This is a barely formatted copy and paste of my recent essay for my course.
The Snakebite Foundation? The Charities Act 2006 and Student Unions
Student Unions have had an image problem for a long time. In the early half of the century they were seen as the toys of the sons of the establishment, whilst by the seventies and eighties they were seen as ‘infested’ with communists, and synonymous with protests, sit-ins, and strikes. More recently they have been associated with irresponsible drinking and criminal damage rather than political activism, so although there would seem to be a lack of charitable activity, Student Unions have always operated as Charities.. Until the Charities Act 2006, the governance and operation of student unions had changed little since their foundation, with King’s College London Students Union (KCLSU) being the notable exception, and had been left to the respective institutions to regulate, a position reinforced by the 1994 Education Act.
KCLSU was the first union to try to adapt itself to the new regulation brought in by the Charities Act, and has sought to be in the vanguard of reform, but just before the Act is due to come into full effect, it can be argued that the new model used is not fit for purpose. Is this because student unions are a special type of charity that the drafters of the legislation did not have in mind?
New Policy Formation: Why a new Charities Act?
If it is a principle that Justice must not only be done, but it must be seen to be done, then the same is also true of politics. The first Charities Bill was introduced in 2005, and had gone through a second reading, but fell when the general election was called. Seeing as the passage of the original Bill had largely been completed, the Labour party felt confident to include a pledge to “reintroduce the widely supported reforms”, and to announce the reintroduction of the Bill “to develop a vibrant, diverse and independent charitable sector” in the 2005 Queen’s Speech. The assured quick passage of the Bill allowed politics to be seen to be done as well as a manifesto pledge delivered, but were there other reasons for this new policy on charities to come about?
Using the policy typology formulated by Lowi (1972) to classify the Charities Act 2006 (CA) shows it has both elements of a regulatory policy (in that it introduced new regulation and changed existing regulation) , and a constituent policy (in that it established a new body, the Charities Tribunal). This typography closely matches an earlier Act of Parliament which may give clues as to genesis of the CA.
It can be argued that the Financial Services and Markets Act 2000 (FSMA) introduced not just a new paradigm of regulation to the financial markets , but a new paradigm to regulation in general. The Cabinet office document, Modernising Government, set out to be the key document for ‘the Government’s programme of renewal and reform’4 and set as one of the key goals ‘a new drive to remove unnecessary regulation’, as well as professing a need for the adoption of a new way of thinking about regulation. This new paradigm was crystallised in the FSMA and in the “Principles of good regulation” as laid out by the Financial Services Authority, the new regulator created by the Act.
The FSMA set out to do several things which can be summarised as setting out the objectives of the regulator to be about maintaining confidence, raising awareness, and protecting the public; regulating the industry; and creating a new Tribunal which hears appeals about decisions made by the regulator. By comparing this to the CA which set out to maintain confidence, to protect the public, to regulate nearly all charities by removing exempt status, and to establish a new Tribunal to hear appeals; there is a strong argument the CA is an application of a new regulatory policy.
If this new ‘meta-policy’, i.e. a policy about policy, subsequently created a climate where all regulation should be re-evaluated then is this a case of disjointed incrementalisim? Hutter (2005) argues that a new regulatory role for the government had come about as the new paradigm of risk-based regulation has become central, resulting in more oversight and less intervention. This new ethos led to a “systematic attempt by government to introduce business risk management practices across the public sector”. This examination of how old policies differ incrementally from the newly formed status quo, and how new expectations of outcomes and consequences require new policy, seem to match Braybrooke and Lindblom’s (1963) definition of disjointed incrementalisim. If this theory of policy formation is augmented with the application Dror’s (1968) concept of the importance of ‘meta-policy’ as a tool for the design of institutions to bring about change then a theoretical picture of the formation of the Charities Act 2006 is completed. We see the ‘meta-policy’ of regulation perturbing existing charity legislation from the status quo, thus instigating a re-appraisal.
Examining Kingdon’s (1995) model of the agenda-setting process of the three streams of pressure within a ‘garbage can’ or ‘primeval soup’ presents the question of what put this on the Government’s agenda? Whilst the ‘policies’ and ‘politics’ streams are present as discussed above in relation to the timing of the bill and manifesto pledge, it is not immediately apparent that there was a problem with the existing framework. It is most likely therefore that the CA is the result of what Kingdon describes as ‘policy entrepreneurs’, who have this new policy (regulation) and are looking for problems to apply it to, since there is a noticeable absence of a ‘big-wave’, or ‘focusing event’ -such as the failure of a large charity or a collapse of public confidence in the sector following some kind of scandal that would thrust the topic to the attention of politicians.
It would appear then that the Charities Act 2006 came about when the confluence of ‘policy entrepreneurs’ for the new paradigm of regulation, who had started to take a systematic approach to adjusting all regulation, found support in politicians eager to be seen to be delivering on manifesto pledges, thus opening the ‘policy window’ and producing action in the form of legislation.
Student Unions: A special type of charity?
An association of students governed democratically and accountable for its finances is a requirement of the 1994 Education Act, however associations, guilds or unions of students have been around for far longer: St. Andrews, founded in 1864 the oldest in Britain; and KCLSU, the oldest in England founded in 1899 and formalised in 1908. The Education Act states that the primary purpose of a Students Union is the representation of students to the parent academic body, which has led to a broader view as the charitable purpose of a Students Union being the advancement of education. However as an exempt charity, a Students’ Union has never had to pass a public benefit test for this charitable aim.
Student Unions have gone through many transformations as the demographics and demands of its member-students have changed. Most pre-1994 student unions started out as a form of student government and student representation, consisting solely of some kind of representative body, often called a Student Representative Council, but growing over time to have many different functions often including sports provision (sometimes separately as part of an Athletic Union), campaigning on broader social issues, welfare or representation services (academic advice, appeals representation , careers service) and commercial services (Bars, nightclubs, newsagents, gyms, food shops). Student Unions have usually taken the form of unincorporated associations, therefore having no distinct legal personality, with Trustees of unlimited liability. The question thus arises, what makes them different from other membership, service, or campaigning charities?
Fundamentally and uniquely for a charity, Student Unions exist in a symbiotic relationship with their parent institution, for a Student Union cannot exist without a body of students at an institution, and also are often institutionalised due to their dependence on the funding that comes from their parent institution. This contrasts with a declared independence, backed up by legal opinion, and a desire to be seen as separate and not part of the parent institution. Student unions are not a form of Trade Union14, though they are representative with roles in academic disputes, and membership based. However the EA makes it clear that all students are automatically members of their students union, with membership being an opt-out system, which is unique for a charity.
The membership of a Student union has a high level of churn, since the average student is at university for three years, after which they cease to be members. Since Student Unions must be democratically governed, the result is often an annual change in leadership, and a non-professional leadership, which is not meritocratic and is necessarily political. Student Unions are also inherently political since they seek to advance the education of their membership by representing them en-masse, but must comply with the restrictions on political activity by charities, that is a union cannot use union funds to “support any activity that is not reasonably calculated to further its charitable objects”, often interpreted to mean funding overtly political activity.
This unique set of conditions on membership, on funding, on activities, on legal obligations, on the role of politics both as a mechanism of decision making, representation and as an activity of the organisation as a whole, and especially their unique symbiotic relationship, means that Student Unions are not easily categorised as any other sort of charity and, it is argued should be treated as a special type.
The Impact of the Charities Act on KCLSU
The incoming changes have impacted on KCLSU in two ways; a forced change in governance, and an adaptation to the new demands of regulation. With the removal of exempt status, all student unions now how to prove that they are fulfilling their charitable purpose and are doing so for the public benefit. For KCLSU this had meant a policy of increased funding, support, and publicity for our volunteering groups, but one that has emerged from the Union Staff, not the students. There has also been an increase in impact reporting in attempt to better quantify the impact KCLSU has on its member-students and the communities in which it operates. These new demands have meant all departments have to introduce ways of accounting for each interaction with a student.
In light of the changes proposed by the Charities Bill, KCLSU became the first Student Union to launch a wide ranging and comprehensive Governance Review. The use of management consultants and the solicitors Bates Wells and Braithwaite, was unique at the time, and sought to fundamentally change the model for student unions.
The new model was significantly different from all existing Student Unions but sought to set an example of how to adapt. Since the initiation of the new model and with the full force of the CA set to be implemented with a commencement order, every student union has had to undergo some form of governance review, most notably the National Union of Students (NUS), the infrastructure organisation for Students Unions. Key aspects of the CA for Student unions have been seen as the removal of exempt status, a statutory definition of charity for the first time, and a new duty to demonstrate public benefit.
The removal of exempt status has meant that Student Unions have had their principle regulator, their parent institution, replaced by the Charity commission, forcing many changes. The review and subsequent implementation at KCLSU has been guided by the document ‘The Hallmarks of a Good Charity’, and especially by Hallmark 2, ‘A Strong Board’. This has also resulted in KCLSU taking on a legal personality in the form of a Company Limited by Guarantee, ending the old unincorporated association and also removing ultimate ‘sovereignty’ of the union from the student body as a whole, and investing it in the board.
Under the previous model, KCLSU’s ultimate decision-making body was the Student Representative Council, a 90-person body made of students elected from within their Schools, and lead by a Chair. In theory this body held power, but the union was run de facto by the Sabbatical Officers, who were full-time members of paid staff, who had both political accountability and operational control. The SRC’s main function was to hold the Sabbatical Officers accountable for both policy and operations, and had the powers to remove sabbaticals by a vote, and to set organisational policy.In this system the Sabbatical Officers were the sole trustees of the union and had unlimited liability.
Under the new system a Board of Trustees was formed who were the registered Directors of the company King’s College London Students Union, and are now the four elected Sabbaticals, with the President ex offcio the Chair of the Board, four students elected at the same time, and four non-student or ‘Lay’ trustees. These four sabbaticals are paid as Trustees and operate as employees of the Union; they combine political leadership as Officers, organisational leadership, as Trustees, whilst not having operational control, a responsibility now given to the Chief Executive Officer. The Lay trustees are appointed to four-year terms with a maximum of two terms, this appointment is theoretically at the discretion of the new democratic body, the Student Council. The Board is now the body of ultimate responsibility.
The Student Council is made up of thirty students is there to give advice, in terms of policy proposals, to the board. The diagram below shows who feeds into Student Council. It should be noted, however that the dotted line from sabbaticals in unidirectional, i.e. Sabbaticals feed into Council, but are neither necessarily accountable to it, nor mandated to report to it. The diagram also shows some of the other groups and representatives who are invited to feed into council.
The new system has set out to separate the three key strands of running a Student Union: democracy, governance and operations. The ideal is that the Student Council is the vibrant, political, democratic part of KCLSU, where policy is debated and formed. The board is there to fulfil the roles of fiduciary responsibility, operational oversight and generative thinking on the organisation as a whole, and to provide good governance. The operational responsibilities of sabbaticals have been removed and vested in the CEO, who is now responsible to the board for the performance of the Union as a whole and is tasked with delivering an agreed strategy.
Criticisms of the model: Student Government vs. Student Governance
As described above, the old model of student unions combined Governance, Politics, and Operations in the offices of the Sabbaticals, a position which has been heavily criticised for putting too much responsibility in the hands of often young and inexperienced students. By separating them out in the new model it was hoped that each could receive individual expertise, and thus synergistically improving the Union as a whole.
With a Trustee Board, Student Government has been replaced by Student Governance, a separation in the more direct involvement and accountability of old. The major criticism of the old model was not that Governance was bad, but that it was non-existent. With an annual change in leadership there was no continuity from one year to the next, no long-term planning, and no strategy for the organisation. However the new model has removed direct accountability from Sabbaticals, making them responsible to the Board not to the Student Council, and breaking the link between students and their Union. With a council that has no binding powers to set policy, to hold officers to account to change the operations of the Union, the democratic heart of the union has been arrested. Council attendance has dipped below 50% by the third session (usually held by December) in each successive year. Feedback has suggested that although newly elected council members arrive full of ideas and enthusiasm, the new model paralyses them from turning this into action.
Sabbatical Officers are now in a far more ambiguous position than ever before. They wear many ‘hats’: as Officers they are politically accountable for the actions of the union yet don not have any kind of operational control; the non-Lay Trustees are elected in a political manner yet are expected to be non-political on the Board; as President and Vice-Presidents the officers are non-equal colleagues, with the President the manager of the others and each with a portfolio, but as Trustees they are equal to each other and to the other Trustees; since an office is held for a year there is a real desire to get something done in that time frame, yet as a Trustees they are compelled to think much farther into the future; they are paid for their work, yet don not fit easily into any kind of managerial hierarchy especially since the President manages the CEO in their capacity as Chair of the Board, and they are elected to ‘lead’ the organisation.
The many conflicts, tensions, and confusions have yet to be resolved three years on. The Board has found it difficult to escape politics and has yet to decide where the Sabbatical Officers fit in the organisation, the Student Council has to date failed to suggest new-policy to the board, and Officers are unable to respond to the criticisms made by member-students about Union services. This new model does not fit the demands placed on it, and the experiences of KCLSU are worrying those who have not yet reformed.
The Future for Student Unions
Is the policy of treating Student Unions as just the same as every other charity the root cause of the problems face by KCLSU? It has been argued by Hill (2005) that ‘choices about forms of governance need to be tailored to specific contingencies and will also be matters of value or ideological choice’. The ideological choice, that of a government of students, by students for students, seems to conflict with a need to have a form of governance that assume that a student union is just another charity. The desire of some student unions, including KCLSU, to act as such is driven by many factors, but the result is that a model not tailored to the unique circumstances and demands of a Student Union is being straight-jacketed into place.
Although a student union is not a form of trade union14, the comparison in objectives is strikingly similar; provision of benefits to members, collective representation and political activity. This would suggest that Student Unions should look at the models of governance used by Trade Unions and their response to the CA and seek to emulate it, even if this means giving up on the idea that a Student Union is not part of the mainstream, but an exotic and rare species of third sector organisation.