the haysmacintyre annual charity conference

The haysmacintyre AnnualCharity Conference

Tuesday 6 June 2006

Welcome

Richard Weaver

Partner, haysmacintyre

Overview – The Sector

• 190,000 charities• Public trust and reputation• 88% of people surveyed said the main factor

in their trust of charities was an inherent belief that they were well managed and spending their money well

Overview – The Sector, cont…

• 84% said they were more likely to trust a charity if they'd heard of them - so a charity's profile affects their trust rating

• 44% of people trust big charities more than smaller ones

Overview - Regulation

• Regulation and accountability– Changes at the Commission– Filing of accounts– SORP 2005– SIR– Guidestar UK

• Increased public scrutiny

Overview – Commerciality

• The fight for funding, especially core funding• Charity fundraising• Maximising investment returns• Service delivery = downside risk• Charities must make a profit…..sorry surplus!

The future

• Charities future role in society• Financial constraints – full cost recovery• The need to look forward strategically and

identify new opportunities• Obligations on trustees to be more active

The days events

• Regulation – Charity Commission

• Legal update – Farrer & Co.

• Investments and the economy – Rensburg Sheppards

• Fighting for your cause – Diana Garnham

The days events

• New ideas and regulation in fundraising – Institute of Fundraising

• Effective leadership – ACEVO

• Compliance – Reporting and VAT

• Panel to answer your questions.

Developments at the Charity Commission

and in charity regulation

Andrew Hind

Chief Executive

Some context - the sector

• 190,000 registered charities• Annual income £38 billion• 78% of income accounted for by 3% of

charities• 600,000 paid staff• 900,000 trustees• 27% of population volunteer once a

month

A time of great opportunities

• New Office of the Third Sector

• New Minister for the Voluntary and Community Sector

• Joint Cabinet Office/HM Treasury review of the third sector

• CSR 2007

• A new Charities Act (?)

• A rejuvenated Charity Commission

A new vision and mission

Promoting best practice

• We are putting more emphasis on encouraging charities to improve their performance

• Creation of Charity Effectiveness Division to capture knowledge from our casework

• New priority to building partnerships to encourage innovation and collaborative working across the sector

• Sharing our brand is now firmly on the agenda

Recent developments in charity regulation

• Improving standards of governance

• Maintaining independence

• Promoting public trust and confidence

• The Charities Bill

Trustees are the key to good governance – some facts

• 900,000 trustees

• 76% are over 45; 42% are over 60

• Only 0.5% are under 24

• 55% are male; but 70% for large charities

• 4.8% are from a black or minority ethnic community

• Average board size is 10; 19 for large charities

Sources: Charity Commission (2005) and Chris Cornforth/NCVO (2001)

Recent developments - 1

• Improving standards of governance– The new code for the VCS

– Clarity about strategic direction

– Value leadership at all levels

– Ensure trustees are effectively recruited, supported, developed

– Understand complementary nature of executive and non-executive roles


• Maintaining independence– Executives and trustees must ensure

that their charity remains independent– 37% of sector’s income is from

government– Most charities are small, with no public

service delivery role– The ‘Wigan and Trafford’ decision


• Promoting public trust and confidence

– Promoting accountability and transparency with stakeholders and public

– Role of the SORP and SIR is critical

– Performance of the leading charities on filing times needs to improve

– Never lose your passion for achieving change and delivering results on behalf of beneficiaries


• Charities Bill– Public benefit test– Charity Tribunal– Charitable Incorporated Organisation– Measures to facilitate fundraising regulations– Increases to thresholds, new group accounts

provisions– New objectives and powers for Charity

Commission

Developments at the Charity Commission

and in charity regulation

Andrew Hind

Chief Executive

Legal update

byJames Carleton

Partner, Charity & Community team

haysmacintyre Charities Conference 2006

In this session

•Where are we now with the Charities Bill

•Self Regulation of Fundraising•Charities and Trustee Investment (Scotland)

Act 2005•Employment•Other legal developments

Charities Bill – where are we now

Strategy Unit recommendations Draft Bill, First Bill, Second Bill … more

amendments made and to come Completed its passage through the House

of Lords What will happen in the Commons?

Charities Bill

New Heads of Charity

Trading

Charity Commission & Charities Tribunal

Fundraising

Charities Bill

Other charity law reforms

Mergers

Exempt & excepted charities

Small charities

New & developing legal structures

CIOs - Charitable Incorporated Organisations

CICs - Community Interest Companies

Industrial & Provident Societies

Regulation of Fundraising Scheme (RFS)

Administration

Est. of Fundraising Standards Board (FSB) Initially to be housed within the Institute of

Fundraising Overseen by Council

Codes of Practice & Donors’ Charter To become freestanding body


Membership

Members’ obligations

Adhere to Codes and Donors’ Charter

Use logo and provide donors with details of RFS

Run compliant internal complaints scheme

Monitoring and reporting

Pay a membership fee


Complaints

Stage 1: Complaint to the body for whom funds

are being raised

Stage 2: Complaint reviewed by FSB

Stage 3: Complaint reviewed by Independent

Complaints Reviewer

Stage 4: Council adjudication

Employment (1)

TUPE Regulations 2006

New unfair dismissal and redundancy limits

Age Discrimination Regulations

Work and Families Regulations

Consultation obligations on changes to pension entitlement

The Employment Equality (Sex Discrimination) Regulations

2005

National Minimum Wage increase

Employment (2)

Volunteers: South East Sheffield CAB -v- Grayson:

Is there a contract?

Is the Charity obliged to provide work?

If the volunteer fails to work would it be a breach of

contract?

Employment (3)

Are they unpaid (other than payment of actual, out of

pocket expenses)?

Can they withdraw their services without notice?

Can the Charity stop the voluntary work without notice?

Does the Charity deny them the fringe benefits it

provides to its employees?

If all “yes”, they’re probably a volunteer

Employment (4)

Employees and consultants

Contract (need not be in writing)

Legally binding

Consideration

Employee

Consultant

Other legislation

• Company Law Reform Bill

• Charities and Trustee Investment (Scotland) Act

2005

• Finance (No 2) Bill 2006

- substantial donors

• Freedom of Information Act 2000

- Informational Tribunal

James Carleton020 7917 7405 (T)020 7917 7408 (F)[email protected]

Rensburg Sheppards Investment Management

June 2006

Investment Outlook and

Strategy

Presented by

John Haynes


Introduction….setting the scene

The Economic Backdrop

The Outlook for Asset Markets

Our Strategy

Summary & Conclusions

Agenda


Source Bloomberg & Datastream 30 May 2006 A Bear and a Bull Market in a half

decade

S&P Composite 7% 4% 35% 15% 1% ( 31%)

FT-All Share 17% 17% 48% 48% 3% 3%

FTSE Europe x UK 21% 21% 67% 58% ( 6%) 5%

Nikkei (Japan) 41% 31% 88% 77% 18% ( 6%)

Emerging Markets 41% 37% 146% 110% 131% 59%

WORLD 18% 14% 59% 36% 23% ( 15%)

UK 5% 14% 37%

Europe ( 1%) 11% 71%

US ( 7%) ( 12%) ( 5%)

Goldmans Index 18% 51% 26%

Gold 52% 54% 69%

Oil 36% 106% 76%

Cash UK Libor £ 5% 14% 25%

£££

Commodities

Local Currency

Local Currency

Local Currency

3 Year 5 Year1 Year

Eq

uiti

es

Lo

ng

B

on

ds

The last five years


Introduction….Setting the scene



Our Strategy


Agenda


Economic Outlook

GDP 2004 2005 2006E 2007E04 Share Of

Global $ GDP

Global 5.1% 4.5% 4.5% 3.8% 100%

US 4.2 3.5 3.4 3.1 31.0

UK 3.1 1.8 2.3 2.6 4.7

EMU 2.1 1.6 2.3 1.4 20.2 Emerging Europe 6.4 5.7 5.6 5.2 2.5

Japan 2.3 2.6 3.2 2.3 14.6

Asia Ex-Japan 8.0 7.6 7.1 6.1 13.5 China 10.1 9.9 9.5 7.5 4.3 India 7.4 8.0 7.0 6.7 1.3

Latin America 5.8 4.3 4.4 3.8 6.0

World Growth at a Glance World GDP Growth

0

1

2

3

4

5

6

7

8

71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07e

0

1

2

3

4

5

6

7

8

Recession Threshold

Linear (Long-termTrend)

Source: Morgan Stanley

A slow-down in growth, not a collapse


Inflation

But growth is only half the picture

Inflation CPI - y/y % Chg

-2

0

2

4

6

8

10

12

14

May-80

May-82

May-84

May-86

May-88

May-90

May-92

May-94

May-96

May-98

May-00

May-02

May-04

May-06

US UK Japan Europe


Global Real POLICY Interest Rates

-3-2-10123456789

101112

M-86 M-88 M-90 M-92 M-94 M-96 M-98 M-00 M-02 M-04

UK US Eur Japan

…..there is an increasing risk of a policy mistake

Global Monetary Policy

GLOBAL Yield Curves

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

5.5

0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30

UK USA EUROPE JAPAN





Our Strategy


Agenda


Valuation 1

At first-blush, stocks look appealing . . .

Index Performance Since Dec '99 -5Yr -3Yr

US -14% 1% 31%

UK -11% 2% 46%

Europe -19% -8% 64%

Japan -2% 27% 101%

Trailing P/E Dec '99 -5Yr -3Yr May '06US 31x 25x 19x 16xUK 24x 20x 14x 13xEurope 30x 24x 17x 14xJapan 143x 101x 54x 21x

Trailing P/E - NORMALISED Dec '99 -5Yr -3Yr May '06US 33x 26x 18x 19xUK 24x 20x 12x 15xEurope 27x 23x 12x 16xJapan 27x 20x 13x 21x

Long Bond Yields Dec '99 -5Yr -3Yr May '06

US 6.4% 5.5% 3.4% 5.1%

UK 5.5% 5.2% 4.1% 4.6%

Europe 5.4% 5.2% 3.7% 3.9%

Japan 1.7% 1.3% 0.5% 1.9%


Valuation 2

. . . but objectively stocks and bonds now have similar attractions

Dividend Discount Model (Over)/UndervaluationDec '99 May '01 May '03 May '06

US -48% -34% -4% -11%UK -38% -24% 23% 0%Europe -43% -31% 36% -3%Japan -24% 2% 55% -2%

Market PerformanceDec '99 - May '01

May '01 - May '03

May '03 - May '06

US -15% -23% 31%UK -13% -30% 46%Europe -12% -44% 64%Japan -23% -37% 101%

Using normalised earnings & long bond yields, long term historic EPS growth rates & equity risk premia


. . . With moderating inflationary pressures, growing earnings & forecast upgrades, both bonds & equities should deliver positive

returns

Earnings Forecasts


• To Growth- Commodity “taxes” impact worse than expected- Policy error- Disorderly $ damages corporate confidence- (Geo) Political dislocation- Health scare (pandemic)- Financial “event”

• To Valuation- Inflation

Risks

…..Increase with the maturing of the economic cycle


• Recent evidence of complacency, not of euphoria. • M&A at record levels, but cash component is high

US Equity Investor Sentiment Index Bullish Percentage Of Survey Respondants

May-06-

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2.20

Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05

Sentiment

Global M&A Activity$Bn + 6m M.av

0

50

100

150

200

250

300

350

400

450

500

Sep-99 Sep-00 Sep-01 Sep-02 Sep-03 Sep-04 Sep-05

Investors do not have unrealistic expectations of likely returns


S&P 500 (top) v VIX Volatility Index

0

200

400

600

800

1000

1200

1400

1600

Jun-00

Dec-00

Jun-01

Dec-01

Jun-02

Dec-02

Jun-03

Dec-03

Jun-04

Dec-04

Jun-05

Dec-05

10

20

30

40

50

60

70

80

90

Volatility

…..but becoming more realistic about increasing risks


US $

The Dollar is undervalued versus the major currencies


• Equities / Bonds / Cash now offering average attractions relative to each other. No “outstanding” value. Broadly “neutral” weightings relative to benchmarks are appropriate

• Soft landing => Modest positive returns expected for all. Equities should earn their premium, bonds their coupon with cash setting a more challenging benchmark than in the past.

• Increasing cyclical risks suggest tactical reduction in exposure to “higher beta” assets & increasing exposure to more defensive (US v Emerging Markets / Commodities)

The Outlook For Asset Markets

Summary





Our Strategy


Agenda


Asset Class RankingEquity / Bonds / Property / Other / Cash

Currencies / Geographic Priorities

Equity Thematic PrioritiesLarge / Small Cap, Growth / Value

Secular & Cyclical Sector Tilts

Investment Selection

Portfolio Construction

Process


In search of returns

No ‘low hanging fruit’ between equity markets

Equity markets relative valuation spreads


Large Cap v Small Cap

Using US data as the illustration,

Larger companies now look attractive

again…


In search of extra return

Growth v Value (US Data)

. . . as do growth stocks


A Possible play on an end to US Monetary Tightening



Unlikely to re-submergeSource: U.S. Census, OECD, IMF, Stifel Nicolaus format and opinions.

G-7 Nominal GDP as a Percentage of Global GDP(All translated into U.S. dollars)

53%

55%

57%

59%

61%

63%

65%

67%

69%

1970

1971

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Pres. Reagan begins to defeat U.S.S.R.

1981.

Cold War ends 1991.

World leaps toward capitalism until

Asia Crisis setback 1997.

Oil bottoms 1999, Asia Crisis crests, global GDP

growth resumes 1999-2001.

Non-G-7 GDP per Capita at Purchasing Power Parity, U.S.$

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

1970

1973

1976

1979

1982

1985

1988

1991

1994

1997

2000

2003

Commodity prices began to rise

extraordinarily fast just as per capita GDP rose through $5,000 in the

non-G-7 world.

G-7 GDP versus Non-G-7 Real GDP Growth, 1980-2005

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

9.0%

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Real GDP of the G-7, y/y% Real GDP of the non-G-7 countries, y/y%


Emerging Markets


U.S. electricity usage per capita vs. real GDP per capita, 1904 to 2004.

10 kWh

100 kWh

1,000 kWh

10,000 kWh

100,000 kWh

$0

$5,0

00

$10,

000

$15,

000

$20,

000

$25,

000

$30,

000

$35,

000

$40,

000

Real U.S. GDP per capita, expressed in current year 2000 dollars

Per

-cap

ita

elec

tric

ity

gen

erat

ion

Chi

Electricity consumption per capita rose 118-

fold as real income per capita rose from $5,000 to $20,000, then

saturation ensued.

U.S. oil usage in barrels/capita vs. real GDP per capita, 1904 to 2004.

0 bbl

1 bbl

10 bbl

100 bbl

$0

$5,0

00

$10,

000

$15,

000

$20,

000

$25,

000

$30,

000

$35,

000

$40,

000

Real U.S. GDP per capita, expressed in current year 2000 dollars

Oil

Co

nsu

mp

tio

n p

er c

apit

a i

n b

arre

ls

Electricity consumption per capita rose 348-

fold as real income per

capita rose from $5,000 to

$20,000, then saturation ensued.

U.S. beef, veal, pork, lamb, chicken & turkey, lbs. per capita, versus real GDP

per capita, 1909 to 2004.

70 lbs/p.p.

90 lbs/p.p.

110 lbs/p.p.

130 lbs/p.p.

150 lbs/p.p.

170 lbs/p.p.

190 lbs/p.p.

$0

$5,0

00

$10,

000

$15,

000

$20,

000

$25,

000

$30,

000

$35,

000

$40,

000

Real U.S. GDP per capita, in year 2000 dollars

U.S

. me

at

co

ns

um

pti

on

, lb

s. p

er

ca

pit

a

China, India

Meat consumption per capita rose

about 90% as real income per capita

rose from $5,000 to $20,000, then

saturation ensued. Since meat is grain

intensive, we estimate grian-for-meat rose about

300%.

Source: U.S. DOE/EIA, BP Statistical Review of World Energy 2005, USDA, U.S. Census. Stifel Nicolaus format and opinions.


Which has strong implications for commodity demand, particularly energy & high protein food


Emerging Markets and Commodities

Sources: State Council (2005), Deutsche Bank Estimates

80

5545

26

8 9.74.1

25

133.0

62.0

129.0

46.0

26.0

60.0

4.6

71.0

0

20

40

60

80

100

120

140

160

Coal Zinc Iron Ore Copper Ore Oil Alumina Natural Gas Water

Per capita reserves

Per capita consumption

China: per capita reserves and consumption of natural resources(% of World Average)


Introduction….setting the scene



Our Strategy


Agenda


• Global monetary tightening is a symptom of the maturing economic cycle => earnings growth but with increased risks.

• Reflected in more volatile returns, but still likely to be positive over coming 12 months.

• Little advantage from big “bets” on asset classes or geographies. Select opportunities within asset classes (growth, large-cap equities, high grade v low grade bonds).

• Commodities & Emerging markets are strong secular themes, but overbought & vulnerable near term.

Conclusions


Stock Markets and Crisis

Events

5 days* 1m 3m 6mJ F K Assassinated 22/11/1963 1% 4% 9% 12%Martin Luther King Assassinated 04/04/1968 2% 6% 6% 10%US Bombs Cambodia 30/04/1970 -6% -5% -1% 3%Arab Oil Embargo 17/10/1973 0% -10% -12% -10%Nixon Resigns 08/08/1974 -7% -16% -15% -10%USSR Invades Afghanistan 04/11/1979 -2% 4% -9% 5%US Bombs Libya 15/04/1986 0% 0% -1% -1%Lockerbie PanAm 21/12/1988 0% 2% 5% 14%Iraq Invades Quwait 02/08/1990 -6% -10% -16% -6%UK ERM Exit 16/09/1992 -1% -5% -1% 4%WTC bombing 26/02/1993 0% 3% 5% 9%Oklahoma City Bombing 19/04/1995 0% 4% 12% 15%Asia Stock Market Crisis 27/10/1997 -2% 9% 11% 25%9/11* 11/09/2001 -5% 0% 3% 6%

Average (Mean) -2% -1% 0% 5%Average (Median) 0% 1% 1% 5%Max 2% 9% 12% 25%Min -7% -16% -16% -10%* S&P Composite

DJIA PerformanceDateIncident


Condition Average Annual Return on Index

Excluding Dividends %

All 19,333 days 5.67

Exclude best 10 days 4.53






Exclude best 90 days -1.32

S&P Return

1 January 1928 to 31 December 2005

*77.0 years: Source Ibbotson, LM Capital Management, Inc and Factset


Rensburg Sheppards Investment Management Limited is authorised and regulated by the Financial Services Authority and is a member of the London Stock Exchange and the RensburgSheppards Group

Contact Details

John HaynesRensburg Sheppards 2 Gresham StreetLondonEC2V 7QN

Telephone 020 7597 1279Fax 020 7597 1000email [email protected]

www.rensburgsheppards.co.uk

Please note that the value of investments and the income derived from them may fluctuate and investors may not receive back the amount originally invested. Past performance is not necessarily a guide to the future. Current tax levels and reliefs may change and the investments and investment services referred to may not be suitable for all

investors.


In search of returns

Source: U.S. Census Bureau, International Data Base; Bank of Japan for Nikkei data, Statistics Bureau - Director General for Policy Planning of Japan for Japanese CPI data. All prices updated to March 15, 2006.

50%

60%

70%

80%

90%

100%

110%

120%

130%

140%

1955

1965

1975

1985

1995

2005

2015

2025

2035

2045

Ja

pa

n:

rati

o o

f 3

5-4

9 y

ea

r-o

lds

to

20

-34

ye

ar-

old

s

100

1,000

10,000

Nik

kei 2

25 In

dex

Ratio of 35-49 year-olds to 20-34 year-olds (left axis)

Real (After Japanese inflation) Nikkei 225 index (right axis)

Source: U.S. Census Bureau, International Data Base; Bank of Japan

for Nikkei data, Statistics Bureau - Director General for Policy Planning, Japan for Japanese CPI data. Format

Barry Bannister, Stifel Nicolaus.

60%

70%

80%

90%

100%

110%

120%

130%

1955

1965

1975

1985

1995

2005

2015

2025

2035

2045

US

A:

rati

o o

f 3

5-4

9 y

ea

r-o

lds

to

20

-34

ye

ar-

old

s

1,000

10,000

Rea

l Do

w J

on

es In

du

stri

als

Ratio of 35-49 year-olds to 20-34 year-olds (left axis)

Real (After USA Inflation) DJIA (right axis)

Japan – a demographic nightmare?

Diana Garnham

Chief Executive

Political campaigning by charities - effectiveness and

accountability

My talk

• Focus on political campaigning

• Explore the boundaries and areas of confusion

• Explore the role of trustees

• Identify some pointers to effectiveness and good practice

Charity Commission guidelines

It is legitimate for charities to campaign to• raise public awareness and public education on

a particular issue• influence or change public attitudes• undertake activities in the political environment

intended to influence Government(s) policy, legislation, regulation

• to have contact with political parties and politicians

Political purposes are not charitable

• A charity cannot exist for the purposes of furthering the interests of any political party

• A charity cannot have as a purpose securing or opposing any change in the law or policy

Terminology

• Campaigning – marketing, advertising, political to engage in an operation planned to achieve a certain goal (crusade, drive, push, advertising)

• Advocacy - to publicly support or suggest an idea, development or way of doing something

• Lobbying – a focus on the decision-makers, to persuade a politician, government or officials

The rationale

• Improves and widens the debate – an enrichment of democracy

• Political activity is a justifiable way of furthering the charity’s objects

• Advocacy on behalf of beneficiaries is a public benefit and furthers beneficiary interest

• Charities may have detailed and special knowledge to contribute to debate

What is a political campaign?• An operation planned to achieve a certain goal• Clausewitz – it is the continuation of policy, not an

act in itself and the policy determines its character• About getting the ‘temperature’ right for a

favourable decision to be made• Not just the provision of information, education,

communication – advertising, marketing, or awareness

Lobbying as part of a ‘campaign’

• Focussed on Government and decision-makers• Probably tied to a particular situation/policy

rather than an ongoing activity• Lobbyist – cab be perceived as only an

information conduit• Mainstay for most ‘campaigning’ charities• Essential platform from which to gear up• Important to be non-partisan

Trustees responsibilities• activity must be an effective means of furthering

the purpose of the charity• expenditure and use of resources must be

justified• activities must be permissible under governing

document• trustees must assess the risks and benefits• must comply with the general rule of law• must monitor and evaluate effectiveness

Expenditure and resources must be justified

• Will this emerge as an issue for the SIR?• for public awareness raising and education, or

seeking to influence a change in public attitudes, a charity can devote up to all its resources

• for political campaigning “charity trustees must ensure that these activities do not become the dominant means by which they carry out the purposes of the charity” – if not, is it in fact a charity?

Trustees must assess risks and benefits

• Impact on reputation• Impact on income• Impact on public trust and confidence• Impact on future ability to influence• Balancing risk - questions to ask

– Will anyone be upset if we do this?– Who will be upset if we don’t?– What will we add to the debate?

Reputational risks• The charity’s most valuable asset - without reputation

there is no influence. Reputation can be affected by:– Methodlology– Level or resources committed– Independence – Individuals involved– Timing and sensitivity to wider agenda– Differing internal positions/views– Over claiming

Methodologies - getting it right

• No restriction as long as it is legal• Be prepared to explain choice and style and defend

the detail of the charity’s position• Be careful of emotive material and partisan use -

controversial, oversimplification of complex issues, headlines without a follow through

• Direct action - bare in mind type(s) of supporters and those you are trying to influence, know how you will keep it under control and legal

• Don’t misuse ‘research’

Consortia and coalitions

• Charity Commission “not realistic that a campaigning alliance will fit with every one of its members’ charitable purposes”

• But bare in mind that:– alliances with non-charitable organisations

can increase the risks– It would be unwise to have an alliance with a

charity with a conflicting object

• Apply all normal tests on value for money etc

Good practice - working with political parties

• Use the appropriate methodology• Charities can

– support a policy advocated by only one party– seek support for policy from all political parties– deal personally with politicians of any party

• Ideally would aim for cross party support

Good practice - working with political parties

• Charities should not– inadvertently run a campaign that results in any

form of partisan support or – consistently work with or – enlisted the support of politicians from only one

political party • Trustees, officers and staff should be

careful about the impact of known political affiliations

Having effective ‘political’ influence

• Is about having a good case• At the right time, in the right way with the right

information• Comes from being respected and trusted• Is about not wasting time, resources and effort• Having good radar - knowing where your

position fits in the wider world

How to evaluate impact

• Media inches and minutes• Parliamentary ‘friends’ and levels of knowledge• Citations in debates• Invitations to participate in consultations• A seat at the table• Impact on the legislation, policy or regulation• Public opinion/awareness will be much harder to

track

Good practice

• A political campaign will be for impact not process or outcome

• Will have a clear objective appropriate for the campaign

• Consulted stakeholders and have a clear mandate

• Good radar - understand the views of members, beneficiaries, the general public, other non-profits and your opponents

Good practice• Research your position thoroughly and present the

case, and facts and figures?• Always make the link to charitable objects and

your beneficiaries• Provide adequately resources for the exercise to

succeed• Research the position of political parties and

individual politicians• Learn and build - share, pass it on and get better

at influencing - don’t depend on individuals

Self-Regulation of Fundraising

Megan Pacey

Director of Policy and Campaigns

[email protected]

Background

• Trust and ConfidenceRole of Fundraising as the Public Face of Charity

Gulf between perception and reality of fundraising

Contribute to the wider work of impACT Coalition

• Endless Consultations !Used process to create ownership beyond the fundraising community

We only have one go at this!

2

How the Scheme will Work• Public Facing

Concentrating on reaching donors and supporters via fundraising charities

• Independent of SectorIndependent Chair and majority of Board not from the sector

Scheme to be floated off from Institute once established and within 12 months

• Capturing ComplaintsRequired to complain directly to charity first

• Donors’ CharterSet by the scheme

Public focused

• Codes of Fundraising PracticeSet by the sector through the Institute of Fundraising.

Practitioner focused 3

What it Means?

The Balance Between Benefit and Burden• Engagement with Trustees

Require Trustee sign off

• Complaints and Internal Audit ProceduresRequire procedures for both of these to be in place

• Obligation to Promote

Carry scheme “logo” and donors charter in all appropriate places

• Part with Money

Scheme to be self financing within 5 years

Fees range from £30-£1,700

Pilot of schemes for small community based organisations being considered

• Annual Renewal 4

Codes of Fundraising Practice

• Explain the LawAct as a useful reference tool to support fundraisers

• Prescribe Best PracticeUse the descriptors MUST, OUGHT and SHOULD

• Useful Reference Tool

• ConsultationWidely publicised and goes beyond membership or sector

• On-going DevelopmentCodes are organic and open to improvement and change in regulations. Will respond to challenges coming from self-regulation

5

Next Steps• Funding from Whitehall Departments and Scottish

Executive

• Board have been appointed. First board meeting recently

held

• Recruitment of staff progressing

• Charity Launch Summer 2006 - Public Launch in Autumn

2006

• Secretary of State to impose Regulation if not successful

6

Fundraising Standards Board

Jon Scourse

Director

0845 402 5442

[email protected]

www.fsboard.org.uk

7

The Third Sector CEO

Effective leadership and performance

Nick Aldridge, Director of Strategy, acevo24th May 2006

acevo 2000 third sector

Chief Executives Charities and social

enterprises From small community

organisations to multi-million pound enterprises

From former FTSE-100 directors to first time leaders

0102030405060

acevo membership (% )

For a modern, enterprising third sector

Priorities for the chief executive

• Funding and finance• Governance• Leadership and management

Doing good and doing well?Acevo annual conference Nov 30th

– Success: goals • defining, • measuring, • reporting

– Governance: • Board• Chair and CEO

relationship

– Leadership: • CEO’s role

Success: emerging issues

• Responding to funders’ demands:– Reluctance to support new ideas– “a war with funders” over what

counts

• Too much emphasis on tools and systems: – must fit the strategic goals, – leave space for change.

Success: emerging issues

• Reporting: – honesty and realism, – impact vs outputs– relationship with service users.

Governance: emerging issues

• Deficits in skills needed to perform scrutiny– Recruitment by word of mouth: 85% of very

large charities– 77% of boards not appraised;

(83 % CEOs are appraised)

• Professionalism or accessibility/involvement– Accountability: down or up

Governance: emerging issues

• Governance roles: – leadership and guardianship– Exec and non-exec

• CEOs as gatekeepers of information– Trustees neutralised

Leadership: emerging issues

• Time given for strategic thought vs. day-to-day fire fighting– Shocks as catalysts

• Balancing demands:– Internal: staff and volunteers– External: stakeholders

Internal leadership

You project an image• Communication style• Respect• “Nobody likes you”• Leadership

External leadership

• Be an ambassador for your organisation• Networking is a core competence

– Be known– Be seen: contribute– Be organised: manage your contacts– Be useful: offer ideas

• Take the opportunities– Make contributions– Don’t be too grand!

Professional Development

• “Chronic underinvestment”– So invest: more than 1%!

• And don’t stop:– 360 Degree Appraisal– Cranfield and Ashridge: acevo courses for

experienced CEOs– IoD/acevo Chartered Director– Alongside Cass Business School New CEO

courses

Key messages

• Create space for strategy: steer, don’t drift;

• People are key: no skills, no development = no results;

• Leadership is external, not just internal: prioritise and invest.

The Third Sector CEO

Effective leadership and performance

Nick Aldridge, Director of Strategy, acevo24th May 2006

haysmacintyre Charity Conference

VAT Claims UpdateGraham ElliottPartner, haysmacintyre

Background

Over-arching Principles

VAT on purchases can only be reclaimed if (and to the extent that) the purchases relate to taxable supplies made.

Thus

• Costs solely linked to taxable supplies:- reclaim VAT

Background continued

• Costs solely linked to non-business activities and exempt supplies: No VAT reclaim

• Costs shared between these activities: Claim part (in most cases).

“Lennartz”

• If a major asset has some taxable use then VAT can be fully reclaimed; BUT

• Proportion of use of asset for non-business activities is reimbursed over the life time of the asset (up to 20 years)

• Only applies to substantial assets and does not affect partial exemption

VAT on Fund-raising Costs

a) Where such costs solely relate to generating grants and donations, they are treated as an overhead of the wide aims of the charity

b) This is because the costs only serve those aims, and not the aim of fundraising for its own sake.

Fundraising is not an activity per se.

VAT on Fund-raising Costs continued

c) VAT recoverable to extent charity’s primary purposes involve making of taxable supplies

d) HMRC may allow costs to be treated as overhead of wider activities of charity (this is questionable).

Special Partial Exemption Methods

• Currently have to be negotiated “upfront” with HMRC, but once agreed HMRC accept consequences of agreement.

• Methods become “obsolete” where they fail to cover all aspects of activities of taxpayer.

• New proposal to enforce “Fair & Reasonable” certification on the application for special method.

Richard Weaver

Charities Partner, haysmacintyre

Topics

• New reporting requirements• Implications for trustees, CEO’s and FD’s• Strategy• Financial matters• Governance

New reporting requirements• Charities SORP• Charitable Companies – CA85 Sec 234ZA(2) to

(4):• ‘So far as each director is aware, there is no

relevant audit information of which the company’s auditors are unaware.’ and

• ‘each director has taken all the steps that he/she ought to have taken in his/her duty in order to make him/herself aware of any relevant audit information and to establish that the company’s auditors are aware of that information.’

The trustees duty

• They must exercise overall control over its financial affairs. They should ensure that the way in which the charity is administered is not open to abuse by unscrupulous associates or employees; and that their systems of control are rigorous and constantly maintained.’

(CC3 :Responsibilities of Charity Trustees)

What can you/should you be doing?

• Securing knowledge and availability of information

• Reviewing strategic direction• Financial planning• Continual monitoring

Strategic Planning

• Who is responsible for strategy?

• What should a strategic plan contain?– Aims– Objectives– Strategies– Financial implications– Risk areas

What you should receive financially?

• Checklist for Trustees and CEO’s:– Income and expenditure (by key activities)– Balance sheet information– Funds analysis– Cash flow– Prior year comparisons– Commentary/explanations– Key indicators/benchmarks

What you should receive financially? Cont…

• Do you understand the information you currently receive?

Governance

• Board structure• Sub committees and delegated authority• Reporting lines• Helping to ensure that staff, management and

trustees are working towards a common goal

Panel Q & A

ACEVO, AIB, Farrer & Co, haysmacintyre,

Science Council

Closing remarks

Bernie Watson

Managing Partner, haysmacintyre

the haysmacintyre annual charity conference

Documents

trust of charities

new charities act

big charities

encouraging charities

governmentmost charities

trust rating

charitiespublic trust

agendarecent developments