CareTech Foundation Trustees’ Report 2019 >> Financial Review
The Charity’s financial position
The Foundation remains well-placed financially to deliver its long-term objectives, thanks to the funding agreed by CareTech Holdings plc as set out in the Donation Agreement between CareTech plc and the Foundation settled in July 2019.
Providing the Foundation with sufficient clarity as to the likely funds at its disposal over at least the medium-term ensures the best possible opportunity for it to deliver impact. The Board of CareTech plc, in establishing the Foundation, fully accepted the importance of settling clearly the funding basis for the Foundation moving forward, enabling it to focus on delivering impact and reinforcing its independence.
CareTech plc complements its financial donations by supplying significant in-kind support, such as office accommodation, back office systems and staff expertise. We have established systems to capture and attribute the full value of CareTech plc’s support to the Foundation, which includes:
- the value of all in-kind support provided
- (accommodation, back-office support, staff salaries for seconded staff, etc.)
- the value of employee volunteering hours
- any other value added/leveraged support provided by the Foundation
In this current year this in-kind support has been valued at £15,568.63.
The Foundation does not currently seek to raise funds from wider fundraising activities nor does it engage a professional fundraiser or commercial participator for such purposes. The trustees have, however, recognised that, as important as CareTech plc’s commitment to long-term financial support is, the charity should seek over time to diversify its income.
The benefits of diversification of income go far beyond simply achieving an income surplus; diversification also gives organisations the security needed to focus more on long-term strategies and ultimately have more impact for their beneficiaries. The proposed aims of the Foundation’s income diversification strategy, therefore, are:
- to increase the capacity of the Foundation’s grant-making capacity
- to reduce its reliance on a single income stream (however reliable)
- to provide greater certainty on future income levels to encourage longer-term investment
A formal budgeting process, scrutinised by the Trustees’ Audit & Risk Committee and approved by the full board of trustees, in place. The Foundation uses the xero.com accountancy system, with additional accountancy and payroll support provided by Sue Cater Accountants Ltd, to manage the Foundation’s finances and monitor performance against budget. The trustees have also approved a Financial Handling Manual which sets out all necessary financial systems for the Foundation. Trustees are provided with a monthly financial report as part of the CEO’s regular report and further scrutiny is undertaken by the Audit & Risk Committee as well as the full Board of trustees.
As a medium-sized charity, the trustees recognise that we need to invest our funds wisely and safely but have also agreed that we wish to back innovative programmes. With innovation comes higher potential impact but also, of course, higher risk. As trustees, we have agreed that we have:
- a reasonably high risk appetite in respect of the projects we support, although will always seek a balanced portfolio of projects of varying risk levels;
- a low risk appetite in respect of the reputation of the organisations with which we partner, preferring to work with credible and respected partners; and,
- a low risk appetite in terms of process, having put in place rigorous due diligence procedures to safeguard the Foundation’s funds and reputation.
In line with the above risk statement, the Foundation maintains free unrestricted reserves:
- to provide a level of working capital that protects the continuity of its core work;
- to provide a level of funding for unexpected opportunities; and,
- to provide cover for risks such as unforeseen expenditure or unanticipated loss of income.
Amount of reserves held
Trustees budgeted for a surplus of £7000 for the full year ending September 2019 (i.e. spanning the operations of the current company and the previous unincorporated body) to allow for unforeseen expenditure.
Reasons for holding zero reserves
Details of fund materially in deficit
Explanation of any uncertainties about the charity continuing as a going concern
Following a review of governance by the trustees, and with advice from our legal advisers, trustees agreed that an incorporated structure was more appropriate for the Foundation. As noted elsewhere, these new structures were concluded in March 2019 with the assets of the previous unincorporated body transferring to the new company limited by guarantee and the winding up of the previous body. This report covers the full year of operation ending September 2018 in terms of performance; the accounts however cover the period of the year from April 2019, reflecting the value of the assets transferred from the previous body.