Oxford college accounts 2002/3
Overview by Scout

Compared with the previous accounts for the year 2001/2 which followed Oxford's internally standardised 'Franks' model, the new accounts for 2002/3 following the Government's 'SORP' guidelines simultaneously provide both much more and much less information. On the one hand, in accord with normal commercial practice, we now have the colleges' valuations of their endowment assets, but on the other hand the various income streams from the various kinds of assets owned by each college are now not distinguished. The earlier accounts listed the incomes from agricultural land, non-agricultural land, properties let on non-repairing terms, properties let on other terms, mineral rights, interest and dividends etc.. In the new accounts there are just two categories, Securities & cash and Land & property, with the annual income from both being lumped together in a single figure. This means that it is now harder to tell how well a particular college's endowment is performing, e.g. in respect of its stockmarket portfolio or its agricultural landholdings.

There is another striking omission. Many of the colleges appear to be quite active in the buying and selling of land, property, equities and so forth, and although the figures for their purchases and sales during the year are entered under the note Endowment asset investments, the actual profits/losses on the sales are omitted, figures which in customary practice must be included, and which in normal commercial contexts carry serious tax implications. It may be that the 'SORP' guidelines for higher education institutions do not require such figures to be included, but then perhaps the guidelines do not envisage our higher education institutions operating like, for example, speculative property developers.

Again, on the expenditure side, comparing the new accounts with the earlier ones there is now far less detail. The earlier accounts (Statements III Aedes Annexae IV and V - altogether 3 pages per college) itemised the costs of maintaining the college buildings and gardens, the head of college's stipend, the teaching and other fellows' stipends, tuition payments, examination expenses, library costs, chapel costs, catering, entertainment, laundry & cleaning, services (heat, light, water), domestic staff, administrative staff, office expenses, legal charges and so on and so forth. Much of this detail is now gone, analysed in a small table (in notes 6 or 7) under just seven headings: Academic, Residences & catering & conferences, Premises, Administration, Endowment management, Fundraising and Other. Again this means that it is now harder to identify the types of expenditure in which a particular college is being most wasteful or to compare the colleges' relative efficiency.

The figures in each college's opening table for its annual operating surplus/(deficit) seem to be largely irrelevant, as they often include (under endowment return) substantial transfers from the endowment (see relevant note), which can apparently be used at will to massage the college into apparent surplus or deficit - highly irregular in normal accounting practice. It may be that each college is governed by rules concerning these transfers, but they are not mentioned in the Statement of accounting policies, so should be ignored when making comparisons between colleges. Note too that most of the annual 'recognized gains' can be attributed to appreciation of endowment assets, resulting (see notes) from 'desktop revaluations'.

All-in-all, although the new accounts are 50% longer in paper terms and now include written reports and (at last) the colleges' endowment valuations (and pension liabilities), they are much more opaque than the previous ones in terms of the colleges' relative investment performance and expenditure efficiency. Presumably this is intentional. As usual, the eleemosynary Lord giveth and the eleemosynary Lord taketh away (see below).

Notwithstanding all this new opacity, I have compiled an Endowment performance table (in MSExcel) which provides some rough indicators of the colleges' relative success, e.g. on the stockmarket. (Different researchers will doubtless find numerous different ways in which to extract data from the figures.) Taking a simple blanket percentage return (row 6) on each college's total endowment assets at the start of the year (row 17) reveals a wide variation, from below 1% to over 7%. Most of the performances, though, seem lamentably poor, with 25 of the 36 colleges achieving less than 4%. Three weigh in at between 2% and 3% (Christ Church, Exeter, Wolfson), another three at less than 2% (St Hilda's, St Catherine's, Keble), with Harris Manchester and Templeton not meaningfully registering at all. The college average works out at 3.8%, that is less than the high street banks' deposit account rates. St Cat's miserable 1.8% may, incidentally, explain its bursar's interesting remarks in the Times Higher of 16th July. Another indicator in the table (row 37) tries to gauge the college's level of stockmarket activity, calculating the average of sales and purchases as a percentage of its initial holdings. These figures, ranging from under 1% to over 90% suggest that some colleges are virtually dormant, while others are frenziedly busy. Super-activity, however, seems to be no guarantee of higher income: Exeter (with 90% activity) achieves only 3.0% return; Merton (84%) only 4.2%, All Souls and Somerville (66% & 55%) only 3.9%, New College (50%) only 3.4%, and so on. More stockmarket activity of course also means more hefty commissions for fund managers and brokers, so any gains are probably more than swallowed up by middlemen. Nor does simple scale of wealth seem to guarantee higher percentages, as one would expect: rich colleges Christ Church, Magdalen and New all notably underperform, and even mighty St John's, with endowment assets totalling over £187 million (and 24% activity) manages only a 3.9% return.

The picture is even more alarming if one adds in the capital endowment appreciation figures (row 22, which excludes new endowments). Here the percentage fluctuations are wild, from negative (Balliol -11.0, Wolfson -8.8, Magdalen -3.4, Somerville -1.0, Wadham -0.7, St Hugh's -0.1) to miserable (St Hilda's 0.9, Keble 1.0, New & Linacre 1.5, St Anne's 2.2, St Antony's 2.5, Brasenose 2.6, St John's & Jesus 2.9, Merton & Trinity 3.3) to fair (All Souls 10.9, University 10.8) to good (Lincoln 27.1, St Peter's 25.9), with Harris Manchester and Templeton again off any meaningful scale. The bursars' claimed overall 8.9 percent "return on investments" comes presumably from some sort of fudged combination of this appreciation percentage with the income percentage (row 9); simple addition of the percentages (row 23) again gives a huge range, roughly from -10 to +35, with 9.4 overall. However you cut them, these roller-coaster indicators provide the clearest demonstration yet of the colleges' profoundly different investment strategies and the single most eloquent argument for their amalgamation.

Of course each of the colleges has a different annual ride. By the luck of the draw (the top draw?) Christ Church and Balliol each copped over £2 million of new money (the latter nevertheless made a thumping endowment loss), while Merton and Nuffield drew a blank (e.g. in expiring alumni). Lincoln's bonanza came courtesy of the sale of a farm and farmhouse at unexpectedly high figures, and University College reports several 'satisfactory' property sales. Oriel's whopping 77% increase in endowment was due to an adventurous expansion into investment property financed by long-term bank loans. One recourse all the colleges share, though, when trying to bail themselves out of investment blunders or incompetence, is to build ever-increasing portfolios of perennially lucrative student housing. Battling Balliol therefore announces "substantial rises in room rents for Freshers from October 2004" and the building of more student accommodation blocks. Brasenose, Exeter, Jesus, Linacre, Lincoln, New College, Nuffield, St Anne's, St Catherine's, St John's, St Peter's, University and Wadham all report similar eleemonsynary plans. - SCOUT

This year, preceding its set of spreadsheets, each college account includes a Report of the Governing Body, a list of the Responsibilities of the Governing Body (identical for all colleges, omitted by Corpus, Lady Margaret Hall), an Independent Auditors' Report (identical for all colleges, auditors listed below), and a Statement of Principal Accounting Policies (similar for all colleges). A few colleges include an index and a few include further information (bankers, fellows, so forth). The order, format and typography varies from college to college, sometimes wildly. Several colleges' GB reports are one-page, University's is spread over five. New and University Colleges are notably barmy on detail, others are notably scant. As a sample, Akme has scanned into html the above items of a typical college, Brasenose, to serve as a model (click for Brasenose Report etc.).

For each college, the Report of the Governing Body is divided into a number of subheadings: Status, Objects, Governance, Scope of financial statements, Review of operations and finance, Investment performance, Reserves, Risk Management. Under Status, every college states that it is "an exempt charity under s3(5a) Charities Act 1993 (as listed in Schedule 2(b) to that Act)".

The following colleges further describe themselves as "eleemosynary chartered charitable corporation aggregates": Brasenose, Exeter, Harris Manchester, Hertford, Jesus, Lady Margaret Hall, Lincoln, Mansfield, New College, Oriel, The Queen's, St Catherine's, St Edmund Hall, St Hilda's, St John's, St Peter's, Templeton, Wadham and Worcester. Corpus Christi is "a chartered charitable corporative aggregate". Christ Church is "a joint foundation - of a college in the University of Oxford and of the Cathedral Church of the Diocese of Oxford - supported by a single corporate endowment". Nuffield, St Antony's, Wolfson and University College are "chartered charitable corporations". Pembroke is "an independent self-governing charitable institution". Somerville is "an (sic) tax exempt higher educational institution governed by a Charter and Statutes". Trinity is "an eleemosynary chartered corporation". Merton is merely "a charitable corporation", while the rest (Balliol, Linacre, Magdalen, Keble, St Anne's and St Hugh's) make no further such claims.

OED entry for 'Eleemosynary' (extracts)

Eleemosynary [Mediaeval Latin eleemosynarius, from Christian Latin eleemosyna ALMS. Old French elemosinaire, which may be the immediate source.]
A. adjective 1. Of or pertaining to alms or alms-giving; charitable. Eleemosynary House, Corporation, one established for the distribution of alms, etc.
quotations: 1630 "These her eleemosinary acts... are almost vanished." Risdon; 1827 "The blind eleemonsynary spirit inculcated by the Romish church is notoriously the cause... of beggary." Hallam.
2. Dependent on or supported by alms.
quotations: 1654 "If we be a mere elemosynary Parliament we are bound to do his drudgery." G. Goddard; 1667 "Is not the whole World the Alms-house of God Almighty... in which he had a right... to place us his eleemosynary Creatures?" H. More .
3. Of the nature of alms; given or done as an act of charity; gratuitous.
quotation: 1849 "Eleemosynary relief never yet tranquillized the working classes." C. Bronte.
B. substantive 1. One who lives upon alms; a beggar. Also figurative.
quotation: 1673 "The Parliamentarians were their Eleemosynaries." H. Stubbe.
2. = ALMONER (rare) -1809
3. = ALMONRY 1688. Hence Eleemosynarily, adverb, charitably, by way of charity.

For more on The Beggars and the Begged, go to an Observer article of May 1990.

Under Scope of financial statements, the following colleges state that they wholly own subsidiary trading companies, whose accounts are consolidated with the college's: All Souls (The Chichele Property Co. Ltd.); Balliol (Balliol College Developments Ltd.); Brasenose (Brasenose Utilities Ltd.); Exter (Collexonco Ltd. and Collexoncotoo Ltd.); Jesus (Jesus Accommodation Ltd.); Keble (Conference Keble Ltd.); Lady Margaret Hall (LMH Conference Services Ltd. and LMH Properties Ltd.); Lincoln (Lincoln College Enterprises Ltd.); Magdalen (Magdalen Development Co. Ltd., Magdalen College Law Tutorship Co. Ltd. and The Fleet Tutorship Co. Ltd.); Merton (Merton Enterprises Ltd.); Nuffield (Nuffield Properties Ltd.); Oriel (Land Estates & Property Ltd. and Tean Ltd.); St Anne's (St Anne's College Services Co. Ltd.); St Antony's (St Antony's Trading Ltd.); St Catherine's (St Catherine's College Management Ltd. and St Catherine's College Development Ltd.); St Hilda's (The Jacqueline du Pre Music Building Ltd. and St Hilda's Properties Ltd.); St John's (The Lamb & Flag (Oxford) Ltd.); St Peter's (Crossed Keys Ltd.); Templeton (Templeton (Oxford) Ltd.); University (Fleximist Ltd. and Micklehall Ltd.); Wadham (Wadham Energy Supplies Ltd.); and Wolfson (Wolfson College Developments Ltd.).

Most of the Responsibilities of the Governing Body sections end with this paragraph:

"Under the Charities Act 1993 the College is an exempt charity and the members of the Governing Body must ensure that the property and income of the College are applied only in support of purposes which are charitable in law."

In the Accounting Policies section, the following paragraphs (or similar) recur under the subheading Taxation Status:

As an exempt charity within the meaning of Schedule 2 of the Charities Act 1993, the College is potentially [Akme's italics] exempt from taxation in respect of income or capital gains received within categories covered by Section 505 of the Taxes Act 1988 or Section 256 of the Taxation of Chargeable Gains Act 1992 to the extent that such income or gains are applied to exclusively charitable purposes. The College receives no similar, general exemption from Value Added Tax by virtue of its charitable status, although the provision of education is exempt under group 6, schedule 9, Value Added Tax.
Trading activities undertaken by the College are administered through its subsidiary companies, which, as commercial organisations, are liable to Corporation Tax. Profits made by these companies are, however, transferred to the College by Gift Aid, income tax being deducted from the Gift Aid payments and recovered by the College.

The following auditors are used: Grant Thornton, Oxford (All Souls, Brasenose, Christ Church, Corpus Christi, Keble, LMH, Oriel, Pembroke, St Anne's, St Hugh's, St Peter's, University); Critchleys, Oxford (Jesus, Linacre, Lincoln, Magdalen, Mansfield, Merton, New, Nuffield, The Queen's, Templeton, Trinity); Wenn Townsend, Oxford (St Hilda's); Wellers, Oxford (wolfson); Edmund Hill, Oxford (Harris Manchester); Pricewaterhouse Coppers, Reading (Balliol); Deloitte & Touche, Reading (St Catherine's); Horwath Clark Whitehill, London (Exeter, Hertford, St Edmund Hall, Somerville); Everett & Son, London (St Antony's, Worcester); Ernst & Young, Southampton (St John's); RSM Robson Rhodes, Hemel Hempstead (Wadham).

The colleges' core financial bulletins are contained in the Governing Body report sections Scope of financial statements, Review of operations and finance, Investment Performance and Reserves. Akme has scanned these four sections college-by-college, together with each college's summary Statement of Recognised Gains and Losses, and collated them into a single, all-college HTML Digest file. For the reports' full details and the spreadsheets themselves in PDF format, return to the College Accounts Index and click on the colleges' A/c 2003 links.