Funding members’ needs is paramount to success
The Treasurer: the Society needs members’ support, advice
and input |
Funding pharmacists’ needs is paramount to the success of pharmacy’s new professional body, the Treasurer of the Royal Pharmaceutical Society, Andrew Gush, told the Society’s annual
general meeting on 21 May 2008. The Society needed members’ support,
advice, recommendations and input to make it a success.
Presenting the 2007 financial statements to the AGM, he said that his
year as Treasurer had been challenging and had involved managing unpopular
decisions. However, he was honoured to work on behalf of the membership
to ensure the Society’s finances were in order.
An early task had been to set some strategic objectives for 2007 and
2008. These were:
- to ensure the Society’s reserves were built to
a level that would meet future liabilities
- to communicate with members
on the Society’s finances
- to review the 2008 budget rigorously,
with target savings to be achieved
- to ensure the Society spent funds
to the benefit of the membership
- to consult on membership fee categories,
focusing on staged payments and low income fees
On his first day as Treasurer
he had inherited a proposal for a large increase in membership fees.
The Society’s reserves were too low
to deal with the escalating cost of regulation and pension fund problems
(as experienced by many organisations).
The members had not welcomed the Council’s fees decision, but a
smaller increase would have been irresponsible and dishonest. The way
forward had to be based on stable finances, underpinned by timely and
proportionate financial control.
The Treasurer added that since June 2007 he had communicated with members
to try to illustrate the work required in balancing the books in a changing
environment made more complex with the move towards demerger.
The AGM was also an opportunity to advise members of the Society’s
approach to its 2008 budget. Measures to ensure the budget met membership
needs included making funds available for increased media attention,
increased communication, a high profile for the profession and increased
information and guidance for pharmacists.
In addition, the team had looked at alternative funding sources to assist
with the Society’s long-term financial commitments (eg, alternative
charities to provide research grants). Significant savings had been made.
Finally, the Society had worked with the Department of Health to secure
funding to support the transitional costs in creating the new regulator.
So far, it had secured an extra £2m. It was committed to productive
dialogue with its members, which would continue as financial support
was required in setting up the new professional body.
Paying the annual fee was a big issue, and he had worked with the Council
and staff to introduce staged payments and low income fees. Staged payments
were now following the parliamentary process and were expected to be
in place this summer. Recommendations for low income fees would form
part of the 2009 consultation. He hoped that many members would contribute
to the consultation.
The 2009 retention fee would form part of this consultation. A number
of options would be presented to members to enable the support of staged
papers and low income fees.
Turning to the 2007 financial results, the Treasurer said that the deficit
on ordinary activities before tax of £220,000 was in line with
the budget forecast presented during the second half of 2007. Significant
work had been undertaken to minimise tax liability, and the Society had
achieved a result of £260,000 against a forecasted liability of £800,000.
The strategic objectives for 2008 were:
• To produce a secure financial framework for the new professional body
that is sustainable, can deliver relevant quality services and is affordable
to potential members
• For expenditure to be further directed to the benefit of the members
• To continue working with the DoH to secure additional funding where
necessary
• For the British Pharmaceutical Conference to become an income-generating
event
• To look at creative ways of solving the pension fund deficit
• To support members with new fee types
• To produce and manage budgets for the President, Council and committees
Bernard Kelly, director of finance and resources, said that the Society
had continued to pursue the financial strategy reported to the 2007 AGM.
However, the benefits of the strategy were not yet reflected in the financial
statements. One outcome of the strategy had been the increase in fees
in 2008. This had been a tough but necessary decision.
The 2007 deficit of £220,000 before tax compared to a 2006 surplus
of £112,000 after Gift Aid payments of £853,000. The Society’s
finances were being squeezed between increased costs arising from the
Section 60 Order implementation and the limited increase in retention
fees in the previous two years.
For 2007, the Society could make no Gift Aid payments because of changes
in legislation. Eventually it had had to pay corporation tax of £260,000.
Taking tax and Gift Aid into account, the Society had faced a substantial
turn-around in its finances, which helped underline the need for the
fee increases in 2008.
A good way to check an organisation’s health was to look at its
balance sheet. In the Society’s case, this showed a relatively
stable position, with the exception of the pension fund figures, which
had been volatile.
Two significant figures were the cash balance of £12.9m at the
year end and creditors of £18.5m. These figures were significantly
higher than for 2006 and reflected the large number of members using
the internet to pay their 2008 fees before 31 December 2007.
Pensions liability had gone from a deficit of £4.4m to a surplus
of £0.7m within 12 months. As a result, the reserves and assets
appeared to have more than doubled in the year.
After offering a short masterclass in pension fund accounting to explain
how the pensions liability was calculated, Mr Kelly said that, because
of the impact of the deficit on the cost of maintaining the pension fund,
the Society had been consulting with staff who are members of the scheme
about limiting future pension benefits to be accrued. If implemented,
the changes would reduce the cost of maintaining the scheme.
Before ending his presentation, Mr Kelly said that he wished to clarify
an issue with regard to the presentation of Council members’ expenses
in the annual review and in particular the President’s expenses.
The figures had been distorted by a change in their presentation and
also by the fact that discussion in 2006 on the issue of attendance fees
and allowances had failed to reach a conclusion and the 2006 allowances
for the President and Vice-President had not been paid until 2007. The
President’s expenses had also risen because of a significant additional
level of activity arising from the White Paper and the prospective demerger
of the Society.
In reply to a question, Mr Kelly said that the Society’s Gift Aid
had been made to the Charities Aid Foundation and subsequently paid into
the Pharmaceutical Trust for Education and Charitable Objectives, a subsidiary
of the Society. It was a tax-efficient way to support the Pharmacy Practice
Research Trust and other areas of cost previously funded directly by
the Society. Most of the money still existed and was still available
to fund activities such as research and education.
In response to a question about a discrepancy in the annual review, it
was reported that the number of international registrations in 2007 should
have been given as 117, not 1,171. |
The
Pharmaceutical Journal