Frequently asked questions

FAQs General

What exactly is a trust?

A trust is a legal relationship created when assets – for example land, money, buildings, shares or even antiques – are placed under the control and legal ownership of a trustee, who must manage them for the benefit of a beneficiary or for a specified purpose.  The trustees are responsible for managing the trust in accordance with its terms.  The terms of the trust will usually be the conditions specified by the person who has put the assets into trust at the time they did so.

The University holds a large amount of funds on trust, often as a result of donations or legacies, to be applied for specific purposes narrower than the University’s general purposes of teaching and research – for example for professorial chairs, lecturership posts, scholarship schemes, student bursaries, and academic prizes.

How and where are the terms of a trust recorded?

The terms of a trust will be the terms intended by the donor at the time the gift was made; these will usually be set out in a will, gift agreement, correspondence, or some other documentation.  In order to preserve an accurate record of these terms, the University records them in the form of a Trust Regulation.  For some older or amended trusts, the terms are recorded in the Schedule to the University's Statutes.  All new Trust Regulations are approved on behalf of Council by the General Purposes Committee and published in the Gazette.  In order to avoid the proliferation of trusts, funds are increasingly being accommodated on flexible terms in the University of Oxford Development Trust Fund (OUDT), rather than being established as bespoke trusts.

Who are the trustees of a trust fund and what are their responsibilities?

For almost all University trust funds, the University itself – in its corporate capacity – is the sole trustee.  As such, University Council has ultimate responsibility for the trust funds and their administration.  On a day-to-day basis, that administration has been delegated to individual Boards of Management, often at a Divisional or Departmental level, details of which are recorded in the Trust Regulations.  In discharging the University’s duties as trustee, the Board of Management has various responsibilities:

(i) Duty to familiarise oneself with the terms of the trust and to comply with those terms – key among these is ensuring that the trust fund’s assets are applied only for the particular charitable purposes for which it was set up.

(ii) Duty of care – board members must exercise reasonable care and skill in ensuring the trust fund is well-run and that the fund’s assets are not placed at undue risk, using their personal skills and experience as needed.

(iii) Duty to avoid conflicts – board members must act with integrity and avoid any personal conflicts of interest or the misuse of charitable trust funds or assets. 

(iv) Duty to apply income – an underlying principle of charity law is that income should be spent as soon as practicably possible.  Restricted funds which are available for a specific activity should be applied first, before any general departmental funds.

(v) Duty to comply with relevant legislation – for example with regard to disposals of land or property, or data protection (in consultation with Finance and Legal Services).

What should our department be doing to ensure it follows best practice in respect of administering trust funds? 

The key things your department should be doing are as follows:

  • You should hold a record of, and be familiar with, the governing terms of all trust funds you administer, as set out in the relevant Trust RegulationSchedule to the University's Statutes, or other document for funds held in OUDT.
  • For each fund you should have a register of authorised signatories, which is complete and up to date, and the latest signed copy filed with the Finance Division (forms are available here: Authorised signatory form (58kb). 
  • Expenditure should be authorised in line with these registers subject to such expenditure falling within the governing terms of the fund. Queries regarding legitimate use of funds should be referred to the Trusts Administrator.
  • Trust fund financial statements should be reviewed quarterly and ad hoc reports generated from Oracle Financials as and when required. Queries should be referred to the Finance Division.
  • Available income should be factored into departmental budgets and spent as soon as practicably possible, in line with legal obligations and University policy.
  • Those departmental staff dealing with trust funds should be familiar with the Trusts Administration website and have received training where appropriate.

I'm new to the University.  Is there a training course I can go on to learn more about trust funds?

A trust fund training course is held regularly by the Training & Learning team within the Finance Division.  Further details of the course can be found here. To register your interest in the course please email finance.training@admin.ox.ac.uk or you can make a direct booking using the online form here.

In addition, there is a regular 'Managing Trust Funds' seminar at the UAS Conference at least once a year.

We'd like to spend more of our trust fund income, but the purposes are so narrowly defined it is proving difficult.  What can we do about this?

This is not an uncommon problem.  Fortunately, it is possible to broaden the terms of a trust in order to provide greater flexibility to spend income, although it will generally involve seeking approval from the Privy Council (or sometimes the Charity Commission) which can be quite a lengthy process to go through.  If you want to explore this option, then contact the Trusts Administrator in the first instance.

We've got a number of very small funds which are fiddly and time-consuming to manage.  Is there anything we can do about this?

Yes, absolutely. The University recognises this is a problem for many Departments, and Council has now endorsed a policy of consolidating small trust funds into larger funds where feasible.  By 'small' we mean any fund that generates less than £10,000 of income per year.  Under the Charities Act 2011 it is possible to consolidate such funds relatively easily, and Departments are already starting to see the benefits of doing so in terms of simpler administration and greater flexibility in spending income.  Contact the Trusts Administrator if you would like to discuss this further.

We would like to change the board of management of one of our trust funds.  How do we go about doing this? 

This depends on how the membership of the board of management has been recorded.  If it is in the form of a Trust Regulation, then this can be done by seeking approval from the General Purposes Committee of Council.  If it has been recorded in the Schedule to the Statutes, then the amendment process will usually be stated in the relevant section of the Schedule – most often it will involve getting additional approval from Council and then Congregation.  The Trusts Administrator will be able to guide you through the process.

Some of our Trust Regulations contain outdated references.  Do we need to update them?

Ideally yes.  The process for doing this depends on whether the references affect the main objects of the fund or administrative provisions only.  If they affect administrative provisions, for example there is reference to a body or position in the board of management that no longer exists, then approval will need to be sought from the General Purposes Committee of Council only.  However, if they affect the main objects, for example if the fund is for the benefit of a teaching post that no longer exists, then additional approval will generally be required from Council, Congregation and Privy Council.  Contact the Trusts Administrator if you are in any doubt about which elements of the trust are affected.

A donor has contacted us to ask if we can change the name of the trust fund they established.  Is this possible?

Yes, this can be done.  As above, the process for doing this will depend on whether the change of name affects the main objects of the fund or administrative provisions only.

I’ve heard the University is not establishing any new trust funds.  Is this true?

Not quite.  Council wishes to avoid the proliferation of trust funds (there are around 750 at present) and has agreed that new ones will only be considered for gifts of £100,000 or more.  The primary vehicle for the receipt of new gifts to the University is now the University of Oxford Development Trust Fund ('OUDT').  A number of “broad purpose funds” have been created within OUDT for things like scholarships, teaching, the Divisions, the Bodleian, the Colleges, etc.  The idea is to encourage donors to give on the broadest possible terms and for any restrictions to be in the form of non-binding preferences, which avoids the setting up of separate trusts.

Who and what is the Trusts Management Board?

The Trusts Management Board was established by Council in 2010 in order to (i) oversee the management of all University trust funds, including their compliance with University practice and the general law; (ii) fulfil the University’s delegable functions as trustee of OUDT; and (iii) streamline the administration of trust funds through the consolidation of small funds.  The Board is made up of the following: Pro-Vice-Chancellor for Planning and Resource Allocation (Chair), Director of Finance, the Secretaries to the University’s Divisions (four Academic Divisions plus ASUC), and a representative from the Conference of Colleges (currently Principal of Harris Manchester College).

FAQs Finance

Why are we being repeatedly told to spend our trust fund income?

Two main inter-related reasons.  Firstly, it is an underlying principle of charity law that trust income must be spent within a reasonable time of having received it.  Secondly, following a change in the regulatory regime in 2010, the University is now being actively monitored by its regulator, the Higher Education Funding Council for England (HEFCE), for compliance with charity law.  So it is important that the University can demonstrate that trust income is being properly applied.

We'd like to use our general departmental income, rather than trust fund income, to pay for an activity this year.  Can we do this?

The short answer is no.  Restricted funds which are available for a specific activity should be applied first, before any general departmental funds.  So if you have incurred costs that can be paid for by one of your trust funds, then you must charge those costs to the particular trust fund account.  This principle is consistent with the University’s charitable duty to apply income (as described above), and has been endorsed by the Trusts Management Board, which is responsible for overseeing all of the University’s trust funds.

We'd like to use trust fund income to pay for some of our overheads.  Are we allowed to do this?

This depends on the terms of the particular trust fund(s) you have in mind.  The terms of endowment trusts will usually be recorded in the form of a University Trust Regulation or in the Schedule to the University Statutes.  Sometimes you will find that a trust has both a primary purpose (such as the endowment of a teaching post) and also secondary purposes which allow the fund to be used for associated costs, including certain overheads.  But this is not always the case.  If you’re in any doubt about interpreting the wording of the Regulation / Scheduled Statute, or if the trust is not recorded in that way, then contact the Trusts Administrator.  If your question is specifically about the use of trust income to pay for the infrastructure charge (ISC), then you may find the following guidelines useful Use of trust income for infrastructure charge (19kb).

Some of our trust funds are classified as expendable, not permanent, endowment.  What does this mean?

An expendable endowment is a fund which can be invested to produce income, but where the trustees have the power to convert some or all of the capital into income (which can then be spent).  Contrast that to a permanent endowment, where there is no power to convert capital into income.  An expendable endowment differs from income in that there is no requirement to spend the capital unless the trustees decide it is in the best interests of the trust to do so.  Income, on the other hand, must be spent within a reasonable period of receipt on the purposes of the trust.

Example: Imagine your Department receives an expendable endowment gift of £100,000, which is invested and produces income of £4,000 per year.  The University is obliged to spend this £4,000 per year within a reasonable period of receipt.  In addition, it has the option (though not the obligation) to spend some or all of the £100,000 capital sum, too, if it believes it will best further the purposes of the trust.

How are trust funds invested by the University?

This depends on the nature of the fund’s assets.  Permanent endowment (where the capital may not be spent) is almost always invested in the Oxford Endowment Fund (‘OEF’); this is a long-term investment fund suitable for investments of at least five years.  Expendable endowment (where the capital may be spent) is sometimes invested in OEF, although if it is likely to be spent in less than five years then it will usually be invested in the Deposit Pool (the University's cash management vehicle) so that it can be accessed at short notice.  For some expendable endowments the Oxford Capital Fund (‘OCF’) is used; this is a medium-term investment fund suitable for investments of between two and five years.  Both OEF and OCF are managed by the University’s Investment Office, OUEM Limited.  Contact the Trusts Administrator if you would like to discuss how your trust funds are invested.

We have a large amount of trust fund income in reserve which we would like to reinvest in the Oxford Endowment Fund.  Can we do this?

The nature of OEF means it is only suitable for long-term investments of at least five years.  Given that trust income must be spent in a much shorter timeframe than that, it would not be appropriate to lock the money away in OEF for that length of time.  All trust income is therefore held in the Deposit Pool for spending in the short-term.

In theory it is possible to convert surplus income into capital (a process known as “accumulation”), which would then make it suitable for investing in OEF.  However, this can only be done if there is a power to do so in the trust’s governing document, and even then the power can generally only be exercised within 21 years of the creation of the trust.  As a general policy, the University is not in favour of accumulating income, although in exceptional circumstances it may be deemed appropriate, subject to the approval of the Trusts Management Board. 

What is the process for drawing down income from a trust fund?

The Finance Division holds all trust funds on a central cost centre in Oracle Financials and allocates them a unique ‘source of funds’ code, which is prefixed with the letter B to indicate they are endowments.  In order to claim income from a trust fund, the Board of Management must charge legitimate costs to the appropriate ‘source of funds’ code using their own departmental cost centre. 

At the end of each financial quarter, income is transferred to the departmental account to match the expenditure coded there, with any overspend being recharged to the Department in which the fund is held, and any surplus revenue being rolled over to the next quarter or year.  A financial statement is issued at the end of each financial quarter for information and planning purposes.

Who can authorise expenditure from a trust fund account?

In order to ensure that trust fund income is spent on legitimate costs only, payments must be authorised by the Board of Management responsible for each fund.  This authority can be delegated by the Board to individual officers within a Department, providing this is documented in a ‘Register of Authorised Signatories’ form (downloadable here: Authorised signatory form (58kb).  These forms are held by the Payments Section and checked to ensure invoices and payment requests have been correctly authorised before payments are released.  Any payment requests that have not been appropriately authorised are referred back to the Department.

We have a fund that is being held in ‘OUDT’ rather than as a separate trust.  What does this mean?

The University has been concerned in recent years about the proliferation of trust funds, which have often been set up for relatively small gifts and with narrowly defined purposes.  In order to address this, Council decided in 2010 that new ones would only be considered for gifts of £100,000 or more, with all other gifts being held in the University of Oxford Development Trust Fund (or OUDT for short).  A number of ‘broad purpose funds’ have been created within OUDT for things like scholarships, teaching, the Divisions, the Bodleian, etc, in order to accommodate such gifts.  The idea is to encourage donors to give on the broadest possible terms and for any restrictions to be in the form of non-binding preferences, which avoids the setting up of separate trusts.

A gift held in OUDT differs from a conventional trust fund in that it is not set out in a formal Trust Regulation, but is part of a specific ‘broad purpose fund’ in the OUDT trust.  The nature of the donor’s (usually) non-binding preference and the administrative arrangements for the ‘sub-fund’ are recorded in an OUDT record form.  The processes for authorising expenditure, drawing down income, and quarterly reporting operate in the same way as for individual trust funds.