Posts Tagged ‘Business’

Eye Don’t Believe It

1079949 – AGE CONCERN SLOUGH AND BERKSHIRE EAST

Who Would Be A Charity Auditor

When things are bad they are often worse. Having survived a whistle blowing episode in 2014 and remaining independent of the Age UK consolidation you would expect this charity to take extra care. With new enthusiasm let us hope this is what happens. Extracts from the latest published report and accounts continue the story.

‘Due to the fields of activity in which the charity operates and its trading enterprises, there is a risk that the charity could suffer serious reputational damage as a consequence of the actions of its staff (e.g. in
advocating for clients), volunteers, trustees or its wider interests such as campaigning. This risk is managed by ensuring …. that good governance arrangements are in place (e.g. declarations of interest and governance polices) to ensure all relevant legal, statutory
and regulatory compliance is adhered to.

The Trustees who served during the year to 31″March but have recently resigned were:
A Cannings
B Mittal
R Whitehouse
R Dhokia

R Akwa was appointed to the Board on 26 September 2018.

Post Balance Sheet event
Since the year end, the group concluded negotiations with a major supplier which resulted in the cancellation of certain amounts owed by the charity at the year end. The benefit of this transaction which relates to this financial year end is £105,975 and has been recognised in these financial reports

The amount due from the subsidiary … was unsecured, interest free and there were no fixed terms for repayment. The Trustees have considered the recoverability of this amount which was £321,484 (2017: f325,968) and in the opinion of the Trustees, the full amount should be recoverable and no provision against that amount needs to be made.’

Oddities from a cursory review of the report and accounts lodged with the charities commission include  the worries of a third year of excess costs over income: debtors of quarter of a million pounds when most shop income is taken as and when a sale arises:  Lease commitments lasting beyond 5 years that over time approach one million pounds:  Profit related pay introduced at loss making charity shops Handy Help Ltd

Concerns

  • Overtrading is a business risk and having opted for a business-charity model this outfit seems to have fallen foul in many ways. Such a badly broken business would be closed, as arguably this charity should be but how do they extract themselves and who will fill the social needs.
  • The charity has a 33% interest in Interhelp Limited the Age Concern company selling insurance and financial products. There is a negative balance sheet and adverse publicity has dogged the project.

Dealers in Drugs – Opioids for the Masses

Not all drug dealers have the negative connotations  one associates with street drug suppliers; consider the pharmaceutical based  Welcome Foundation or the Sackler family.

1128926 The Dr Mortimer And Theresa Sackler Foundation’s aims are  ‘the advancement of research and education in England and Wales and
elsewhere in the fields of art, science and medical research.’ The Sacklers funded the Medical Research Center at the University of Cambridge, our School of Clinical Medicine and the Faculty of Medicine at Tel-Aviv university as well as numerous other research programs and fellowships.

The wealth of the $multi-billion families of Raymond and Mortimer Sackler arises from Purdue Pharma a privately owned and operated global company which sells the opiate drug Oxycontin and Oxycodone.

Issues For Purdue Pharma

  • Major health concerns continue to surface about the use and abuse of synthetic opioid drugs. Increased mortality, reduction in life expectancy and more suicide & liver disease are cited.
  • Federal judges in Ohio are allowing public health organisations to sue opioid manufacturers and distributors.
  • In Connecticut the attorney general alleges that ‘the Purdue Pharma’s board and executives made huge financial gains by misleading doctors and patients about how addictive their prescription opioid medications were’.
  • ‘Massachusetts Attorney General Maura Healey said the family that owns the drug company Purdue Pharma is personally responsible for the company’s role in the opioid crisis’   purdue-‘pharma-family-oxycontin-abuse
  • Back in 2007 fraudulent promotion of OxyCotin resulted in a $600million fine for Purdue plus personal fines for the executives responsible. Perhaps this will now be an outbreak of litigation addiction.

Concerns Beyond Charity

  • Other drugs in widespread use in the UK including fentanyl, tramadol and methadone are prone to causing addiction and other health problems.
  • The United States is in the midst of a drug crisis, with dramatic increases in the rate of opioid overdose deaths. Australia’s drug research center says ‘Powerful opioid fentanyl poses serious risk of fatal overdose’. Wake up UK it is also happening here!
  • Can charity and business mix?
  • Who has the ability to police and prevent corporate and personal abuse of such powerful narcotics. Charities are left to pick up the pieces.

Clothing Charity Stitch Up

CAPITB Trust 1000290 succeeded  the Clothing and Allied Products Industry Training Board as a perpetual trust or for as long as the industry has a requirement. (Or as long as the money lasts?) The chairman reports he is ‘pleased with the increase in the distribution of grants paid out in 2016. In total, the amount granted was £50,100 versus £42,000 the prior year.’ (No big deal)
The charity has over £3m in unrestricted funds but two non-charitable subsidiaries each made trading losses totaling over £100,000 in 2016 and further investment losses contributed to a reduction in reserves of in excess of quarter of a million pounds.
The Clothing and Allied Products Industry Training Board had its roots in West Yorkshire. Alongside many notable businesses in the industry they were part of the then ‘Northern Powerhouse’. This is shown by the location of the professional advisers and former bankers Yorkshire. It is hard to detect  this trust is going to help make these industries great again.

Principal activity

Charity -The promotion of education and training for the public benefit of those employed or intended to be employed in the British apparel industry.
CAPITB Limited – Provision of training and technical consultancy services
RTITB Limited – Property rental

Suggested activity

Sell the consultancy business, sell the property, eliminate the pension and staff millstones, improve investment management and become a small grant giving charity without all the baggage.

Where are all the Plastic Bag 5p’s Going

Since October 2015 shoppers in England are charged 5p for every new single use plastic bag they obtain from a shop . Scotland started a similar scheme in 2014. The income should go to good causes.

The charge applies only to shops or chains with 250 or more full-time employees and there are 261 such chains registered. Some items are excluded such as unwrapped food, raw meat and fish where there is a food safety risk, prescription medicines, uncovered blades, seeds, bulbs and flowers, or live fish and paper bags. Smaller businesses can introduce a charge if they wish but remain unregistered.

Benefits from the Law

  • £60m savings in litter clean-up costs and less pollution in seas and rivers.
  • Large savings from the reduced hydrocarbon consumption and other environmental benefits.
  • Over £400m should be raised for good causes if the 5p’s collected are passed on to charities as originally envisaged?
  • Increased public awareness of plastic pollution.
  • Retailers are not spending money on single use bags they used to give away.

Charity Schemes

  • Retailers  need to report what they do with the money. Smaller charities could pitch direct to retailers for a slice of the cash generated.
  • Some major supermarket chains, including Aldi, Marks and Spencer, Sainsbury’s and The Cooperative Group have worked with CAF.
  • Waitrose have just concluded a deal with  Marine Conservation Society to fund clean ups.
  • Tesco have just stopped  selling “single use” 5p  bags instead offering shoppers reusable “bags for life” costing 10p. Double or quits for their local community grant scheme.

Bags of Suspicion

Are some retailers keeping the 5p charge to boots profits or to offset the cost of all the bags and packaging they supply.

Are some retailers collecting the charge without being require too.

Are some retailers and charity administrations using the income to cover inappropriate costs  or none charitable purpose.

 

Hybrid Animal between Business and Charity

Support Adoption for Pets  Registered Charity 1104152 also registered with the Gambling Commission.

The charity provides support for national animal welfare organisations and locally based re-homing centres through a combination of grants, joint fundraising activities and events. The charity also operates small animal adoption centres in a large number of pets at home stores.

Cross Between Business & Charity

  • Support Adoption for Pets is an independent charity established by Pets at Home in 2006
  • The Charity address is c/o Pets at Home, Handforth, Cheshire SK9 3RN.  Six of the Trustees of the Charity were also employees of Pets at Home Group.
  • Pets at Home branding and support is closely linked with the charity.
  • The principal funding sources for the Charity are the Support Adoption scheme, operated through Pets at Home stores, whereby donations from new pet owners, fundraising within stores, till donations, ‘Rounding Up’, charity boxes and bespoke store fundraising events contribute to the £3.6 annual income.
  • Pets at Home have 400 stores offering a  re-homing service for small pets.
  • Support Adoption for Pets offer funding support to pet re-homing organisations through a Grant Programme. The list of testimonials is impressive.
  • Private equity investors Kohlberg Kravis Roberts  recently bought the Pets at Home retail chain for a reputed £955m. They must appreciate and value the close link to this charity.
  • In a further business link the charity has a lottery managed by The Unity Lottery.  Unity itself is further administered by Sterling Management Centre, a registered External Lottery Manager.

Sporting Land Development

1141811 – SURREY CANAL SPORTS FOUNDATION LIMITED

Still hitting the headlines, this charity is involved with  land around The Den Millwall FC’s football ground, offshore company Renewal and the new multi-million pound Bermondsey development. The media continue to question loans and funding arrangements and  relationships with Sports England and Lewisham council. To add to the problems a member of the public contacted the Charity Commission in January 2017 with some specific concerns including that:
  • the charity was a vehicle for money laundering and/or tax avoidance
  • there were conflicts of interest in the charity’s decision making, and links between the charity, a developer and local officials
  • the charity’s income was low, while its expenditure was high
  • that the charity had failed to achieve its stated aims

After  investigating the issues raised that were within their regulatory remit  the commission issued a report that included a conclusion ‘We considered that the charity had addressed our regulatory concerns and demonstrated that it was acting independently, we had no ongoing concerns about the funding of the charity. We closed our case in March 2017.’ The full report can be read here.

The Commission was able to provide public assurance that  the charity is operating in compliance with charity law. They did not examine the merits of the development scheme and the compulsory purchase orders that fall outside their regulatory remit.

‘We have ensured the trustees are clear that they need to continue to ensure that the charity is independent and that any decisions are made in the best interests of the charity. Charities can attract considerable public scrutiny where they are involved with decisions that are unpopular or controversial.

The public expect that charities and trustees should be as open and transparent as possible regarding the decisions they make. It is especially important where there may be an impression that individuals have conflicts of loyalty that trustees always act in the best interests of their charity. The key to making the right decisions (and being able to defend them) as a trustee is knowing your role and responsibilities.’

Reinforcing guidance for trustees

  • ensure your charity is carrying out its purposes for the public benefit
  • comply with your charity’s governing document and the law
  • act in your charity’s best interests
  • manage your charity’s resources responsibly
  • act with reasonable care and skill
  • ensure your charity is accountable

Blood and Bone Marrow Cancer Charities

Cancers and diseases of the blood particularly in children generate a high level of fear and emotive concern.  Putting the ‘Child’ in the title of a charity may help with fundraising but is also a focus for remembering the pain and anguish that can be caused by cancer and blood problems.

Looking at a sample of the charities currently operating in this area they can be placed in three categories. Those supporting sufferers and their families with support information and advice. The funding charities who support clinical and related research and thirdly the local ‘light touch’ charities who have been motivated to extraordinary efforts by personal circumstance.

Our motivation for focusing on these charities is to highlight some of the good work but also the concerns for continued or increasing effectiveness.

Blood Relative Charities

216032 Bloodwise  was formerly called Leukaemia & Lymphoma Research until 2015. The rebranding and name change has led to some confusion and cynicism. Early problems with web site changes damaged confidence as does spending 31% of income  on fund raising. Given the high proportion of Legacy income this cost of fund raising seems excessive. Bloodwise partner with  the Calendar Girls, musical,  film and calendar raising £4m.
One of  over 50 registered Leukaemia charities Bloodwise  has  spent £500m over the last 56 years to fund world-class research into what they say are 137 different types of blood cancer.

1107328 – CLIC Sargent was created from a successful merger between ‘Cancer and Leukaemia in Childhood’ (CLIC) and Sargent Cancer Care for Children named in memory of the conductor Sir Malcolm Sargent. For children with cancer teams can provide nursing and specialist support to help families limit the damage cancer causes beyond their health.

1156384 -Child & Teenage Cancer & Leukaemia Foundation registered in 2014 had a small income £12,648 in 2015 and no current accounts. Information is scant despite a positive web site. They, like many small charities hit the radar via fund raising activities.

1118733 – The Maria Watt Birmingham Foundation for Childhood and Teenage Leukaemia.  Formed after the death from leukemia of 17 year old Maria. Over £400k has been raised and  The Maria Watt Foundation was instrumental in setting up the Be Child Cancer Aware campaign see below.

1141987 Be Child Cancer Aware has provided millions of ‘child cancer awareness cards’  to thousands of UK schools. BCCA is primarily concerned with helping the early-identification of cancers by disseminating the signs and symptoms of childhood cancers as widely as possible. Income includes charity bag collections.

For more on Hepatitis and Haemophilia read Bloody Issues

Who Controls Bone Marrow

803716 -Anthony Nolan generates annual income of £47m of which £34m is from donor provision. They help maintain a register of volunteer adult bone marrow donors who are prepared to donate their bone marrow to unrelated patients in need of  transplants.

They searche worldwide on behalf of UK patients for suitable donors prepared to donate stem cells. Additionally Anthony Nolan undertake pioneering research to improve the outcome of stem cell transplants.

1153917 – The Rik Basra Leukaemia Campaign a low income charity punching above its weight by running  stem cell registration events to add donors to the UK stem cell register.

1150056 DKMS Bone  Marrow Donor Center Branded as ‘DELETE BLOOD CANCER UK’, DKMS launched in February 2013 and already generates £3.6m revenue mainly from donor typing services and service provision. Their key mission is to recruit, retain and motivate potential stem cell donors to be on standby to save blood cancer patients’ lives. They are part of DKMS a 501(c)(3) non-profit organization based in the United States and Deutsche Knochenmarkspenderdatei  GmbH –

Concerns

  • There is  international commercial activity to register and match potential stem cell and bone marrow donors. It is more the role of Government than the charity commission to control and monitor these activities.
  • Why are there so many smaller charities dedicated to childhood forms of cancer. It must be possible to establish a method to optimise personal commitment and involvement to maximising the benefits from legacy or donation income.
  • Changing names, rebranding, launching social media and new web activity needs clear plans, trustee backing and sound capable management.
  • Charities need a ‘narrative’ or cohesive brand story to maximise impact and awareness. From small beginnings great charities can grow: the Eastwood family started Leukemia Research Fund, CLIC started by Bob Woodward, Anthony Nolan family and Sir Malcolm Sargent memorial all have made strong contributions. We should encourage and help new visions.

The Art of Auction Acquisition

A. Alfred Taubman 1924- 2015 His Legacy?

Is it a done deal? It sure looks that way and there seems to be plenty of funds available so why not. Still there is a slightly bad taste to a deal to the Save the King appeal at York Civic Trust. The object of York’s desire is a 17th century wooden carving celebrating psalm 150 with King David playing a harp and Saint Cecilia playing an organ. It is said to have been created by  Grinling Gibbons whilst he was working in York.

It sold recently by Sotheby’s New York,  for $ 162,500 including buyers premium after a pre-sale estimate of $250,000 — $350,000. A small part of a $500m auction of Al Taubmans’s art collection.

Lets have a Fund Raiser

York’s appeal is for £300,000 of which £242,500 is already assured from the Heritage Lottery Fund, the Art Fund and Arts Council / V&A Purchase Grant. The public appeal launched in April 2017 is for a final £60,000 ‘to save this panel and secure the purchase….’

Strange then that it is likely to ‘become the focal point of the exhibition Made in York: Inventing and Enlightening the Georgian City’ from 5 May 2017 (almost before the money is donated.)

Strange also that the art work was part of the estate of the Sotheby’s former chairman Anthony A Taubman. As the former chairman of Sotheby’s, he served time in federal prison in 2003 over his role in a price-fixing scandal with Christie’s.

The third strange aspect is an assumption that the art work will be owned by the  York Civic Trust 229336. In January 2016 this charity had over £3.6m available stock market investments. The management fees paid by the Civic Trust are £20k per year! The York Conservation Trust 504302 act as heritage property asset owning landlords to various sites in York.

Concerns

If the resources are already ‘in the bank’ why be disingenuous raising more money. If the intention is top up resources then why not say so. Poor behaviour risks damaging appeals for other charities and causes.

How open are the surrounding transactions and is money being wasted when it costs more than twice the hammer price compared to buying at auction.

It is not Charity Chit Chat’s role to question the who’s and whys of a deal that fits within the scope of the charitable purpose. However in the long term pushing the boundaries to the limit does no favours to the charity industry.

 

Fair Trade Industry – Should It Focus on ‘Not Unfair Trade’?

Globalisation and commercialisation has increased the rate of change across many agricultural and industrial sectors. Organisations and charities are trying to move with the times but need to retain their vision and focus on the World Fair Trade Organisation (WFTO) principles of fair trade and the relevant charitable objectives.They do not need to become more aggressively  business like or political but world wide ‘fair trade’  has become an industry in its own life time with a raft of international assessors, promoters, branders and do betterers.

Leveraging exceptional value under WFTO principles of fair trade.

The  UK based charity  1043886 – THE FAIRTRADE FOUNDATION   has extremely wide objectives ‘To relieve poverty suffering and distress in any part of the world and to promote research into and education concerning the causes and effects of poverty.’ These aims are open ended such that the 100 or so Fairtrade Foundation employees have a business model for generating most of the funds required by using the ‘brand’ through activities based on licensing. This is the tip of the iceberg with a billion euro income for producers and probably more than double that for retailers and manufacturers.

More specifically Fairtrade Foundation (as part of wider fair trade) is :-

  • ‘Providing an independent certification of the trade supply chain with their fairtrade mark as the consumer guarantee.
  •  Facilitating the market so that producers can sell to traders and retailers in order that the market for fairtrade grows.
  • Raising awareness among consumers of the need for fairtrade and the importance of the fairtrade mark.’
  • For a charity, licensing is a very commercial business like activity but it would be churlish to question the charitable motives which are designed to help small farmers and businesses.

Since before 2010 the charity has had steady income of around ten million pounds a year from licenses bought by retailers and producers using the Fairtrade  supply chain, verification methods, reputation,  and logo. It is a complex and multi-faceted business where the license income has stalled but the volume of underlying ‘fair trade products sold seems to increase’. Somewhere the money trail seems to under perform against the ideals.

Global Fair Trade  is Fragmented to Divide and Rule

WFTO is the worldwide network of Fair Trade organizations and includes WFTO Europe which receives some funding from the EU and our own Fairtrade Foundation. The goals are to enable producers to improve their livelihoods and communities through Fair Trade. (see detailed principals below)

WFTO’s  fair trade certification scheme and mark is verified by self-assessment, mutual reviews and external verification.

There has been growth and unnecessary competition amongst fair trade certifiers, and ‘products’ in the market including Fairtrade International , IMO, Rainforest Alliance, Make Trade Fair, Eco-Social and Fair Trade USA .

Major corporate manufacturers and retailers like Starbucks are considering withdrawing from full certification. Suchards and Cadburys have chosen to establish their own sustainability programme ‘Cocoa Life’ but have a ‘side deal’ with Fairtrade that allows a continued use of a logo.

More Concerns  and Issues with Fair Trade

In recent years a greater awareness of issues highlighted by the advocates of fair trade  have been a major plus. However the commercial and business world is progressively modifying the concepts, ideals and attainments to suit their own ends. Fair trade its self has become a commercial competition, power base and business. Perhaps the time is coming to refocus onto Not Unfair Trade!

  • Where fair trade under performs it should return to focusing on helping the producer and their community.
  • Less scrupulous retailers, importers, middlemen and consolidators who abuse ‘Fair Trade’ exclusively for their own ends need to be ‘outed’. This is ‘Unfair Trade’.
  • Where potential benefits fail to filter down due to political interference fair trade needs to work in partnership with NGO’s and poverty focused charities.
  • Coffee production is up to 50% of fair trade schemes yet is hostage to the commodities  market and true fair trade is impractical.
  • Producers complain about costs of compliance, oversupply of certification, rigid rules and failure to enforce the standards and discrimination by large producers  .
  • Many people volunteer to support fair trade doing unpaid work for  Fairtrade in schools, towns, communities and with local governments or parliament. They may be misled if the benefit are going to businesses in rich countries or political influence in the producer countries.

WFTO Principles of Fair Trade

Read On…

Nesta a Business or Charity

The National Endowment for Science Technology and the Arts NESTA was a public body designed to promote creativity, talent and innovation across a wide spectrum of areas and interests. In 1998 it received an endowment from the national lottery and has benefited from various government support.  An investigation and report in 2010 concluded ‘that, while NESTA provided a valuable role, it did not need to be a public body and that its activities were better suited to the voluntary sector’. This led to NESTA becoming an independent charity in 2012 when it changed its name to Nesta with gifted assets of £343m.

In summary the main object and purpose of the charity is  to advance education, and in particular the study of innovation by the promotion of research and the publication of the useful results. By working to improve the conditions in which great ideas can flourish – addressing the policy and structural conditions that can either energise or stifle creativity.

Key Items from 2016 Report & Accounts

  • Assets and funds carried forward from March 2016 were £384m with less than 7% held in ‘mixed motive early stage companies.
  • A significant proportion of investments are in overseas quoted companies and showed a loss in the year. ‘In 2016 global equities generated a loss of £10.2 million, compared to a gain in 2015 of £25.1m.’
  • Income from investments and endowment fund was £1,956,000 but investment management costs of £1,257,000 wiped most of this out.
  • Staff levels have increased by 75% in four years to 167 full time equivalents with 27 of those earning over £60,000 pa.
  • The Nesta trust which holds the endowment fund has a Protector appointed by Government to oversee the administration of the Trust – with a principal trustee being Nesta. Additionally Nesta has 9 committees and 10 trustees running a complex operation.
  • Grants of £2,126,000 were made to 120 organisations during 2015/16 including charities and public bodies  compared to £12,288,000 in the prior year.

Concerns and Issues

Nesta is well recognised in the business fraternity and shares some wider business ethics and aspirations to good effect. It is less known as a charity.

The endowment has been protected in scale if not in real terms but is it time to set a date for the ultimate use and expiry of the trust fund.

In the same way that NESTA did not need to continue as a public body should all or part of Nesta become a commercial and financial business.

The reduction in the value of grant awards seems logical and could go further to avoid none productive costs being incurred both by Nesta and the recipients.

Is the existence within Nesta too comfortable and in danger of drifting from the core purpose and intent. How do this and similar charities retain focus.

Costs of holding investment reserves, growth of staff levels and control of outsourced charitable work need to be kept under review.

The 2017 reports and accounts are awaited with interest. Detail of the numerous schemes, ventures and investments may then be worth further comment