Notes on income from charities for HEFCE-funded HEIs

Notes on research income from charities for all HEFCE-funded HEIs and HEIs in Northern Ireland receiving recurrent funds for research

Version 1.1 Produced 2010-07-30

1. The following notes of guidance are to assist all HEFCE-funded HEIs and HEIs in Northern Ireland (receiving recurrent funds for research) in completing information on research income from charitable foundations and trusts for the following columns on Table 5b:

• UK-based charities (open competitive process)
• EU-based charities (open competitive process)
• Non-EU-based charities (open competitive process).

2. Subject to further checks on data quality, HEFCE intends to switch to using research income from charities collected in the HESA finance statistics return (FSR) to inform the charity support element of its quality-related research (QR) allocations. It is possible that  the 2009-10 HESA FSR will be used to inform the charity support fund for 2012-13, and HEFCE’s Research Activity Survey will not be collected from 2011 onwards.

Eligibility criteria

3. Two main eligibility criteria apply to the income underpinning these allocations:

• Research income which is awarded through open competition, excellence and priority using a method of external peer review.
• Research income which is awarded by a charity registered in the United Kingdom or an overseas body with exclusively charitable purposes.

Open competition and external peer review

4. For income to be treated as awarded through open competition and peer review there needs to be evidence that a particular income stream or grant was available to more than one institution through direct competition within a process where no credible candidate was excluded, and awarded to the institution which demonstrated the highest-quality research proposal according to external peer review. However, grants will also be accepted as complying with open competition and external peer review in circumstances where it can be shown that the charity took external expert advice on its choice of institution to receive a grant, and either:

• The charity had made it known that it was open to grant applications from other HEIs and these would present a competing call on the funds, even though the charity did not issue an open invitation to bid for the particular grant in question.
• The charity restricted the funding opportunity on a reasoned basis that there were particular requirements of the project that could only be met by a limited number of HEIs. This could arise, for example, where a project required highly specialist expertise or facilities, or a specific regional focus.

5. Any long-term grant or funded programme will not be eligible unless it is subject to periodic review involving external expert advice and if it competes with other demands on the charity’s funds, at intervals of no more than five years. Where the initial award of the grant was for a period of longer than five years, the income may be eligible for up to a maximum of seven years after the initial award without periodic review; thereafter it will not continue to be eligible unless subject to periodic reviews at intervals of no more than five years.

Charitable purposes

6. Only research income which is awarded by a charity registered in the UK (these are charities registered with the Charity Commission for England and Wales, Scottish charities registered with the Office of the Scottish Charity Regulator and charities in Northern Ireland recognised as having charitable status by HM Revenue and Customs or registered with the Charity Commission for Northern Ireland) or an overseas body with exclusively charitable purposes, consistent with the definition set out in the Charities Act 2006 and which exists for the public benefit in a manner which is consistent with the Public Benefit Guidance published by the Charity Commission for England and Wales (http://www.charitycommission.gov.uk/Charity_requirements_guidance/Charity_essentials/Public_benefit/default.aspx) is eligible.

7. In practice, determining whether or not each and every grant from an overseas body satisfies this test may be unduly burdensome. It is therefore recommended that institutions begin by identifying whether the awarding body has charitable status in its home jurisdiction. In most cases this will serve as an adequate proxy for the criteria described above. However, institutions should pay close attention to any bodies which seem to be in danger of not satisfying the test of eligibility in England and Wales, either because their objectives appear to be on the margins of the definition described above (for example, groups campaigning for political change) or because they are based in a jurisdiction where the definition of charity may be significantly different to that which prevails in England.

Charity funding derived from government sources

8. The charity support element of HEFCE and DEL(NI) funding is not intended to support research that is already funded from public sources. Where a charity exists to allocate government funds, or where a charity allocates funds which come wholly or mainly from government sources, this income is not eligible.

9. So, income awarded by the Royal Society and British Academy from grants made to them by the UK government to be disbursed on its behalf should be returned under Table 5b column 1h 'DIUS Research Councils (other)'. However, income awarded by these bodies and funded from non-government sources should be returned under 'UK-based charities' (either 'open competitive process' or 'other') where the HEI has received confirmation from the awarding body that the grant or contract was not government funded.

Other factors

10. Where a grant or contract is held across more than one cost centre, its value should be divided in proportion to the number of grant or contract holders.

11. Though HEIs in the UK have charitable status, they should not be regarded as charities here. Likewise, overseas HEIs should also not be regarded as charities. Research income from other UK HEIs should be returned under column 13 'Other sources' in Table 5b. Research income from overseas HEIs should be returned under one of the following columns in Table 5b: column 9 'EU other'; column 12 'Non-EU other'; column 13 'Other sources'.

12. Income awarded through initiatives funded jointly by HEFCE and UK-based charities, such as the Joint Infrastructure Fund, should not attract additional financial support from HEFCE’s charity support element of research funding. HEFCE decides its level of contribution to these initiatives at the time of their establishment, taking sustainability into account. The portion of these grants coming from charities should be returned under Table 5b column 3 ‘UK-based charities (other)’, and not under column 2 'UK-based charities (open competitive process)'.

13. For universities in Northern Ireland, the elements of grants awarded from the Support Programme for University Research that are provided from Atlantic Philanthropies should not be returned under any of the charity columns for grants awarded through an open competitive process.

14. The charities listed below provide very substantial amounts of research funding across a number of HEIs and their grants were found in all HEFCE’s audited cases to have met the eligibility criteria:

• Arthritis Research Campaign
• British Heart Foundation
• Cancer Research UK
• Diabetes UK
• Leukaemia Research Fund
• The Health Foundation
• The Leverhulme Trust
• The Wellcome Trust.

15. HEFCE will seek assurances directly from these charities that their grants in general continue to meet the criteria for open competition and external peer review, and that they will make known any potential exceptions to this. In order to improve the efficiency of administering the charity element of HEFCE research funding and the associated data audits, HEIs should generally regard income from these charities to meet the criteria for open competition and external peer review. Institutions will remain responsible for ensuring that all returned income is eligible.

16. This is not intended to be an exhaustive list of charities whose grants generally meet the criteria of open competition and external peer review, and HEFCE would normally expect that members of the Association of Medical Research Charities would meet these criteria.