The Role of The Oversight Trust
The Oversight Trust – Assets for the Common Good (“the Oversight Trust”) oversees the activities of Big Society Capital, Access - The Foundation for Social Investment ("Access"), Youth Futures Foundation and Fair4All Finance which are termed "Operating Companies".
The board of each Operating Company is responsible for its own governance, strategy, policies and procedures, day-to-day operations and ensuring that its funds and resources are at all times applied in a manner that is compatible with its obligations. The Oversight Trust does not intervene in the day-to-day operations of the Operating Companies’ activities.
The Oversight Trust is responsible for oversight of the Operating Companies, with the aim of ensuring that they remain true to their objects. In particular, The Oversight Trust is required to:
ensure that the Operating Companies' objects remain appropriate;
ensure that the Operating Companies are well governed;
ensure that the Operating Companies' strategic plans are in accordance with their objects;
review achievement of social impact;
review transparency of financial and impact reporting; and
provide guidance and advice to the Operating Companies, if appropriate and practicable, or as requested.
How does the Oversight Trust fulfil its responsibilities?
Processes and Powers
The Oversight Trust has a number of rights and powers set out in the Governance Agreements which it has entered into with each Operating Company and in the founding documents of each Operating Company. (Jump to the Corporate Structure section of this page)
The Governance Agreements set out the key processes and powers to enable the Oversight Trust to fulfil these responsibilities with the proviso that the Oversight Trust may make reasonable requests from each Operating Company in addition to those set out in the Governance Agreements if necessary to help the Oversight Trust meet its obligations.
The Oversight Trust’s ultimate power to enforce any concerns in relation to its responsibilities is its ability to remove Operating Company directors (or not to re-appoint them). The Oversight Trust is also involved in the process of appointing new Operating Company Chairs (in addition to its powers of ratifying their formal appointment).
These rights allow the Oversight Trust to fulfil its specific responsibilities in the following principal ways:
Ensure that the Operating Companies' objects remain appropriate
The Oversight Trust was established as sole member or majority shareholder of the Operating Companies to have the governance powers necessary ensure that each entity could not potentially change its objects in a way that would mean that it no longer qualified for funding under the Dormant Assets Act 2022. The need for a body to perform this function was a pre-requisite for National Lottery Community Fund providing funding.
The Oversight Trust reviews any changes proposed by the Operating Companies to their Objects and all such changes have to be formally approved by the Oversight Trust. The Oversight Trust cannot (except in very limited circumstances such as changes required by law or regulation) propose changes to Operating Company Articles without the agreement of the Operating Company.
Ensure that the Operating Companies are well governed
The Oversight Trust reviews the activities of the Operating Company Boards and their Committees to ensure that they are acting in compliance with good governance principles. This review is continuous throughout the year but there is a formal meeting each year with the Chair of each Operating Company at which governance issues are discussed. This discussion is informed by the Oversight Trust’s knowledge of the Operating Companies’ ongoing activities and a review of the minutes of the Operating Company Boards and their Committees.
The Oversight Trust also reviews Operating Company remuneration policies and has an annual meeting with the Chairs of each of the Operating Company Remuneration Committees at which any changes to an Operating Company's remuneration policies are reviewed and approved and its Remuneration Report is reviewed and subsequently received/adopted.
Ensure that the Operating Companies' strategic plans are in accordance with their objects
The Oversight Trust reviews the Operating Companies' longer-term strategic plans, their business plans and budgets to ensure that they are consistent with their objects.
Review achievement of social impact
The Oversight Trust reviews the Operating Companies' quarterly performance reports and carries out an annual "deep dive" on each Operating Company to review progress against strategy and plans and reporting on the achievement of social impact.
Every four years the Oversight Trust commissions an independent review of the effectiveness of each Operating Company in advancing its objects. This will include assessing its achievement of social impact, its overall effectiveness and stakeholder feedback. The Operating Companies have committed to participate fully and to co-operate with the independent review panel and provide such information and assistance as may be necessary. (Jump to the Quadrennial Reviews section of this page.)
Review transparency of financial and impact reporting
The Oversight Trust has annual meetings with the Chair of each Operating Company’s Audit Committee to ensure that the preparation of Operating Company annual reports is in line with appropriate governance processes. The Oversight Trust also has annual meetings with relevant Operating Company personnel to review the reporting of social impact achievement.
The Board of Oversight Trust meets annually to review and to receive/adopt the Operating Companies’ annual reports.
Provide guidance and advice to the Operating Companies, if appropriate and practicable, or as requested
In addition to the ongoing communication between the Oversight Trust and individual Operating Companies, the Oversight Trust has at least two Board meetings each year at which representatives from all Operating Companies are invited to discuss matters of common interest.
In summary, in order to oversee the Operating Companies the key activities of the Oversight Trust area:
Annual Governance Review of each Operating Company;
Annual Deep Dive by the Board into the strategy and performance of each Operating Company;
Independent Quadrennial Review of each Operating Company's impact and effectiveness; and
Review progress through update Reports to each quarterly Oversight Trust Board meeting.
Meetings of The Oversight Trust Board and Governance Meetings
The Oversight Trust has at least six Board meetings each year, four Quarterly Board Meetings a Governance Board Meeting and an Extraordinary Board Meeting to approve the consolidated accounts. Each meeting carries out specific functions in order to enable the Oversight Trust to carry out its responsibilities as outlined in the Processes and Power section above.
Quarterly Board Meetings
At each Quarterly Board Meeting there is a "deep dive" on one of the four Operating Companies (in rotation) and a review of the quarterly updates from the other Operating Companies in order to assess the performance of the Operating Company against its objectives. Board and management representatives from the Operating Company which is the subject of the "deep dive" attend that meeting. Each Operating Company has a designated "Link Director" selected from the Board of the Oversight Trust - the Link Director is responsible for liaising with their Operating Company around any issues which are contained in their quarterly updates.
Two of the Quarterly Meetings are attended (for the first part of the meeting) by Chairs and/or Chief Executives of all the Operating Companies to allow issues of common interest to all the Operating Companies to be raised and discussed at the beginning of the meeting.
Governance Board Meeting
The Governance Board Meeting reviews the reports of the annual meetings of the Governance Review Groups with each Operating Company, see below. The Oversight Trust Board also reviews and authorises publication of the consolidated Annual Report of the Oversight Trust Group.
The minutes of Quarterly Board meetings are published on the Oversight Trust’s website (they may be redacted in case of confidential information having been shared).
Governance Review Group
There are four separate Governance strands which meet annually in relation to all four Operating Companies and report their conclusions back to the Oversight Trust Board as follows:
Chair-to-Chair - to review any significant governance issues arising and broader issues of concern to the Operating Company Chair.
Remuneration Review - to review remuneration policies and annual Remuneration Report with the Chair of the Operating Company Committee responsible for renumeration.
Accounting Review - to review governance processes and contents of the Operating Company annual reports with the Chair of the Operating Company Audit Committee.
Impact Review - to review social impact objectives and the achievement and public reporting of social impact with the Operating Company.
Issues related to Equity, Diversity and Inclusion policies and processes are also covered by the Governance Review.
Governance Review Groups are led by the Oversight Trust representatives as detailed here. Link Directors for each Operating Company are in attendance in order to bring their more informed knowledge to bear on any issues arising.
Each Operating Company has a designated Link Director selected from the members of the Oversight Trust Board. The objective of Link Directors is for someone on the Board of the Oversight Trust to be close to the activities of each Operating Company and to liaise with that Operating Company on any issues arising from quarterly updates where the Operating Company has no representation at the relevant Quarterly Meeting of the Oversight Trust Board.
The Link Director is not intended to represent the interests of the relevant Operating Company - rather to have a more informed knowledge of any issues relating to it. Link Directors change periodically to ensure a good spread of knowledge of individual Operating Companies across the members of the Oversight Trust Board.
The current allocation of Link Directors from the Oversight Trust Board is detailed here.
Statements of Assurance
There is a separate requirement for the Operating Companies to provide an annual “Statement of Assurance” from their Chairs. This assurance is in a standard form and confirms that the Operating Company is in compliance with the Governance Agreement and that dormant accounts funding has been spent in accordance with the purpose detailed in the Operating Company’s tripartite Funding Agreement with the National Lottery Community Fund and Oversight Trust. (In the case of Big Society Capital, the tripartite agreement relates to its receipt of dormant account funding in the form of an equity investment by the Oversight Trust.)
The Oversight Trust Governance Review
The Oversight Trust has looked at its own Governance practices and adopted policies, role descriptions and terms of reference to clarify the functions of the Oversight Trust and reflect its accountability to stakeholders. An external review of the Oversight Trust’s Governance and Board Effectiveness was completed in 2022 and the Review's conclusions and recommendations are published here.
The Oversight Trust commissions an independent Review on at least a quadrennial basis of each operating company to examine their effectiveness in delivering against their respective missions as set out in their governing documents.
The Reviews are intended to offer constructive challenge and comment on strategic issues for consideration, to which the Operating Companies are invited to offer a public response. The Reviews are also expected to note successes and celebrate achievements. They are not intended to dictate the future direction of the reviewed Operating Company and are not audits. They are not carried out by a team of subject matter experts from the field in which the Operating Company operates, and as such are not expected to offer specific recommendations about improvements to the operating model
Each Review is commissioned by the Oversight Trust, led by an independent panel, and is published. These Reviews provide a sense of accountability to the wider public, which is appropriate considering the source of the funding of the Operating Companies. They also provide an opportunity for a wide range of stakeholders to feed in their views and for the Chairs of the Operating Companies to respond publicly.
Some information is gathered from the operating companies themselves (impact and monitoring reports, board papers etc.), and this is augmented by a public call for evidence and interviews with key stakeholders (including beneficiary organisations), led by the commissioned reviewers.
Form of Report
The Report is a brief, high-level report (roughly 20 pages in length) and intended to be focused rather than comprehensive. It should identify both key achievements of the Operating Company and strategic issues where the Review Panel believes further consideration is required. The Chair of the Operating Company being reviewed is expected to publish a public response.
Appointment of Review Panel
The Oversight Trust Quadrennial Review Team (jump to the Board Roles section of this page) appoints a suitably qualified Panel to conduct the Review comprising three independent commissioners and a Secretariat. The recruitment process for the Review Panel involves the Nominations and Remuneration Committee reviewing names, suggested by the Oversight Trust Board and DCMS, of individuals who have the background and track-record to be able to produce a high-quality report. To ensure objectivity, the individuals will not be directly from the sector covered by the review. The Nominations and Remuneration Committee looks to the appointment of a Panel that reflects diversity of perspective and experience.
Terms of Reference
The initial terms of reference for the Review are attached to the Operating Companies’ Governance Agreements, but these may be developed by the Oversight Trust Review Team over time in light of experience.
Interface with Operating Company
The Operating Company that is being reviewed is expected to co-operate fully with the Review process and provide all information that is reasonably requested. A draft copy of the Review is shared with the Operating Company to ensure the factual accuracy of the report. In addition to the published response by the Operating Company’s Chair, the Oversight Trust may publish its own observations on the process, the Report’s conclusions and the Operating Company’s response. The Oversight Trust may use the findings of the Review as the basis for the subsequent annual Deep Dive review of the Operating Company in question to gauge progress against actions that have been identified.
Evolution of The Oversight Trust
The Big Society Trust (which changed its name to the Oversight Trust in August 2020) was originally established in 2011 for the purpose of overseeing Big Society Capital and ensuring that it remained “on mission”.
Alternative oversight through regulation by the Charities Commission or the Community Interest Company Regulator or by the Government holding a Golden Share were considered. However, the idea of establishing a two-tiered governance structure with an independent private sector company limited by guarantee with a Board comprising stakeholder representatives acting as the majority shareholder was also proposed. This was the option preferred by the Cabinet Office (the Ministry responsible for the Office of Civil Society at that time) and the nascent Big Society Capital.
Evolution of BST Since Establishment in 2011
Initially the Big Society Trust met twice a year. It shadowed the Big Society Capital Board and received updates at these meetings in the form of papers already prepared for the Big Society Capital Board and an oral update from the Big Society Capital CEO.
In 2014, the Big Society Trust became the sole member of the newly created company Access – The Foundation for Social Investment (Access) in order to perform a similar oversight role.
A review of the Big Society Trust’s Governance in 2016 highlighted the need for greater clarity on the role and responsibilities of the Big Society Trust in relation to its two operating subsidiaries. This resulted in a codification of these functions for both organisations.
In 2018, the Big Society Trust received a grant from the National Lottery Community Fund (under the direction of the DCMS Secretary of State) of £10 million for place-based investment which it passed on to Access under a Grant Agreement with the Big Society Trust. Access was required to produce a letter each year to confirm it was complying with its obligations under this agreement (Letter of Assurance).
In December 2019, the Big Society Trust took on additional oversight roles for Fair4All Finance and the Youth Futures Foundation, acting as sole Member of both. This provided suitable governance structures for both new entities that meant they were independent of government but ensured that they remain true to their missions and the objectives set for the funding allocated to them.
Expanding the group involved changing the Board structure of the Big Society Trust and developing the oversight model to cover all four operating companies. This was reflected in each company’s Governance Agreement with the Big Society Trust and in the newly created companies’ Funding Agreements with the National Lottery Community Fund and the Big Society Trust. (Access has since also entered into a similar Funding Agreement.)
Also in December 2019, the Big Society Trust, which had previously been supported administratively by Big Society Capital, entered into a Funding Agreement with the National Lottery Community Fund to become independent of Big Society Capital’s systems and appointed a Chief Operating Officer.
In August 2020, the Big Society Trust changed its name to “The Oversight Trust – Assets for the Common Good” to reflect its broader remit.
The operating companies have been allocated further dormant account monies. As at 31 August 2023 they had been allocated the following amounts:
Big Society Capital: £433 million
Access: £83 million
Youth Futures Foundation: £110 million
Fair4All Finance: £145 million
Fair4All Finance, the Youth Futures Foundation and Access are all companies limited by guarantee which have the Oversight Trust as their sole member. (Access is also a regulated charity.) Big Society Capital is a company limited by shares.
The shareholding of Big Society Capital comprises “A” shares held by the Oversight Trust and “B” shares held by the shareholder banks (NatWest, HSBC, Barclays and Lloyds Bank). The “A” shares enjoy 80% of the voting rights at shareholders’ meetings and specific protections for the interests of the minority shareholders are contained in a Subscription Agreement (see below).
The Oversight Trust and Operating Companies have Articles of Association – these are all public documents available at Companies House.
Each Operating Company has a Governance Agreement with the Oversight Trust (dated 2019) – as described below.
Fair4All Finance, the Youth Futures Foundation and Access each have a tripartite Funding Agreement with the Oversight Trust and the National Lottery Community Fund – this document specifies the conditions attached to the dormant account funding provided by the National Lottery Community Fund (including the specified purpose of the funding, reporting and State Aid requirements).
The Oversight Trust also has a Funding Agreement with the National Lottery Community Fund which provides for funding from the English allocation of Dormant Account monies on an on-going basis.
Big Society Capital has a Subscription Agreement with the Oversight Trust and its shareholder banks (dated 2012). This document provides rights to the shareholder banks in relation to the governance of Big Society Capital and any further subscription of shares.
Access has a Grant Agreement with the Oversight Trust detailing the use of the £10 million grant it received for place-based funding in 2018.
The board of each Operating Company is responsible for its own governance, strategy, policies and procedures, day-to-day operations and ensuring that its funds and resources are at all times applied in a manner that is compatible with:
the requirements under the Dormant Assets Act;
any requirements in respect of State Subsidy rules;
principles of good governance; and
the terms of its Governance Agreement.
The Oversight Trust is responsible for oversight of each Operating Company, with the aim of ensuring that they remain true to their objects. The Governance Agreement sets out the Oversight Trust’s key processes and powers to enable it to successfully achieve these responsibilities.(See The Role of The Oversight Trust section of this page).
The Board of the Oversight Trust comprises:
Sir Stuart Etherington (Chair; Nominations and Remuneration Committee; and Remuneration, Governance Review Group);
Kevin Davis (Link for Access);
Helen England (Link for the Youth Futures Foundation);
Jo Fox (Nominations and Remuneration Committee);
Stephen Howard (Nominations and Remuneration Committee Chair; and Quadrennial Review Team);
Ian Hughes (Accounting Governance Review Group);
Nicola Pollock (Senior Independent Director; Quadrennial Review Lead; and Impact Governance Review Group);
Andrew Rose (NED).
David Lindsell (Link for Fair4All Finance)
Vicki Thornton (Link for Big Society Captial); and
Robert Bell (Nominations and Remuneration Committee).
Besides the Quadrennial Review Team and the Governance Review Teams, the Oversight Trust Board has established a Nominations and Remunerations Committee. The Committee is responsible for making decisions about recruitment and recruitment policy for: the Oversight Trust Board, the independent Review Panel and staff.