We live in interesting times…
George Penaluna takes a look at the financial landscape currently facing the Friend
The Friend Publications Limited, publisher of the Friend and Friends Quarterly, is a small independent charity. We have a board of Quaker trustees and a small number of paid staff. We are independent of Britain Yearly Meeting, both editorially and in governance.
Financially we have always tried to cover our costs as far as we can through subscription and advertisement revenue. Recently these revenues have met over ninety per cent of our costs. A modest level of much appreciated donations and grants helps to cover the balance. Our deficit last year was £12,320.
The main reason for this shortfall is an ongoing pension liability we have towards The Pensions Trust, which will provide pensions for some former and current staff members. In our 2016 financial year we had to pay £11,356 towards this liability, a sum which will increase by three per cent annually until 2025. We are one of many third sector organisations liable for these payments.
While we remain a member of The Pensions Trust this liability may continue for an unlimited time into the future, and as and when other charities leave the scheme (either voluntarily or through liquidation) we become liable for a share of their obligations as well. This creates a significant and ongoing risk for the long-term financial security of the Friend. A number of charities have already closed because they couldn’t cover their pension liabilities.
It has become apparent that the most prudent way of ensuring the long-term financial security of the Friend is to buy ourselves out of this continuing liability with a one-off lump sum payment. This sum will be actuarially calculated based on the ages of the members we have in the scheme. A recent valuation put our liability at £248,000. It is a significant sum, but the trustees of the Friend decided it is the best course of action, and have been considering ways of financing it. It was not felt appropriate to burden subscribers through a general appeal, and was considered an unlikely cause for grant funding!
After much deliberation a decision was made that we should use a significant portion of our modest reserves, accumulated through careful financial management by staff and trustees over many years, to fund the liability. An overdraft facility is also being put in place in case it becomes necessary.
There are consequences for the magazine in making this decision but trustees believe it is the most financially prudent option. Other charities, including some Quaker bodies, have also decided to pay-off their deficit in one lump sum, partly financing it with interest free loans.
The success of the Friend cannot be measured simply in financial terms – but it cannot survive without generating more income than expenditure. It is a non-profit charity and exists sometimes on a precarious knife-edge.
The magazine, however, is a survivor. Next year it will celebrate its one hundred and seventy-fifth birthday. The Friend is proud of and cherishes its independence and could not exist without the wonderful support given by subscribers, advertisers and donors. This is deeply appreciated.
George is advertisement manager for the Friend and Friends Quarterly.
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