Financial Review

CareTech Foundation Trustees’ Report 2020 >> Financial Review

Going concern

After making appropriate enquiries, the Trustees have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements. Further details regarding the adoption of the going concern basis can be found in the accounting policies.

Reserves policy

As a medium-sized charity, 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

Trustees budgeted for a surplus of £70,000 for the full year ending September 2020 to allow for unforeseen expenditure. At the end of this Financial Year, the Foundation held £167,310 of free reserves.

This year, trustees quantified updated the Foundation’s Reserves Policy to establish a target of maintaining free reserves equal to six months of staff and associated costs. The agreed Business Plan for FY2020/21 includes plans for £100,000 to be allocated to free reserves which will ensure that this target has been substantially met, The Foundation confirmed a formal long-term Donation Agreement with CareTech Plc to provide the Foundation with the required confidence as to the quantum of donations to ensure that the Foundation could meet its longterm commitments. The trustees’ budgeting is currently based on conservative estimates and a small amount of in-year unallocated funds, in addition to the Reserves target noted above, to allow for any significant unforeseen expenditure.

As noted above, CareTech Plc has, over the last two years, made a restricted donation to the Foundation – over and above its main annual donation – to support the Foundation’s Staff Hardship Fund. This year’s restricted donation in this regard was £50,000, all of which was committed during the year. No other restricted funds were received or held this reporting period.

Our financial position

The Foundation remains well-placed financially to deliver its long-term objectives, thanks to the funding agreed by CareTech Plc as set out in the Donation Agreement between CareTech Plc and the Foundation settled in July 2019.

This year saw a welcome growth in income from the Plc’s annual donation and an additional restricted donation to support the growth of the Foundation’s Staff Hardship Fund. Of most importance, however, was the settling of one million shares in CareTech Plc with the Foundation. This very significant addition will enable the Foundation to ensure its long-term financial sustainability in the longer term, as well as boosting short-tern income thanks to the dividend yield expected from the shares.

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. For the year ahead, the Donation Agreement provides for an increase in the Plc’s annual donation from 2% to 2.5% of pre-tax profits, following the success of the Foundation over the first three years of its support by the Plc.

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, the overall value of this in-kind support has been valued at just over £23,000 (compared to £15,568.63 last year).

As noted elsewhere in this Report, trustees have established an Income Diversification Strategy. 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 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

Unfortunately, the COVID19 pandemic has thwarted a number of elements of the implementation of the Income Diversification Strategy, notably the planned fundraising challenges as a result of so many events being cancelled due to COVID-19. Despite this, the Foundation surpassed its internal target with £5,158.09 raised through fundraising challenges this year and there are good plans in place for the resumption of fundraising challenges next year. The Foundation team also had good success in securing additional income for the Championing Social Care initiative, securing £90,000 over three years from three other organisations to match the Foundation’s own commitment. Beyond the actual income raised, this move shows that other organisations trust the Foundation to deliver programmes of mutual interest.

A formal budgeting process, scrutinised by the Trustees’ Audit & Risk Committee and approved by the full board of trustees, in in place. The Foundation uses the xero.com accountancy system, with additional accountancy and payroll support provided by Cater Chartered Accountants Ltd, to manage the Foundation’s finances and monitor performance against budget. The trustees have also approved a Financial Handling Manual that 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.

Other financial matters

The Foundation has no material pension liability. To date, the Foundation has had no material and trustees have not considered the extent to which the Foundation takes social, environmental or ethical consideration in to account in investment policy. However, trustees established a new investments target towards the end of this reporting year and have agreed to update the Foundation’s investment policy to reflect trustees’ commitment to pursuing an ethical investment strategy.

The shares in CareTech Plc acquired during this period can only be disposed of with the express written approval of the Directors of CareTech Plc. Trustees accepted this restriction when approving the terms of the acquisition of the shares.

Our approach to fundraising

The main source of income for the Caretech Foundation is the annual donation gifted by its founding company, Caretech Plc. Over the past year, there has been emphasis for the Foundation to diversify their income stream to ensure sustainability of the Foundation in its delivery of public benefit.

In line with the Foundation’s Income Diversification Strategy, we secured places in a number of fundraising challenge events, including the Vitality 10k Run, the Welsh Dragon Ride and Swim Serpentine, in this financial year. These places were made available to Caretech Plc employees and external stakeholders with the purpose that all donations would go towards the Foundation’s grants. Despite the COVID-19 pandemic, which forced several events to be postponed, supporters of the Foundation rallied and raised £5,158:

• The Foundation’s CEO, Jonathan Freeman, successfully completed the 2.6 Challenge in April 2020, raising £712 for the Foundation.
• Richard Hawkes, CEO of the Foundation’s partner, the British Asian Trust, completed an open water outdoor swim of 4km in September 2020. Out of the total of £6,388 that was raised for the mental health programme in Pakistan, £3,444 was raised for the Caretech Foundation.
• Caretech Plc employees raised £1,003 by successfully completing the Yorkshire 3 Peaks event in September 2020.

Over the course of this year, the Foundation has supported two new initiatives established in response to the COVID-19 pandemic: Connect the Love and Kit4Carers. These initiatives are supported by groups of volunteers who fundraise specifically for them, within the over-arching approach of the Foundation. The two initiatives fundraise through individual donations and through applications to other grant-making bodies. The Foundation monitors the activities of these volunteers and ensures that all involved operate in line with the highest possible standards of fundraising. In addition to the commitments made by the Foundation, Connect the Love raised £512 and Kit4Carers raised £11,702 over this reporting period.

The Foundation did not collaborate with any professional fundraisers or commercial participators to carry out any activities.

Regulatory issues

In developing its fundraising efforts, the Foundation has sought to apply the best practice standards of The Code of Fundraising Practice issued by the Fundraising Regulator. In recognition of the planned growth in its fundraising efforts, the Foundation is completing its registration with the Fundraising Regulator to ensure that all fundraising efforts comply with current regulations and best practice set out by regulators and professional membership bodies. Once registration is completed, the Foundation will share codes of best practice with supporters and relevant partners to ensure these standards are applied across all activities.

To date, we are not aware of any breach of The Code of Fundraising Practice. Due to the nature of delivering fundraising across multiple sites through volunteer effort, the Foundation is aware that there is a risk of breaching fundraising compliances. The Foundation is currently in the process of engaging with the Fundraising Regulator to establish a Compliance Policy to ensure all concerns are raised as a priority. The Foundation is currently in the process of reviewing its policies to ensure that they are fit for purpose for its expanded fundraising efforts.

Fundraising activities for the Foundation are available to Caretech Plc employees as well as external shareholders. All information relating to fundraising challenges are promoted on the Foundation’s website with links to the official website to ensure transparency. Fundraising agreements are shared with interested participants at the earliest possible time. The Foundation understands that, due to inexperience in fundraising for charities, some of our supporters may require additional training and support. These services are offered to fundraisers once they enter into agreement with the Foundation.

All fundraising donations are processed through the Virgin Money Giving website, which allows the Foundation to monitor fundraising efforts. The Foundation actively communicates with supporters and engages on their social media to encourage transparency.

The Foundation has a Complaints Policy that outlines how complaints should be dealt with within the charity and when the complaints should be escalated to senior management. The Complaints Policy is available on the Foundation’s website. The Foundation has taken active steps to ensuring the Policy is shared at the earliest opportunity with the fundraising agreements for individuals undertaking fundraising challenges. The Caretech Foundation has received no complaints with regard to fundraising over the past 12 months.

The Foundation engages with those in vulnerable positions as part of their day-to-day activities. The Foundation has a Safeguarding Policy in place and a nominated Safeguarding Trustee as part of its efforts to protect vulnerable people. To ensure our vulnerable supporters are able to undertake safe and effective fundraising, the Foundation is currently reviewing its Safeguarding Policy. The nature of the work undertaken by the Foundation ensures all employees are comfortable recognising and working with those in vulnerable positions.