An investigation into whether Scotland's universities should lose their charitable status was yesterday attacked by lecturers.

Scotland's new charities watchdog is currently examining whether universities should retain charitable status alongside a raft of other organisations including independent schools, private hospitals, museums and social clubs.

Scotland's largest lecturers' union said the decision to include universities in the review was "perverse" given the enormous public benefit they provided through education. The bodies being assessed by the Office of the Scottish Charities Regulator (OSCR) have been made a priority because there is some risk or uncertainty about whether they deserve charitable status, which brings generous tax breaks worth some £12m annually to the higher education sector in Scotland.

To qualify, an organisation must have a charitable purpose, such as relieving poverty or advancing education, the environment, arts, sport, or animal welfare. However, it must also provide a public benefit, and where there is a fee, at a private school for example, it should not be "unduly restrictive". Universities are included because they charge students fees.

In its submission to the review, the Universities and Colleges Union (UCU) called for the regulator to remove universities from its list of bodies at risk of losing charitable status. Alastair Hunter, president of UCU Scotland, said: "Bodies that misuse charitable funds should be reviewed rather than bona fide organisations which already have full accountability as public bodies. To take away charitable status would seem perverse if universities in the rest of the UK maintain that status at a time when they are charging top-up fees to all students. It would also give them a further financial advantage.

"It is a waste of taxpayers' money to review such organisations. If universities lost charitable status it would mean the loss of public money for no good reason."

Last night, Universities Scotland, which represents university principals, said charitable status was important to the sector, but distanced themselves from the UCU submission.

"Universities give an enormous social benefit to Scotland and, for the vast majority of what we do, the only restriction is someone's ability," a spokesman said. "We don't think there is any serious case to suggest our charitable status would be at risk and we are absolutely convinced it would be in nobody's interest to threaten that status." Fiona Hyslop, SNP education spokeswoman, said: "It is better that universities are reviewed in line with the law and keep their charitable status rather than lose it.

"The SNP raised the risk of loss to universities during the course of the legislation and the situation could have been much worse if that had not happened."