The Children, Schools and Families Bill is due to have its second reading in the House of Commons on 11 January 2010. If the unamended Bill becomes an Act, it will grant Academy Trusts exempt charity status. Vicki Hair examines the current charitable status of Academy Trusts and what the change will mean

What are Academy Trusts?
An Academy Trust is a charitable company limited by guarantee which operates an academy. The Academy Trust is run by a board of governors who set the curriculum and admissions policy, employ the staff, appoint the head teacher etc. Some academies have their own Academy Trust; other academies share an Academy Trust.

What is the current charitable status of Academy Trusts?
The Charity Commission and the DCSF currently consider Academy Trusts ‘registerable’ charities – ie the Academy Trust must apply to the Charity Commission to be registered as a charity and listed on the Commission’s Register of Charities. In fact, according to the academy’s Funding Agreement (the contract between the DCSF and the Academy Trust which guarantees the academy’s funding) the Academy Trust must apply to register with the Charity Commission.

As the board of governors runs the Academy Trust, they are responsible for ensuring that the Academy Trust observes charity law.

But don’t all charities have to register with the Charity Commission?It’s a common misconception that all charities must register with the Charity Commission. Some charities cannot register (known as ‘exempt’ or ‘excepted’ charities) and others could register but do not yet have a large enough income to allow them to (charities have to have a minimum income of £5,000 per annum before they can apply to register). Lots of charities therefore cannot or will never register with the Charity Commission during their lifetimes but still operate as charities.

As Academy Trusts have an income of more than £5,000 per annum and are not exempt or excepted charities, they must register with the Charity Commission.

How does the new Children, Schools and Families Bill change the charitable status of Academy Trusts?
Clause 42 of the Children, Schools and Families Bill states that ‘Academy Proprietors’ will become exempt charities. The definition of academy proprietors is not clear but it appears to mean Academy Trusts. If the unamended Bill is made into an Act, all Academy Trusts will become exempt charities.

What are exempt charities?
Exempt charities are charities which are prevented from registering with the Charity Commission. These charities are already regulated or supervised by or are accountable to another body (known as a principal regulator) and, in order to avoid dual regulation, these charities are not supervised by the Charity Commission as well. It is currently unclear who the principal regulator for Academy Trusts will be but the logical choice would be the DCSF.

As well as not being permitted to register with the Charity Commission, exempt charities are also exempt from other aspects of charity law, such as the restrictions on disposal or mortgaging of land, the need to obtain the Charity Commission’s consent before amending aspects of the charity’s governing document, and so on.

What does this mean for Academy Trusts?
If Academy Trusts become exempt charities, they will no longer have to apply to the Charity Commission to register or seek its permission before undertaking certain activities or amending aspects of the governing document, and they will not have to submit an annual report or a copy of the Academy Trust’s annual accounts to the Commission each year.

Certain aspects of charity law will continue to apply, however, and the duties and responsibilities of the board of governors will remain unchanged. The board will still have a duty to act reasonably, prudently and in the best interests of the Academy Trust at all times. While the change should relieve some administrative burdens for Academy Trusts, practically they are unlikely to notice any practical differences on a day-to-day basis.

This e-bulletin issue was first published in January 2010

About the author: Vicki Hair is a lawyer at Browne Jacobson. To find out more about the legal services Browne Jacobson provides in the education sector and to visit their website, please follow this link