 Act in accordance with their Operation
Guidance 83 "Endowed Charities: A total return approach to
investment" (section 26(5) of the 1993 Act contains an express
prohibition on the authorisation of action prohibited by the trusts
of the charity). And it would be appropriate, in view of the proposal
to require the Cambridge Colleges to become registered charities,
if section 26(6) of the 1993 Act were amended to include the Universities
and College Estates Acts 1925 and 1964 in the list of disabling
Acts there mentioned.
June 2004
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