Improving the inclusion, safety and success in school of young people experiencing absence, exclusion or marginalisation. THE DIFFERENCE EDUCATION LTD ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 AUGUST 2023 Charity Registration No. 1184843 | Company Registration No. 11426427 (England and Wales)
Trustees, Annual Report for the Year Ended 31 August 2023 The trustees present their report and financial statements for the year ended 31 August 2023. Administrative Details Trustees C Megson M Bayin-Adomako J Benamor C Heald J Hutchinson A Salz D Whitaker D Xiberras Key Management Personnel Kiran Gill Danny Swift Jenny Graham Shaun Brown (resigned 9 March 2023) Katharine Booth {appointed 6 April 2023) {resigned 8 December 2023) (appointed 21 February 20241 Lily Bissett Charity Number Company Nunther 1184843 11426427 Registered Office The Difference School House Morpeth School Portman Plate London E2 OPX Auditor Godfrey Wilson Limited Chartered Accountants and Statutory Auditors 5thFloor Mariner House 62 Prince Street Bristol, BSI 4QD
Purpose and Activities Our Purpose The puryosc: The Difference is a charity founded to irnprove the lives of vulnerable children by raising the status and expertise of those who teach them. By 2030 The Difference has ambitions to influence school leadership across the country. The problem: Schooling isn't working for our most vulnerable children. Every week in England 109 children- equivalent to three full classrooms - are permanently excluded from school. These children are often experiencing rnultiple vulnerabilities- more likely to live in poverty, have learning needs, and be suffering mental health challenges stemming from a lack of safety in their lives. These young people commonly experience marginalisation and inequality. disproportionately they have Gypsy Rorna and Traveller or black Caribbean heritage. Once excluded, life chances are dramatically reduced. As they become adults, these young people are unlikely to become fully literate, vulnerable to long-term and serious mental ill-heaith and too often are involved in the criminal justice system. But this isn't the full picknre. Children are falling out of learning in an increasing number of ways- school suspensions have been rising, hundreds of thousands of children post- pandemic are excluding themselves through absenteeism, and untold numbers are increasingly struggling to stay in class - absenting themselves in-school or being sent outside the elassroom door. And in all these instances, demographic patterns persist- those losing learning are disproportionately experiencing vulnerability and marginalisation. OUL" work: From 2022-23 The Difference worked on finding and growing the people who will become tomotTOW'S inclusive school leaders. Our two-year Difference Leadership Programme has developed teachers with the will and skill to lead improved outcornes for vulnerable children, by placing and training them in schools for excluded learners. Our Inclusive Leadership Course provides a year of professional developrnent for existing mainstream senior leaders. The Difference has identified best practice in Inclusion, sharing this with both Alternative Provision (API and mainstream school leaders, as well as aeross the whole education sector. We share our research on inclusive policy with key stakeholders in education, while highlighting and celebrating leaders and groups of schools who are changing the story on school exclusion. In 2022-23, we have worked on laying the foundations for a growing body of research, impact and influencing work over the coming years, building our team to drive the campaign to make schools meaningfully more inclusive. Our .Qctiiities Our strategy in 2022-23 Academic year focussed on scalable irnpact on the life-outcomes of vulnerable children via People, Practice and Policy. This work wa5 as follows:
I PEOPLE I PRACTICE I POLICY 11 GROW EXCEPTIONAL LEADERS 1MAOU6H THE PIFFERENCE LEADERS PROGRAMME FIND AND SHARE INCU)SIVE PRACTICE ACROSS TEACIIERS IN fflAINSTREAffl & AP INFORM LOCAL ANP NAIIONAL POLICY TO IrnPROVE OVTCI)mES FOR VULNERA8L£ CHILPREN People: Difference Leadership Programme Teacher recruitment". The Programme raises the profile of working in Alternative Provision schools, establishing it as an aspirational career route that attracts the best teachers. Leadership Development and Specialist Teacher Training: Training provides intensive skills development for Difference Leaders during two years in AP schools. We rnonitor their progression and impact, adding to the evidence for what works in reducing school exclusion. Practice: School Leadership Development and New Practice Research Mainstream partnership via the Inclusive Leadership Course: The Difference delivers the InclusiFe Leadership Course- a year-long professional development offer for mainstream Headteachers, Deputy Heads and Assistant Heads keen to improve Inclusion in their schools. Leaders learn about key relational practices and cornplete accompanying assignments to support them to lead whole-school change. New practice research: The Difference's partnerships and wider practice research enable us to identify the practice and systems currently improving outcomes for vulnerable children, across AP and mainstream sehools. This learning is shared through our publications and research collaborations, as well as informing our programmes. IncludEd Teachers, Conference: The Difference runs an annual Teachers, Conference, bringing together researchers, policymakers and teachers to share the sehool practice and systems whieh improve vulnerable children's life outcomes. Community-buildlng cross-sector: To disseminate our research, The Difference presents at education conferences, delivers online training) speaks on podcasts, and publishes in sector press media, to reach thousands of teachers.
Policy: Medxa, Policy Events and New Policy Research MedAa: The Difference keeps exclusions in the spotlight, supporting journalists to ensure national coverage of school exclusion. New Policy Research: We conduct original research on practice, systems and outcomes across and beyond our partner schools. Infonning Pollcymakers: Our work involves organising roundtablesy presenting research to politicians and contributing to research projects with think tanks and academics, sharing the frontline realities of policies affecting vulnerable children.
Public Benefit All of The Difference's activities are undertaken to further our charitable puryose, which is to advance education for the public benefit. More specifically) the charity is working to improve the inclusion, safety and success in school of young people experiencing absence, exclusion or marginalisation, by raising the status and expertise of those who educate them. The charity believes that improved outcomes for the most vulnerable benefit society as a whole, and that education plays an important role in bringing about this change. The trustees have a duty to consider public bertefit guidance published by the Charity Commission. We are satisfied that the puryose and activities of the charity continue to satisfy the requirements of the public benefit test set out in section 17 of the Charities Act 2011. We have demonstrated how we have worked towards our charitable puryoses, by setting out our achievements during the year in this Trnstees, Report.
Achievements and Perforniance This annual report covers the financial year 2022123 in terms of activities, achievements, financial review, risks and uncertainties, structure) governance and management. For more detailed inforniation on The Difference's impact in 2022123) please see our Im People 2022123 Since 2019, The Difference has developed People through two unique programmes: The Difference Leadership Programme The Inclusive Leadership Course Forschool leaders who aspire to be tomorrow's inclusive headteachers. Participants work as a senior leader in Altemative Provision Is¢hools or units that serve excluded children) fortwo years. They receive 290 hours of professional éevelopment from The Difference, 5UPPOrting them to become expert practitioners in school inclusion. Targeted at existingsenior leaders in mainstream, nging from Executive Headteachers to Special Education Needs Co-ordinators ISENCosl. It combines six intensive training days with practical assignments. Participants engagewith new thinking and inclusive solutions to tackle common challenges such as student wellbein& persistent absenteeism, and repeat exclusion. In our tlrsty•ar, w• In our flfst y•ar, w• Trnlnod 10 $ehool1oad•rs Trnlned 12 sd1 l¢ad•rs Partnerèd wlth 9 schools Reaeh•d Partnered with 11 schools Reached 826 d•nts 13,510 9 Flve years on, we've Flve years on, we've Trained 75 sch¢)ol leaders Trained 414 school leader8 Partnered wlth 57 sehools Partnered with 270 ¢ch•)ols 17.174 205,435 stud•nts 100% of the 2023 graduates from the Difference Leadership programme have had an evxdenced positive impact on their school, according to their headteachers. This includes improvements to curriculum, behaviour, mainstream reintegration, and attendance. 870/6 have progressed to more senior leadership roles since they started the programme two years ago. 9896 of participants on this yearfs Inclusive Leadership Course reported a positive impact in their school as a result of implementing Course learnings.
Durlng his two years as Assistsnt Headteacherfor a Hampshire pupil referral unit, Taylorand his fantaSC team developed a new behavlour pollcy whlch leaned heavily into the school's exlstlng trauma-lnfomied and relational approaches. This policy focused on understanding the origins of challenging behaviourand putting support in place rather than automatic sanctions. E.g. referringstudents with vaping problems to local health services or rearting to the use of inappropriate language through class discussion and education effort From 2021122 to 2023, the school saw a 50% redurtion in suspensions term-on-term, and an Il% reduction in unauthorised absence. Taylor hastaken this experien with whole-school inclusion impartonto a new role as Deputy Headteacherof Reach Academy- an influential. malnstream all-through school. Taylor Bellamy "1093 Diffe.'e.:ioe Leadershlp Programme graduate -Lastyear we had something in the region of 750 suspensions. After fomialfy intmducing the whole trduma.based practice, our zones of regulation, our understanding andmaknng teachers understand the importance of the restorative justice approach. we've got it down to four suspensions this year." Hablb Hussein Deputy Headteacher and 2022123 ILC Participant Where is The Difference going no Afterfive years of delivery and piloting our programrnes, we have seen amazing impact, a tiny portion of which is detailed above. We are now in the process of reviewing our learnings- with input from ouryouth action group, school leaders and investor coalition- to help us evolve our approach for our 2025-2030 Strategy. We will set out how our programmes will expand the number of Alternative Provision and ma•nstream schools we work with,. deepen the impact of inclusion for those schools,. and develop our impact capture so we can share learnings from our most successful school partners across the country. Watch this spacel
Practice 2022123 The Difference identifies effective inclusion practice by tracking interventions that improFe outcomes. We investigate impact within our own programmes and partner with other organisations to research practiee more widely. Practice through Programmes A keycOnPtdl$CY$5ed and developed within 74% stated theres been a ieduction I all Difference programme5 1sWhole.School dètèntions andlor havIoUr points Inclusion: the idea that all students have wellbeingand safeguarding needs and that 54% are already seeinga reduction In all staff have a role to play in recognisingand suspenstons and permanent exclusions suprKJrtingthese needs. EffectNeWhole-School From thi5, The Difference has developed the Inclusion means improved outcomes for a much wider group. not just a minority known Ex¢lu$ion$ Continuum. This tool encourages to be at5ignificant risk. This was reflected in all school le3ders land policymakers) tt> frame permanent School exclusion as the the impact ported by leaders on our 2022123 end point of a continuum that includes Inclusrve Leadership Cour5•- dernonstratirlg detentions, time outside of classrooms, the power ol inclusion to positively affect and absenteeism. Attention to data across everydayoccurrences In schools. aswell as the continuurn means schwls are better morÈserious incidents-. equipped to identifyvulnerdble stlkdents eartier, providetargeted inteNentions, and ultlma¢ely reduce allfomis of ltssi leamin8. 92% saw improvement in the decalation otchallenging behaviour 82% reported irnproved outcomes foi vulnerable st¥Jdents Contlnuum of Conthiuum ot s1- ¢luOn and Ab$ Etecttve Home Ed Monag8d Mov8• Persistent Absence Suspensions Internd Exclusion TNantSng LessoTr8 ToiletTrip8 Dotsntlon Timeout cards Stand Oulglde Room L4teneag to Legsong
Spreading Effective Practice Where is The Difference going now? In January 2023, The Difference welcomed over5QQ edutators. students. researchers. and education charftiesto IncludEd, ourannual cofiferente. The best mind5 working on inclusive education host workshops on the practi. systems and t(x)Is that can spread to more schools. Thi5 year, topics ranged from contextual safeguarding to social pedagogyto diversifying turritLtlums. There's a huge appetite for actionable research and transferable prdCti£e in inclusion. as schools Erapplewith rising absenteelsm and an Alternative Provislon sector understrain.The DIffenCe- and our School partners- are atthefrontline of this work and have expanded our Research and Impact Directorate accordingly. Upcoming prioiities include= the developmentof a safety and wellbeing measure to help schools trackand respond to student need. and publication ofongoing research intothe under-explored a3 of intemal Alteinative Provision lin partnershipwith National Foundation for Education Researchl. oday& InCIlEd was nothing short of brilliant. So many inspiring speakers and so so much to take away, think about, talk about, write about. read about andm05t importantly...doV thony Assistant Headteacher
PoIicy 2022123 With a general election coming up and many challenges in education reaching crisis levels, The Difference's policy work has taken on new urgency. Influencing in Partnership September 2023 saw the launch of the Who's Losing Learning Coalition by founding partners, The Difference, Impetus, and the Institute for Public Policy Research, all bringing a range and depth of experience aeross the education sector. The Coalition aims to reveal the extent to which children are currently missing out on learningy join the dots between different types of exclusion, and champion the Cause of the most vulnerable learners who are disproportionately affected. There's been a 301yo increase in suspensions post-pandemic and our analysis shows this rise has largely affected children living in poverty or who have speeial educational needs (respectively 3.7 times and 4 times as likely to be suspended as their peers). Racial inequity also persists. Dual heritage white and Black Caribbean children are suspended at nearly double the rate of white peers, while Gypsy Roma Traveller children are sent home 3.2 times as much. The Who's Losing Learning Coalition is already raising the alarm about lost learning as a social justice issue, securing press coverage in The Guardian, Sky, ITV, and Schools Week. Where is The Difference going now? The Wh05 Losing Learning? Coalition will collect and analysefurtherdata, draw on insights from young people and school leaders, and review good inclusion prnctice nationally. Nextyearwill see the coalition publish two papers- one on problern diagnosis and another on policy recommendations. The ultimate aim is that fecommendations are taken up by policymakers, leading to schools reIving incentives. resources and support to tackle lost learning at scale. The Difference has appointed a new Education Policy Lead, Cristin O'Brien, who will play a key part in our influencing strategy- drawing on experience from her preVioS role at Otsted and as a Social workerserwng Irish Traveller communtties lone of the most excluded demographics in England). Cristin's work will ensure the insights ofThe Difference community- young people, school leadets. education experts, researchers- get in front of the right policy stakeholders to hèlp us effectively scale expertise in inclusitsn. io
Financial Review Financial position We achieved a financial surplus of £0.2m in 2022123 (£0.05m in 20211221. Our income increased l£1.5m up from £l.Im in 20211221 as did our expenditure (£1.3m up from £l.Im in 2021122), as The Difference expanded the nurnber of schools we partnered with, and began to build our second significant function: a research, irnpact and influence team to spread learnings from our programmes with schools nationally. Income Our total income through the academic year 2022123 was £1.5m lup from £l.Im in 2021122). The Difference's prirnary source of thnding is from philanthropy) With the majority of our income coming from trusts and foundations and small but growing group of individual donors and coryorate foundations. This year voluntary income made up 8396 of overall income. Thank you to all our donors who made our work possible this year. Our 2021-2025 strategy has included ambition to grow traded revenue to The Difference including school contributions to our programmes, speaking events, and research contract work which now make up a growing proportion of our income. The proportion of The Difference's income from school contributions has risen over the years from 2% in 201912020 to 1796 in 2022123. In 2023124 the charity is undergoing a year of strategy development ahead of our 2025-2030 Strategy, which will set out future ambitions to grow this rcvenue strcam further. The Difference does not use any external professional or comrnercial fundraisers - all fundraising activities are conducted by our own employees. The Difference is not currently subscribed to any schemes for fundraising regulation and does not do any kind of communityy events or digital fundraising. The entirety of our fundraising activity is conducted with grant-making organisations, meaning we do not haFe any interaction with potentially vulnerable members of the public. The Difference has never received any complaints about fundraising activities which we've undertaken. Expenditure The Difference's total expenditure through the academic year 2022123 was £1.3m (up from £l.Im in 20211221. As outlined in the Achievements section of this report, expenditure has been on activities recruiting and developing school leaders and delivering new research projects. In this academic year, the team recruited their highest ever number of participants (reaching 150 school leaders to deliver in the year ahead 23124). and expanded our second team (Research, Impact & Influence) to launch the 'Who's Losing Learning?, Coalition and deliver further research into elements of practice like Internal Alternative Provision. There has also been li
expenditure on the central team, as we prepared for a year of strategy development in 2023124, which is expected to contract again in 2024125. As with many other charities, inflation has been a driver in rising costs year-on-year at The Difference. Reserves policy Our unrestrirted lor'free'} resetyes are the net current assets of our general unrestricted funds. We hold these funds to: ensure we can carry out rnulti-year work already committed to be delivered to teacher5 and schools provide working capital to finance our day-to-day operations provide a safeguard against failure to deliver against contractual obligations we have entered into protect our solvency in the event of any Curtailment in our ineome-generating activities It is the Difference's policy that unrestricted funds which have not been designated for a specific use should be maintained at a level equivalent to between three to six months, budgeted operating costs, where possible (currently between £500k and £988kl. The trustees consider that reserves at this level would ensure that, in the event of a significant change in fundingj The Diffcrence 15 able to meet its obligations to programme participants, partner organisations and staff, whilst giving consideration to ways in which additional or alternative funds may be raised. On 31st August 2023, total ndS were £1.5m, of which £246k were restricted and £700k were designated, leaving free reserves of £573k. Going concern Trustees and the senior managernent tearn review spending and revenue, and re-forecast aetordinglyj on a quarterly basis. Current forecast cash flow shows that The Difference has adequate free cash to meet its obligations as they fall due. Trustees are content that The Difference has adequate resources to fund its activities for the foreseeable future. The trustees therefore believe that the eharity is a going concern, and so have prepared the aceounts and flnancial statements on this basis. 12
Risks & uncertainties Effective risk management is eritical to ensuring that The Difference achieves its mission for the improved life-outcomes of vulnerable children. All our employees are encouraged and supported to identify and manage key risks within their work, and to comrnunicate and escalate these appropriately. Through this, responsibility for risk 15 distributed across the charity. We manage our risks in line with our risk-rnanagement poIicyy which includes the collation and monitoring of key organisational risks within a risk register. The Executive Team has responsibility and accountability for the risk register. The Board of Trustees maintains overall accountability by reviewing risks escalated from the Executive on a quarterly basis. The key risks which will be managed in the year ahead, 2023124 are: Reduced budgets in Alternative Provision sch(M)Is make it harder to find vacancie$ which can be filled by 8enior leaders from mainstream Schools, reducing scope to scale the Difference Leader$ programme. Mitigation$: The Difference has been evolving its Difference Leaders programme in 2022123, with experimental Difference Leader placements in mainstream schools running internal Alternative Provision, and working with existing staff in Alternative Provision schools rather than asking schools to hire new staff. There have been early signs of high impact in these new placements, and The Difference is looking to its 2025-2030 Strategy to continue to evolve programme delivery for the highest impact return on investment. Impact of the Cost of Living Crisis and other sector trends I wlicy changes on school budgets and, therefore, the charity's traded income With schools seeing real-terms reduction in funding due to inflation, and especially sharp rises in energy bills, many schools are having to reduce staffing numbers, and cut back on costs previously deemed essential. This is likely to affect sales for The Difference's programmes and services. Mitigations- Part of the response will be to redouble efforts to market our programmes including strengthening our sales function, and to articulate their value - particularly to students most affected by the econornic crisis. We have built an increased fundraised income buffer into our budgeting) to ensure cost coverage of all bases. The Difference's fundraising function is overly reliant on the CEO, at a time when fundraised revenue is more crucial to build capacity for impact via a new strategy 13
Mitigations: The Difference has hired a fundraising expert to develop our fundraising strategy and function in 2023124 including hiring a new Head of Fundraising at The Difference. 14
Structurey governance & management Constitution and governing documents The Difference Education Ltd is governed by its Mernorandum of Association and Articles of Association. The Difference Education Ltd is a charitable companyj limited by guarantee and not having a share capital. The Difference operates within England and Wales capital (Charity nurnber: 1184843. Company nunther: 11426427). The Difference Education Ltd gained charitable status from the Charity Commission in 2019. None of the trustees has any beneficial interest in the cornpany. All of the trustees are rnernbers of the cornpany and guarantee to contribute £10 in the event of a winding up. Dire('.tiirs aii(l Tru.%t(.'c% The Board of Trustees meets regularly to govern the charity. During the period of reporting) it held four meetings. At its meetings in 2022123, the Trustee Board agreed the budget for 2023124. advised and approved the re-structure of the Executive Team. agreed on embarking on process of post-pilot programme washup and future strategy design. managed and rnitigated ongoing risk. and approved delegation to and growth of The Difference's staff team. Or4yanisational StriictLire and Ke)-' Personnel The appointment or election of Trustees is as determined by the Board of Trustees. The Trustees have overall responsibility for the charity, but the day-to-day running of the charity is delegated to the Chief Executive Officer, Kiran Gill, and her staff. This year, Kiran Gill returned frorn maternity leave in January 2023. Danny Swift took on the Chief Executive's role in her absence, which covered September 2022-January 2023. The Trustees are responsible for: Overseeing the work of the Chief Executive. Approving plans to scale the charity. Agreeing the strategy for the development and growth of The Difference. Ensuring that The Difference meets its legal responsibilities. Ensuring The Difference improves the lrfe outcomes of the most vulnerable children through their work and practice,. and Ensuring sound financial management of The Difference. Induction and Training policy for new Trustees New Trustees meet with the Chief Executive and Chair to discuss their role and responsibilities. This gives an opportunity to answer any questions raised by the new Trustee and to clarify the content of any written documentation circulated to the new 15
Trustee. Opportunities for training of the Trustees are presented to them, as well as pre- existing documents on The Difference's strategy) impact, and previous decisions. The Chief Executive ensures Trustees are kept up to date with developments in Charity and company law. This is achieved through briefings at Board meetings and, as appropriate, circulated written information. Executive Pay Policy The Trustees consider the CEO and Directors to represent the Executive Team of The Difference. Changes to salaries take place after their Performance Management Reviews on an annual basis. These are determined by the Chair of Trustees in coordination with other trustees. Such Changes may take plaee on the back of exceptional performanee or an evolution of role eorresponding to inereased responsibility. This year, The Difference decided to set a new pay policy to include salary increases on the basis of changed responsibilities only (ie. no performance related payl. These salaries are regularly benchmarked against other similar organisations in our sector. Statement of responsibilities of the tteeS The trustees (who are also directors of the charity for the purposes of company lawl are responsible for preparing the trustees, report and the financial statements in aecordanee with 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 Praetiee). Company law requires the trustees to prepare financial statements for each financial year, which give a true and fair view of the state of affairs of the charity and of the income and expenditure of the Charity for that period. In preparing those financial statements the trustees are required to: select suitable accounting policies and then apply them consistentlyy obSee the methods and principles in the Charities SORP. make judgements and accounting estimates that are reasonable and prudent. state whether applicable UK accounting standards and statements of recommended practice have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in operation. The trustees are responsible for keeping proper accounting records whieh disclose with reasonable accuracy at any time the financial position of the charity and which enable them to ensure that the financial statements comply with the Companies Act 2006. The trustees are also responsible for safeguarding the assets of the charity and hence for taking 16
reasonable steps for the prevention and detection of fraud and other irregularities. In so far as the trustees are aware: there is no relevant audit infonnation of which the charitable company's auditors are unaware,. and the trustees have taken all steps that they ought to have taken to make themselves aware of any relevant audit inforn]ation and to establish that the auditors are aware of that information. The trustees are responsible for the rnaintenance and integrity of the corporate and financial infomation included on the charitable company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Auditors Godfrey Wilson Limited were re-appointed as auditors to the charitable company during the year and have expressed their willingness to continue in that capacity. The trustees, report was approved by the Board of Trustees. C Megson Chair of Trustees Dated: 18 March 2024 17
Independent auditors. report To thg members of The Difference Education Ltd Opinion We have audited the financi81 statements of The Difference Eduealion Ltd (the 'charitll for the year ended 31 August 2023 which comprise the statement of financial aclivilies, balance sheet, statement of cash flows and the related 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 Iunited Kingdom Generally Accepted Accounting Practice). In our opinion, the financial stalemenls.. give a true and fair view of the slate of the charity's affairs as at 31 August 2023 and of its incoming resources and application of resources, including its income and expenditure, for the year then ended", have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice", and have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing IUKI IISAS IUKII 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 are independent of the charity in accordance with the ethical requirements that are relevant lo our audit of the financial slalements in the UK, including the FRC'S Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate lo provide a basis for our opinion. Conclusions relating to going concern In auditing the financial ststemenls, 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 perfomied, we have not identified any material uncertainties relating lo events or conditions that, individually or collectively, may cast significant doubt on the charity's ability lo continue as a going concern for a period of at least e1ve months from when the financial statements are authorised for issue. Our responsibilities and the responsibilities of the Iruslees with respect lo going COnM are described in the relev8nt sections of this report. Other information The trustees are responsible for the other information. The other information comprises the informab'on included in the annual report other than the financial statements and our auditor's report Ihereon. Our opinion on the financial statements does not cover the other Information and. except to the exlenl otherwise explicitly slated in our report, we do not express any form of assuran conclusion thereon. 18
Independent auditors. report To thg members of The Difference Education Ltd In connection with our audit of the financial stalemenls, our responsibility is to read the other information and, in doing so, consider whether the other information is materialty inconsistent wth the financial statements or our knowledge obtained in the audit or otherwise appears lo be materially misstated. If we identify such material inconsistencies or apparent material misstalemenls, we are required to determine whether there is a material misstalemenl in the financial statements or material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misslatemenl of this other information, we are required to report that fact. We have nothing lo report in this regard. Opinion on other matters prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit". the information given in the Iruslees, report for the financial year for which the financial statements are prepared is consistent with the financial st8temenls," and the trustees, report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the charity and its environment obtained in the course of the audit, we have not identified material misstalemenls in the trustees, report. We have nothing to report in respect of the following matters in relation lo which the Companies Act 2006 requires us to report to you if, in our opinion.. adequate accounting records have not been kept or returns adequate for our audit have not been received from branches not visited by us., the financial statements are not in agreement with the accounting records and returns., certain disc105ures of Iruslees, remuneration specified by law are not made", or we have not obtained all the information and explanations necessary for the purposes of our audit. Responsibilities of the trustees As explained more fully in thè Iruslees, responsibilities ststement set out in the trustees, report, the Iruslees are responsible for the preparation of the financial stslemenls and for being satisfied that they give a true and fair view, and for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material misstslemenl, whether due to fraud or error. In preparing the financial statements, the trustees are responsible for assessing the charity's ability to continue as 8 going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Iruslees either intend lo liquidate the charity or to cease operations, or have no realistic alternative but to do so. 19
Independent auditors. report To thg members of The Difference Education Ltd Our responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financi81 statements as 8 whole are free from material misslalement, whether due lo fraud or error, and to issue an audilorfs report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guamntee that an audit conducted in accordan with ISAS IUKI will always delecl a material misstslement when il exists. Misstatements can arise from fraud or error and are considered material if, individually or In the aggregate, they could reasonably be expected to Influen the economic decisions of users taken on the basis of these financial ststemenls. Irregularities, including fraud, are instsnces of non-compliance 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 prOdureS we carried out and the extent lo which they 8re capable of detecting irregularities, including fraud, are detailed below.. 111 We obtained an unders18nding of the leg81 and regu18tory framework that the charity operates in, and assessed the risk of non-compliance with applicable laws and regulations. Throughout the audit, we remained alert lo possible indications of non-compliance. 121 We reviewed the charity's policies and procedures in relation to". Identifying, evaluating and complying with laws and regulations, and whether they were aware of any instances of non-compliance., Deterting and resF)onding to the risk of fraud, and whether they were aware of any actual, suspected or alleged fraud., and Designing and implementing internal controls to mitigate the risk of non-compliance with laws and regulations, including fraud. 131 We inspected the minutes of Iruslee meetings. 141 We enquired about any non-routine communication with regulators and reviewed any reports made to them. 151 We reviewed the financial ststement disclosures and assessed their compliance with applicable laws and regulations. IS) We performed analytical prttedures to identify any unusual or unexperted transactions or balances that may indicate a risk of material fraud or error. 171 We assessed the risk of fraud through management override of controls and carried out procedures to address this risk. Our procedures included. Testing the appropriateness of journal entries., Assessing judgements and accounting eslimales for potential bias., Reviewing related party Iransaclions", and Testing transactions that are unusual or outside the normal course of business. Because of the inherent limitstions of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. Irregularities that arise due lo fraud can be even harder lo detect than those that arise from error as they may involve deliberate concealment or collusion. 20
Independent auditors. report To thg members of The Difference Education Ltd A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at." www.frc.org.uklauditorsresponsibilities. This description forms part of our auditor's report. Use of our report This report is made solely lo the charity's members, as a body. in accordance wlh Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might stale lo the charity's members those matters we are required to stste 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 charity's members as a body, for our audit work, for this report, or for the opinions we have formed. Dale." 18 March 2024 William Guy Blake ACA (Senior Statutory Auditor) For and on behalf of.. GODFREY WILSON LIMITED Chartered accountsnts and statutory auditors 5th Fl(ior Mariner House 62 Prince Street Bristol BS14QD 21
The Difference Education Ltd Statement of financial activities (incorporating an income and expenditure account) For thg ear endod 31 Au ust 2023 2023 Totsl 2022 Total Reslricled Unrestricted Note Income from: Donations Charitable activities 429,765 825,741 1,255,506 250,199 250,199 925,546 201,067 Total income 429,765 1,075,940 1.505,705 1,126,613 Expenditure on: Raising funds Charitable activities 112,705 112,705 764,216 1,187,700 76,967 991,176 423,484 Total expenditure 423,484 876,921 1,300,405 1.068,143 Net income and net movement in funds 6,281 199,019 205,300 58,470 Reconciliation of funds: Total funds brought forward 239,677 1,073,603 1.313,280 1,254,810 Total funds carried fOard 245,958 1,272,622 1.518,580 1,313,280 All of the above results are derived from continuing activities. There were no other recognised gains or losses other than those staled above. Movements in funds are disclosed in note 13 to the accounts. 22
The Difference Education Ltd Balance sheet Asat31Au ust 2023 2023 2022 Note Current assots Debtors Cash at bank and in hand 68,371 1,557.312 65,935 1,383,080 1,625,683 1,449,015 Liabilities Creditors.. amounts falling due within 1 year 10 107.103 135,735 Net current assets 1.518.580 1,313,280 Net assets 12 1518.580 1,313,280 Funds Restricted funds Unreslricled funds Designated funds General funds 13 245.958 239,677 699.343 573,279 777,153 296,450 Total charity funds 1,518.580 1,313,280 These accounts have been prepared in accordan with the special provisions applicable to companies subject to the small companies, regime. Approved by the trustees on 18 March 2024 and signed on their behalf by Clzkistli18 M8JSOII C Megson, Chair of Trustees 23
The Difference Education Ltd Statomgnt of cash flows For the ear ended 31 Au ust 2023 2023 2022 Cash used in operating activities: Nel movement in funds 205,300 58,470 Adjuslmenls for". Ilncreasel I decrease in debtors IDecreasel l increase in creditors 12,4361 28,632 225,965 37,106 Net Cash provided by operating activities 174.232 321,541 Increase in cash and cash equivalents in the year 174.232 321,541 Cash and cash equivalents at the beginning of the year 1383.080 1,061,539 Cash and cash equlvalents at the end of the year 1,557,312 1,383,080 The charity has not provided an analysis of changes in nel debt as il does not have any long temi financing arrangements. 24
The Difference Education Ltd Notes to the financial statements For the ear 9nded 31 Au ust 2023 Accounting policies a) Basis of preparation The financial statements have been prepared in accordance with Accounting and Reporting by Charities". Slalement of Recommended Practice applicable to charities in preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland IFRS 1021 (effective 1 January 20191- (Charities SORP IFRS 10211, the Financial Reporting Standard applicable in the UK and Republic of Ireland IFRS 1021 and the Companies Act 2006. The Difference Education Ltd meets the definition of a public benefit entity under FRS 102. Assets and liabilities are initially recognised al historical cost or transaction value unless otherwise staled in the relevant accounting policy note. b) Going concern basis of accounting The accounts have been prepared on the assumption that the charity is able to continue as a going concem, which the Iruslees consider appropriate having regard lo the current level of unrestricted reserves. There are no material uncertainb'es about the charity's ability to continue as a going cOnM. c) Income All income is included in the statement of financial activities when entillemenl has passed to the charity, il is probable that the economic benefits associated with the transaction wll flow to the charity and the amount can be reliably measured. The following specific policies are applied to particular categories of income.. Income from donations or grants is recognised when there is evidence of entillemenl to the gift, receipt is probable and ils amount can be measured reliably. Income from the supply of services is recognised wth the delivery of the servi. Where the grant does not impose specified future performance-relaled conditions on the recipient, il is recognised in income when the grant proceeds are received or receivable. Where the grant does impose specified future performance-related conditions on the recipient, it is recognised in income only when the performance-relaled conditions have been mel. Where grants received are prior to satisfying the revenue recognition criteria, they are recognised as a d) Donated services and facilitie5 Income from donated goods is measured al the fair value of the goods unless this is impractlC81 to measure reliably, in which case the value is derived from the cost lo the donor or the estimated resale value. Donated facilities and services are recognised in the accounts when received If the value can be reliably measured. In accordance with the Charities SORP IFRS 1021, no amounts are included for the contribution of general volunteers. 25
The Difference Education Ltd Notes to the financial statements For the ear 9nded 31 Au ust 2023 Accounting policies (continued) e) Interest receivable Interest on funds held on deposit is included when re1vable and the amount can be measured reliably by the charity". this is normally upon notification of the interest paid or payable by the bank. fj Funds accounting Unrestricted funds are available for use al the discretion of the trustees to further any of the charity's purposes. Designated funds are unrestricted funds earmarked by the trustees for a particular future project or commitment. Restricted funds are subjected lo reslriclions on their expenditure declared by the donor or through the tems of an appeal, and fall into one of two sub-classes." restricted income funds or endowment funds. gl Expenditure and irreeoverable VAT Expenditure is recognised on an accruals basis as a liability is incurred. Expenditure includes any VAT which cannot be fully recovered, and is classified under headings of the statement of financial activities to which it relates.. Expenditure on raising funds includes the costs of all fundraising activities, events, non- charitable trading aclivilies, and the sale of donated g(iods. Expenditure on charitable activities includes all costs incurred by a Charity in undertaking activities that further its charitable aims for the benefit of ils beneficiaries, including those support costs and costs relating to the governance of the charity apportioned to charitable activities. Other expenditure includes all expenditure that is neither related to raising funds for the charity nor part of ils expenditure on charitable aclivilies. All costs, including overhead support costs, are allocated to expenditure categories reflecting the use of the resource. Staff costs are allocated beeen charitable aclivilies, fundraising and support based upon the proportion of time spent on each activity. h) Allocation of support and governance costs Support costs are those functions that assist the wort( of the charity but do not directly undertake ch8ri18ble acb'vilies. Governance costs are the costs associated with the governance arrangements of the charity, including the costs of complying with constitutional and slatulory requirements and any costs associated with the strategic management of the charity's activities. These costs have been allocated between cost of raising fLJnds and expenditure on charitable activities based on the proportion of staff cost as follows.. 2023 2022 Raising funds Charitable activities 8.40/0 89.7.1 26
The Difference Education Ltd Notes to the financial statements For the ear 9nded 31 Au ust 2023 Accounting policies (continued) i) Debtors Trade and other debtors with no staled interest rale and due within one year are recorded al the amount of the cash or other consideration expected to be received. Prepayments are valued at the amount paid. j) Cash at bank and in hand Cash at bank and cash in hand includes cash and short term highly liquid investments with a short maturity of three months or less from the date of acquisition or opening of the deposit or similar account. k) Creditors Liabilities are reC(niSed when there is an obligation al the balance sheet date as a result of a past event, it is probable that a transfer of economic benefit will be required in settlement, and the amount of the setuement Can be estimated reliably. Liabilities are recognised 8t the amount that the charity anlicipales il will pay to sellle the debt or the amount it has received as advanced payments for the goods or services it musl provide. l) Conduit funding Conduit funds are monies received for third parties and do not belong lo the charity. The incoming funds and outgoing payments are excluded from the Statement of Financial Activities. Any conduit funds in hand at the year end are shown as Creditors in the accounts. m) Flnanclal Instruments A financial asset or a financial liability is recognised only when the entity becomes a paty lo the contractual provisions of the instrument. The charitable company only has financi818ssets and financial liabilities of a kind that qualify as basic financial inslrumenls. Basic financial instruments are initially recognised al the amount receivable or payable including any related transaction costs, unless the arrangement conslitules a financing transaction, where it is recognised al the present value of the future payments discounted al a market rate of interest for a similar debt inslrumenl. Current assets and current liabilities are subsequently measured at the cash or other consideration expected to be paid or received and not discounted. n) Pension costs Contributions lo defined contribution plans are recognised as an expense in the period in which the related service is provided. Prepaid contributions are recognised as an asset lo the extent that the prepayment wll lead to a reduction in future payments or a cash refund. o) Accountlng estlmates and key Judgements In the application of the charity's accounting policies, the Iruslees are required lo make judgements, eslimales and assumptions about the carrying values of assets and liabilities that are not readily apparent from other sources. The eslimales and underlying assumptions are based on historical experience and other factors that are considered lo be relevant. Actual results may differ from these estimates. 27
The Difference Education Ltd Notes to the financial statements For the ear 9nded 31 Au ust 2023 Accounting poli¢ie$ l¢ontinued} o) Accounting estimates and key judgements Icontinuedl The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. There are no key sources of eslimalion uncertainly that have a significant effect on the amounts recognised in the financial statements. Prior period comparatives: statement of financial activities 2022 Total Restricted Unreslricled Ineome from.. Donations Charitable activities 338,600 586,946 201,067 925,546 201,067 Total Income 338,600 788,013 1,126,613 Expenditure on: Raising funds Charitsble activities 76,967 864,326 76,967 991,176 126,850 Total expenditure 126,850 941,293 1,068,143 Net income I lexpenditurel and net movement in funds 211,750 153,280 58,470 Income from donations 2023 Total Restricted Unreslricled Donations Trusts and foundations 3,000 822,741 3.000 1,252.506 429,765 Total income from donations 429,765 825,741 1.255,506 28
The Difference Education Ltd Notes to the financial statements For the ear ended 31 Au ust 2023 Income from donations Icontinued} Prior period comparative: 2022 Total Restricted Unreslricled Donations Trusts and foundations 1,950 584,996 1,950 923,596 338,600 Total income from donations 338,600 586,946 925,546 Income from charitsble activities 2023 Total 2022 Total Restricted Unrestricted Inclusive Leadership Course The Difference Leadership Programme Consultancy and research Other 175,525 30,000 29,446 1 5,228 175,525 30,000 29,446 15,228 143,500 15,000 37,401 5,166 Total income from charitablo activities 250, 199 250,199 201,067 Al income from charitable activities in the prior year was unrestricted. 29
The Difference Education Ltd Notes to the financial statements For the ear 9nded 31 Au ust 2023 Total expenditure Support and Raising Charitable govemance funds activities costs 2023 Total Staff costs (note 71 Freelance staff costs Pwramme delivery costs- DLP and ILC Research, Impact and Influencing Office and equipment Fundraising Recruitment Staff support Back office costs Other operating expenses Travel expenses 73,930 645,974 183,367 4,143 903,271 4,143 164,169 49,786 57,435 1,138 54,639 8,985 36,711 4,261 15,867 164,169 49,786 57,435 1,138 54,639 8,985 36,711 4,261 15,867 Sub-total 75,068 859,929 365,408 1.300,405 Allocation of support and governance costs 37,637 327,771 365,408 Total expenditure 112.705 1.187.700 1.300,405 Total governance costs were £9,20912022.. £8,235). Prior period comparative Support and Raising Charitable governance funds activities costs 2022 Total Staff costs (note 71 Freelance staff costs Pr(raMMe delivery costs- DLP and ILC Research, Impact and Influencing Reconnect London Office and equipment Fundraising Recruitment Staff support Back office costs Other operating expenses Travel expenses 59,912 649,348 22,486 154,210 16,899 2,400 33,504 19,702 742,764 42,188 154,210 16,899 2,400 55,066 3,682 5,258 7,466 29,622 3,837 4,751 55,066 3,682 5,258 7,466 29,622 3,837 4,751 Sub-total 63,594 845,343 159,206 1,068,143 Alocation of support and governance eosts 13,373 145,833 159,206 Total exponditure 76,967 991,176 1,068,143 30
The Difference Education Ltd Notes to the financial statements For thg ear gndod 31 Au ust 2023 6. Net movement in funds This is staled after charging.. 2023 2022 Trustees, remuneration Trustees, reimbursed expenses Trustee aggregate donations Operating lease payments Auditors. remuneration Stalulory audit (excluding VATI Other services (excluding VATI 376 1,000 18,660 15,550 7,200 350 5,950 1,083 During the year 3 trustees12022". 01 were reimbursed for travel and subsistence eosts. 7. Staff costs and numbers staff costs were as follows.. 2023 2022 Salaries and wages Social security costs Pension costs 776,724 80,411 46,136 639,353 65,090 38,321 903,271 742,764 The key management personnel of the charitable company comprise the Trustees, Chief Executive Officer, Programme Director, Managing Director, Director of Research, Impact & Influence and Director of Operations & Strategy 12022.. Trustees, Chief Executive Officer, Programme Director and the Managing Direclorl. The total employee benefits of the key management personnel were £285,323 12022.. £231,283). 2023 No. 2022 No. Average head count 16.10 13.50 The number of employees whose remuneration for the year fell within the following bands were.. 2023 No. 2022 No. £60,000 10 £69,999 £70,000 10 £79,999 31
The Difference Education Ltd Notes to the financial statements For thg ear gndod 31 Au ust 2023 8. Taxation The charity is exempt from corporation tax as all ils income is charitable and is applied for ch8ri18ble purposes. 9. Debtors 2023 2022 Trade debtors Prepayments and accrued income 31,508 36,863 37,800 28,135 68,371 65,935 10. Creditors '. amounts due within 1 year 2023 2022 Trade creditors Accruals Other taxation and social security Deferred income (see note 111 15,872 39,202 30,228 21,801 5,070 28,713 20,952 81,000 107,103 135,735 11. Deferred income 2023 2022 At 1 September 2022 Deferred during the year Released during the year 81,000 21,801 81,000 39,000 81,000 39,000 At 31 August 2023 21,801 81,000 Deferred income relates lo fees reiVed for the Inclusive Leadership Programme, The Difference Leadership Programme and the IncludED conference in respect of the academic year commencing September 2023. 32
The Difference Education Ltd Notes to the financial statements For thg ear gndod 31 Au ust 2023 12. Analysis of net assets between funds Restricted funds Designated funds Gener81 funds Total funds Current assets Current liabilities 247,568 1,610 699,343 678,772 105,493 1.625.683 107,103 Net assets at 31 August 2023 245.958 699.343 573,279 1.518.580 Prlor perlod comparatlve Restricted funds Designated funds General funds Total funds Current assets Current liabilities 246,677 7,000 777,153 425,185 128,735 1,449,015 135,735 Nel assets al 31 August 2022 239,677 777,153 296,450 1,313,280 33
The Difference Education Ltd Notes to the financial statements Forthe ear ended 31 Au u$t 2023 13. Movements in funds A11 September 2022 Transfers between At 31 August funds 2023 Income Expenditure Restricted funds Bridges Impact Foundation Fidelity UK Foundation Garfield Weston Mission 44 Reconnect London Wates Family Enterprise Trust 40,000 94,375 75.000 120,390 19,8351 198,2251 195,0341 1120,3901 30,165 72,800 42,466 76,650 62,500 25,527 75,000 25,527 75,000 100,000 100,000 Total restricted funds 239,677 429,765 423,484 245,958 Unrestricted funds Designated funds.. Programme Delivery 777,153 77,810 699,343 Total designated funds 777,153 77,810 699,343 General funds 296,450 1,075,940 799,111 573,279 Total unrestricted funds 1,073,603 1,075,940 876,921 1,272,622 Total funds 1,313,280 1,505,705 1,300,405 1.518.580 Purposes of restricted funds Bridges Impact Foundation The Bridges Impa¢l Foundation grant was offered to fund the expansion of The Difference Leadership Programme, as well as the charity's strategy and impact measurement work. Fidelity UK Foundation The Fidelity UK Foundation grant was tsffered to fund the development of a new CRM system and scaling the Inclusive Leadership Course. Garfield Weston Funding for dèlivering The Difference Leadership Programme. Mlsslon 44 Funding for delivering The Difference Leadership Programme. Reconnect London The Reconnect London fund is monies received from Trusts towards the costs of a teachers, COVID response project. 34
The Difference Education Ltd Notes to the financial statements Forthe ear ended 31 Au u$t 2023 13. Movements in funds leontinued) Purposes of restricted funds Icontinuedl Wates Family Enterprise Trust The Wales Family Enterprise Trust grant was funding for work that will support The Differen in implementing a new 5 year strategy. Purposes of designated funds Programme delivery Programme delivery fund holds funds for the delivery of The Difference Leadership Programme. This is equivalent to the costs associated with delivery of The Difference Leadership Programme for the cohorts currently on the programme. Prior period comparative A11 September 2021 Transfers beeen Al 31 August funds 2022 Income Expenditure Restricted funds Bridges Impact Foundation Fidelity UK Foundation Garfield Weston Mission 44 Reconnect London Talbol Village Trust Wates Family Enterprise Trust 30,000 95,500 75,000 28,100 130,0001 118,8501 112,5001 128, 1001 12,4001 110,0001 25,000 76,650 62,500 27,927 25,527 10,000 100,000 75,000 Total restricted funds 27,927 338,600 126,850 239,677 Unrestricted funds Designated funds.. Programme delivery 846,900 69,747 777,153 Total designated funds 846,900 69,747 777,153 General funds 379,983 788,013 941,293 69,747 296,450 Total unrestricted funds 1,226,883 788,013 941,293 1,073,603 Total funds 1,254,810 1,126,613 1,068,143 1,313,280 35
The Difference Education Ltd Notes to the financial statements Forthe ear ended 31 Au u$t 2023 14. Operating lease commitments The charity had operating leases al the year end with total future minimum lease payments as follows.. 2023 2022 Amount falling due.. Wi'thin 1 year Within 1 5 years 6,220 7,775 6,220 7,775 15. Conduit funding 2023 2022 Balan at start of year Funding received during year Funding distributed during year Retained as administration fee 15,000 113,5001 1,500 Conduit funds are monies received for third parties and do not belong to the charity. The charity passes them through the accounts as a Servi lo other charities to help the charitable purposes, bul does not claim Gift Aid nor has control over their use. The reTripts and payments referred to above have been excluded from the Statement of Financial Activities. Conduit funding was held on behalf of The Re- engagement Project. 16. Related party transactions There were no related party transactions in the current or prior period. 36