Trustees Report

Financial Review

For the year ended 30 September 2023

Our Financial Position

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

This year, the Company committed to an annual donation of £750,000 and an additional restricted donation of £50,000 to support the growth of the Foundation’s Staff Hardship Fund. As highlighted above, the sale of CareTech Ltd’s shares provided the Foundation with a significant cash boost and the opportunity for the Foundation to implement its long-term investment and income diversification strategy.

CareTech Ltd 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 Ltd’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; and,
  • 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 £24,400, of which £21,400 is support towards facilities (IT devices and office costs) and £3,000 towards relevant projects through expertise sharing of staff members.

As noted 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 on 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); and,
  • to provide greater certainty of future levels to encourage longer-term investment.

As noted above, CareTech Ltd has made a restricted donation to the Foundation over and above its main annual donation over the last four years to support the Foundation’s Staff Hardship Fund. This year’s restricted donation remained at £50,000, all of which was committed during the year. Those funds provided for Championing Social Care programmes, as detailed above, are also treated as restricted income.

A formal budgeting process, scrutinised by the Trustees’ Audit & Risk Committee and approved by the full board of trustees, in in place. Trustees’ budgeting is 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. 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, which is reviewed at least annually.

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.

Our 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.

 

Since the 2021/22 Financial Year, the trustees have agreed the Foundation’s Reserves Policy to establish a
target of maintaining free reserves equal to six months of staff and associated costs. At the end of this financial
year the Foundation had £7,447,507 of unrestricted reserves, of which £3,700,000 has been designated as
relating to the investment property which is leased for a 30 year term. The Foundation has an investment of
unlisted shares valued at £1,772,909, and has commitments of £230,009 which are disclosed in Note 16 to the
Financial Statements, and therefore free reserves of £1,744,589. This is in excess of our target holding of
£200,000. The Foundation intends to use the excess reserves to supplement anticipated donations in future
years, in line with the trustees’ agreed general aim to maintain expenditure at similar levels to that of the last few
years.

Going Concern Review

Trustees have considered carefully the position of the Foundation as a going concern throughout the year and is confident that the charity remains well-placed in this respect. Trustees base this assessment on the following factors:

  • The Foundation has a formal agreement with CareTech Ltd in respect of the charitable donation it can
    expect each year. The agreement provides for a lengthy notice period should the company wish to withdraw
    from these arrangements.
  • The trustees note the long-term profitability and growth of CareTech Ltd over its long history.
  • The sale of the shares in CareTech plc has provided the Foundation with significant extra cash revenues,
    and the opportunity to provide a diversified income additional confidence.
  • The Foundation has agreed an Income Diversification Strategy, with good progress being made on its implementation.
  • Strong business planning and financial management systems are in place to contain costs.
  • Strong contingency and mitigation plans and measures are in place in the event of significant downward pressures on income, as well as the use of conservative budgeting assumptions.

Other financial matters

The Foundation operates defined contributions schemes for its employees. Contributions outstanding at the year end are disclosed in Note 23 to the Financial Statements.