Decisions decisions - what does recent OfS regulatory activity mean for university decision-making?

While the OfS has reminded universities about complying with constitutional requirements around who takes decisions under delegated authority, the other half of the equation is how decisions are made, whether by governing bodies or under delegated authority. Here we look at recently updated guidance from the Charity Commission, which serves as an important reminder of the relevance of charity law duties and provides a helpful framework for good decision-making. We also consider some practical steps to ensure decision-making processes align with legal and regulatory responsibilities.  

Compliance with delegation arrangements  

The OfS has issued the following reminder to providers in its regulatory case report about ensuring decisions are taken in accordance with governing documents dealing with delegation arrangements and by those with appropriate delegated authority:

"Decisions at higher education providers should be taken at the appropriate level by appropriate individuals or groups. When decisions are made by individuals or groups not identified by the university as appropriate to make those decisions, there is a risk that this may lead to decision-making of a degraded quality. For example, decisions may be made without sufficient scrutiny, expertise or knowledge of the matters at hand. As a result, decisions may not be made in the best interests of students and staff, or in accordance with the university’s legal and regulatory obligations. This may include decisions that affect important matters, such as freedom of speech and academic freedom".

The case report also gives an interesting insight into the regulator's approach to questions of governance, specifically compliance with Condition of Registration E2: Management and governance. In looking at compliance with E2(i) (the provider must have in place adequate and effective management and governance arrangements to operate in accordance with its governing documents):

• The clear focus was on the university's compliance with its own framework for decision-making, with no wider commentary on the relevance of any of the range of behaviours which the Regulatory Framework lists as being indicative of compliance with condition E2, including in particular whether delegations were appropriate. 
• While noting the risk that non-compliance with delegations could have for decision-making, it is not clear from the report whether there was in fact any impact on the quality of the decision making processes undertaken (or indeed how the OfS might assess this). 

Charity law duties 

Decision-making by universities is underpinned by charity law duties which apply to decisions taken at the top of the institution by a university's council, governors or board of trustees. By extension, any decisions taken by committees and executive boards under delegated authority must reflect and support compliance with trustees' charity law duties. 

These include the duty to act prudently in the management of the charity's resources; to safeguard the charity's assets and manage risk; and most fundamentally to act in the best interests of the charity - or more precisely, in a university context, in the best interests of furthering the university's charitable education and research objects. 
Unpicking what that 'best interests' duty actually means in the context of some decisions is not easy (Mary Synge's excellent 2023 book The University-Charity devotes a whole chapter to it and no attempt is made to address it here). However, based on some specific Charity Commission guidance, the question might be posed as "What do trustees reasonably believe will best enable the university to carry out its education and research objects for the public benefit?"

The key point, we would suggest, is that university decision-making - including the papers and resolutions which support and record it - should expressly recognise the institution's charitable status. For some particularly key or high risk decisions, this might actually involve articulating approvals by reference to charity law duties.

Charity Commission guidance

The Charity Commission publishes guidance on decision-making, which provides a useful framework around which to structure decision-making and the papers and resolutions which support and document it.

This guidance was updated in September 2024 as part of a programme to make Commission guidance more accessible and easier to use. Whilst the guidance is now much shorter (a worthwhile 12-minute read), it retains the 7 decision-making principles developed by the Courts for reviewing decisions of trustees. These are that trustees must:

• act within their powers
• act in good faith
• be sufficiently informed
• take account of all relevant factors
• identify and disregard irrelevant factors
• manage conflicts of interest
• ensure their decision is within the range of decisions that a reasonable trustee body could make. 

The guidance also includes new or valuable messages based on the Commission's experience. While much of this is aimed at smaller registered charities, the key principles are universally relevant. These include:

• collective responsibility and what to do when trustees disagree;
• recording decisions including a level of detail in proportion to the nature, significance or impact of the decision
• basic principles for delegation, terms of reference, reporting procedures
• giving advisers all the information they need to advise
• consulting stakeholders on important decisions especially ones that will affect them
• regularly reviewing decisions with long-term effects; and
• a reminder of the duty to have regard to the Commission's public benefit guidance where relevant to a decision.  

Compliant decision-making - practical reminders

The Sussex case raises ongoing questions around the scope of a university's "governing documents" and the OfS's jurisdiction to find a failure to comply with internal delegation arrangements. However, if there is one practical take-away from the case report in governance terms it is to ensure that decision-making is in fact carried out in line with constitutional requirements. As the CUC Higher Education Code of Governance notes, governing bodies need assurance around the university's compliance with its governing documents so consider what form those assurances take and whether current assurances are adequate.

In addition: 

• Generally ensure that powers of delegation in governing documents, schemes of delegation and committee / board terms of reference are fit for purpose. Do procedures reflect the compliant behaviours set out in the OfS's Regulatory Framework against condition E2? Are delegated authorities clear and drafted within parameters specifying when a decision needs to be referred upwards?
• Clearly identify the roles of different committees in decision-making on key projects - early mapping of the decision-making pathway will help with identifying at what level key decisions will need to be taken and where additional delegations are required. 
• Plan ahead for what professional advice (internal or external) decision-making bodies will need to have. 
• Ensure trustee codes of conduct and board procedures are up to date and support good decision-making by reflecting charity law principles and those set out in the CUC Governance Code. These include: (i) management of conflicts of interest; (ii) maintenance of confidentiality; (iii) ensuring that decision-making processes are free of any undue pressures from external interest groups; and (iv) requiring trustees to abide by the principle of collective responsibility if they disagree with decisions. 
• Carry out 'stress testing' of project scenarios against OfS conditions of registration at an early stage in the decision-making process to make sure any reporting obligations triggered by decisions are identified in time to meet the OfS's tight reporting deadlines. 
• Ensure that decisions taken under delegated authority support compliance with trustee charity law duties as well as decisions taken by governing bodies themselves.

This article is part of a series looking at the practical implications for universities and their operations of having charitable status. Charity law can impact on a wide range of university projects, activities and decisions in ways that are not always obvious and sometimes overlooked.

Drawing on our own experience of supporting universities with charity law and governance aspects of key strategic projects, income diversification and trading, research and innovation, spin-outs, investment, fundraising and much more, our aim is to prompt the question 'Do we need to be thinking about charity law here?' 

For more information, please contact Rachel Tonkin in our Higher Education team at 0117 314 5397.