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2021-03-31-accounts

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About Nesta

We are Nesta, the UK’s innovation agency for social good. We design, test and scale solutions to society’s biggest problems. Our three missions are to give every child a fair start , help people live healthy lives , and create a sustainable future where the economy works for both people and the planet.

For over 20 years, we have worked to support, encourage and inspire innovation. We work in three roles: as an innovation partner working with frontline organisations to design and test new solutions, as a venture builder supporting new and early stage businesses, and as a system shaper creating the conditions for innovation.

Harnessing the rigour of science and the creativity of design, we work relentlessly to change millions of lives for the better.

Find out more at nesta.org.uk

If you’d like this publication in an alternative format such as Braille or large print please contact us at information@nesta.org.uk

Design: Green Doe Graphic Design Ltd

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Annual Report and Accounts

For the year ended 31 March 2021

Trustees 4
Chair and Chief Executive’s introductory statement 5
Strategic report 7
Financial review 21
Principal risks and uncertainties 25
Objectives 26
Governance and management 27
Independent auditor’s report to the members and 35
trustees of Nesta
Financial statements 38
Reference and administrative details 74

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Annual Report and Accounts: For the year ended 31 March 2021

Trustees

Sir John Gieve Nesta’s Chair Chair of Homerton NHS Trust

Professor Anthony Lilley OBE Trustee

Director of Scenario Two Ltd

Christina McComb OBE

Heider Ridha

Imran Khan Trustee

Trustee

Trustee Operating Partner of TDR Capital

Chair of OneFamily, Chair of Standard Life Private Equity Trust plc, Senior Independent Director of Big Society Capital

Science & society adviser

Jimmy Wales

Judy Gibbons Trustee

Moira Wallace OBE Trustee

Trustee

Founder of Wikipedia and WT Social

Chairman of Which? Ltd, Non-executive Director for Capri Holdings, Trustee of Somerset House and the House of Illustration

Visiting Professor, Centre for the Analysis of Social Exclusion, LSE, Trustee of Kennedy Memorial Trust

Sarah Hunter

Ian Gomes

Trustee

Trustee

Director of Global Public Policy at X and The Moonshot Factory, part of Alphabet

Board Advisor and Director to a portfolio of companies after a career with KPMG

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Chair and Chief Executive’s introductory statement

Annual Report and Accounts: For the year ended 31 March 2021

Chair and Chief Executive’s introductory statement

The past year has seen substantial change at Nesta, driven by COVID-19 and the launch of a new 10-year strategy.

This financial year (2020/21) started at the peak of the first surge of COVID-19 in the UK and ended as we recovered from the second surge. Even today, the pandemic continues to shape our personal and work lives and casts a shadow of uncertainty over the coming months. Like most employers, we closed our office and asked staff to work from home in March 2020, hoping to reopen in the summer. But lockdown largely continued for a further year and we are only now taking tentative steps back towards working in the office. We are grateful to all our staff who adjusted to the new world so quickly and effectively even with the pressures of cramped flats, home schooling, and isolation.

As the UK went into lockdown, we focused on what we could do to mitigate the consequences of COVID-19 on education, health and employment. Alongside the Education Endowment Foundation and Impetus, we established the National Tutoring Programme (NTP), aimed at delivering one-to-one tuition to disadvantaged pupils to help them catch up on the learning they lost as schools closed. We supported the expansion of this evidence-based intervention through online tutoring, helping the NTP to enrol 345,000 pupils in its first year. This focus on tutoring built on Nesta’s long-term work in education technology and investment in companies including Third Space Learning. Alongside this work, we grew our partnership with the Department for Education (DfE), working with more than 60 schools to test online tools that push the boundaries of remote learning.

As the NHS shifted many appointments online, our People Powered Results team worked with NHSX to support the transition, gathering and analysing feedback from frontline practitioners to help tackle challenges and accelerate the shift, so that more routine appointments take place in spite of the COVID-19 crisis.

Our CareerTech Challenge backed 31 innovators in all, who collectively supported thousands of people with guidance to retrain for and find work in more secure sectors, based on the skills they have. We also invested in a new Challenge Prize – the £3 million Rapid Recovery Prize – to support the growth of new solutions to help one million people hardest hit by the economic fallout of the pandemic access work and handle financial stress.

We also undertook a fundamental review of our strategy. Starting from our commitment to achieving social good through innovation, we asked how we could maximise our impact over the next 10 years. While we were impressed with the range and quality of Nesta’s work, we concluded that we would achieve more impact over time if we had a tighter focus both in our objectives and in our skills and methods. Our new strategy reorients Nesta towards three long-term missions, each of which reflect generational challenges.

Our Fairer Start Mission aims to narrow the gap in educational attainment between children with low incomes and the national average. We are focused on the two age ranges where inequalities widen the most – in early years and secondary school.

The goal of our Healthy Life Mission is to half the prevalence of obesity in the UK, in a drive to narrow health inequalities between the richest and poorest.

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Chair and Chief Executive’s introductory statement

Annual Report and Accounts: For the year ended 31 March 2021

Our Sustainable Future Mission is focused on accelerating the decarbonisation of people’s homes, with the aim of reducing household emissions by 28 per cent within a decade and be on track to reach zero by 2048.

Our strategic review also saw us redefine the roles we play as a foundation, and the skills and expertise we seek to deploy. As an ‘Innovation partner’, we will work with frontline partners and deploy teams of behavioural scientists, data scientists, and designers to design new solutions and test them rigorously, with a view towards achieving nation-wide scale. As a ‘Venture Builder’, we will support the creation of new products and start-ups, and invest in early stage ventures. Using the insight we gain from our work partnering frontline organisations, our networks and capital, we aim to generate three new ventures a year, and invest in four to six existing early-stage ventures. Our third role will be more indirect, working as a ‘System Shaper’ to create the conditions that support innovation in each of our three missions.

The change in strategy and approach led to a significant restructuring, with some activities and teams scaling down as new mission teams and programmes were formed. We thank all our staff for the commitment they showed to ensure that Nesta responded effectively to the pandemic and

for their help in reshaping and then launching our new mission and strategy early this year, despite not being able to gather in person. We also thank our trustees for their guidance and encouragement and particularly thank Natalie Tydeman and Joanna Killlian who have stepped down since our last report

The need for innovation to tackle the UK’s social, economic and environmental challenges has never been greater. As Nesta enters its third decade, we aim to build on the innovation expertise we have developed and apply it to generate large-scale, long-term change. We are setting out to make an impact for our missions with optimism and humility – confident in the skills and contribution we can bring to new partnerships, while acknowledging that tackling these challenges requires patience, an appetite for risk, and a willingness to learn.

Sir John Gieve, Chair Ravi Gurumurthy, CEO

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Annual Report and Accounts: For the year ended 31 March 2021

Strategic report

Strategic report

The year 2020/21 was a time of change for Nesta. It was the year that we launched a 10-year strategy that will align our efforts behind three innovation missions working to promote a fairer start, a healthy life, and a sustainable future. It was also the year that some landmark programmes like Accelerating Ideas drew to a close.

This review shows what we have achieved over the last year.

Our missions

The three challenges that will define our work over the next decade

The poorest people in the UK die around nine years earlier than their more affluent peers. Children from lower-income families lag five months behind in vocabulary skills before they even start school. And to achieve carbon net-zero the UK will need to convert five million homes to low-carbon heating by 2030: currently only 25,000 households switch each year.

These are the stark realities that will propel Nesta’s work over the coming decade, as we concentrate our resources on addressing three defining societal challenges: how can we give every child a fairer start, how can we help people enjoy healthier lives, and how can we drive forward a sustainable economy. Innovative thinking will be critical to tackling these deep-seated problems, and we’ve scoped three ambitious new missions to identify where we can achieve measurable outcomes – and so impact millions of lives.

Our Fairer Start mission sets out to narrow the gap between children growing up in disadvantage and the national average, and evidence tells us we must focus our efforts on two key areas to achieve that. The early years (ages 0-5) and secondary school period (11-16) account for 80 per cent of the divergence in life outcomes, so our goal is that by 2030 the UK will have eliminated the school readiness gap between those born into deprivation and their peers, with similar gains at age 16 in relation to students receiving free school meals.

Our Healthy Life mission aims to boost the average number of healthy years lived in the UK, while narrowing inequalities between rich and poor. Here we are focusing our attention on the obesity crisis, which affects 35 million adults, and loneliness, now understood to be as harmful as smoking 15 cigarettes a day. We’ve calculated that reducing food consumption by just 250 calories a day over five years can move 50 per cent of adults who are obese and 16 per cent of those overweight into a healthier weight class. That would mean around ten million people living nearly two extra years in good health – and that’s Nesta’s mission goal.

Our Sustainable Future mission focuses on decarbonising UK homes. The nation’s 2050 netzero emissions pledge (2045 in Scotland) will require a paradigm shift in consumer behaviour: people will need to insulate their homes, move to electric cars, replace their gas boilers and shift electricity use away from peak periods. Our aim is that by 2030, the UK will have reduced carbon emissions by 28 per cent from 2019 levels and be on track to reach zero by 2048. To achieve this reduction, over five million households will need to switch to lowcarbon heating, and over 10 million will need to install cavity wall, solid wall or floor insulation. We’ll also work to boost the UK’s lagging productivity by addressing skills mismatches in the economy. As the UK decarbonises, we must ensure a greener future delivers a good standard of living for all.

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Our missions in action: some first steps

Our new mission teams were quick out of the blocks in early 2021, commissioning research and convening expert voices to help define their future focus for maximum impact. Several of Nesta’s existing programmes play into our overarching mission goals, notably a £4.6 million partnership with the DfE to hone more effective use of technology in schools, which stepped up last year to help disadvantaged young people with remote learning during the COVID-19 lockdowns.

Our Fairer Start team also embarked on an innovation partnership with early years providers, working with local authorities in Leeds, York and Manchester to trial new methods of improving outcomes for pre-school children. That has included collating data to offer real-time information to practitioners; assessing the impact of switching health visitor checks from opt-in to opt-out; and running experiments on what kind of messaging best engages parents. We’re seeking out partners for similar discovery work in Wales, too, structuring our field of enquiry around four areas linked to our theory of change: poverty, mental health and wellbeing, the home learning environment and childcare.

Our Healthy Life mission published Designing with the grain, a report which pins the blame for Britain’s obesity crisis squarely on poor food environments – the lack of affordable, accessible healthy food choices, especially for communities where there is

the greatest need. Meanwhile our complementary research with the Behavioural Insights Team revealed that public attitudes are lagging behind the data, with people still placing more faith in measures that try to reduce obesity by changing individual behaviour. What people think matters: if governments are unwilling to introduce unpopular measures, then progress on reducing obesity is at risk.

The Sustainable Future mission has been busy with research too, testing public perceptions of which actions matter in the drive toward carbon reduction, as well as partnering with the Rapid Transition Alliance to collect case studies of successful energy transitions from the UK and beyond. We’re using the findings to identify and engage likely ‘early adopters’ of low-carbon heating, so we can design methods to create a lower-hassle customer experience for people who want to instal heat pumps. Meanwhile our mission team in Scotland began researching the specific challenges posed by decarbonising heating across the housing stock there – they will use those lessons to design and test a suite of solutions across different dwelling types. Separate studies in Edinburgh, Dundee and Dumfries and Galloway are exploring which workplace skills are now underutilised because of COVID-19, and how those might overlap with the jobs needed in sustainable and growth industries.

Our practices

Taking innovation expertise to the next level

Nesta’s approach to innovation builds on deep expertise in a raft of disciplines: data science, behavioural science, collective intelligence and more. Historically, we’ve analysed, developed and tested innovation best practice and shared that knowledge with others – now we want to apply those techniques directly to our own work on the ground. In 2020/21 we reforged our vision for how innovation methods will achieve our mission goals, adding new practices so we can bring a wider blend of methods across the entire lifecycle of innovation – from inception to design, from testing to scaling.

Our new Design and Technology practice will help understand what solutions people really want and need, developing and prototyping products and services relevant to missions. Our Evidence and Experimentation practice will help us understand not just what works, but when, how and why, and ensure that all of our actions are underpinned by robust evidence. Meanwhile we aim to build on our efforts to champion the role of the creative industries as a catalyst for changing social attitudes around health, education and sustainability through our Arts practice.

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We’re already making great strides, as the case studies below reveal. And last year’s achievements also include our work on the Open Jobs programme, which uses data-driven research and experimentation to help individuals, businesses and governments make smarter labour market

decisions. In November, we published new guidance on how workers whose occupations are at risk of automation can transition to lower-risk roles, and 80 organisations across 13 countries have since been in touch to use the findings.

Case study: Data Analytics: the Liverpool Food Supply Map

The perils of food insecurity – not eating enough or eating unhealthily – are increasingly recognised in the UK, and they are shaping the work of Nesta’s new Healthy Life mission. Our Data Analytics team teamed up with Liverpool Council, local charities and the NHS to help develop their good food strategy, mapping a range of retail outlets and food initiatives

city-wide. We’ve investigated travel times for people who might be affected by food insecurity, flagging neighbourhoods in the lowest 20 per cent income bracket, or with high incidence of obesity, which lie more than ten minutes’ walk from affordable and emergency food providers. Armed with our analysis, the city can begin to address those gaps.

Case study: Collective Intelligence Design: addressing global sustainability

In low-income countries over 90 per cent of rubbish is openly burned or dumped, and our Centre for Collective Intelligence Design has been combining human and machine intelligence to take on the waste management crisis engulfing the developing world. We worked with UN Development Programme teams in 13 countries from Argentina to Zambia, creating a Collective Intelligence Design Studio and sharing it through online workshops and mentoring.

The solutions that emerged were inspiring and impactful: in Ukraine, satellite images and crowdsourced data came together to plot wasteburning sites across the country, and identified 367 previously unknown composting sites as an alternative. In Laos, GPS sensors on the carts of informal waste-pickers created the first ever map of their routes, bringing home their vital importance to the recycling system in Da Nang city.

Discovery hub

Scanning the horizon for emerging trends and promising technologies

Nesta’s Discovery Hub launched in 2021 to scan for emerging trends, promising technologies and interventions. It embeds strategic foresight at the heart of our work, building on Nesta’s long track record of public engagement with futures, horizonscanning and emerging technologies. The Discovery team also runs a programme of employee-driven innovation to surface the best ideas – wherever they come from in the organisation.

Discovery projects bring together future methods such as scenario-building with data science, to ensure Nesta’s strategy is responsive to our changing world. For example we’ve developed a living ‘library of trends’ which teams can use as a dynamic tool to analyse the drivers of change affecting our mission areas. Meanwhile our Innovation Sweet Spots project (see below) sheds light on which innovations are gaining traction in terms of investment and public discourse. Forthcoming work will see us continue to interrogate the social impact of the technologies set to change our lives over the years to come.

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Case study: Innovation Sweet Spots

The Discovery Hub is harnessing the power of big data to identify promising technologies on a growth trajectory. Until now, analysis of technological innovation has tended to rely on qualitative measures: it has also mainly been designed for a

corporate audience. We are piloting a new approach looking at the convergence of investment and public funding, parliamentary records and media coverage to spot new trends, opportunities or stagnation in a given field.

Investments

Nesta’s investment portfolio has long supported both arts and technology ventures, and in 2020/21 we reaffirmed our focus on meaningful social impact. We unveiled major new financial commitments in both sectors.

Impact investments

Supporting new tech, from science kits to skin cancer

For 20 years now Nesta has been investing in earlystage technology ventures that align with our wider strategy, helping them to develop and scale. In 2020/21 we added three exciting new innovators to our portfolio, as well as taking additional equity in four businesses we’ve supported before. Our team look for a commercially viable model and strong social or environmental impact, and last year’s calls were coloured by COVID-19: notably a follow-on investment in Third Space Learning (TSL), which provides one-to-one maths tutoring by online video for primary school children – especially disadvantaged young people who are falling behind.

Two first-time investments resonate with our new Fairer Start mission, too. We took stakes in Empiribox and MEL Science, which provide science experiment

kits to primary and secondary schools, respectively. They make science engaging and interactive, helping bridge the attainment gap for pupils who may struggle to respond to more conventional teaching.

Our team also forged a new two-year partnership with UK Research and Innovation (UKRI): we’ve allocated £3 million of equity funding which will be matched by £3 million in grants from UKRI for companies working to improve health and productivity outcomes for older people. In total Nesta invested £4.2 million during the 2020/21 financial year, and this March we committed to a new five-year investment facility worth £50 million, which will support our Impact Ventures as well as private sector innovators who advance our mission goals.

Case study: Skin Analytics

One of Nesta’s 2020/21 investments saw us deploy £750,000 of equity in Skin Analytics, which has used AI technology to develop a diagnostic tool to detect skin cancer. Family doctors are flooded with patients worried about skin problems, and because rigorous studies have shown machine learning to be comparable to a dermatologist in accurately diagnosing skin cancer, it is well suited in assisting GPs in early screening. MedTech diagnostics is at

the cutting edge of health sector practice, and innovations can be expensive to bring to market, but Nesta’s investment came as Skin Analytics signed its first major contract with a UK hospital trust, in Birmingham. As well as saving lives, the tool can reduce the burden on secondary care, so dermatologists have more time with patients who really need it.

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Arts and culture finance

Rolling out the world’s biggest investment fund for the creative sector

The 2020/21 financial year opened with a landmark Nesta commitment to the UK’s cultural sector. Overnight, our new £23 million Arts & Culture Impact Fund became the world’s biggest investment portfolio for arts and culture, open until 2023 and offering affordable loans of up to £1 million to help social enterprises in culture and heritage to innovate and grow. It complements Nesta’s existing Cultural Impact Development Fund, which places smaller loan and grant packages, and whose eye-catching array of investees includes InHouse Records, the world’s first fully functional prison-based record label.

As COVID-19 lockdowns devastated the creative industries, Nesta supported our investees by suspending all capital and interest repayments from April to December and beyond, so they could wait

for audiences to return. Interest in our newer fund was nonetheless brisk, and it’s already changing lives across the country. We’ve approved over £2 million so far, and among the early beneficiaries are Friends of the Pipe Factory, who’ve used their loan to buy an iconic Victorian building in Glasgow’s East End, which they’ll transform into a cultural hub supporting the creative aspirations of young people. Another investee is the Talent House, a new centre on East London’s Sugar House Island that will nurture local dance and music artists.

Meanwhile, Nesta is now spreading its expertise worldwide with the January launch of Creativity, Culture & Capital, an international advocacy platform that showcases the power of creative initiatives to effect social change – and the innovative ways they can be funded.

Case study: Future Yard CIC

When it comes to Nesta’s arts investments, demonstrating positive social impact is key – and Future Yard CIC is a terrific example. It launched in Birkenhead with an ambition to reimagine the role of a community music venue, and use music as a force for good. In February the Arts & Culture Impact Fund invested almost £300,000 and, alongside a busy

roster of exciting new music talent, Future Yard is now hatching free skills programmes for young people keen to pursue careers in the business. Birkenhead has high levels of deprivation, and the project has enlisted the local job centre, mental health charities and social housing associations to reach vulnerable youngsters with limited opportunities.

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Programmes

Nesta often works in partnership with other organisations, joining forces for maximum impact. These eight programmes, delivered with a host of government, commercial and third sector organisations, build on many years of collaborative activity, focusing on everything from health sector innovation to developing future employment skills.

EdTech innovation

Making online learning work for everyone

Among the many challenges thrown up by COVID-19, few loomed larger than how best to support the millions of children who found their education seriously disrupted. Nesta was at the forefront of the response: our £4.6 million partnership with the DfE had already been probing more effective use of technology in education, and 2020/21 saw us apply those lessons, adapting EdTech packages to support pupils at home.

Our own research showed disadvantaged children face persistent barriers to remote learning, with 61 per cent of teachers telling us in May 2020 that the widening achievement gap was a major concern. So we launched the £800,000 EdTech R&D Programme, working with the DfE, 65 schools and six EdTech tuition partners to rapid-test improvements designed to help those young people to prosper. Our grantees developed a new set of interactive resources for A-level maths, explored the use of texts to nudge

parental engagement, and much more. Meanwhile our EdTech Innovation Fund has enabled 15 providers to grow their reach in England, build their evidence base and/or develop new features to reduce teacher workload. We plan to share all our findings this September, and Nesta is carrying forward that strategic focus on educational disadvantage through our new Fairer Start mission.

Case study: The National Tutoring Programme

Traditionally, only better-off schools and families tend to benefit from quality tuition, but during the COVID-19 pandemic it played an especially vital role in supporting children. It is estimated that around 80 per cent of disadvantaged pupils don’t have access to tuition, so the National Tutoring Programme set out to help schools get high-value, subsidised tuition to as many children as possible – and in turn make a longer-term contribution to closing the attainment

gap. The Education Endowment Foundation ran the main programme, but as a founding partner, Nesta’s role saw us deliver a capacity-building programme to the 33 approved providers, and we awarded grants to five to develop the quality and impact of their online tuition. For example, Manning’s Tutors invested almost £100,000 in creating new functionality which can split a main group session screen into mini-views, so tutors can switch to tailored one-to-one teaching.

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Creative Industries Policy and Evidence Centre

Sharing up-to-the-minute research to help weather the pandemic

COVID-19 sent UK arts and culture reeling, with venues shut down, event programmes scrapped and thousands of freelance performers, artists and technicians entirely without work. Step forward the Nesta-led Creative Industries Policy and Evidence Centre (PEC), which exists to research and recommend policy changes that can most benefit the sector. In April, we set about collating evidence to help policymakers respond, and working with the Centre for Cultural Value and The Audience Agency, we discovered that 15 per cent of creatives left the industry in the second quarter of 2020, while music, performing and visual arts alone suffered 55,000 job losses within six months of the first lockdown. Our research was picked up by the Labour Party to argue for continued financial support.

Last year also saw us investigate class disparities in arts and culture, and again the findings were stark, revealing that just 16 per cent of people working in creative occupations are from working-class origins – a figure largely unchanged over the last five years. More positively, our research has thrown a spotlight on surprising ‘microclusters’ of creative enterprise in regional hubs – a local ecosystem has been built around Creative Folkestone in Kent, for example; and 65 creative businesses are gathered in the Shetland Islands. We are now using the research to inform the Government’s levelling-up agenda and forthcoming Spending Review, with six new papers already published.

Case study: Digital culture tracker

In April 2020, three weeks after the first COVID-19 lockdown, the PEC launched a six-week study with the Intellectual Property Office tracking the consumption of digital culture at home. Our 1,000-strong consumer panel threw up powerful evidence on the value of film, e-books, video games and more in helping people deal with challenging life circumstances. For example, 90 per cent of our group said music helped them cope with the ‘new normal’, though we found that COVID-19 also brought a widening of the cultural class divide, with

people from lower-income backgrounds embracing digital arts more slowly. As Keren Nicol, a furloughed arts manager at Glasgow’s Citizens Theatre, said on Twitter: “It takes confidence and security in our own world to enter into imagined others’ through literature, drama or film. All things that are lacking in redundancy/ furlough.” The PEC is assiduous in sharing its research outcomes swiftly with the sector, and the tracker aimed to help creative bodies flex their offer in tune with people’s habits as the UK went in and out of lockdown.

Accelerating Ideas

Scaling innovations in health practice nationwide

Nesta’s Accelerating Ideas programme launched in 2016, a £5 million partnership with the National Lottery Community Fund to scale innovations in the health sector so they become more widely adopted across the UK. Our eight project partners include big established names like the British Red Cross and British Lung Foundation, and exciting new players such as Shared Lives Plus, which offers fresh ways to give older people more confidence and control over their health.

Over the last year we’ve been helping our innovators adapt to the new world of COVID-19, embracing digital options to connect people then moving toward hybrid approaches as lockdowns eased. Despite the challenges, they have sustained their impact – for example the Cares Family brought together 5,700 younger and older people to share friendship and community online, on the phone and by post. It hosted more than 400 virtual social clubs, attended a total of 3,827 times by people across the

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age spectrum – including dances and discos, history nights, quizzes and yoga. Another to successfully pivot is GoodGym, which combines exercise with community volunteering, and has grown with our grant to engage more than 6,000 people across 58 UK neighbourhoods. A 2020 study showed older people were statistically less lonely and isolated after using GoodGym.

Accelerating Ideas closed in July 2021 after five years, and a report will pull together lessons from our partners, highlighting their successes and failures and illuminating the factors that help health innovators to scale.

Case study: Young Stroke Survivors

The Stroke Association has been trialling approaches to support younger survivors, who often get overlooked. Part of its Nesta-funded Hand in Hand programme, the Young Stroke Survivors network now has three pilots up and running for people aged 21-45. Attendees have shared their experiences of

effective pain-relief medication, for example, while two women whose strokes were caused by boxing injuries forged a lasting connection. Not only did every participant report that they’d recommend the sessions to others, most said they would like to volunteer to facilitate young people’s groups in future.

CareerTech Challenge

Throwing a lifeline to people in precarious jobs

More than six million people in the UK work in occupations likely to change radically or disappear altogether by 2030 – and the COVID-19 pandemic has made their lives even more precarious. Its impact was felt especially acutely by those already in low-paid, insecure jobs, and among women and minority ethnic groups in particular. Without urgent action those inequalities will widen, and our CareerTech Challenge set out to find new ways to empower people either to retrain online or get guidance to help them find work.

A £5.5 million partnership with the DfE, the challenge supported 31 early-stage innovators in 2020/21, and they upskilled and advised more than 10,000 people. Our 11 grantees in the digital training field received up to £250,000 to test and refine their ideas, plus tailored help from the Learning and Work

Institute to evaluate their effectiveness. Among the more intriguing was Game Academy, whose career programme for gamers includes quests and challenges that sharpen work-related skills. Meanwhile, a separate CareerTech Challenge prize supported 20 different tech solutions that make high-quality careers advice easier to access: our overall winner is profiled below. And the partnership is also delivering the Open Jobs Observatory, which analyses online job adverts to provide up-to-theminute insight on UK skills demands.

CareerTech Challenge has brought us new intelligence on what works in these spaces – lessons we shared in March at our Changing World of Work symposium, and by publishing a new evaluation toolkit for online adult learning and career change programmes.

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Case study: Bob UK

Developed by the non-profit Bayes Impact, Bob UK is an automated online coach that gets crucial, life-changing employment advice to people who need it – quickly, easily and for free. Awarded our CareerTech Challenge’s £120,000 top prize, Bob is powered by AI and hyper-personalised. It pulls together data from the Office of National Statistics, the LMI For All portal and others to help people understand how their skills fit with employers’ needs, and offers ongoing digital coaching to boost their job-hunting chances. What’s unique is that rather

than rely on matching people with a pre-made ‘solution’, Bob gives a clear understanding of their place in the job market, and the steps to take next.

Bob UK builds on the success of Bob Emploi, which has already coached more than 250,000 jobseekers in France, 41 per cent of whom said its coaching was a key factor in their job recovery. And it is now building out features for careers advisers to use with their clients, recognising that face-to-face human support is crucial for many of the most vulnerable jobseekers.

Y Lab

Befriending the vulnerable during lockdown

How can the arts help to boost public health in a pandemic? That was one of the questions answered last year by Y Lab, our innovation partnership with Cardiff University. It launched HARP – Health, Arts, Research, People – with backing from the Arts Council of Wales. Twelve arts practitioners tested novel COVID-19-safe interventions to support the vulnerable during lockdown, including the Powysbased dance charity Impelo, which ran Zoom sessions for care home residents and their families. Participants learned to navigate new technologies while enjoying quality time with loved-ones, and Impelo has since taken lessons from that pilot to develop Joio, an online dance programme to improve older people’s mobility and reduce falls.

Y Lab has also been busy with Infuse, an innovation skills-building programme for the Cardiff Capital Region. Primed by £5.6 million from the European Social Fund through the Welsh Government, it will work with 120 public servants until 2023, building their capability in data analysis, procurement and

adaption and applying that expertise to some of the region’s most pressing issues, such as accelerating decarbonisation. Meanwhile last year saw the culmination of Innovate to Save, our four-year project exploring how finance and loan programmes can best support public service innovation. Its final ‘playbook’ now offers a best-practice guide to other organisations. Nesta also published research on data poverty across Scotland and Wales, deepening our understanding of how many people struggle to access vital public services.

Case study: The Mockingbird Family Model

In 2020 we distributed £2 million in Wales through Innovate to Save, which gives interest-free loans for ideas that improve public services and generate savings. Flintshire County Council received £1.5 million to roll out a new model for delivering foster care. The Mockingbird programme replicates an extended family through ‘constellations’ of fostering

households, and it will support 50 families by 2024, saving £2.4 million. Two of five constellations are already operational, and foster carers report feeling better supported, while children find new stability and even new placements in the hub network, where needed.

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NGI Forward

Plotting the path to a more inclusive internet

The pioneers of the internet dreamed of an open, free, decentralised information exchange, but today the prevailing story is of a loss of control: a handful of global companies determine what we read, what we buy, even who we vote for. The Next Generation Internet initiative is the European Commission’s flagship programme to develop an internet that responds to people’s fundamental needs, and Nesta has been tasked with setting out a policy roadmap to this more human-centric internet by 2030.

Our NGI Forward project unveiled its vision last September, and it is already helping inform both EC and UK policy agendas. Founded on five key goals – to make the internet more democratic, resilient, sustainable, trustworthy and inclusive – it is full of radical proposals that would place the levers of digital power back in the hands of

citizens. They include issuing every European their own self-sovereign online identity ‘wallet’ by 2025, empowering them to control how their data is shared on a case-by-case basis. Also included is bold new ‘right to repair’ legislation for digital hardware, and a digital tax levy on large platforms to help fund trusted journalism.

These ideas were explored at a major NGI Policy Summit bringing together 750 expert stakeholders, and we’re now testing some of them through our £80,000 Policy-in-Practice fund. The fund’s four experimental projects include the BBC’s work to measure online engagement through human needs instead of clicks or profit; and efforts by the Dutch police to build trusted databases from the information people share with emergency firstresponders.

Case study: eReuse

After COVID-19, bridging the digital divide has never been more important. Backed by our Policy-in-Practice fund, Barcelona-based eReuse is investigating how we can make it easier for companies and public bodies to donate old laptops and smartphones to low-income families who are unable to access the internet. Such devices are often binned or recycled before their useful lifespan

is up, so this scheme also reduces the growing environmental footprint of our internet use. The project will trial the model locally and measure its impact by tracking the machines over time. But it also aims to make it easier to replicate elsewhere, by creating legal templates for public and private procurement, as well as solidifying the network of refurbishers and recyclers across Europe.

FutureFit

Empowering workers with the skills of tomorrow

These days everyone needs digital skills to get online, access basic services and progress their careers – and COVID-19 has made that even more imperative. But how do we motivate workers who lack confidence, or don’t have the time, money or support to train, retrain and do their jobs online? Nesta launched FutureFit in 2019, backed by £1.65 million from Google.org and briefed to create an effective adult learning system that tackles inequality and social exclusion.

Since then, we’ve forged partnerships in five countries – Finland, Sweden, Denmark, Belgium and the Netherlands – teaming up with trade unions, training providers and some of the world’s bestknown companies, including Volvo, Nokia and Oras. We’ve upskilled more than 1,100 people across nine sectors facing radical change, from banking to retail, metal to meat. And by designing, delivering and evaluating methods that boost learner behaviour and outcomes, we’ve seen terrific results: 89 per cent

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of participants emerged with better digital skills, using that knowledge in their jobs and beyond.

FutureFit plans to launch a website showcasing resources and evidence from the project, including both a new learning framework for institutions and businesses, and practical tools to help adult learners thrive in tomorrow’s workplace. Meanwhile,

the UK Government has announced a string of multi-million-pound incentives to ‘build back green’ post-pandemic and create hundreds of thousands of jobs. A major transformation will be needed to prepare sectors and workers for this fourth industrial revolution, and we’ve built on the lessons from FutureFit to publish Going Green: Preparing the UK workforce for the transition to a net-zero economy.

Case study: FutureFit Sweden

FutureFit’s intervention in Sweden was especially innovative and successful, bringing people with limited digital skills together to learn online. Our partners included Unionen, the world’s biggest white-collar union, and we trained 365 people in administrative roles who perceived their jobs as being at risk, had lower education levels or who lacked confidence online. COVID-19 meant our

learners gathered via Zoom, in digital classrooms 250-strong, and worked in online breakout groups too. Meanwhile Doris the chatbot nudged them to finish tasks and reflect on their experiences. Wrote one: “This was absolutely the most rewarding and interesting programme I have ever taken part in. A huge lift for me in both my private and working life.”

Data Dialogues

Forging new frontiers in digital healthcare

Nesta’s partnership with the Scottish Government has blended funding, futures analysis and research to unearth the best ways to innovate in digital health, as well as exploring public attitudes on how health data should be shared and used.

The five projects we commissioned engaged people from diverse cultural and socioeconomic backgrounds via a range of participatory futures methods, including immersive theatre and pop-up installations. And when COVID-19 hit, four were able

to pivot and deliver their work online, developing remote workshops, virtual online games and a fictional pharmacy of the future. The fifth couldn’t be adapted, so Nesta redirected that money into an interactive toolkit to help the Government design and develop its new digital health and care strategy. We also published Dialogues about Data, a report probing the barriers and enablers to creating a datadriven health service, and the programme wrapped up in summer 2021 with a workshop on how to apply all the insights we’ve gathered.

Case study: Scotland on Mars

In one of Data Dialogues’ participatory futures projects, SHIFT Design asked people aged 16-18 to game-play building a healthcare system for a Scottish colony in space. Roleplaying as the Health Minister, they were called upon to make thorny judgement calls on how to gather and share

citizens’ health data across different departments, and SHIFT gathered feedback from in-game play and interviews. The experiment garnered valuable insights on the appropriate use of sensitive material, grappling with the stigma around sharing data on issues such as mental and sexual health.

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Enterprises

As Nesta trains its future focus on three big societal missions, the enterprises we’ve incubated will continue to shape the innovation ecosystem in the UK and beyond. Their activity will bring important benefits for our missions – with opportunities to leverage their expertise and blend their methods with others in pursuit of impact. And their work for partners and clients will help keep Nesta at the forefront of global innovation.

Nesta Challenges

Reinventing the wheelchair

Nesta Challenges is renowned worldwide for our expertise in innovation challenge prizes. Since 2012 we’ve run more than 40, and researched, designed or advised on many more. Last year we awarded seven prizes, in fields spanning everything from disability to ageing, lifelong learning to legal services, and we also moved forward apace with our Million Cool Roofs global challenge and our flagship Longitude Prize, launched in 2014.

The Longitude Prize challenges innovators to develop rapid, affordable point-of-care diagnostic tests that tell doctors whether they need to prescribe antibiotics, and in some cases which one will be effective. That in turn reduces their overuse, tackling antibiotic resistance and conserving them for future generations. The innovators’ final deadline is still a year away, but at least three teams have already brought forward solutions we think could carry off the £8 million pot.

Nesta Challenges launched five new prizes in 2020/21, too, including a £200 million fund from

Ofwat to grow the water sector’s capacity to innovate. And we moved fast to respond to COVID-19 through Nesta’s Rapid Recovery Challenge, which is seeking out new tools and approaches for people worst hit by the economic fallout of the pandemic. Our ambition is to help one million people access them by 2023, improving their career and financial prospects. The prize will be awarded this autumn, and our six-strong shortlist includes Turn2Us, which uses open banking technology to get grants to those who need them faster; and Udrafter, where businesses can access talent on demand, paying students and graduates to complete microinternships that give them crucial work experience.

Nesta Challenges also offers consultancy: last year we helped the Government of Chile launch its first challenge prizes, and we’re now advising Canadia’s Centre for Regulatory Innovation. Our Afri-Plastics Challenge, worth $14 million Canadian dollars, launched in partnership with the Canadian Government this summer.

Case study: Phoenix Instinct

Despite advances in precision technology, electronics and AI, the wheelchair has barely changed in decades. Our Mobility Unlimited Challenge set out to change that, seeking out a new device for people with lower-limb paralysis. The $4 million fund saw teams compete from Japan, Italy, Scotland and the US, and the $1 million top prize went to Moray-based Phoenix Instinct, whose new ultra-lightweight chair has a smart centre of gravity, allowing people to

cross uneven surfaces while keeping perfect control. Founder and inventor Andrew Slorance himself suffered a spinal injury as a teenager, and he says the challenge gave his team – an SME without the deep pockets of a big multinational – the chance to compete on a level playing field and ultimately prevail. Taking part didn’t require onerous reporting or proof of match-funding, and was backed with extensive publicity, technical support and mentoring.

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Innovation Growth Lab

Bringing a scientific mindset to business decisions

Innovation Growth Lab (IGL) is a Nesta-led global initiative to maximise the impact of innovation and growth policy. We help organisations become more experimental, test new ideas, create better evidence and learn from each other, and to date we’ve worked with more than 1,000 policymakers and practitioners to develop their experimentation skills.

IGL typically operates in partnership, and we currently bring together seven government agencies, from the Greater London Authority to Innovation, Science and Economic Development Canada. With the Department for Business, Energy and Industrial Strategy (BEIS), Innovate UK and the European Commission, we’ve been delivering experimentation

funds that explore business growth: in 2020/21 we worked on 44 randomised controlled trials and pilots. We also provided bespoke support for NASA, the Taftie network of 32 European innovation agencies, and the National League of Cities in the US. Common to all those programmes was adapting to COVID-19: sometimes it entailed overhauling the design and purpose of experiments, sometimes it meant providing support through new online formats. Our annual conference itself happened virtually, reaching over 250 participants from 36 countries, and we spread the word even wider via a new project with the Kauffman Foundation to translate the latest body of evidence into actionable insights for policymakers and business support organisations.

Case study: Bocconi University

Are entrepreneurs more likely to succeed if they apply scientific method to their business decisions? That’s the question tested by researchers at Milan’s Bocconi University in a randomised controlled trial funded through the IGL Grants Programme. Companies were trained to formulate hypotheses about their business models, then design experiments to test them, using the findings to inform their decisions. The result: those who had the scientific entrepreneurship training were more likely to change their model by making a strategic pivot, and on average they generated higher revenues than a control group who received only traditional business training. We’ve since replicated the research with small business owners in the UK, funded by BEIS and Innovate UK through their Business Basics Programme, and the approach is now being tested further in trials in China, India and Tanzania.

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People Powered Results

Finding the positives in the UK’s COVID-19 response

Nesta’s People Powered Results (PPR) team sets out to create the conditions and cultures that allow rapid innovation. We bring together leaders, frontline staff and communities to focus on a new goal for change, then take a whole-system approach to achieving them.

The COVID-19 pandemic forced the UK’s public services to adapt at lightning pace, transforming how they work. To make sense of that, PPR has partnered with institutions nationwide to listen to voices on the frontline and in communities, capturing the long-term lessons and helping them test and scale ideas that put people at the heart of change.

Alongside Healthcare Improvement Scotland, for example, we have taken soundings from the many community organisations that rallied to assist the country’s initial COVID-19 response, with the aim

of sustaining and strengthening their future role. We have joined forces with Marie Curie and St Christopher’s Hospice to gather insights that will help them reshape and humanise future experiences of death, dying and bereavement. That work culminated in September with an online gathering of more than 200 stakeholders from NHS trusts, palliative care networks and universities. And at a more local level, we’ve partnered with organisations like Big Hearts Community Trust to bring a peoplepowered approach to its work with isolated individuals and families across Edinburgh.

We also advanced our efforts to help NHS England implement personalised care models at scale, and co-produced its Peer Leadership Development Programme, which empowers people to take a more active role in shaping care systems.

Case study: Parent-Pal Essex

Essex County Council wanted to help an oftoverlooked group: working families with informal childcare. How do you build their resilience, connect them together, and avoid their falling into crisis? Our project set out to hatch new solutions by bringing parents themselves together with experts from Barnado’s, Home Start, adult community learning and local primary schools. With Basildon the focus

and 49 days to forge fresh ideas, our cross-sector team brought a suite of prototypes to an intensive launch workshop, which explored case studies and emerged with two big programme ideas, ‘Parent-Pal’ and ‘Family Friendly Employers’. And underpinning our people-powered approach? Making sure families were key team members.

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Financial review

The Group is comprised of Nesta (the main operating charity through which all charitable activity is undertaken), the Nesta Trust (a charitable trust which holds all the investment assets invested to fund the charitable activities of Nesta in advancing the objects of the Trust), six companies, four limited liability partnerships and one entity registered in the United States.

A number of subsidiaries have been set up to manage Nesta’s investing and fund managementrelated activities. It enables Nesta to manage and invest funds on behalf of its investment partners in compliance with the Financial Conduct Authority’s (FCA) requirements. This structure is made up of Nesta GP Limited, NII GP2 Limited, Nesta PRI Limited, Cultural Impact Development Loans Limited, Nesta Partners Limited, Nesta Investment Management LLP, NII2 Special Partner LLP, Nesta Arts Impact LLP, Nesta Arts and Culture Impact LLP and Nesta US Inc. The Group also includes Nesta Enterprises Limited, incorporated as a trading subsidiary for non-primary purpose trading. The results of the Group consolidate all subsidiary undertakings as well as the Trust and the joint venture in Behavioural Insights Limited.

Nesta Trust provided funding to Nesta of £28.1 million (2020: £21.8 million) during the year of which £23.6 million (2020: £18 million) was applied to charitable operating activities and £4.5 million (2020: £3.8 million) committed in relation to the Impact Investment Fund and other programmerelated investments.

Funding made available by Nesta Trust does not constitute a commitment until a drawdown is made. The assets of the Trust are held as an expendable endowment and the Trust is therefore able to fund charitable activity beyond the returns it generates during the year subject to long term sustainability.

Charitable income and expenditure breakdowns have been restated for 2020 to reflect the new headings in 2021 in line with Nesta’s new strategy.

The categories defined by the trustees for the purposes of organisational management are – Committed Programme Delivery; Investments;

Missions; Practices and Enterprises. Previously, these were – Programmes; Investment (early-stage and social impact) management; Research, Policy and Analysis; Skills; and FutureFest.

Charitable income of £16.9 million (2020: £25.3 million) was recognised in addition to the £7.9 million (2020: £10.1 million) of investment income and £4.8 million (2020: £8.0 million) of other income. Charitable income is predominantly in the form of partnership funding where Nesta’s expertise in programme design and project management is combined with the funding capacity of other typically larger organisations. Other income consists of rental income, trading income and fund management receipts.

Total Group expenditure was £37.1 million (2020: £47.2 million) of which £34.3 million (2020: £42.1 million) was spent on charitable activities, £1.9 million (2020: £3.9 million) on trading activities and £0.8 million (2020: £1.2 million) on managing endowment assets held by the Trust and impact investment funds held by Nesta. Grant expenditure commitments totalled £8.7 million (2020: £7.7 million) with recipients over £50,000 detailed in Note 7b.

Support costs of £12.4 million (2020: £10.8 million) relate to Communications and Corporate Services activities and are allocated to programme areas as shown in Note 7a.

Total Group funds increased by £81.4 million (2020: decreased by £30.9 million) during the year. This resulted in Group funds of £505.1 million carried forward as at 31 March 2021 (31 March 2020: £423.7 million), of which £22.0 million was unrestricted (2020: £9.4 million) and £458.6 million was in relation to the expendable endowment (2020: £391.6 million).

As Nesta is able to draw down cash from Nesta Trust as required within the approved funding envelope. The Trustees have concluded that the Trust has adequate assets to fund the activities of the charity over the medium term; we are confident because we have £400m in the Fund which we can draw on as needed.

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Investment review

The assets of the Trust provide income and capital to be applied by Nesta as sole Trustee to further the objects of the Nesta Trust. The investment strategy balances the desire to maintain the real value of the endowment and its ability to generate the income required by the Nesta Trust to advance its charitable objectives. The strategy aims to balance risk, return and capital preservation.

During the year ended 31 March 2021, the value of Trust investments and cash increased by £70 million to £468 million (2020: £398 million) after annual transfers to Nesta to carry out the objectives of the Trust in line with the Trust Deed. The fund has fully recovered from losses experienced last year following the outbreak of the COVID-19 pandemic. A further breakdown of the £70 million increase can be seen in the table below:

Asset class (Trust accounts only) Market value of
investment
assets
31 March 2021
£’000		 Proportion of
total endowment
assets
31 March 2021
%		 Market value of
investment
assets
31 March 2020
£’000
Current assets:
Cash 9,842 2 4,143
Fixed asset investments:
Equities – UK 39,100 8 30,753
Equities – Overseas 232,377 50 183,591
Bonds and fixed income 84,972 18 74,234
Early-stage venture portfolio* 18,338 4 20,536
Investment property 77,655 17 76,640
Private equity funds 5,618 1 7,693
Total Fixed asset investments 458,060 98 393,447
Total Cash plus Fixed asset
investment		 467,902 100 397,590

*Mixed motive investments – see Note 10 of the accounts for further breakdown

Strategic review

During the year, Nesta’s trustees continued to monitor and review the investment portfolio including the asset allocation policy through the Trust Investment Committee. A risk register is used in order to proactively manage key risks.

Global equities performance

Strategic allocation to equities increased to 58 per cent (2020: 54 per cent) during the year which, together with market conditions, resulted in an increase in the valuation to £271 million as at 31 March 2021 (2020: £214 million). During the year £24 million of equities were sold (2020:

nil), of which £6 million was reinvested in other alternative asset classes in order to rebalance the portfolio, with the remainder being used to ensure the Trust had sufficient cash to fund day to day activities.

Managing holdings of alternative asset classes

As noted above, a total of £6 million was reinvested into alternative asset classes during the year (£4 million into Bonds and £2 million into Investment property). A £6 million financial commitment remains outstanding for alternative asset classes as disclosed in Note 10 to these Financial Statements (2020: £6 million).

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Maximising value from our self-managed early-stage venture portfolio

The early-stage venture portfolio includes equity and loan investments in 12 (2020: 18) early-stage companies, and to three (2020: four) early-stage investment funds. The Trust’s investment strategy is to maximise the returns from the current portfolio but not to invest in any new early-stage companies or funds in the near future due to these investments being slow to generate income and being typically higher risk than other asset classes. There were net gains of £2.3 million (2020: £1 million) recognised in the year applying the valuation methodology which remains unchanged from previous years and is detailed in Note 1h to these Accounts.

Costs of managing the assets

Direct costs, reported by external fund managers, of the Trust’s investment assets totalled £1 million (2020: £1 million) across the Trust and include external fund manager fees and custodian fees. In addition, there are other indirect costs associated with fund management activities. Where fund manager fees are offset against the relevant fund’s value, these are grossed up and shown as fund manager fee expenditure, in the statement of financial activities in accordance with normal practice, along with those fund manager fees that are invoiced and paid for in cash. The full cost of investment goes beyond the fees we are charged by managers and include, for example, transaction costs, advisory costs and staff costs. We estimate that the full costs were about 0.5 per cent of the average asset value over the year (2020: 0.6 per cent).

Investment policy

The Nesta Trust was established by a Trust Deed dated 22 September 2011. As the sole Trustee of the Nesta Trust (‘the Trust’), Nesta is responsible for the Trust’s investment policy. Investment strategy advice is delegated to the Trust Investment Committee of the Board which is also responsible for strategic and tactical asset allocation, rebalancing and weighting within asset classes, as well as monitoring manager, consultancy and custodial arrangements. The Board approved an updated Investment Policy in March 2021.

Investment assets are invested on a total return basis in furtherance of the Trust’s objects, balancing cash distributions where possible to fund Nesta’s drawdown requirements. These

investment assets are held as an expendable endowment.

Trust assets are invested in accordance with the wide investment powers set out in the Trust Deed, which requires that Nesta must set the investment and spending policy for the Trust with a view to preventing the value of the Trust assets and any returns generated by the Trust assets falling below £260 million.

Nesta’s investment objective for the Trust is to balance the current and future needs of the Group by producing a consistent and sustainable level of return, within acceptable levels of risk, to support the work of Nesta in advancing the charitable objects of the Trust. To meet these objectives Nesta invests globally and diversifies across a range of asset classes, maintaining the majority in higher returning instruments whilst ensuring enough liquidity to avoid sales at distressed prices.

Responsible investing

Nesta believes that responsible investment can enhance long-term portfolio performance and is committed to capturing investment opportunities driven by environmental, social and governance (ESG) integration and active ownership within its asset portfolio. The Trust’s Investment Committee aims to encourage companies to innovate for the delivery of long-term returns. To date, the process of incorporating a more responsible approach to investment has involved:

These policies have informed Nesta’s actions, oversight and asset allocation decisions. However, it should be noted that such initiatives take

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time to fully implement and Nesta may have some holdings that do not fully accord with its responsible investment policies. These will be run down over time. Equally, Nesta will continue to develop its policies to further embed responsible investing across the portfolio.

Programme-related investments and grantmaking policy

Nesta achieves its charitable objects, and the objects of the Nesta Trust, in several ways, which include providing investment, grantmaking, providing non-financial support and carrying out research. It also provides support in a range of different ways, depending on the nature and objectives of each programme.

In line with Charity Commission guidelines, programme-related investments are made primarily to further the objects of the charity for public benefit but are also expected to make a financial return and are managed in line with programme objectives. Consequently, they are, as permitted by Accounting and Reporting by Charities: Statement of Recommended Practice (FRS 102) applicable in the UK and Republic of Ireland (effective 1 January 2015), issued by the Charity Commission and included in the balance sheet at cost less any provision for impairment where there is no evidence for fair value.

There is no set allocation of the annual budget for overall grant expenditure. Rather, Nesta sets programme deliverables and determines the appropriate method of delivery within that programme’s budget. Nesta sets out specific entitlement criteria for each programme at its launch where grants are appropriate as a funding mechanism. These criteria vary from programme to programme and are made available on Nesta’s website. Applications are assessed against these criteria and awards are made taking into account the availability of funds, Nesta’s ability to deliver the objectives of the programme and the quality

of applications. The period for which grants are awarded depends upon the programme but typically lasts between one and three years. Grants are monitored regularly and appropriate progress reports are required from recipients. A list of grants over £50,000 can be found on pages 51 to 54, and a comprehensive list of all grants made during the year can be found on the Nesta website.

Free reserves policy

In accordance with the Trust Deed of the Nesta Trust, Nesta’s reserves policy is to provide sustainable funding to advance the charitable aims of the Nesta Trust whilst holding reserves at sufficient levels to maintain the underlying assets above a market value of £260 million.

On 31 March 2021 the reserves of the Group stood at £505.1 million (2020: £423.7 million). Nesta Trust provided funding to fulfil its charitable objectives, through activities carried out by Nesta, totalling £23.6 million (2020: £18 million).

Nesta, as the parent charity, has no requirement to maintain its own reserves, provided that expenditure remains within the approved amount of drawdown from the Trust. The policy for drawdown was established in line with the Trust Deed and subject to the powers of the Protector of the Trust, and allows drawdowns at any time during the year as long as the approved drawdown total is not exceeded.

Cash received that is restricted in use of specific programme expenditure is held on Nesta’s own balance sheet.

This reserves policy will only be reviewed when there is a change in the funding relationship between the Trust and Nesta; such a change is currently not foreseeable.

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Principal risks and uncertainties

The trustees are responsible for the management of risks within the Nesta Group. These are considered both organisationally and by activity.

The majority of Nesta’s Trust investments are externally managed by investment managers in pooled fund vehicles.

i. Organisational risk:

The monitoring and implementation of the risk management framework and consideration of organisational risk is delegated to the Audit and Risk Committee (previously Finance and Audit Committee). All Nesta staff take part in a risk-forecasting exercise to identify, anticipate and mitigate risks. The results from this exercise are used by the Executive Team to develop a corporate risk register presented at the Audit and Risk Committee quarterly and the Board biannually. The Executive Team assigns mitigating actions and reviews progress against them every month.

The key controls in place include:

One of the Group’s main financial risks is the investment activity of Nesta Trust. Investment risk is managed with the support of our investment advisors, through regular review of the Nesta Trust investment policy, management of the strategic asset allocation, regular performance reporting, diversification across a broad range of asset classes, investment managers and investment strategies, and ongoing manager reviews.

ii. Activity risk:

Nesta’s mission is to bring bold ideas to life to change the world for good which requires experimentation and an element of risk-taking in its activities if it is to succeed. Accordingly the risk appetite is for ‘managed risk-taking’ rather than simple ‘risk aversion’. Recognising that some activities or projects may fail to a greater or lesser extent and that such failure can be an important source of learning.

Trustees are satisfied that the major risks identified through risk management processes are being adequately managed, whilst recognising that any framework can provide reasonable but not absolute assurance. There were no material control weaknesses identified by trustees or management during the year.

The following organisational risks and uncertainties are considered the most significant and which include those associated with the adoption by Nesta of its new strategic plan:

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Objectives

Objectives

Nesta works to advance the following charitable aims for the public benefit

1. To advance education, and in particular the study of innovation, by the promotion of research and the publication of the useful results thereof, in:

2. To advance:

through, or by encouraging and supporting, innovation.

The ‘voluntary sector’ means charities and voluntary organisations. Charities are organisations which are established for exclusively charitable purposes in accordance with the law of England and Wales.

Voluntary organisations are independent organisations which are established for purposes that add value to the community as a whole, or a significant section of the community and which are not permitted by their constitution to make a profit for private distribution. Voluntary organisations do not include local government or other statutory authorities.

Sustainable development means ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’.

3. To advance any other purpose which is recognised as exclusively charitable under the laws of England and Wales and Scotland.

Fundraising statement

Section 162a of the Charities Act 2011 requires us to make a statement regarding fundraising activities. Nesta does not undertake any fundraising activities and does not use any professional fundraisers or ‘commercial participators’ or any third parties to solicit donations.

We are therefore not subject to any regulatory scheme or relevant codes of practice. We have not received any complaints in relation to fundraising activities, nor do we consider it necessary to design specific procedures to monitor such activities.

Public benefit statement

The trustees confirm that, in exercising their powers and duties in relation to both Nesta and the Nesta Trust, they have had due regard to the Charity Commission’s statutory guidance on public benefit.

A copy of the Charity Commission’s guidance on public benefit is provided to each trustee. The Board considers how every proposal brought to it for approval will advance Nesta’s charitable objects for public benefit.

This report sets out some of the activities and achievements of Nesta in carrying out its charitable purposes, and the purposes of the Nesta Trust, for the public benefit over the year. These range from major grant programmes to challenge prizes to other projects looking for ways to improve public services, education, healthcare and the arts. Nesta undertakes and disseminates research to improve public understanding of innovation through its reports, events and digital

media, and provides training and tools to teach innovation skills to a variety of audiences.

Support is provided to private and for–profit companies only where this will further Nesta’s charitable purposes for public benefit and where personal benefit is incidental to furthering those purposes. The potential for personal benefit is assessed on a case-by-case basis, through due diligence on potential investments, for example, and appropriate conditions are imposed to ensure this is incidental to furthering Nesta’s charitable purposes. Grants and investments are closely monitored to ensure they continue to further Nesta’s charitable purposes throughout the project.

The details of Nesta’s purposes and objectives, and its strategies and achievements in pursuing these purposes and objectives, are set out on pages 7 to 25.

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Annual Report and Accounts: For the year ended 31 March 2021

Governance and management

Governance and management

Nesta was established and registered as a charity in 2011 to act as successor body to the National Endowment for Science, Technology and the Arts (‘NESTA’). NESTA was a non-departmental public body with a statutory remit to promote talent, creativity and innovation in science, technology and the arts, with an endowment from the National Lottery. All NESTA activities, staff, assets and liabilities were transferred on 1 April 2012 to Nesta and the Nesta Trust, registered charity no. 1144091. The Trust holds the expendable endowment and Nesta, its sole trustee, uses returns from the Trust to pursue the charitable objects of the Trust.

Nesta is a company limited by guarantee and a charity registered with the Charity Commission and the Office of the Scottish Charity Regulator. Its trustees are both directors and members of the company. For more information on the Group structure and subsidiaries please see pages 74-75.

Under company and charity law, the Board of Trustees retains overall responsibility for Nesta and its role as Trustee of the Nesta Trust. Trustees on the date this annual report is published are listed on page 4. Sir John Gieve is Chair of the Board, which met seven times during the year with members of the Executive Team present. The Nesta Trust also has a Protector appointed by the Secretary of State for Business, Energy and Industrial Strategy with a fiduciary duty to ensure the integrity of administration of the Trust. The current Protector is James Sinclair Taylor.

Trustees receive no remuneration for acting as trustees and are appointed for an initial term of three years, renewable for another three years with Board approval. All new trustees receive a tailored induction and information about structure and governance, and their responsibilities as charity trustees, in accordance with the Charity Governance Code. The Board observes all seven principles of the Charity Governance Code and

provides appropriate control, challenge and support to the Executive Team.

The Board has adopted a conflicts of interest policy and processes for both staff and trustees to ensure that conflicts of interests are declared and managed appropriately, and maintains a Register of Interests. Trustees are reminded to declare relevant interests at the start of every Board and committee meeting.

The Board has appointed a Chief Executive to lead and manage Nesta by implementing the policy and strategy adopted by the trustees within the plan and budget approved by the Board. Approval for decisions up to certain financial thresholds have been delegated to the Chief Executive and other executive directors under a Scheme of Delegation. All decisions above this threshold must be approved by the Board or its committees. The Board has also reserved to itself certain important decisions, such as changes to the Articles, appointment of the Chief Executive, and approval of the long-term objectives and strategy.

Nesta’s Executive Team comprises the Chief Executive, plus the Chief Operating Officer, Chief Programme Officer, Executive Director, Investment, Chief Finance Officer, General Counsel and Company Secretary, Chief Scientist, Chief Strategy Officer and Chief Partnerships Officer, all of whom report to the Chief Executive. A full list is given on page 75.

The Board has established a number of committees to oversee aspects of Nesta’s activities. Each of the Board committees has delegated authority in respect of certain functions and activities and has written terms of reference approved by the Board, and reports to the Board at each Board meeting. A list of trustee members for each of the Board committees is provided on page 74.

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Annual Report and Accounts: For the year ended 31 March 2021

Governance and management

Here is a list of the main Board committees:

Finance and Audit Committee (recently renamed the Audit and Risk Committee) which reviews management reporting and financial performance against budget, and recommends to the Board the annual budget; as well as reviewing audit and financial reporting, internal financial controls, risk management and compliance. Grant Thornton are engaged to provide internal audit services to assist the Committee to monitor the effectiveness of internal control arrangements. The Committee met four times during the year.

Trust Investment Committee whose key

responsibilities are to draw up the policies and objectives governing the investment of Nesta Trust’s assets, to approve investments within ranges set by the Board, to oversee their implementation and to monitor financial performance of the Nesta Trust. The Committee met four times during the year.

Venture Investment Committee which manages the Trust’s portfolio of interests in early-stage companies and funds transferred from NESTA, manages programme-related and mixed-motive investments, and oversees any other Nesta Investment. The Committee met 12 times during the year.

People Committee whose key responsibilities are staff terms and conditions, and ensuring fair and appropriate remuneration and benefit policies. The Committee also manages the recruitment of new trustees and overseas appointments to other committees. The Committee met six times during the year.

Challenges Committee whose key responsibilities include regular monitoring and reviewing the performance and activities of Nesta Challenges, considering, advising, and scrutinising the scope, nature and impact of Nesta Challenges work and long-term objectives, and approval of all income and associated expenditure in Nesta Challenges above the level delegated by the Board. The Committee met three times during the year.

Thematic committees Nesta had five thematic committees at the start of the year – Health, Government Innovation, Innovation Policy, Education and Arts and Creative Economy – whose main purpose was to help Nesta to set clear objectives and impact measures in each field, to monitor progress and support executive teams to use their resources in the most effective way. These committees were disbanded in January 2021 as they were no longer required after the launch of Nesta’s new strategy (see pages 7-8 for more detail).

Mission Committees In March 2021, the Board approved the introduction of three advisory committees: A Sustainable Future Committee, a Fairer Start Committee and a Healthy Lives Committee. These committees’ purpose is to provide advice and direction to the Missions and to actively participate in the shaping of initiatives and supporting staff to deliver the new Mission goals.

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Governance and management

Sustainability and carbon reporting

Nesta is reporting energy and carbon emissions in compliance with The Companies (Director’s

Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018.

Nesta is reporting energy and carbon emissions
in compliance with The Companies (Director’s
Report) and Limited Liability Partnerships (Energy
and Carbon Report) Regulations 2018.		 Nesta is reporting energy and carbon emissions
in compliance with The Companies (Director’s
Report) and Limited Liability Partnerships (Energy
and Carbon Report) Regulations 2018.		 Nesta is reporting energy and carbon emissions
in compliance with The Companies (Director’s
Report) and Limited Liability Partnerships (Energy
and Carbon Report) Regulations 2018.		 Nesta is reporting energy and carbon emissions
in compliance with The Companies (Director’s
Report) and Limited Liability Partnerships (Energy
and Carbon Report) Regulations 2018.
Reporting category Year ending
March 2021		 Year ending
March 2020		 Change
Energy consumption used to calculate emissions: (kWh) 354,705 449,664 -21%
Electricity
Natural gas
Emissions from combustion gas (Scope 1) (tC02e)
Emissions from purchased electricity (Scope 2, location-based) (tC02e)		 108,287
246,418
45
25		 235,917
213,747
39
59		 -54%
15%
15%
-57%
Total gross tC02e based on above 71 98 -28%
Intensity ratio: gross tC02e/SQM 0.026 0.036 -28%
Emissions from purchased electricity (Scope 2, market-based factor) (tC02e)
0
0
-
Carbon offsets (tC02e)
0
0
-
Total annual net emissions (tC02e)
45
39
15%
Additional intensity ratio: net tC02e/SQM
0.017
0.014
15%

----- Start of picture text -----
Carbon emissions Carbon emissions
16 0.006 by energy source
14
0.005
12
0.004
10
36 [%]
tCO2e 8 0.003 tCO2e/
SQM
6 64 [%]
0.002
4
0.001
2
0 0.000
Apr.20 May.20 Jun.20 Jul.20 Aug.20 Sep.20 Oct.20 Nov.20 Dec.20 Jan.21 Feb.21 Mar.21
Previous FY Carbon intensity – Previous FY (kg/SQM) Electricity (kWh)
Current FY Carbon intensity – Current FY (kg/SQM) Natural gas (kWh)
----- End of picture text -----

Methodology and estimates

The methodology used to calculate total energy consumption and carbon emissions has been extracted from invoice data for the financial year. As Nesta does not occupy the whole building at 58 Victoria Embankment, consumption for areas outside of Nesta’s control has been deducted. This has been deduced through sub-meter readings. Gas is supplied to the whole building and there are no heat meters to enable the identification of each final customer’s consumption. As such Nesta is responsible for all gas consumption in the building. No estimates have been used as we have access to 100 per cent actual data from the invoices. The Company does not own any vehicles and all travel is undertaken using public transport. Energy and fuel consumption has been converted

to carbon (kgCO2e) using 2019 DEFRA published conversion factors.

The Nesta building was BREEAM certified on construction in 2011 gaining an overall score of 70.5 per cent and a rating of excellent. Investigations have taken place on implementing improved lighting control across 95 per cent of the building to progressively illuminate instead of instantly lighting whole areas on entry. Implementing light level controls to switch lighting off when lighting level meets set point. Investigations have also taken place on implementing the use of heat pumps in conjunction with our HVAC to heat domestic hot water. Solar thermal gain is something we have also been investigating to reduce the energy required for cooling.

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Annual Report and Accounts: For the year ended 31 March 2021

Governance and management

The Governance Code

Nesta’s Board is committed to adopting the principles set out in the Charity Governance Code (the ‘Code’). In accordance with good practice, Nesta has recently undertaken a governance review which is within the timeframes set by the Code. In any event, Nesta’s governance structures are currently being reviewed and updated to ensure they continue to be best practice in light of our new strategy.

Our stakeholders

Section 172 Statement

Background

As a company limited by guarantee, Nesta is required to report on how trustees have discharged their duty to promote the best interests of Nesta, while having regard to the matters set out in section 172(1)(a) to (f) of the Companies Act 2006. In doing so, regard (amongst other matters) must be given to:

The Board recognises that Nesta’s relationship with its stakeholders is critical to its success. Our charitable objectives, scale and impact are achieved in part through relationships and having a positive influence on public policy for public benefit.

The table below sets out our key stakeholder groups, the key considerations of each group and how we engage with them. By understanding our stakeholders, Board discussions consider the potential impact of our decisions on each stakeholder group and consider their needs and concerns.

Stakeholder
group		 Key considerations How we engage
Beneficiaries • Improving the lives of the people and communities that
Nesta works with.
• Making sure that our work benefits a significant section
of the public.		 • Website, newsletters and direct communications.
• Nesta events.
• Via our partners, including our grant recipients, and the
projects that we support.
• Via grant recipient reporting.
Partners • Nesta’s partners are broad with varying interests and
interactions with Nesta. From policy influence (from
UK Government and opposition parties) to regional
stakeholders to international, and from our funders to
our grantees and projects.		 • Publication of research reports, articles and blogs.
• One-to-one engagement on relevant issues.
• Lobbying for change at a policy level.
• Direct communications.
• Partner feedback and insights sought on issues of
relevance to that partner.
• Website, newsletters and direct communications.
• Twitter.
• Nesta events.
Employees • Succession planning.
• Growth, training and development.
• Diversity, inclusion and equality.
• Fair and appropriate remuneration, benefits and
conditions.		 • We receive feedback and seek to implement positive
change through our employee represented Staff Forum
and Diversity and Inclusion working group.
• Intranet, staff newsletters and all-staff meetings.
• Employee engagement survey.
• Learning and development through our People team.
Regulators • Maintaining strict governance procedures to ensure
compliance with all applicable regulatory regime.		 • Timely submissions of all necessary filings and returns.
• Self-reporting and engagement where appropriate.
• Prompt and comprehensive response to requests for
information if requested.
Investment
managers		 • Comprehensive view of the financial performance and
sustainability of the endowment.
• Engagement on ethical, social and governance factors.
• Ability to maximise the overall return of the endowment.		 • Regular meetings, calls and correspondence with our
investment managers.
• Oversight from our Trust Investment Committee.
• Via Nesta’s external appointed investment advisers.

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Annual Report and Accounts: For the year ended 31 March 2021

Governance and management

Key decisions in 2020/21

The table below sets out the key decisions taken by the Nesta Board in 2020/21 and how the interests of our stakeholders and the wider factors

set out in section 172 of the Companies Act 2006 were taken into account.

Restructure to
accommodate
new strategy		 In preparation of the
launch of Nesta’s
new strategy, a two-
phase restructure of
the organisation was
approved by the Board		 Key considerations:
• Change management and the impact on Nesta employees
• Positive integration of new employees
• Impact on current and future Nesta beneficiaries
• How the restructure will enable Nesta to better achieve impact
through the new strategy and continue to achieve its charitable
objectives
Launch of new
strategy and
Missions		 The Board approved
the formal strategy and
Missions launch which
took place in February
2021		 Key considerations:
• External stakeholder engagement to explain new direction and
engender support
• Internal staff engagement to engender support and advocacy of
new strategy
• Ensure that the positive impact created through the new strategy
and how it achieves Nesta’s charitable objectives is clearly
articulated

Remuneration policy

Nesta and its people

The Nesta Executive Team

Nesta’s Executive Team is responsible for setting our strategic direction in tandem with providing day-to-day operational leadership of the charity. Our Executive Team provides advice and updates to the Board of Trustees on all strategic, operational or policy matters, the delivery of organisational key results (OKRs) and communicates any issues arising from the specific functional areas for which its members are responsible.

Following the appointment of Ravi Gurumurthy as CEO and our organisational restructure and strategic review there have been a number of new Executive appointments:

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Annual Report and Accounts: For the year ended 31 March 2021

Governance and management

Full details of the current Executive Team are outlined on page 75.

Nesta’s workforce has experienced significant change in 2020/21, not only related to the external impact of the COVID-19 pandemic and wholesale shift to 100 per cent remote working for much of the period due to lockdown but also as a result of the strategic review and organisational restructure that commenced in the autumn of 2020 and concluded in March 2021.

In March 2020, the Executive Team focused on Incident Management response to lead the organisation through an unprecedented pivot to lockdown working whilst also continuing to press on with the strategic review and restructuring activities.

As a direct result of the organisational restructure and strategic review, Nesta saw 32 employees accept voluntary redundancy. We had 60 new positions created as a result of our strategic realignment under our new Missions and practice areas, and the targeted recruitment campaign has seen overall Nesta headcount drop to 277 (down from 302 FTE in 2019/20). During the year Nesta did not use any HMRC furlough schemes to support staff pay.

Key people activities

People Plans for 2021/22

Following the appointment of a permanent People and Organisational Development Director in January 2021, the following goals for the next financial year have been developed and agreed with the Nesta People Committee.

We will be developing a performance appraisal methodology that applies a Nesta-wide approach to rating performance based upon the following principles:

We will be continuing our review to develop a levelled and externally benchmarked pay framework that is fit for purpose across all segments of the organisation, including revamping our flexible benefit scheme and updating our group pension plan to include more sustainable ESG options for our employees.

We will be implementing a new HR information system to ensure we have the appropriate technology in place to support people-related decision making and to automate and modernise a number of our people lifecycle activities.

We will be reviewing, refreshing and modernising all of our Nesta people policies to ensure they are attractive, inclusive and best in class for our sector. There will be a particular focus on how we support our employees to make hybrid working work for them and thrive in a new flexible working pattern as we adapt to a new way of working in the wake of the COVID-19 pandemic. In order to support our ambitions as a learning organisation we will also be embedding a new Learning and Development strategy and curriculum.

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Annual Report and Accounts: For the year ended 31 March 2021

Governance and management

Pay at Nesta

At Nesta transparency is fundamental to all aspects of our work and we take the same approach to employee remuneration. In line with recommendations from the National Council for Voluntary Organisations inquiry into executive pay, we have detailed our approach to pay; outlined how our pay levels are defined, and we have listed the cumulative salary total of our Executive Team. All pay bands are visible and available to our employees and we engage openly via internal collaboration tools on all pay related questions.

Our People Committee is responsible for agreeing salary levels of all executive posts upon appointment, any ex gratia or non-contractual one-off payments and annual pay awards for all staff. The People Committee meets at least four times a year and also supports the People team via correspondence when required.

The cumulative total for Executive salaries is disclosed in Note 8d of the accounts. Our Executive pay band has been set to ensure we attract and retain the talent we require to successfully run a complex organisation, deliver on our strategy and maintain our standing as a global leader in innovation.

Nesta is proud to be an Accredited Real Living Wage employer and funder. We ensure any work experience or interning within the organisation is also fully paid. Nesta’s annual salary review takes place each year with any changes taking effect from 1 April. A general award to salaries may be made to reflect changes in the wider labour market and levels of inflation. A general award of one per cent was made in April 2021 to reflect the economic impact of the COVID-19 pandemic, contraction of cost of living and pay decisions across similar organisations (April 2020: two per cent).

Any Individual above inflation employee pay awards or promotions are determined with reference to individual achievement against objectives, demonstrating Nesta values or where there have been substantial changes to a role. Individual pay awards are in the form of a salary increase within the appropriate pay band or promotion to the next pay band and are approved by Executive Directors who meet with the People team to review and agree any proposed increases.

All increases fall within the annual remuneration review budget set aside for salaries which is signed off by the People Committee (a total of two per cent in 2020/21). Given emphasis on equity, diversity and inclusion we attempted to ensure that above inflation awards and promotions across the organisation were proportional and representative across the protected characteristics of ethnicity and gender in this financial year. Further details on our gender pay gap can be found in our gender pay gap report.

Nesta provides a mixed portfolio of financial and non-financial rewards and benefits for our employees to ensure we are able to attract and retain the most talented people to deliver our strategy. We are undertaking an externally benchmarked review of our remuneration in 2021/22 and we are also reviewing our flexible benefits to ensure they are fit for purpose, competitive and reflect demand and changing needs across the organisation. Proposed changes and approval of budget for any recommendations arising from the review will be sought from the People Committee by December 2021 with a view to take effect in April 2022.

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Annual Report and Accounts: For the year ended 31 March 2021

Governance and management

Statement of trustees’ responsibilities

The trustees are responsible for preparing the strategic report, annual report and financial statements in accordance with applicable law and regulations.

Company law requires the trustees to prepare financial statements for each financial year in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the trustees must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and charity, and of the net income of the Group for that period. In preparing these financial statements, the trustees are required to:

The trustees are responsible for keeping proper accounting records that are sufficient to show and explain the Group’s and charity’s transactions, and disclose with reasonable accuracy, at any time, the financial position of the Group and charity, and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence taking reasonable steps for the prevention and detection of fraud and other irregularities.

The trustees are responsible for the maintenance and integrity of the corporate and financial information included on Nesta’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Disclosure to our auditors

As far as the trustees are aware, at the date of this report, they have taken all the steps they ought to have taken to make themselves aware of any relevant audit information of which the company’s auditor is unaware.

The trustees’ report and strategic report are approved by the Board of Trustees and authorised for issue on 21 September 2021, and signed on its behalf by:

Sir John Gieve, Chair of the Board of Trustees of Nesta

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Annual Report and Accounts: For the year ended 31 March 2021

Independent auditor’s report to the members and trustees of Nesta’

Independent auditor’s report to the members and trustees of Nesta

Opinion on the financial statements

In our opinion, the financial statements:

We have audited the financial statements of Nesta (‘the Parent Charitable Company’) and its subsidiaries (‘the Group’) for the year ended 31 March 2021 which comprise the consolidated statement of financial activities, the consolidated and Charity balance sheet, the consolidated cash flow statement and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remain independent of the Group and the Parent Charitable Company in accordance with the ethical requirements relevant to our audit of the financial statements in the UK, including the Financial Reporting Council’s (FRC’s) Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

Conclusions related to going concern

In auditing the financial statements, we have concluded that the trustees’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Charitable Company’s ability to continue as a going concern for a period of at least 12 months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the trustees with respect to going concern are described in the relevant sections of this report.

Other information

The trustees are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements,

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Annual Report and Accounts: For the year ended 31 March 2021

Independent auditor’s report to the members and trustees of Nesta’

we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Other Companies Act 2006 reporting

In our opinion, based on the work undertaken in the course of the audit:

In the light of the knowledge and understanding of the Group and the Parent Charitable Company and its environment obtained in the course of the audit, we have not identified material misstatement in the Strategic report or the Trustee’s report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 and the Charities Accounts (Scotland) Regulations 2006 requires us to report to you if, in our opinion:

Responsibilities of trustees

As explained more fully in the Statement of responsibilities of the trustees, the trustees (who are

also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the trustees are responsible for assessing the Group’s and the Parent Charitable Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the Group or the Parent Charitable Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

We have been appointed as auditor under section 44(1)(c) of the Charities and Trustee Investment (Scotland) Act 2005 and under the Companies Act 2006 and report in accordance with the Acts and relevant regulations made or having effect thereunder.

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

Extent to which the audit was capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of noncompliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

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DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35 Annual Report and Accounts: For the year ended 31 March 2021

Independent auditor’s report to the members and trustees of Nesta’

Based on our understanding of the Charity and the industry in which it operates, we identified that the principal laws and regulations that directly affect the financial statements to be the Companies Act 2006, Charities Act 2011 and Charities and Trustee Investment (Scotland) Act 2005. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement items.

In addition, the Charity is subject to many other laws and regulations where the consequences of noncompliance could have a material effect on amounts or disclosures in the financial statements, for instance through the imposition of fines or litigation. We identified the following areas as those most likely to have such an effect: employment law, data protection and health and safety legislation. Auditing standards limit the required audit procedures to identify non-compliance with these laws and regulations to enquiry of the trustees and other management and inspection of regulatory and legal correspondence if any.

Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we are to become aware of it.

Audit procedures performed by the engagement team included:

A further description of our responsibilities for the audit of the financial statements is located at the FRC’s website at: www.frc.org.uk/ auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the Charitable Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006, and to the Charitable Company’s trustees, as a body, in accordance with the Charities and Trustee Investment (Scotland) Act 2005. Our audit work has been undertaken so that we might state to the Charitable Company’s members and trustees those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Charitable Company, the Charitable Company’s members as a body and the Charitable Company’s trustees as a body, for our audit work, for this report, or for the opinions we have formed.

Paul Clark (Senior Statutory Auditor) For and on behalf of BDO LLP, Statutory Auditor London, United Kingdom.

Date: 10/11/21

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

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Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

Financial statements

Consolidated statement of financial activities for the year ended 31 March 2021

Notes to the
accounts		 2021
£’000
Unrestricted
funds		 2021
£’000
Restricted
funds		 2021
£’000
Expendable
endowment		 2021
£’000
Total funds		 2020
£’000
Total funds
*Restated
Income and endowments from:
Investment income
Charitable activities
Other trading activities
Other income		 2
3
4
5		 187
1,899
2,900
6,654		 -
14,988
1,599
-		 7,697
-
-
-		 7,884
16,887
4,499
6,654		 10,124
25,267
7,442
6,751
Total income
Less share of joint venture’s turnover		 11,640
(6,330)		 16,587
-		 7,697
-		 35,924
(6,330)		 49,584
(6,237)
Total group income 5,310
16,587		 7,697 29,594 43,347
Expenditure on:
Raising funds
Trading activities
Investment management costs
Total expenditure on raising funds		 6 721
9
730		 1,221
-
1,221		 -
833
833		 1,942
842
2,784		 3,893
1,151
5,044
Charitable activities
Committed programme delivery
Investments
Missions
Practices
Enterprises		 7
7
7
7
7		 9,503
(823)
558
2,236
7,762		 9,106
-
-
491
5,108		 199
(9)
6
29
138		 18,808
(832)
564
2,756
13,008		 23,638
4,911
-
2,315
11,284
Total expenditure on charitable activities 19,236 14,705 363 34,304 42,148
Total expenditure 19,966 15,926 1,196 37,088 47,192
Net (expenditure)/income before investment (losses)/gains
Net gains/(losses) on investments
Net (expenditure)/income
Share of profits in joint venture
Transfers between funds
Net income/(expenditure) before other recognised gains
Other recognised gains
Foreign exchange (losses)/gains		 10 (14,656)
-
(14,656)
279
26,975
12,598
-		 661
-
661
-
1,161
1,822
-		 6,501
88,672
95,173
-
(28,136)
67,037
(55)		 (7,494)
88,672
81,178
279
-
81,457
(55)		 (3,845)
(27,480)
(31,325)
346
-
(30,979)
36
Net movement in funds for the year 12,598 1,822 66,982 81,402 (30,943)
Reconciliation of funds
Total funds brought forward 22 9,433 22,696 391,605 423,734 454,677
Total funds carried forward 22,031 24,518 458,587 505,136 423,734

A summary income and expenditure account is presented in Note 17 in compliance with the Companies Act 2006.

The Group has no recognised gains or losses other than those included in the consolidated statement of financial activities. All activities are continuing.

The notes on pages 42 to 73 form part of these accounts.

No separate Statement of Financial Activities has been presented for Nesta as permitted by section 408 of the Companies Act 2006.

38

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

Consolidated balance sheet as at 31 March 2021

Notes
to the
accounts		 Group
2021
£’000		 Parent
Charity
2021
£’000		 Group
2020
£’000
Fixed assets
Tangible assets
Investments:
Investments – quoted and unquoted
Programme-related investments
Programme- related investment in joint venture
– share of net assets/costs		 9
10
11a
11b		 25,199
428,596
19,008
2,012		 521
-
15,817
6,000		 25,729
363,983
11,817
1,733
Total fixed assets
Current assets
Debtors
Bank and cash
Current asset investment		 12 474,815
22,008
24,004
-		 22,338
22,794
9,434
-		 403,262
18,536
15,424
5,000
Total current assets
Current liabilities
Creditors – amounts falling due within one year
Net current assets		 13 46,012
(7,107)
38,905		 32,228
(10,852)
21,376		 38,960
(11,845)
27,115
Total assets less current liabilities
Creditors – amounts falling due after more than
one year		 13 513,720
(8,584)		 43,714
(743)		 430,377
(6,643)
Net assets 505,136 42,971 423,734
Charitable funds
Expendable endowment funds
General funds		 15a
15a		 458,587
20,019		 -
18,813		 391,605
7,700
Total charitable unrestricted funds
Restricted funds		 15b 478,606
24,518		 18,813
24,158		 399,305
22,696
Total charitable funds
Funds retained within non-charitable joint ventures		 15a 503,124
2,012		 42,971
-		 422,001
1,733
Total funds 505,136 42,971 423,734

Total net surplus for the year of Nesta, the parent charity, was £14,871,000 (2020: £6,992,000).

The notes on pages 42 to 73 form part of these accounts.

Approved by the Board of Trustees and authorised for issue on 21 September 2021 and signed on its behalf by Sir John Gieve, Chair of the Board of Trustees.

Sir John Gieve,

Chair of the Board of Trustees of Nesta

39

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

Consolidated cash flow statement for the year ended 31 March 2021

Note Group
2021
£’000		 Group
2020
£’000
Cash flows from operating activities
Net cash generated used in operating activities		 (a) (23,292) (15,236)
Cash flows from investing activities
Net cash inflows from investing activities		 (b) 26,940 8,294
Cash flows from financing activities
Net cash (outflows)/inflows from financing activities		 (c) (13) (19)
Change in cash and cash equivalents in the reporting period 3,635 (6,961)
Cash and cash equivalents at the beginning of the reporting period 20,424 27,349
Change in cash and cash equivalents due to exchange rate movements (55) 36
Cash and cash equivalents at the end of the reporting period 24,004 20,424
Cash flow statement notes
(a) Reconciliation of net income to net cash flow from operating activities
Net (expenditure)/income for the reporting period (as per consolidated
statement of financial activities)
Depreciation charges
Unrealised (gains)/losses from investments
Revaluation of investments
Dividends, interest and rents from investments
Interest from investments
Interest paid and bank charges
Investment fees
(Increase) in debtors
(Decrease) in creditors		 81,178
674
(88,671)
(3,175)
(7,811)
(73)
13
842
(3,472)
(2,797)
(23,292)		 (31,325)
682
29,518
2,685
(9,945)
(179)
19
1,150
(4,896)
(2,945)
(15,236)
(b) Cash flows from investing activities
Dividends, interest and rents from investments
Interest from investments
Investment fees
Purchase of property, plant and equipment
Purchase of quoted investments
Purchase of unquoted investments
Purchase of programme-related investments
Proceeds from sale or maturity of quoted investments
Proceeds from sale or maturity of unquoted investments
Proceeds from sale of programme-related investments		 7,811
73
(842)
(144)
(77,400)
(586)
(4,737)
95,545
6,499
721
26,940		 9,945
179
(1,151)
(180)
(52,426)
(10,058)
(5,929)
56,703
9,583
1,628
8,294
(c) Cash flows from financing activities
Interest paid and bank charges		 (13)
(13)		 (19)
(19)

40

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

Consolidated cash flow for the year ended 31 March 2021 (continued)

Analysis of changes in net debt

At start
of year
£’000		 Cashflows
£’000		 Foreign
exchange
movements
£’000		 At end
of year
£’000
Bank and cash
Current asset investment		 15,424
5,000		 8,635
(5,000)		 (55)
-		 24,004
-
20,424 3,635 (55) 24,004

Included in cash and cash equivalents of £24,004,000 (2020: £20,424,000) is a balance of £6,308,000 (2020: £8,819,000) which is restricted for use for specific projects. Cash equivalents represent current investment assets totalling £nil (2020: £5,000,000).

41

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

1. Accounting policies

a. Basis of preparation

The financial statements are prepared under the historical cost convention, modified by the revaluation of certain financial assets as specified below. They have been prepared on a going concern basis and in accordance and compliance with: (i) FRS 102, the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland; (ii) Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) ‘Charities SORP (FRS 102) (second edition – October 2019)’ issued by the Charity Commission; and (iii) Companies Act 2006.

portfolio, they are included within investment assets.

No separate Statement of Financial Activities has been presented for Nesta as permitted by section 408 of the Companies Act 2006.

c. Fund accounting

The general fund consists of unrestricted funds that are available for the furtherance of the objects of the charity at the discretion of the trustees.

Restricted funds are subject to specific restrictions as applied by programme funders.

Where Nesta provides match-funding or programme support on projects, total expenditure is shown in the restricted fund and a transfer from the general fund to the restricted fund is made to account for Nesta’s share of expenditure.

b. Basis of consolidation

The consolidated financial statements incorporate the results of Nesta and all its subsidiary undertakings including Nesta Trust (‘the Trust’), from the date that control commences to the date that it ceases.

The Trust holds investment assets previously held by the NESTA which was abolished on 1 April 2012. The assets of the Trust provide income and capital to be applied by Nesta as sole Trustee to further the objects of the Trust. As the sole Trustee of the Trust, Nesta is considered to control the Trust which operationally means Nesta is responsible for the Trust’s investment policy. It is for this reason that the accounts of the Trust have been consolidated with the accounts of Nesta.

Subsidiary undertakings are consolidated on a line-by-line basis using the acquisition method of accounting in accordance with Section 9 ‘Consolidated and Separate Financial Statements’ of FRS 102.

Details of Nesta’s subsidiary undertakings can be found in Note 14.

Joint ventures that are not held as part of an investment portfolio are consolidated using the Gross Equity method of accounting in accordance with Section 15 ‘Investments in Joint Ventures’ of FRS 102. Details of Nesta’s joint ventures can be found in Note 11b.

The Group applies the exemption contained in Section 15 ‘Investments in Joint Ventures’ of FRS 102 so that where joint ventures and associates are held as part of an investment

The expendable endowment fund relates to the funds of the Trust. These funds are held without distinction as to capital and income and can be applied in furtherance of the objects of the Trust. The Trust makes an annual transfer to Nesta to deliver its charitable aims as detailed in the reserves policy.

d. Income

Income is recognised in the consolidated statement of financial activities in the period in which Nesta is entitled to receipt and where the amount can be measured with reasonable accuracy, and where receipt is probable.

The income breakdown in Note 3 has been restated for 2020 to reflect the new headings in 2021 in line with Nesta’s new strategy.

Grant income is recognised in the Consolidated Statement of Financial Activities when the charity has entitlement to the funds, it is probable the income will be received, the amount can be measured reliably and any performance conditions attached to the grants have been fully met. Where performance related conditions have only been partially met, income is recognised to that extent with the balance deferred until conditions have been satisfied.

Investment income includes interest and dividends from investment assets, deposits and a joint venture, with any associated tax credits or recoverable taxation included in the Consolidated Statement of Financial Activities on an accruals basis.

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DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

Income from trading activities represents the value of services provided under contracts to the extent that there is a right to consideration and is recorded at the value of the consideration due. Where a contract has only been partially completed at the balance sheet date, income represents the value of the service provided to date based on proportion of the total contract value. Where payments are received from customers in advance of services provided, the amounts are recorded as deferred income and included as part of creditors due within the year.

e. Expenditure

Expenditure is accounted for on an accruals basis.

The charitable expenditure breakdown has been restated for 2020 to reflect the new headings in 2021 in line with Nesta’s new strategy.

Expenditure on raising funds is incurred on non-primary purpose trading activities of the trading subsidiary Nesta Enterprises Limited as well as investment management costs which include investment fund manager fees paid in cash as well as those that have been grossed up where they are offset against the fund’s value rather than payable in cash, dilution levies, investment consultancy and custodian fees.

Expenditure on charitable activities is incurred in pursuit of the Group’s charitable objects and is reported as a functional analysis of the work undertaken. The categories defined by the trustees for the purposes of organisational management are – Committed Programme Delivery; Investments; Missions; Practices and Enterprises. Previously, these were – Programmes; Investment (early-stage and social impact) management; Research, Policy and Analysis; Skills; and FutureFest.

Grants payable are recognised as expenditure in the consolidated statement of financial activities on the date when a grant agreement

is signed or equivalent obligation created less any awards cancelled or refunded, where there are no performance related obligations that are required to be fulfilled under the terms of the grants. Grants awarded but not yet paid are recorded as a liability in the consolidated balance sheet. Where grants paid are selected to be converted to an equity holding in the grantee organisation by virtue of grant conditions being met, on the date where there is a binding contract with investment terms agreed by both parties, grant expenditure is reversed and an investment asset is recognised and the asset valued in accordance with Nesta’s investment valuation policies.

Commitments or approvals to fund specific projects not yet signed by Nesta are disclosed by way of note (see note 19).

Non-grant direct costs include staffing, programme delivery partner costs, workshop event costs, commissioned research and evaluation, and any other direct costs attributable to a specific activity.

Support costs include costs shared by all activities. They include the costs of the office of the CEO, communications, front of house, facilities, finance, legal, information technology, and human resources. Support costs also include the costs related to governance which are costs attributable to maintaining the public accountability of the charitable group and ensuring compliance with regulation and good practice. Costs incurred by trustees, internal and external audit costs and legal fees are included within governance costs.

Irrecoverable VAT incurred is allocated to the expenditure category to which it relates.

Redundancy and termination payments are recognised when there is a demonstrable commitment that cannot be realistically withdrawn.

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DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

f. Support costs – allocation

Support costs are allocated to each area of programme activity on bases appropriate to the activity concerned. These drivers include ratio of direct costs and headcount.

g. Tangible fixed assets and depreciation

Property, plant and equipment are capitalised at their historic cost and stated at cost less depreciation. Assets costing less than £500 are expensed in the year of purchase.

Depreciation is calculated on a straight-line basis over the expected useful life of the assets as follows:

Balance Sheet date. The loans are included in fixed assets except where repayment is expected within 12 months of the balance sheet date, when they are included as current assets.

The carrying value of all investments is at market value except where we are unable to obtain a reliable estimate of market value. Unrealised changes in value between accounting periods are charged or credited to the Statement of Financial Activities. For financial assets for which there is no quoted market, market value is established by using valuation guidelines as detailed below.

I. Valuation – quoted investments:

h. Investment assets – quoted and unquoted

Investment assets include quoted and unquoted investments. Nesta holds its investment assets on trust without distinction between capital and income, applying them in furtherance of its objects. Assets held by the Nesta Trust are classed as an expendable endowment.

Cash and short-term deposits and investments to be held less than 12 months are presented in the balance sheet as current assets. All other financial assets are presented as fixed assets. Deferred investments and loans represent the portion of commitments which remain undrawn but draw down has been requested at the balance sheet date. The corresponding commitment is recognised under current liabilities.

Loans are recognised as financial assets when repayment of the loan or the option to convert to equity has not expired by the

The market values of quoted investments are based on externally reported bid prices at the balance sheet date.

Equity investments, high yield bonds, and property trusts are held in pooled funds and are stated at market value, being the market value of the underlying investments held. These valuations are provided by the relevant fund manager.

Private equity investments are held through funds managed by private equity managers. As there is no identifiable market price for private equity funds, these funds are included at the most recent valuations provided by the private equity managers.

Where a valuation is not available at the balance sheet date, the most recent valuation from the private equity manager is used, adjusted for cash flows between the most recent valuation and the balance sheet date.

An estimated value of unquoted investments in early-stage companies is established by using valuation guidelines produced by the British Private Equity & Venture Capital Association (BVCA).

44

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

Valuation of companies at this early stage of development is an inherently volatile and uncertain process. The valuation guidelines used are considered to be the best estimate of market value at the balance sheet date.

Loans to early-stage companies have the same valuation methodology applied as for investments in early-stage companies.

An estimated value of investments in earlystage funds is calculated as the Group’s share of partnership net asset value as stated in the last audited financial statements of each investment fund. Contributions made by the Group in any period between the date of a fund’s balance date and the Group’s own for which there is no audited valuation, are valued at cost unless there is information to determine otherwise.

Transaction costs incurred by the Group and management support costs are not included in valuations and are charged to expenditure in the period in which they are incurred.

III. Valuation – investment property

Physical investment property assets are revalued by an independent external property valuer. The proportion of the investment property that is leased to the charity is accounted for as a leasehold asset in the consolidated accounts. Investments in an investment property fund are valued at the market values, being the externally reported bid prices at the balance sheet date.

IV. Treatment – unquoted investments

Investments, loans or contributions to funds to date are recognised in full in the balance sheet. Undrawn commitments are disclosed by way of Note 19.

Unrealised changes in value between accounting periods are reflected in the consolidated statement of financial activities.

Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred with all risks and rewards of ownership.

Unquoted equity and similar programmerelated investments are held at cost, less any provision for diminution in value, as Nesta is unable to obtain a reliable estimate of fair value. Programme-related investments that are loans are accounted for at the outstanding amount of the loan less any provision for unrecoverable amounts. Any diminution or impairment in value is charged to the consolidated statement of financial activities under charitable activities.

b. Investment assets – Arts Impact investments

Arts Impact related investments are held at cost, less any provision for diminution in value, as Nesta is unable to obtain a reliable estimate of fair value. Arts Impact related investments that are loans are accounted for at the outstanding amount of the loan less any provision for unrecoverable amounts. Any diminution or impairment in value is charged to the consolidated statement of financial activities under charitable activities.

45

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

Investment assets – mixed motive

c.

Mixed motive investments are held at cost, less any provision for diminution in value, as Nesta is unable to obtain a reliable estimate of fair value. Any diminution or impairment in value is charged to the consolidated statement of financial activities under charitable activities.

d. Investment assets – joint venture

Joint ventures are held at cost, less any provision for diminution in value, or uplift based on current available external information. Any change in value is charged to the Statement of Financial Activities under charitable activities for Nesta single entity and eliminated on consolidation.

j. Significant estimates

The preparation of financial statements requires management to make estimates and judgements that affect the reported amounts of assets and liabilities as well as the disclosure of contingent liabilities at the balance sheet date. Actual outcomes could differ from those estimates. This is especially the case of the valuation of the Group’s investment in earlystage companies which is an inherently volatile and uncertain process. However, the valuation guidelines applied are considered to be the best estimate of market value.

An estimated value of unquoted investments is early-stage companies is established by using valuation guidelines produced by the BVCA. BVCA guidelines provide for investments to be carried at cost unless there is information indicating an impairment or sufficiently clear evidence to support an increase in valuation.

The investment property 58 Victoria Embankment was revalued at the year end by an independent qualified property valuer.

Investment assets are valued on an asset by asset basis, and in each case a prudent approach is taken.

k. Debtors receivable, creditors, provisions and contingent liabilities

Debtors receivable are recognised at fair value less any provision for bad debt. A provision for bad debt is established when there is objective evidence that the debt will not be collected according to the original terms.

Creditors are recognised when Nesta has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation, and the amount can be reliably estimated.

Where there are significant obligations which do not meet the requirements for recognition as a provision set out in Section 21 ‘Provisions and Contingencies’ of FRS 102 these are disclosed as a note to the accounts (see Note 19).

l. Pension costs

The Group operates defined contribution schemes. The amount charged to the consolidated statement of financial activities in respect of pension costs and other postretirement benefits is the contributions payable in the year.

Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments in the balance sheet.

m. Taxation

Nesta and the Nesta Trust are charities within the meaning of Para 1 Schedule 6 Finance Act 2010. Accordingly they are potentially exempt from taxation in respect of income or capital gains within categories covered by Chapter 3 of Part 11 of the Corporation Tax Act 2010 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied exclusively to charitable purposes.

No tax charge arose in the period.

46

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

The subsidiary companies make qualifying donations of all distributable taxable profit to Nesta. No corporation tax liability on the subsidiaries arises in the accounts.

n. Exchange gains and losses

The statutory financial statements are presented in pounds sterling, the functional and presentational currency. Foreign currency transactions are translated using the exchange rates prevailing at the date of settlement. Realised and unrealised exchange gains and losses are recognised in the consolidated statement of financial activities.

q. Going concern

The trustees are not aware of a specific or general event which would change the charity’s status as a going concern.

As Nesta is able to draw down cash from Nesta Trust as required within the approved funding envelope, as well as the Group’s strong net asset position, the trustees have concluded that there is a reasonable expectation that the Group has adequate resources to continue activities for the foreseeable future and have therefore adopted the going concern basis in preparing the financial statements.

o. Operating leases

r. Financial instruments

Leases where the lessor retains a significant portion of the risks and rewards of ownership are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the consolidated statement of financial activities on a straight-line basis over the period of the lease.

The Group has only basic financial instruments. These comprise fixed asset investments measured at fair value through profit or loss along with other financial assets which comprise of cash, group debtors and other debtors and financial liabilities which comprise of trade creditors and other creditors, measured at amortised cost.

p. Related party transactions

s. Current asset investments

Transactions with related parties are disclosed in the notes to these financial statements. The Group’s policy is for all trustees, non-trustee committee members, executive directors and senior direct reports to executive directors, to declare interests and related party transactions on appointment and at least annually. Declared interests are recorded in the Register of Interests and these are reviewed by the Audit and Risk Committee.

Current asset investments are cash deposits which are expected to be ‘utilised’ or ‘mature’ within 12 months and are measured at fair value.

Transactions between all group undertakings (parent charity, subsidiaries, associates and joint ventures) are also disclosed in compliance with 23.4 of The Charities SORP (FRS 102).

47

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

2. Investment income

Group
2021
£’000
Quoted investments:
Interest and dividends receivable		 7,000
Total income from quoted investments
Unquoted investments:
Interest and dividends receivable		 7,000
811
Total income from unquoted investments 811
Bank interest 73
Total investment income 7,884

3. Income from charitable activities

2021
£’000
Funding from
government
bodies		 2021
£’000
Funding from
non-government
bodies		 2021
£’000
Other charitable
activity income		 2021
£’000
Group total		 2020
£’000
Funding from
government
bodies*		 2020
£’000
Funding from
non-government
bodies*		 2020
£’000
Other charitable
activity income*
Committed programme delivery
Investments
Practices
Enterprises
Other		 Note 3a
202
-
-
10,973
-		 4
-
176
3,000
195		 91
228
138
1,417
463		 297
228
314
15,390
658		 8,262
-
184
5,689
-		 603
24
701
3,259
360		 769
137
166
4,258
855
Total income from charitable activities 11,175 3,375 2,337 16,887 14,135 4,947 6,185

Other charitable activity income includes income from consultancy services, monitoring and product sales.

48

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

3a. Funding from government bodies

Group
2021
£’000
Arts and Humanities Research Council
Arts Council of Wales
British Council
Cabinet Office
Creative England
Department for Business, Energy and Industrial Strategy
Department for Business, Energy and Industrial Strategy
Department for Digital, Culture Media and Sport
Department for Digital, Culture, Media and Sport
Department for Education
Economic and Social Research Council
Government of Canada
HM Treasury
Innovate UK
Intellectual Property Office
Welsh Government		 269
438
2
-
24
-
(155)
2
-
-
13
10,964
-
150
17
(549)
Total restricted funding from government bodies 11,175

Negative income relates to grant conditions Nesta has not been able to fulfil and so have been returned to funder.

4. Income from other trading activities

Group
2021
£’000
Rental income
Income from trading
Consultancy
Challenge prizes
Venue hire and other		 1,691
1,921
827
60
Total income from other trading activities 4,499

5. Other income

Group
2021
£’000
Impact fund management fees
Events and workshops fees
Returns on legacy investments
Share of income from joint ventures		 324
–
–
6,330
Total other income 6,654

49

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

6. Investment management costs

6 Intmnt mnmnt t
. vese aagee coss
Group Group
2021 2020
£’000 £’000
Investment manager fees 777 1,086
Custodian fees 65 65
Total investment management costs 842 1,151
The investment management costs are the direct fees paid to intermediaries.

The investment management costs are the direct fees paid to intermediaries.

7. Charitable activities

2021
£’000
Grant-
making		 2021
£’000
Non-grant
direct cost		 2021
£’000
Allocated
support costs		 2021
£’000
Group total		 2020
£’000
Grant-
making*		 2020
£’000
Non-grant
direct cost*		 2020
£’000
Allocated
support costs*
Committed programme delivery
Investments
Missions
Practices
Enterprises		 Note 7b
5,171
-
-
168
3,386
8,372
(1,655)
458
1,557
4,455		 Note 7a
5,265
823
106
1,031
5,167		 18,808
(832)
564
2,756
13,008		 5,160
-
-
112
2,450		 13,173
4,315
-
1,499
4,601		 5,305
596
-
704
4,233
Total charitable activities 8,725 13,187 12,392 34,304 7,722 23,588 10,838

Negative expenditure above arises from upward valuation of programme related investments.

50

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

7a. Support costs

Support costs have been allocated to charitable activity areas as follows:

2021
£’000
Support
staff costs		 2021
£’000
Premises,
technology
and other costs		 2021
£’000
Governance		 2021
£’000
Group total		 2020
£’000
Support
staff costs*		 2020
£’000
Premises,
technology
and other costs*		 2020
£’000
Governance*
Committed Programme Delivery
Investments
Missions
Practices
Enterprises		 2,212
506
3
642
3,399		 2,802
291
95
357
1,622		 251
26
8
32
146		 5,265
823
106
1,031
5,167		 1,467
255
-
367
2,756		 3,525
313
-
310
1,356		 313
28
-
27
121
Total support costs 6,762 5,167 463 12,392 4,845 5,504 489

The basis for allocation of support costs and governance is as follows:

Support staff costs Allocated based on headcount Other support costs Allocated on the ratio of direct costs of each area

7b. Grants

Included in the cost of charitable activities are grants payable. Grants of £50,000 and above are detailed below. A full list of grants committed is available via Nesta’s website.

Recipient Grants to
institutions
2021
£’000		 External/
Nesta
funded		 Programme
Flintshire County Council 1,150 External Y Lab – Innovate to Save
Saffron Interactive 250 External CareerTech Challenge Fund
CENTURY Tech 250 External CareerTech Challenge Fund
Sopra Steria 250 External CareerTech Challenge Fund
Coventry University 248 External CareerTech Challenge Fund
MyKindaFuture 241 External CareerTech Challenge Fund
The Open University 239 External CareerTech Challenge Fund
City of Glasgow College 205 External CareerTech Challenge Fund
Digital Mums 200 External CareerTech Challenge Fund
Nesta Italia 181 Nesta funded Business Development
Wizenoze 146 External CareerTech Challenge Fund
Turn2us 125 External Rapid Recovery Challenge
Prosper 4 Group Limited 125 External Rapid Recovery Challenge
IncomeMax 125 External Rapid Recovery Challenge
Evenbreak 125 External Rapid Recovery Challenge
City & Guilds 125 External Rapid Recovery Challenge
UK Youth 125 External Rapid Recovery Challenge
Hastee 125 External Rapid Recovery Challenge
Sort Holdings Ltd 125 External Rapid Recovery Challenge
Capital Enterprise 125 External Rapid Recovery Challenge
NestEgg 125 Nesta funded Rapid Recovery Challenge

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Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

7b. Grants (continued)

Recipient Grants to
institutions
2021
£’000		 External/
Nesta
funded		 Programme
Udrafter Ltd 125 Nesta funded Rapid Recovery Challenge
Policy in Practice 125 Nesta funded Rapid Recovery Challenge
Money Dashboard 125 Nesta funded Rapid Recovery Challenge
Beam 125 Nesta funded Rapid Recovery Challenge
ACH Group 120 External CareerTech Challenge Prize
Schools Partnership Tutors 100 External National Tutoring Programme
FFT Education Datalab 100 External National Tutoring Programme
Manning’s Tutors Ltd 99 External National Tutoring Programme
The Brilliant Club 92 External National Tutoring Programme
Learning with Parents 85 External EdTech Innovation Fund
Sumdog 85 External EdTech Innovation Fund
Do It Now Now 85 External Rapid Recovery Challenge
The Big Issue 85 External Rapid Recovery Challenge
Bradford Moor PASS 84 Nesta funded Neighbourhood Challenge
Would You Rather Be Ltd 80 External CareerTech Challenge Prize
Pobble 70 External EdTech Innovation Fund
Texthelp 70 External EdTech Innovation Fund
MEI 70 External EdTech Innovation Fund
Youth Federation 60 External Rapid Recovery Challenge
The RCJ & Islington Citizens Advice Bureau 50 External Legal Access Challenge
Access Social Care 50 External Legal Access Challenge
TalentED Education 50 External National Tutoring Programme
Economic Modelling UK Ltd 50 External CareerTech Challenge Prize
CareerEar 50 External CareerTech Challenge Prize
MiFuture 50 External CareerTech Challenge Prize
Avora Ltd 50 External CareerTech Challenge Prize
Grofar Ltd 50 External CareerTech Challenge Prize
Adhunter Ltd 50 External CareerTech Challenge Prize
Sort Holdings Ltd 50 External CareerTech Challenge Prize
Stay Nimble 50 External CareerTech Challenge Prize
DMH and Associates Ltd 50 External CareerTech Challenge Prize
Would You Rather Be Ltd 50 External CareerTech Challenge Prize
Attain Oxford 50 External CareerTech Challenge Prize
Twelve Two Ltd 50 External CareerTech Challenge Prize
ACH Group 50 External CareerTech Challenge Prize
Yuno Technologies 50 External CareerTech Challenge Prize
Nerds with Words Ltd 50 External CareerTech Challenge Prize
Learnisa Ltd 50 External CareerTech Challenge Prize
FutureFit AI (UK) Ltd 50 External CareerTech Challenge Prize
Devon County Council 50 External CareerTech Challenge Prize
PDMS 50 External CareerTech Challenge Prize
Grants below £50,000
(number of grants to institutions 199)		 1,638
Grants cancelled in the year (408)
Total grants 8,725

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Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

Grants committed in 2020

Grants to
institutions
External/
2020
Nesta
Recipient
£’000
funded
Programme
Capital Credit Union Ltd
350
External
Affordable Credit Challenge
Fair For You
350
External
Affordable Credit Challenge
Serve and Protect Credit Union
350
External
Affordable Credit Challenge
Mid & West Wales Fire and Rescue Service
297
External
Innovate to Save
Social Innovation Camp
207
External
Future News Fund
Game Academy
175
External
CareerTech Challenge Prize
Central Liverpool Credit Union
150
External
Affordable Credit Challenge
Hoot Credit Union
150
External
Affordable Credit Challenge
Salad Money
150
External
Affordable Credit Challenge
Agent Academy CIC
150
External
CareerTech Challenge Prize
Chayn
125
External
Tech to Connect
Pobble
100
External
EdTech Innovation Fund
Mangahigh
100
External
EdTech Innovation Fund
Bolton College
100
External
EdTech Innovation Fund
Firefly Learning
100
External
EdTech Innovation Fund
H & A Learning Ltd
100
External
EdTech Innovation Fund
Seneca Learning
100
External
EdTech Innovation Fund
Studybugs
100
External
EdTech Innovation Fund
Edval Education Ltd
100
External
EdTech Innovation Fund
Mirthy
100
External
Tech to Connect
The Chatty Café Scheme
100
External
Tech to Connect
University of Oxford
100
External
EdTech Innovation Fund
Enabling Enterprise
100
External
EdTech Innovation Fund
Educake
99
External
EdTech Innovation Fund
Engagement in Education
90
External
EdTech Innovation Fund
Texthelp
87
External
EdTech Innovation Fund
Axate
70
External
Future News Fund
Black Ballad
70
External
Future News Fund
mySociety
70
External
Future News Fund
Courtdesk
70
External
Future News Fund
openDemocracy
70
External
Future News Fund
Media Trust
65
External
Future News Fund
No More Marking Ltd
64
External
EdTech Innovation Fund
#ThisMuchIKnow News
60
External
Future News Fund
PX HealthCare Ltd
60
External
Digital Health Scotland
Pharmatics Ltd
60
External
Digital Health Scotland
The Foundation for Positive Mental Health
60
Internal
Future Ready Fund
Voice 21
60
Internal
Future Ready Fund
Empathy Lab
56
Internal
Future Ready Fund
Purple Shoots Business Lending Ltd
50
External
Enhancing Impact Fund
Restart Project
50
External
Enhancing Impact Fund
South London and Maudsley NHS Foundation Trust
50
External
Enhancing Impact Fund
St. Joseph’s Hospice Hackney
50
External
Enhancing Impact Fund
Doteveryone
50
External
Legal Access Challenge
Formily
50
External
Legal Access Challenge
The RCJ & Islington Citizens Advice Bureau
50
External
Legal Access Challenge
Resolve Disputes Online
50
External
Legal Access Challenge
Solomonic Ltd
50
External
Legal Access Challenge
Glow
50
External
Legal Access Challenge

53

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Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

Grants committed in 2020 (continued)

Grants to
institutions
External/
2020
Nesta
Recipient
£’000
funded
Programme
Mencap
50
External
Legal Access Challenge
Organise
50
External
Legal Access Challenge
Glimpse Protocol Limited
50
External
Future News Fund
Tortoise Media
50
External
Future News Fund
WT.Social
50
External
Future News Fund
Entale
50
External
Future News Fund
Original Content London Limited
50
Nesta funded
Lab General
NatCen Social Research
68
External
What Works Centre for Children’s Social
Care
Coram
56
External
What Works Centre for Children’s Social
Care
University of Chicago Booth School of Business
50
External
Innovation Growth Lab
CEI Global UK Limited
50
External
What Works Centre for Children’s Social
Care
Grants below £50,000
1,907
(number of grants to institutions 112)
Grants cancelled in the year
(24)
Total grants
7,722		 Grants to
institutions
External/
2020
Nesta
Recipient
£’000
funded
Programme
Mencap
50
External
Legal Access Challenge
Organise
50
External
Legal Access Challenge
Glimpse Protocol Limited
50
External
Future News Fund
Tortoise Media
50
External
Future News Fund
WT.Social
50
External
Future News Fund
Entale
50
External
Future News Fund
Original Content London Limited
50
Nesta funded
Lab General
NatCen Social Research
68
External
What Works Centre for Children’s Social
Care
Coram
56
External
What Works Centre for Children’s Social
Care
University of Chicago Booth School of Business
50
External
Innovation Growth Lab
CEI Global UK Limited
50
External
What Works Centre for Children’s Social
Care
Grants below £50,000
1,907
(number of grants to institutions 112)
Grants cancelled in the year
(24)
Total grants
7,722		 Grants to
institutions
External/
2020
Nesta
Recipient
£’000
funded
Programme
Mencap
50
External
Legal Access Challenge
Organise
50
External
Legal Access Challenge
Glimpse Protocol Limited
50
External
Future News Fund
Tortoise Media
50
External
Future News Fund
WT.Social
50
External
Future News Fund
Entale
50
External
Future News Fund
Original Content London Limited
50
Nesta funded
Lab General
NatCen Social Research
68
External
What Works Centre for Children’s Social
Care
Coram
56
External
What Works Centre for Children’s Social
Care
University of Chicago Booth School of Business
50
External
Innovation Growth Lab
CEI Global UK Limited
50
External
What Works Centre for Children’s Social
Care
Grants below £50,000
1,907
(number of grants to institutions 112)
Grants cancelled in the year
(24)
Total grants
7,722
Recipient Grants to
institutions
2020
£’000		 External/
Nesta
funded
Mencap 50 External
Organise 50 External
Glimpse Protocol Limited 50 External
Tortoise Media 50 External
WT.Social 50 External
Entale 50 External
Original Content London Limited 50 Nesta funded
NatCen Social Research 68 External
Coram 56 External
University of Chicago Booth School of Business 50 External
CEI Global UK Limited 50 External
Grants below £50,000
(number of grants to institutions 112)		 1,907
Grants cancelled in the year (24)
Total grants 7,722

There were no grants made to individuals in the years 2021 or 2020.

7c. Auditor’s fees

Group
2021
£’000
External audit
Internal audit
Other assurance services
Tax advisory services		 77
63
4
23
Total auditor fees 167

External audit fees incurred for Nesta, the parent charity, were £39,850 (2020: £31,000) excluding VAT.

External audit fees and tax advisory services were payable to external auditors.

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Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

8. Employees for parent and Group

8a. Staff costs

Group
2021
£’000
Salaries and emoluments of directly employed staff
Social security costs
Pension costs
Agency/temporary staff costs
Other staff costs*		 13,965
1,528
1,413
260
710
Total 17,876

*During the year, there were redundancy payments totalling £647,503 (2020: £142,504) as a result of restructuring.

8b. Staff numbers

The following shows average headcount staff numbers during the year.

Group
2021
Committed programme delivery
Investments
Missions
Practices
Enterprises
Support		 62
14
–
18
96
87
Total 277

The average full time equivalent for 2021 is 265 (2020: 289).

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Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

8c. Higher earners

The number of employees who earned remuneration (salaries, bonus and benefits in kind) of more then £60,000 in the year was as follows:

Group
Group
2021
2020
£60,000 – £69,999
31
21
£70,000 – £79,999
9
16
£80,000 – £89,999
7
8
£90,000 – £99,999
8
5
£100,000 – £109,999
8
1
£110,000 – £119,999
1
1
£120,000 – £129,999
1
2
£130,000 – £139,999
1
1
£160,000 – £169,999
1
-
£210,000 – £219,999
1
-		 Group
Group
2021
2020
£60,000 – £69,999
31
21
£70,000 – £79,999
9
16
£80,000 – £89,999
7
8
£90,000 – £99,999
8
5
£100,000 – £109,999
8
1
£110,000 – £119,999
1
1
£120,000 – £129,999
1
2
£130,000 – £139,999
1
1
£160,000 – £169,999
1
-
£210,000 – £219,999
1
-
Group
2021
£60,000 – £69,999
£70,000 – £79,999
£80,000 – £89,999
£90,000 – £99,999
£100,000 – £109,999
£110,000 – £119,999
£120,000 – £129,999
£130,000 – £139,999
£160,000 – £169,999
£210,000 – £219,999		 31
9
7
8
8
1
1
1
1
1

Of staff with remuneration over £60,000, 64 (2020: 51) are members of Nesta’s defined contribution pension scheme. Employer contributions to the scheme related to staff in these salary ranges during the year were £523k (2020: £440k).

8d. Key management personnel

The annual salaries (including benefits and any bonuses) of the Executive Team for the year ended 31 March 2021 totalled £1,235k (2020: £1,165k). The Executive Team are considered to be key management personnel.

The Executives are entitled to the same flexible benefits and pension scheme as all staff. Nesta offers a defined contribution pension scheme with the contribution from Nesta ranging from a minimum of 8 per cent up to 12 per cent of salary, depending on the level of contributions made by the employee. Employer pension contributions for executives amounted to £123k (2020: £131k) for the year. Employer National Insurance contributions were £129k (2020: £140k).

8e. Pensions

Nesta offers employees 8 per cent up to 12 per cent contribution, on a defined contribution basis, to a personal pension scheme or group stakeholder scheme. Nesta’s total contributions made in respect of the year, for all schemes, totalled £1,413k (2020: £1,448k), including outstanding contributions of £131k (2020: £195).

8f. Trustee remuneration

None of the trustees received remuneration for performance of their role as trustees during the year. Travel expenses of £nil (2020: £157, one trustee) were reimbursed during the year.

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Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

9. Tangible fixed assets

Group fixed assets

Group fixed assets
£’000
Leasehold
asset		 £’000
Plant and
machinery		 £’000
Computer
hardware		 £’000
Computer
software		 £’000
Fixtures and
fittings		 £’000
28,473
144
28,617
2,744
674
3,418
25,199
Group
total
Cost
Opening balance
Additions		 23,243
-		 3,405
-		 974
76		 298
67		 553
1
Depreciation
Opening balance
Charge for theyear		 23,243
628
157		 3,405
947
238		 1,050
779
105		 365
81
64		 554
309
110
785 1,185 884 145 419
Net book value 2021 22,458 2,220 166 220 135
Net book value 2020 22,615 2,458 195 217 244
£’000
£’000
£’000
£’000
Cost
Opening balance
974
298
553
1,825
Additions
76
67
1
144
1,050
365
554
1,969
Depreciation
Opening balance
779
81
309
1,169
Charge for the year
105
64
110
279
884
145
419
1,448
Net book value 2021
166
220
135
521
Computer
hardware
Computer
software
Parent charity
total
Fixtures and
fittings
Parent charity fixed assets
£’000
Computer
hardware		 £’000
Computer
software		 £’000
Fixtures and
fittings
Cost
Opening balance
Additions		 974
76		 298
67		 553
1
Depreciation
Opening balance
Charge for the year		 1,050
779
105		 365
81
64		 554
309
110
884 145 419
Net book value 2021 166 220 135
Net book value 2020 195 217 244

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Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

10. Investments

10. Investments 10. Investments 10. Investments 10. Investments 10. Investments 10. Investments
Category £’000
Market/fair
value at
1 April 2020		 £’000
Additions at
cost		 £’000
Maturities,
proceeds and
disposals at
market value		 £’000
Net gains and
losses		 £’000
Group total
market/fair
value at 31
March 2021
Fixed asset investments
Quoted investments
Global equities
Fixed income
Bonds		 214,344
35,054
39,180		 67,852
2,118
5,431		 (91,976)
-
(3,569)		 81,257
5,688
1,070		 271,477
42,860
42,112
Total quoted investments
Unquoted investments
Managed funds
Private equity funds
Mixed motive investments
Investment in early-stage companies
Investment in early-stage funds
Total unquoted investments		 288,578
7,693
17,106
3,430
28,229		 75,401
217
369
-
586		 (95,545)
(1,624)
(3,001)
(1,874)
(6,499)		 88,015
(668)
(650)
2,958
1,640		 356,449
5,618
13,824
4,514
23,956
Investment properties 47,176 1,998 - (983) 48,191
Total investments 363,983 77,985 (102,044) 88,672 428,596

Quoted investments are held at market value, unquoted investments and the investment property are at fair value.

As at 31 March 2021, total cash and investment assets held by the Nesta Trust totalled £468 million (2020: £398 million). Refer also to the Investment Review on pages 22 to 24 of this report for more detail of the investments.

The above table has been adjusted for consolidation in relation to the investment property; 51.3 per cent of the property represents investment property to the Group. The remaining 48.7 per cent is used by the Group and included within leasehold asset in Note 9.

The investment property 58 Victoria Embankment was revalued at the year end by an independent qualified property valuer. In the prior year, due to the market dislocation caused by the outbreak of COVID-19 the Royal Institute of Chartered Surveyors provided guidance to surveyors to state that all valuation reports should refer to the ‘material uncertainty’ relating to the assumptions applied to the valuation methodologies. There is no such material uncertainty in the current year.

As part of the balanced portfolio held by Nesta Trust is an investment in a property related fund valued at £17 million (2020: £16 million). In the prior year, the fund manager had been notified by their external valuers that they were unable to value its assets at 31 March 2020 without inserting a ‘material uncertainty’ provision in the valuation certificate. This was due to the effective closure of the commercial property investment market by the measures being taken to prevent the spread of COVID-19. Following consultation with the Fund’s Corporate Trustee and Investors’ Committee, the Manager had suspended all dealings in the Fund which meant there was no published BID price as at 31 March 2020. As a result of this, the fund was valued as the last available published bid price from 29 February 2020 of 86.07 p.p.u. There is no such material uncertainty in the current year.

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Financial statements

10. Investments (continued)

Investment assets consist of the following

Market/fair
value at 31
March 2021
£’000		 Market/fair
value at 31
March 2020
£’000		 Percentage
of 2021
portfolio
%
UK quoted – Equities
UK quoted – Fixed Income & Bonds
Overseas quoted – Equities
Overseas quoted – Fixed Income & Bonds
UK unquoted
Overseas unquoted
UK investment property		 39,100
42,112
232,377
42,860
18,338
5,618
48,191		 30,753
39,180
183,591
35,054
20,536
7,693
47,176		 9
10
54
10
4
1
11
428,596 363,983 100%

Total gains and losses on investment assets above impacting the consolidated statement of financial activities are summarised as follows:

summarised as follows:
Group total Group total Percentage Percentage
gain/loss gain/loss of 2021 of 2020
March 2021 March 2020 portfolio portfolio
£’000 £’000 % %
Quoted investments 88,014 (28,771)
Unquoted investments 657 1,291
88,671 (27,480)

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Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

11. Programme-related investments

11a. Programme-related investments – Group and charity

11a. Programme-related investments – Group and charity 11a. Programme-related investments – Group and charity 11a. Programme-related investments – Group and charity 11a. Programme-related investments – Group and charity 11a. Programme-related investments – Group and charity 11a. Programme-related investments – Group and charity 11a. Programme-related investments – Group and charity
Group
total value
1 April 2020
£’000		 Reclassification
£’000
Additions
£’000		 Disposals
£’000		 Revaluations
£’000		 Group
total value
31 March 2021
£’000
Investment type:
Equity
Unsecured loan		 7,259
4,558		 (1,390)
1,390		 3,551
1,186		 -
(721)		 2,920
255		 12,340
6,668
Total 11,817 - 4,737 (721) 3,175 19,008
Parent charity
total value
1 April 2020
£’000		 Reclassification
£’000
Additions
£’000		 Disposals
£’000		 Revaluations
£’000		 Parent charity
total value
31 March 2021
£’000
Investment type:
Equity
Unsecured loan		 7,744
1,015		 (6,904)
6,904		 -
4,535		 -
(295)		 -
2,818		 840
14,977
Total 8,759 - 4,535 (295) 2,818 15,817

11b. Programme-related investments in joint venture – Group and charity


Organisation
name		 Country of
registration		 Class of
ownership		 Class of
ownership		 Joint
venture
interest		 Joint
venture
interest		 Year
end
date		 Nature of
business		 Nature of
business		 Group share
of gross assets
2021 £’000		 Group share
of gross assets
2021 £’000		 Group share
of gross assets
2020 £’000
1,733
Behavioural
Insights Ltd		 UK Ordinary 30% 31 March A social purpose
consultancy
company
2,012
Parent charity
total value
1 April 2020
£’000		 Additions
£’000		 Repayments
£’000		 Revaluation
£’000
Investment type:
Equity		 3,000 –
–
3,000
Total 3,000 –
–
3,000

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Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

12. Debtors

Group
2021
£’000		 Parent
2021
£’000		 Group
2020
£’000
Amounts falling due within one year:
Trade debtors
Amounts due from subsidiaries
Accrued income
Prepayments
Other debtors		 1,436
-
10,917
396
1,151		 1,337
556
11,640
1,078
75		 1,775
-
12,085
606
88
Total debtors falling due within one year 13,900 14,686 14,554
Amounts falling due after more than one year:
Accrued income		 8,108 8,108 3,982
Total debtors falling due after more than one year 8,108 8,108 3,982
Total debtors 22,008 22,794 18,536

13. Creditors

Group
2021
£’000		 Parent
2021
£’000		 Group
2020
£’000
Amounts falling due within one year:
Trade creditors
Amounts due to subsidiaries
Amounts due to joint ventures
Accruals
Deferred income
Grant creditors
Other tax and social security
Other creditors
Total creditors falling due within one year		 593
-
3
1,407
1,412
2,921
457
314
7,107		 493
1
3
5,356
1,507
2,862
320
310
10,852		 1,423
-
54
1,740
1,178
6,743
495
212
11,845
Amounts falling due after more than one year:
Grants creditors
Trade and other payables		 743
7,841		 743
-		 480
6,163
Total creditors falling due after more than one year 8,584 743 6,643
Total creditors 15,691 11,595 18,488

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Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

13. Creditors (continued)

Analysis of deferred income

Group
2021
£’000		 Parent
2021
£’000		 Group
2020
£’000
At 1 April
Prior year deferred income released during the year
Income deferred in the year		 1,178
(1,178)
1,412		 1,374
(1,374)
1,507		 1,511
(1,511)
1,178
At 31 March 1,412 1,507 1,178

Nesta leads a consortium of UK-wide universities via the Creative Industries Policy and Evidence Centre (PEC). The PEC aims to provide independent research and authoritative recommendations that will aid the development of policies for the UK’s creative industries, contributing to their continued success. The PEC is part of the Creative Industries Clusters Programme led by the Arts and Humanities Research Council (AHRC) and funded through the Industrial Strategy Challenge Fund. During the year, Nesta administered £721k (2020: £819k) of income and expenditure on behalf of PEC which is not recognised within Nesta’s statement of financial activities due to Nesta handling these funds as an agent. As at the balance sheet date, Nesta held funds totalling £nil (2020: £35k) on behalf of the consortium which is included within restricted deferred income.

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Financial statements

14. Subsidiaries


Organisation
name		 Country of
registration and
registered charity/
company number		 Class of
ownership		 Parent
interest		 Share
capital
held		 Nature of business
The Nesta Trust United Kingdom
charity number
1144683		 Sole
corporate
Trustee		 - - A charitable trust that holds investment assets
Nesta
Enterprises
Limited		 United Kingdom
company number
08580327		 Ordinary 100% £1 A charitable trading company
Nesta GP
Limited		 United Kingdom
company number
08231985		 Ordinary 100% £1 General partner in the Nesta Impact Investments 1
Limited Partnership Fund
Nesta PRI
Limited		 United Kingdom
company number
08232090		 Ordinary 100% £1 Limited partner in the Nesta Impact Investments 1
Limited Partnership Fund
Cultural Impact
Development
Loans Limited		 United Kingdom
company number
11388464		 Ordinary 100% £1 Financial support for arts organisations
Nesta Partners
Limited		 United Kingdom
company number
06618114		 Ordinary 100% £1 Partner in Nesta Investment Management LLP
and Nesta Arts Impact LLP
NII GP2 Limited United Kingdom
company number
10710378		 Ordinary 100% £1 (Dormant) General Partner
Nesta
Investment
Management LLP		 United Kingdom
company number
OC338038		 Limited
Liability
Partnership		 - - Investment manager funds
Nesta Arts
Impact LLP		 United Kingdom
company number
OC396102		 Limited
Liability
Partnership		 - - Financial support for arts organisations
Nesta Arts
and Culture
Impact LLP		 United Kingdom
company number
OC423779		 Limited
Liability
Partnership		 - - Financial support for arts and culture
organisations
NII2 Special
Partner LLP		 United Kingdom
company number
OC416761		 Limited
Liability
Partnership		 - - (Dormant) Special partner
Nesta US Inc United States Sole
member		 100% Non-
stock		 To engage in charitable and educational activities
within the meaning of Section 501(c)(3) of the
Internal Revenue Code 1986

All of the above entities have a year end date of 31 March.

63

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

14. Subsidiaries (continued)

The results of the consolidated entities are as follows:

2021
£’000
Nesta Trust		 2021

£’000
Nesta Enterprises
Limited		 2021
£’000
Nesta GP
Limited		 2021
£’000
Nesta PRI
Limited		 2021
£’000
Cultural Impact
Development
Loans Limited		 2021
£’000
Nesta Partners
Limited		 2021
£’000
Nesta Investment
Management LLP		 2021
£’000
Nesta Arts
Impact LLP		 2021
£’000
Nesta Arts &
Culture Impact
LLP		 2021
£’000
Nesta
US Inc		 2021

£’000
Total		 2020
£’000
Total
Profit/(loss)
for the year
ended 31
March 2021
Income
Expenditure
Other gains/
(losses)		 10,203
(29,317)
88,671		 2,816
(2,816)
-		 -
-
-		 -
-
1,225		 122
(202)
39		 -
-
1,594		 610
(44)
(249)		 71
(145)
199		 13
(291)
-		 162
(44)
-		 13,961
(32,823)
91,479		 19,324
(29,669)
(28,554)
Partner share/
Profit/(loss)
for the year		 69,557 - - 1,225 (41) 1,594 317 125 (278) 118 72,617 (38,899)
Balance
sheet as of 31
March 2021
Assets
Liabilities		 472,526
(1,036)		 1,016
(1,016)		 -
-		 3,796
(6,535)		 593
(634)		 9,137
(7,543)		 705
(18)		 4,459
(5,473)		 2,716
(2,994)		 469
-		 495,417
(25,249)		 418,632
(21,081)
Net assets/
(liabilities)		 471,490 - - (2,739) (41) 1,594 687 (1,014) (278) 469 470,168 397,551
Opening net
reserves/
(liabilities)		 401,933 - - (3,964) - - 370 (1,139) - 351 397,551 436,450
Closing net
reserves/
(liabilities)		 471,490 - - (2,739) (41) 1,594 687 (1,014) (278) 469 470,168 397,551

64

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

15. Funds

15a. Unrestricted funds

General
funds
£’000		 Endowment
funds
£’000		 Funds retained
within
non-charitable
joint ventures
£’000		 Total
£’000
Balance at 1 April 2020
Net (expenditure)/income
Transfers to restricted funds
Transfers from endowment to general funds*
Unrealised gains on investments
Share of operating profit in joint venture		 7,700
(14,656)
(1,161)
28,136
-
-		 391,605
6,446
-
(28,136)
88,672
-		 1,733
-
-
-
-
279		 401,038
(8,210)
(1,161)
-
88,672
279
Balance at 31 March 2021 20,019 458,587 2,012 480,618

** The expendable endowment fund relates to the funds of the Trust. These funds are held without distinction as to capital and income and can be applied in furtherance of the objects of the Trust. The Trust makes an annual transfer to Nesta to deliver its charitable aims as detailed in the reserves policy.

15b. Restricted funds

15b. Restricted funds 15b. Restricted funds 15b. Restricted funds 15b. Restricted funds 15b. Restricted funds 15b. Restricted funds 15b. Restricted funds
Funder Programme £’000
Balance
1 April 2020		 £’000
Income		 £’000
Expenditure		 £’000
Transfers from (to)
general fund		 £’000
Balance
31 March 2021
Arts Council of England Economic Value of Culture 209 - (68)
-		 141
ESRC ESRC Management Practices 54 - (13)
(11)		 30
JP Morgan JP Morgan Chase 209 - (109)
(68)		 32
European Commission NGI Forward 1,022 - (515)
(49)		 458
Scottish Government Digital Health Scotland 253 - (105)
12		 159
Department for Education EdTech Innovation Fund 2,057 37 (1,878)
179		 396
Department for Education CareerTech 2,645 - (2,550)
206		 301
DCMS Future News Fund 140 - (186)
46		 -
Big Lottery Fund Accelerating Ideas Fund 7 - (126)
119		 -
Cardiff University* Innovate to Save 3,933 (2,018) (824)
6		 1,097
Big Lottery Fund Rethinking Parks 50 - (76)
26		 -
Arts Council of Wales (Scaling Fund) Digital Innovation Fund for the Arts in Wales 34 450 (355)
110		 239
Innovate UK Audience of the Future 91 - (29)
11		 73
AHRC Policy and Evidence Centre – Core 2,099 1,076 (1,511)
(17)		 1,647
The Technology Strategy Board Longitude 5,000 - (330)
330		 5,000
Argidius Foundation Innovation Growth Lab 118 - (118)
-		 -
Innovate UK Innovation Growth Lab 50 75 (65)
-		 60
Institute of Energy and Sustainable
Development		 Innovation Growth Lab 75 - (25)
-		 50

65

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

15b. Restricted funds (continued)

15b. Restricted funds (continued) 15b. Restricted funds (continued) 15b. Restricted funds (continued) 15b. Restricted funds (continued) 15b. Restricted funds (continued) 15b. Restricted funds (continued) 15b. Restricted funds (continued)
Funder Programme £’000
Balance
1 April 2020		 £’000
Income		 £’000
Expenditure		 £’000
Transfers from (to)
general fund		 £’000
Balance
31 March 2021
Department for Business, Energy and
Industrial Strategy		 Innovation Growth Lab 50 - (50)
-		 -
ENISA Spain Innovation Growth Lab 51 - (2)
-		 49
Greater London Authority Innovation Growth Lab - 75 -
-		 75
Innovation Norway Innovation Growth Lab - 75 -
-		 75
Austrian Research Promotion Agency Innovation Growth Lab - 75 -
-		 75
University of Sussex International Workstream 10 (10) (67)
67		 -
Department for Education CareerTech 1,764 - (1,603)
(51)		 111
DCMS Longitude Explorer 19/20 488 (155) (288)
(45)		 -
European Commission EURITO 301 - (172)
(38)		 91
Google.org FutureFit 1,301 - (762)
(107)		 432
European Commission Pro-Ethics 142 - (31)
(8)		 103
JP Morgan Rapid Recovery - 2,097 (2,433)
757		 421
Greater London Authority GLA Crowdfund London Evaluation - 75 (65)
(9)		 -
The Solicitors Regulation Authority SRA Testbed - 129 (117)
(12)		 -
European Commission TalTech Twinning - 176 (8)
(2)		 166
Economic & Social Research Council NordForsk COLDIGIT - 195 (3)
-		 193
Government of Canada Ocean Plastics** - 10,964 -
-		 10,964
NASA NASA SBIR Experimentation - 62 (8)
(5)		 50
Welsh European Funding Office WEFO Skills and Capacity Building - 1,469 (40)
40		 1,469
Kauffman Foundation Kauffman Foundation Translational Research 352 162 -
-		 514
ClimateWorks Foundation Cool Roofs - 194 (203)
9		 -
Open Banking Limited Open Up II - 1,404 (1,018)
(387)		 -
All values < £50k 191 (20) (176)
52		 47
22,696 16,587 (15,926)
1,161		 24,518

** Ocean Plastics programme, funded by the Government of Canada, aims to reduce ocean plastics in Sub-Saharan African countries by developing and scaling innovative solutions to plastic mismanagement.

In many cases, restricted income is received for programmes for which there is part or match-funding by Nesta (either in cash or in kind). The expenditure shown as restricted is the total expenditure of the programme funded by both Nesta and the external donor. A transfer from the general fund represents the portion of the programme funded by Nesta. A transfer to the general fund represents the portion of funding that Nesta is able to retain to cover overheads.

66

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

16. Analysis of consolidated net assets between funds

Unrestricted
funds
2021
£’000		 Restricted
funds
2021
£’000		 Expendable
endowment
funds
2021
£’000		 Group
total funds
2021
£’000
Fund balances are represented by:
Tangible fixed assets
Investment assets
Current and long-term assets
Current and long-term liabilities		 521
21,020
16,181
(15,691)		 -
-
24,518
-		 24,678
428,596
5,313
-		 25,199
449,616
46,012
(15,691)
Total net assets 22,031 24,518 458,587 505,136
Expendable
Unrestricted Restricted endowment Group
funds funds funds total funds
2020 2020 2020 2020
£’000 £’000 £’000 £’000
Fund balances are represented by:
Tangible fixed assets 656 - 25,073 25,729
Investment assets 13,550 - 363,983 377,533
Current and long-term assets 12,619 22,696 3,645 38,960
Current and long-term liabilities (17,392) - (1,096) (18,488)
Total net assets 9,433 22,696 391,605 423,734

67

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

17. Summary consolidated income and expenditure account for the year ended 31 March

The summary income and expenditure account is presented in order to ensure compliance with the Companies Act 2006.

The major difference in the figures presented from those in the consolidated statement of financial activities is that unrealised gains and losses on investment assets are not recognised.

Group
2021
£’000
Gross income:
Income
Income of non-charitable subsidiaries		 52,261
4,102
56,363
Less: share of joint venture turnover (6,330)
50,033
Gross expenditure:
Expenditure
Depreciation and charges for impairment of fixed assets		 35,218
674
35,892
Share of profit in joint ventures 279
Net income/(expenditure) for the year 14,420
Reconciliation to consolidated statement of financial activities:
Net income for the year
Movement on endowment funds		 14,420
66,982
Net income/(expenditure) 81,402

18. Contingent liabilities

There were no contingent liabilities at the balance sheet date (2020: nil).

68

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

19. Commitments

Investments, loans or contributions to funds that have been contracted but not yet drawn down, and grant agreements not yet signed by Nesta by Balance Sheet date, are shown as commitments below.

Investments, loans or contributions to funds that have been contracted but not yet drawn down, and grant
agreements not yet signed by Nesta by Balance Sheet date, are shown as commitments below.		 Investments, loans or contributions to funds that have been contracted but not yet drawn down, and grant
agreements not yet signed by Nesta by Balance Sheet date, are shown as commitments below.		 Investments, loans or contributions to funds that have been contracted but not yet drawn down, and grant
agreements not yet signed by Nesta by Balance Sheet date, are shown as commitments below.		 Investments, loans or contributions to funds that have been contracted but not yet drawn down, and grant
agreements not yet signed by Nesta by Balance Sheet date, are shown as commitments below.		 Investments, loans or contributions to funds that have been contracted but not yet drawn down, and grant
agreements not yet signed by Nesta by Balance Sheet date, are shown as commitments below.		 Investments, loans or contributions to funds that have been contracted but not yet drawn down, and grant
agreements not yet signed by Nesta by Balance Sheet date, are shown as commitments below.		 Investments, loans or contributions to funds that have been contracted but not yet drawn down, and grant
agreements not yet signed by Nesta by Balance Sheet date, are shown as commitments below.
Parent charity
and group
total at
1 April 2020
£’000		 Additions
£’000		 De-committed
£’000		 Drawdowns
£’000		 Parent charity
and group
total at
31 March 2021
£’000		 Funded
from
Investments, loans, contributions
to funds:
Private equity secondaries
Investments in early-stage funds
Programme-related investments
Grants:
Grant agreements not yet signed
by Nesta		 6,420
125
21,974
4,427		 -
-
-
1,390		 -
-
-
-		 (631)
(116)
(13,411)
(4,305)		 5,789
9
8,563
1,512		 Endowment
fund
Endowment
fund
General fund
Restricted
and general
fund
Total 32,946 1,390 - (18,463) 15,873

20. Operating lease commitments

At 31 March 2021 the Group was committed to total payments during the next year in respect of operating leases which expire within the following periods.

Group
2021
Photocopiers
Expire within one year
Expire within two to five years
Expire in more than five years		 5
-
-
Total 5

At 31 March 2021 the Nesta parent charity had entered into agreements with organisations to lease part of 58 Victoria Embankment.

The rental payments due to the parent charity are:

Parent
2021
Buildings – 58 Victoria Embankment
Expire within one year
Expire within two to five years
Expire in more than five years		 1,598
6,393
2,040
Total 10,031

69

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

21. Related party transactions

The Nesta Trust (‘the Trust’) was established by a Trust Deed dated 22 September 2011. The Trust holds investment assets previously held by the NESTA which was abolished on 1 April 2012. The assets of the Trust provide income and capital to be applied by Nesta as sole Trustee to further the objects of the Trust. As the sole Trustee of the Trust, Nesta is considered to control the Trust which operationally means Nesta is responsible for the Trust’s investment policy.

The Trust is a registered charitable trust which is classified by the Office of National Statistics as within the public sector boundary. Nesta has had transactions with government departments and bodies during the year as part of its ordinary course of business. As the Trust is not involved in the operational decisions of Nesta, any transactions between government departments/bodies and Nesta are not considered to be related party transactions.

The related party transactions that require disclosure between Nesta and its related companies are as follows:

Entity Connection £’000
Opening net
(creditor)/
debtor		 £’000
Receivable/
(payable) by
charity		 £’000
Cash paid by/
(received by)
charity
£’000
Closing net
(creditor)/
debtor		 Notes
The Nesta Trust Subsidiary
undertaking		 (870) (3,485) 4,355 - Nesta recharged the Trust for salary costs totalling £19,920
(2020: £nil).
Nesta charged Nesta Trust £4,511,009 (2020: £3,840,145)
in relation to PRI Investments. Nesta refunded Nesta Trust
£69,643 (2020: £1,221,978) in relation to PRI Investments.
Nesta Trust has transferred £23,625,000 (2020:
£18,000,000) to its Trustee Nesta in support of its charita-
ble objects
Nesta Trust charged Nesta £2,505,535 (2020: £2,505,535)
for rental of 58 Victoria Embankment.
Nesta
Enterprises
Limited		 Subsidiary
undertaking		 1,495 1,331 (2,912) (86) Nesta recharged Nesta Enterprises Limited for salary
costs totalling £98,464 (2020: £630,511).
Nesta Enterprises Limited accrued rental expense to
Nesta of £520,538 (2020: £642,215).
Nesta Enterprises Limited gift aided its profits to Nesta
£350,280 (2020: £1,123,030).
Nesta Arts
Impact LLP		 Subsidiary
undertaking		 16 65 (58) 23 Nesta charged Nesta Arts Impact LLP loan interest
expense totalling £30,082 (2020: £30,000).
Nesta charged Nesta Arts Impact LLP management fees
totalling £64,278 (2020: £90,162).
Cultural Impact
Development
Loans Limited		 Subsidiary
undertaking		 (1) 128 (85) 42 Nesta charged Cultural Impact Development Loans Lim-
ited management fees totalling £179,385 (2020: £81,871).
Nesta
Investment
Management
LLP		 Subsidiary
undertaking		 (9) (11) 27 7 Nesta received a distribution from Nesta Investment
Management LLP of £249,745 (2020: £nil).

No amounts were written off in the year, and no guarantees were given in respect of these transactions.

Nesta’s Trustees are drawn from among its key stakeholders, and staff may at times have links to stakeholder organisations and therefore it is in the nature of Nesta’s business to have some transactions which are classified as related. All transactions are entered into the ordinary course of business and on an arm’s length basis, consistent with Nesta’s policy on potential conflicts of interest.

During the year, combined non-contractual payments of £144k were made to Simon Morrison and Kirsten Bound, who were members of Nesta’s Senior Leadership Team, as part of a compensation package. Ex-gratia payments totalling £103k (2020: £16k) were made in the year to other departing staff as part of compensation packages.

70

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

22. Comparative consolidated statement of financial activities

Expendable
Unrestricted
Restricted
endowment
Group
funds
funds
funds
total funds
2020
2020
2020
*2020
£’000
£’000
£’000
£’000
Income and endowments from:
Investment income
414
-
9,710
10,124
Charitable activities
7,305
17,962
-
25,267
Other trading activities
7,292
150
-
7,442
Other income
6,751
-
-
6,751
Total income
21,762
18,112
9,710
49,584
Less share of joint ventures’ turnover
(6,237)
-
-
(6,237)
Total group income
15,525
18,112
9,710
43,347
Expenditure on:
Raising funds
Trading activities
3,810
83
-
3,893
Investment management costs
43
-
1,108
1,151
Total expenditure on raising funds
3,853
83
1,108
5,044
Charitable activities
Committed programme delivery
10,434
13,022
182
23,638
Investments
4,874
-
37
4,911
Missions
-
-
-
Practices
1,811
486
18
2,315
Enterprises
11,090
107
87
11,284
Total expenditure on charitable activities
28,209
13,615
324
42,148
Total expenditure
32,062
13,698
1,432
47,192
Net (expenditure)/income before investment (losses)/gains
(16,537)
4,414
8,278
(3,845)
Net (losses)/gains on investments
-
-
(27,480)
(27,480)
Net (expenditure)/income
(16,537)
4,414
(19,202)
(31,325)
Net interest in joint venture
346
-
-
346
Transfers between funds
18,863
1,755
(20,618)
-
Net income/(expenditure) before other recognised gains
1,090
(2,216)
10,327
9,201
and losses
Other recognised gains
Foreign exchange gains
-
-
36
36
Net movement in funds for the year
2,672
6,169
(39,784)
(30,943)
Reconciliation of funds
Total funds brought forward
6,761
16,527
431,389
454,677
Total funds carried forward
9,433
22,696
391,605
423,734*

71

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

23. Comparative funds

23a. Comparative unrestricted funds

23a. Comparative unrestricted funds
Funds
retained
within non-
charitable
subsidiaries
General Endowment or joint
funds funds ventures Total
2020 2020 2020 2020
£’000 £’000 £’000 £’000
Balance at 1 April 2019 5,374 431,389 1,387 438,150
Net (expenditure)/income (16,537) 8,314 - (8,223)
Transfers to restricted funds (1,755) - - (1,755)
Transfers from endowment to unrestricted funds 20,618 (20,618) - -
Unrealised gains on investments - (27,480) - (27,480)
Share of operating profit in joint venture - - 346 346
Balance at 31 March 2020 7,700 391,605 1,733 401,038

23a. Comparative restricted funds

SME Fintech Challenge Prize
Various banks
150
150
(83)
(217)
-
Kauffman Foundation
Innovation Growth Lab
234
141
(23)
-
352
Argidius Foundation
Innovation Growth Lab
30
128
(10)
-
148
Arts Council of England
Digital Culture 2019
33
-
(46)
13
-
Arts Council of England
Further work on Economic value of culture
-
297
(88)
-
209
Arts Council of Wales (R&D fund)
Digital Innovation Fund for the Arts in Wales
133
67
(200)
-
-
Arts Council of Wales (Scaling fund)
Digital Innovation Fund for the Arts in Wales
34
-
-
-
34
Australian Department of Industry,
Innovation Growth Lab
-
50
(50)
-
-
Science, Energy and Resources
Department for Business, Energy and
Innovation Growth Lab
-
50
-
-
50
Industrial Strategy
Big Lottery Fund
Accelerating Ideas Fund
9
(9)
-
-
-
Big Lottery Fund
Rethinking Parks
50
-
(131)
131
50
Cabinet Office
Connected Communities
475
(428)
(63)
16
-
Children’s Investment Fund Foundation
Children’s Investment Fund Foundation CIFF
151
-
(153)
2
-
(CIFF)
Cloudera Foundation
CCID Grant Programme
-
120
(162)
54
12
Department for Business, Energy and
Longitude Explorer 2019/20
-
901
(365)
(49)
487
Industrial Strategy
Department for Business, Energy and
Rocket Fund
25
24
(193)
144
-
Industrial Strategy
Department for Digital, Culture, Media
Future News Fund
-
1,984
(1,726)
(118)
140
and Sport
Funder
Programme
£’000 £’000 £’000 £’000 £’000
Income
Expenditure
Transfers from/
(to) general fund
Balance
31 March 2020
Balance
1 April 2019

72

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

Annual Report and Accounts: For the year ended 31 March 2021

Financial statements

23a. Comparative restricted funds (continued)

Department for Digital, Culture, Media
Enhancing Impact Fund
-
280
(288)
8
-
and Sport
Department for Digital, Culture, Media
Tech to Connect
-
951
(882)
(69)
-
and Sport
Department for Education
EdTech Innovation Fund
-
3,500
(1,711)
267
2,056
Department for Education
CareerTech Challenge Fund
-
5,000
(714)
123
4,409
Dunhill Medical Trust
Health as a Social Movement
100
-
(163)
75
12
Economic and Social Research Council
ESRC Management Practices
-
82
(6)
(21)
55
ENISA Spain
Innovation Growth Lab
-
75
(24)
-
51
European Commission
NGI Forward
1,335
-
(256)
(58)
1,021
European Commission
Pro-Ethics
-
153
(9)
(2)
142
European Commission
DECODE
128
14
(178)
36
-
European Commission
EU Design Innovation Platform
218
(28)
(178)
(12)
-
European Commission
NGI-Engineroom
138
-
(89)
(49)
-
European Commission
SEP 2.0
96
-
(107)
11
-
European Commission
Eurito
583
-
(243)
(39)
301
Google.org
FutureFit
-
1,657
(591)
235
1,301
Heritage Lottery Fund
Rethinking Parks
10
-
(27)
27
10
HM Treasury
Affordable Credit Challenge
-
1,572
(1,699)
127
-
Innovate UK
Flying High II
263
(60)
(318)
115
-
Innovate UK
Audience for the Future
-
124
(23)
(10)
91
Innovate UK
Innovation Growth Lab
-
50
-
-
50
Innovation Science and Economic
Innovation Growth Lab
-
75
-
-
75
Development Canada
JP Morgan
JP Morgan Chase
-
228
(13)
(6)
209
National Lottery Community Fund
UK Alliance for Useful Evidence
66
-
(300)
234
-
Omidyar Network
CCID Grant Programme
-
120
(162)
54
12
Robert Wood Johnson Foundation (RWJF)
Health Innovation Mapping
83
-
(77)
(6)
-
Scottish Government
Healthier Lives Data Fund
500
-
(315)
68
253
Scottish Government
ShareLab Scotland
38
-
(23)
(3)
12
The Arts and Humanities Research Council
Creative Industries Policy & Evidence Centre
2,538
24
(463)
-
2,099
The Tata Group
Tata Maths
8
-
(8)
-
-
The Tata Group
Maths Mission
107
-
(166)
79
20
The Technology Strategy Board
Longitude Explorer 2019/20
5,000
-
(324)
324
5,000
Value of Heritage
The Arts Humanities and Research Council
8
-
-
(8)
-
Wellcome Trust
CCID Grant Programme
-
120
(162)
54
12
Welsh Government
Innovate to Save
3,772
510
(366)
17
3,933
All values < £50k
Various
212
190
(520)
208
90
16,527
18,112 (13,698)
1,755 22,696
Funder
Programme
£’000 £’000 £’000 £’000 £’000
Income
Expenditure
Transfers from/
(to) general fund
Balance
31 March 2020
Balance
1 April 2019

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DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35 Annual Report and Accounts: For the year ended 31 March 2021

Reference and administrative details

Reference and administrative details

Trustees and Main Board Committee Members

Trustees

Sir John Gieve (Chair) Professor Anthony Lilley Christina McComb Heider Ridha Imran Khan

Jimmy Wales Judy Gibbons Moira Wallace Sarah Hunter

Ian Gomes (Joined 01 January 2021)

Joanna Killian (Resigned 30 July 2021)

Natalie Tydeman (Resigned 26 March 2021)

Audit and Risk Committee

Ian Gomes (Chair) Christina McComb Judy Gibbons Tony Thomas (Non-Trustee member)

Government Innovation Committee

Moira Wallace Joanna Killian (Resigned 30 July 2021)

Innovation Policy Committee

Trust Investment Committee

Christina McComb (Chair) Sir John Gieve Ian Gomes Sally Bridgeland (Non-Trustee member)

Venture Investment Committee

Professor Anthony Lilley (Chair) Sir John Gieve Heider Ridha Natalie Tydeman (Resigned 26 March 2021)

People Committee

Judy Gibbons (Chair) Sir John Gieve Imran Khan

Heider Ridha (Chair) Sir John Gieve

Education Committee

Moira Wallace (Chair) Sir John Gieve Joanna Killian (Resigned 30 July 2021)

Challenges Committee

Ravi Gurumurthy (Chair) Judy Gibbons Sarah Hunter Jimmy Wales

Arts and the Creative Economy Professor Anthony Lilley (Chair)

Health Committee Imran Khan Sir John Gieve

Protector of the Nesta Trust James Sinclair Taylor

74

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35 Annual Report and Accounts: For the year ended 31 March 2021

Reference and administrative details

Executive Team

Pre-September 2020

Ravi Gurumurthy Chief Executive
Simon Morrison Deputy Chief Executive Officer (resigned 28 August 2020)
Trevor Richards Chief Finance Officer
Nathan Elstub Chief Investment Officer
Hasan Bakhshi Executive Director, Creative Economy and Data Analytics
Vicki Sellick Executive Director of Programmes
Tris Dyson Executive Director, Challenge Prize Centre
Corinna Theuma General Counsel & Company Secretary
Kirsten Bound Executive Director of Research, Analysis and Policy (resigned 19 August 2020)

Post-September 2020 following organisational strategy review

Post-September 2020 following organisational strategy review Post-September 2020 following organisational strategy review
Ravi Gurumurthy
Chief Executive
Trevor Richards Chief Finance Officer
Lisa Barclay Executive Director, Investments
Vicki Sellick Chief Partnerships Officer
Samuel Hanes Chief Operating Officer
Matthew Seden Chief Strategy Officer
Jenny Gibson Chief Scientist
Ksenia Zheltoukhova Acting Chief Scientist
Elspeth Kirkman Chief Programme Officer (secondment)
Corinna Theuma General Counsel & Company Secretary (maternity leave)
Jacqueline Lewis
General Counsel & Company Secretary (interim maternity leave cover)

Administrative details of the charity

Registered name Companies House registered number Charity Commission registered number Office of the Scottish Charity Regulator registered number Registered Office Independent Auditor Internal Auditor Principal Bankers

Nesta (changed from ‘Nesta Operating Company’ on 22 July 2013) 07706036 (registered 15 July 2011) 1144091 (registered 30 September 2011) SC042833 (registered 30 December 2011) 58 Victoria Embankment London EC4Y 0DS

BDO LLP 2 City Place, Beehive Ring Road Gatwick, West Sussex, RH6 0PA Grant Thornton UK LLP 30 Finsbury Square London, EC2A 1AG

Lloyds Bank plc 25 Gresham Street London, EC2V 7HN

75

DocuSign Envelope ID: B194743A-0F52-459B-8AE2-21619C308C35

58 Victoria Embankment London EC4Y 0DS +44 (0)20 7438 2500 information@nesta.org.uk @nesta_uk www.facebook.com/nesta.uk www.nesta.org.uk

Nesta is a registered charity in England and Wales with company number 7706036 and charity number 1144091. Registered as a charity in Scotland number SCO42833. Registered office: 58 Victoria Embankment, London EC4Y 0DS.