OpenCharities

This text was generated using OCR and may contain errors. Check the original PDF to see the document submitted to the regulator.

2021-03-31-accounts

The Royal Institute of International Affairs

Annual Report and Financial statements

31 March 2021

Charity Registration Number 208223

Contents

Reports
Reference and administrative information 1
Report of the Council 3
Independent auditor’s report 23
Financial statements
Consolidated statement of financial
activities 28
Balance sheets 29
Consolidated statement of cash flows 30
Principal accounting policies 31
Notes to the financial statements 36

The Royal Institute of International Affairs

References and administrative details

Status The organisation is a Royal Institute, established by Royal Charter on 16 July 1926 and registered as a charity on 22 September 1962. Principal Trustees Lord Jim O’Neill (Chair) Sir Simon Fraser (Deputy Chair) John Berriman (Honorary Treasurer) See page 4 for a full list of trustees Senior Executives Dr Robin Niblett (Director and Chief Executive) Dr Renata Dwan (Deputy Director and Senior Executive Officer) Stephen Martin (Managing Director, Finance and Executive Office) Caroline Usher (Managing Director, External Relations and Executive Officer) Registered office and Chatham House operational address 10 St James’s Square London SW1Y 4LE Website www.chathamhouse.org Charity registration number 208223 Auditor Buzzacott LLP 130 Wood Street London EC2V 6DL Banker Lloyds Bank plc 39 Piccadilly London W1V 0AA Solicitor Stone King LLP 91 Charterhouse Street London EC1M 6HR

The Royal Institute of International Affairs 1

References and administrative details

Investment managers Cazenove Capital Management 12 Moorgate London EC2R 6DA Vanguard Asset Management Limited The Walbrook Building 25 Walbrook London EC4N 8AF

The Royal Institute of International Affairs 2

Report to the Council Year to 31 March 2021

The Royal Institute of International Affairs is also known as Chatham House (the “Institute” or the “Charity”).

These financial statements consolidate the financial statements of Chatham House with those of its wholly owned subsidiary, Chatham House Enterprises Limited (together, referred to as the “group”).

Report of the Council

This Report of the Council has been prepared for statutory purposes. A fuller description of the Institute’s activities for the year can be found in the Chatham House Impact Review (formerly Annual Review), obtainable from the Chatham House website: www.chathamhouse.org.

The financial statements have been prepared in accordance with the accounting policies set out on pages 31 to 35. The Council has authorised the Chairman and Honorary Treasurer to sign the financial statements on its behalf.32

Objectives

The objectives for which Chatham House is established are:

Chatham House seeks and receives funding from its membership and a diverse set of private and government sources and by utilising its investment income.

The Royal Institute of International Affairs 3

Report to the Council Year to 31 March 2021

Members of the Council

Members of the Council (who are also trustees of the Royal Institute of International Affairs for the purposes of charity law) who served during the year and up to the date of this report were:

Members of the Council Dr Mimi Ajibadé Heide Baumann John Berriman (Honorary Treasurer) Catherine Brown Retired 29 July 2020 Ann Cormack Kenneth Cukier Sir Simon Fraser (Deputy Chairman) Kathleen Gibbons Jawad Iqbal Retired 29 July 2020 Anita Lowenstein Dent Lord Jim O’Neill (Chairman) Andrew Payne Lapo Pistelli Retired 29 July 2020 Mark Spelman Retired 29 July 2020 Timothy Willasey-Wilsey Jasmine Zerinini

The Senior Executives of Chatham House at the date this report was signed were:

Structure, Governance and Management

Responsibilities of the Council

The Royal Charter and Bye-laws of Chatham House, its incorporating document, lay down the powers and authorities of the Council.

The Council is responsible for agreeing the annual Strategic Plan as well as the Financial and Business Plan and the annual budget and for monitoring performance of Chatham House against those plans. The Council is also responsible for accepting the auditor’s report and recommendations and agreeing the annual report and financial statements, on the recommendation of the Finance Committee.

The Royal Institute of International Affairs 4

Report to the Council Year to 31 March 2021

Structure, Governance and Management (continued)

The Council members, who are trustees under charity law, are required to prepare financial statements for each financial year which give a true and fair view of the state of affairs of the group and the Institute at the balance sheet date and of the group’s income and expenditure for that period.

In preparing those financial statements Council is required to:

The Council members are responsible for keeping adequate accounting records that are sufficient to show and explain the group and the Institute’s transactions and disclose with reasonable accuracy at any time the financial position of the group and the Institute and to enable them to ensure that the financial statements comply with the Charities Act 2011, the Charity (Accounts and Reports) Regulations 2008, and the Chatham House Charter and Byelaws. The Council is also responsible for safeguarding the assets of the group and the Institute and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Council is responsible for the maintenance and integrity of the financial information on the Institute’s website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions.

The members of the Council confirm that as far as they are aware, there is no relevant audit information of which the group and the Institute’s auditor is unaware. They have taken all the steps that they ought to have taken as Council members in order to make themselves aware of any relevant audit information and to establish that the group and the Institute’s auditor is aware of that information.

All executive responsibilities rest with the Director and Chief Executive and the Executive Leadership Team (ELT) of Chatham House.

The Royal Institute of International Affairs 5

Report to the Council Year to 31 March 2021

Structure, Governance and Management (continued)

Appointment of Council members

The Council is elected from members of Chatham House and consists of between 10 and 20 Council members. Nominations for election are reviewed by the Nominations Committee and if the number of nominations exceeds the number of vacancies, a ballot is held. The Council may also co-opt up to five additional members each year. The Honorary Treasurer is a member of Council ex-officio. Elected members of the Council retire at the third AGM after the AGM at which they were elected and can stand for a further three-year term after which they must stand down. Co-opted members of the Council initially serve until the second AGM following their co-option and may be co-opted again by the Council for successive terms of one year.

Induction and training of Council members

Newly appointed Council members, whether elected or co-opted, are provided with an induction pack, which includes the Charter and Bye-laws, the Charity Commission’s guide to responsibilities of trustees (‘The Essential Trustee (CC3)’), terms of reference and the latest minutes of the Council and its sub-committees as well as the most recent annual report and financial statements.

In addition, annual briefing sessions on Chatham House finances are held by the Managing Director, Finance and Executive Officer on behalf of the Honorary Treasurer, to which all Council members are invited. A copy of the Charities SORP (FRS 102) which contains the requirements governing the financial statements of charities is made available to all Council members. Council members also have open access to the Director and Chief Executive, the Secretary to the Council and other senior staff for advice and information.

Responsibilities of staff

The Director and Chief Executive of Chatham House is appointed by the Council and has full executive authority for the management of Chatham House and its staff, as well as devising and recommending to Council suitable strategies and policies and implementing the plans and budgets approved by the Council.

Governance arrangements

The Council has delegated specific responsibilities to five Council Committees: the Finance Committee, the Investment Committee, the Nominations Committee, the Next Generation Committee, and the Research Committee. The Council disbanded the Executive Committee in June 2020 and assumed its responsibilities. The Council members receive copies of all committee minutes, and reports from the chairs of each committee. The terms of reference for all committees are established and agreed by the Council, which also periodically reviews them.

The Royal Institute of International Affairs 6

Report to the Council Year to 31 March 2021

Structure, Governance and Management (continued)

Governance arrangements (continued)

Selected members of Council serve on each of the Committees together with those members co-opted by Council. Co-opted members are appointed principally to enhance the diversity of thought, skills and experience on Council and its Committees. The co-opted members who served during the year were:

The Finance Committee is responsible for maintaining oversight of all the Institute’s financial activities which includes the review of the Risk Register, and for advising the Council generally on the Institute’s finances.

The Investment Committee is responsible for the investment of all monetary assets of the Institute within the powers laid down in the Charter and Bye-laws and in accordance with the investment policy approved by the Council and designed to further the long term objectives of the Institute.

The Nominations Committee is responsible for considering all valid nominations put forward for election to the Council and for co-option to the Council or its Committees.

The Next Generation Committee is responsible for maintaining oversight of the Institute’s Next Generation Strategy, in line with the Institute’s commitment to reach younger and more diverse audiences as part of its broader mission, vision and strategic plan.

The Research Committee is responsible for maintaining oversight of the Institute’s research activities, and for advising the Council generally on the Institute’s research.

Remuneration policy for key management personnel

The Director and Chief Executive and other directors who comprise the Executive Leadership Team (ELT) are responsible for managing the day-to-day operations of Chatham House. The remuneration of the Director is set by the Chairman in consultation with the Deputy Chairman and Honorary Treasurer. The remuneration of the other directors is set by the Director and is reviewed by Council. All such remuneration is normally increased in accordance with the cost of living increase awarded to Chatham House staff. In view of the nature of the activities of Chatham House, annual remuneration is usually benchmarked against pay levels in other equivalent organisations in the public and not-for-profit sectors, with account being taken of any special responsibilities (see note 5 for further details of key management personnel remuneration).

The Royal Institute of International Affairs 7

Report to the Council Year to 31 March 2021

Structure, Governance and Management (continued)

Remuneration policy for key management personnel (continued)

No Council members received any payments during the year for services provided to Chatham House (2020 - no Council members received payments).

Chatham House Enterprises Limited

Chatham House Enterprises Limited is a wholly-owned trading subsidiary of the Institute. Its results are consolidated within the group financial statements (see note 9 for further details).

Chatham House Foundation

The Chatham House Foundation (CHF) is a US 501 (c) (3) tax-exempt charity founded in the United States in 1982 with its own board of trustees. Under its Bye-laws, it is permitted to make grants to other organisations for charitable, scientific, literary, or educational purposes. The Foundation seeks to bring to a U.S. audience the type of rigorous analysis, independent speakers, and members’ events developed by Chatham House.

Auditor

Buzzacott LLP was re-appointed at the last AGM. Buzzacott has expressed its willingness to continue in that capacity and will be seeking re-election at the AGM on 20 July 2021.

Objectives and Activities

Objective 1

To conduct independent research and analysis on prominent topical issues in international affairs and to disseminate the output as widely as possible with a leading presence in the media.

This is conducted through the different research programmes at Chatham House focusing on both regions and themes, with the output published as books, Chatham House Reports, Briefings, Expert Comments, working papers and meeting summaries, articles in journals and in other outlets including on digital platforms and social media channels. In addition, the Communications Department promotes Chatham House’s output in the media, to policy makers and other relevant constituencies and to the general public via an extensive range of online mediums.

Objective 2

To provide an independent, accessible platform for debate on international affairs.

This is achieved by giving the Institute’s diverse membership access to regular open access events involving expert speakers and to a wide range of publications on international affairs. Members can join Chatham House as individuals, corporate nominees and associate members. Chatham House also provides open access to its publications for those who are interested via its website.

The Royal Institute of International Affairs 8

Report to the Council Year to 31 March 2021

Objectives and Activities (continued)

Objective 3

To help set the agenda and shape policy by encouraging new ideas and forward thinking in international affairs.

This is promoted through seminars, discussion and study groups, and conferences – sometimes held under the Chatham House Rule – often leading to Chatham House publications whose conclusions are disseminated actively to policy communities in the UK and internationally.

Objective 4

To expand our membership and develop an international network that will contribute to all these objectives.

The Chatham House External Relations Department continues to focus on expanding our membership and its international networks, supported by the strength of Chatham House’s reputation and the quality of its output.

Objective 5

To sustain Chatham House on a sound financial basis through careful stewardship of its sources of income and expenditure commitments .

This is achieved through securing membership income, other discretionary income streams including conferences and publications, government grants, application to trusts, foundations and corporate sponsors for research, and through tight control of costs. In addition, funding is being sought through endowments and major gifts to fund research and future capital investment.

Objective 6

To provide a high quality, courteous and efficient service to all our members, visitors, supporters and the media.

As a membership organisation, Chatham House seeks to achieve this through regular review of the benefits available to members as well as the facilities offered to all those who visit the Institute.

Public Benefit

Council has considered the Charity Commission’s guidance on public benefit when overseeing the planning of the activities of the Institute and has taken legal advice on its position. This advice has confirmed that the Institute’s activities provide a clear public benefit.

The Royal Institute of International Affairs 9

Report to the Council Year to 31 March 2021

Public Benefit (continued)

There are clear identifiable benefits from the dissemination of the Institute’s research papers, books, articles and online information to Chatham House members, the media, and the general public. The dissemination of these outputs is measured by the collation of statistics, for example on the number of downloads of a particular report / briefing paper, by whom, as well as the number of unique page views and media coverage and engagement.

There are benefits to the general public in the UK and the broader international community from the debates that the Institute hosts on international affairs and the contribution that it makes towards setting the agenda and informing policy. These are shown by the participation in its events and conferences by several national and world leaders, government officials, and representatives from civil society, academia, the media and the corporate sector.

All the benefits are related to the Institute’s aims and objectives. The Council does not consider that there is any detriment or harm arising from the Institute’s activities that would offset the benefits provided by the Institute. Care is taken to retain balance and political neutrality in relation to the Institute’s activities and output, in accordance with the Charity Commission’s regulatory advice to charitable think tanks, issued in December 2018. The Institute is a membership organisation open to all those with an interest in the Institute’s work ranging from individuals to academic institutions, government organisations, embassies, high commissions, NGOs, the media, and national and multi-national businesses. The membership contributes to, and is an integral part of, the activities of the Institute and the dissemination of its output, and hence is appropriate to the aims of the Institute. The beneficiaries of the Institute’s activities are also the general public, as most of the Institute’s output is freely available and in the public domain. Council considers that any private benefits that may arise for sections of the membership are incidental to the main activities of the Institute.

The Institute has continued to deliver public benefit through its substantial programme of virtual activities despite the restrictions on public gatherings imposed by the UK Government due to the Coronavirus (COVID-19) outbreak. These activities are detailed throughout this report.

At the end of the period, the Institute was monitoring the roll-out of the UK Government’s roadmap for easing restrictions and considering in what conditions the Institute could resume in-person events later in 2021 while noting that, until it is safe and lawful to do so, it would continue to run only virtual activities.

Fundraising

Chatham House is registered with the Fundraising Regulator and reports compliance on an annual basis. Chatham House employs a professional fundraising team who maintain a high standard of ethical fundraising and whose systems and practices are kept under continual review. It does not use the services of any third-party organisation to help in its fundraising activities. No complaints were received about its fundraising activities during the year. In the event of a complaint being received, these are handled by a senior member of staff, usually a Director.

The Royal Institute of International Affairs 10

Report to the Council Year to 31 March 2021

Achievements and Performance 2020/21 - Benchmarks

Objective Measurement Target Achievement
Research and Analysis Research projects 45 39*

Dissemination
Publications		 55 59**
WebsiteHits >3,100,000 >3,416,000
Media
and
Online		 >30,000 36,000
Debate Conferences / Events
180
239

* multi-year projects of over 18 months in length which provide an improved measure of analysis and impact.

** substantive publications rather than just short articles / meeting summaries

The Royal Institute of International Affairs 11

Report to the Council Year to 31 March 2021

Achievements and Performance – Events and Conferences

Key Chatham House events held in the year included speaking engagements by, in chronological order: Liu Xiaoming, then Ambassador of China to the UK; HE George Vella, President, Republic of Malta; Lisa Nandy MP, UK Shadow Foreign Secretary; Rt Hon Lord Hammond of Runnymede; UK Chancellor of the Exchequer (2016-19); UK Foreign Secretary 2014-2016; Gordon Brown, UK Prime Minister (2007-10); UK Chancellor of the Exchequer 1997-2007; Luis Almagro , Secretary General, Organization of American States; Foreign Minister, Uruguay (2010-15); Janet Napolitano, US Secretary of Homeland Security (200913); David Lidington, Minister for the Cabinet Office and Chancellor of the Duchy of Lancaster (2018-19); Tony Blair, Executive Chairman, Institute for Global Change,UK Prime Minister (1997-07); Lord Peter Ricketts, National Security Adviser, UK (2010-12); Ambassador of UK to France (2012-16); Strategic Adviser, Lockheed Martin; Laurence Tubiana, CEO, European Climate Foundation. Mary Robinson, President of Ireland (1990-97); Ellen Johnson Sirleaf, President of Liberia (2006-2013); Ambassador Robert Lighthizer, then US Trade Representative; Lord Darling, UK Chancellor of the Exchequer (2007-2010); Ban Ki-Moon, Secretary General of the UN (2007-16); HE Nyeleti Mondlane, Minister of Gender, Mozambique; HE Nomatemba Tambo, South African High Commissioner to the UK; Melanie Kenderdine, US Department of Energy (2013-17); Dr Norbert Röttgen, Chairman, Bundestag Foreign Affairs Committee; candidate for the CDU Party Leadership, Germany; Carl Bildt, Prime Minister of Sweden (1991-94); H.E. Andreas Michaelis, newly appointed German Ambassador to the UK; Sir Peter Westmacott, former UK Ambassador to the US; Robert Zoellick, former US Trade Representative and President of the World Bank; Mark Landler, London Bureau Chief , New York Times ; Andriy Yermak, Head of Office of the President of Ukraine; Fionnuala Ni Aolain, U.N. Special Rapporteur on the Promotion and Protection of Human Rights; Sir Mark Sedwill, UK Cabinet Secretary (2018-20); Lord Kim Darroch, Former UK Ambassador to the US); Prince Faisal Bin Farhan, Minister of Foreign Affairs of Saudi Arabia; Helen Clark, Prime Minister of New Zealand (1999-2008); Kurt Campbell, Former US Assistant Secretary of State for East Asia Affairs; Chairman of The Asia Group; Kevin Rudd, Prime Minister of Australia (2007-10; June – Sept 2013); Farnaz Fassihi, journalist, New York Times; Rachel Kyte, Dean, Fletcher School, Tufts University, former UN climate envoy; Nigel Topping, COP26 High Level Champion; Greg Myre, National Security Correspondent, NPR; Catherine Mann, Global Chief Economist, Citi; Anwar Gargash, Minister of State for Foreign Affairs, United Arab Emirates; Shyam Saran, Former Indian Foreign Secretary ; Manuel Rapnouil, Director of Policy Planning , French Ministry of Foreign Affairs; Rob Malley, President, Crisis Group (now United States Special Representative for Iran); Michał Kurtyka, Polish Minister of Climate and Environment; Dr John Murton, UK COP26 Envoy; Rt Hon Matt Hancock MP, UK Secretary of State for Health; Jens Stoltenberg, NATO Secretary-General; Patrick Jenkins, Deputy Editor, Financial Times; Catherine McGuinness, City of London Corporation; Julian David, techUK; Ulf Pehrsson, VP, Head of Government and Industry Relations, Ericsson; Jeremy Fleming, Director of GCHQ; General Sir Patrick Sanders, Commander of UK Strategic Command.

The Royal Institute of International Affairs 12

Report to the Council Year to 31 March 2021

Achievements and Performance – Events and Conferences (continued)

The Covid Pandemic Series hosted special guest speakers including Dr Richard Horton, Editor in Chief, The Lancet ; Sir Jeremy Farrar, Director, Wellcome Trust; Prof Azra Ghani, Chair of Infectious Diseases and Epidemiology, Imperial College; Dr Mike Ryan, Executive Director, WHO Global Health Emergencies; Dr Thorolfur Gudnason, Chief Epidemiologist of Iceland; and Dr Anthony Fauci, Director, US National Institute of Allergy and Infectious Diseases (NIAID).

With the election of a new Director General of the World Trade Organization in 2020, Chatham House hosted the eight candidates for the post in a special series of webinars for Members.

The Future of Liberal Democracies Series was developed in cooperation with the former UK Foreign Secretary, the Rt Hon Jeremy Hunt MP and draws on the participation of former British foreign secretaries and high-level political officials alongside their counterparts from liberal democracies around the world. The series will run through 2021. Speakers thus far this year have included former Prime Minister Tony Blair, Dr Henry Kissinger, Chair, Kissinger Associates Inc.; Margot Wallstrom, Minister for Foreign Affairs, Sweden (2014-19); Hillary Clinton, former US Secretary of State; Lord Hague, former UK Foreign Secretary.

The 2020 Chatham House Prize was awarded to Malawi’s constitutional court judges in recognition of their ‘courage and independence in the defence of democracy’. At a time when standards of democratic governance are under threat not only in some African countries but in many other parts of the world, the judges set an example for their peers across the world by upholding the centrality of the rule of law and separation of powers.

Key Chatham House conferences held through the Institute’s virtual platform during the year included:

The Royal Institute of International Affairs 13

Report to the Council Year to 31 March 2021

Achievements and Performance – Events and conferences (continued)

Note: Conferences originally scheduled to take place in Spring 2020 were either cancelled or postponed due to the pandemic and closure of the building.

Achievements and Performance – Research and publications

Chatham House undertook several important projects and initiatives during the year on a range of topical subjects. These included research on: food system impacts on biodiversity loss; Britain’s role in the world; NATO and the Treaty on the Prohibition of Nuclear Weapons; Chinese investment in Sri Lanka and on how recipient countries shape China’s Belt and Road Initiative; understanding US policy in Somalia; the future of the E3; the future of democracy in Europe; Egypt and the Gulf; US foreign policy priorities; assessing control and power dynamics in Syria; cultural revival and social transformation in Ukraine; and mining’s impact on forests.

Chatham House has communicated the conclusions of its major research projects to key policy and opinion-forming stakeholders. Regular reports show the number of views and downloads for all key publications and relevant content on the website, such as expert comments, audio and video. Detailed analyses of these downloads show, for example, which international governments, corporate members, universities/academic members, media and other non-governmental organisations are accessing Chatham House output. In addition, the number of unique page-views and the average time on the page are also measured for each publication in each research area. This information, along with data from our social media and other platforms as well as coverage in the media, helps provide a measure of the impact of the research output not only for Chatham House but also for the funders of the project. Impact reports are produced in many formats including under four categories: outreach (reaching target audiences), engagement (with policymakers or target stakeholders), influence (research outputs or activities contribute to policy-making) and implementation (recommendations have been or will be implemented).

The top 3 Downloaded Research Publications published in 2020/21 were:

The Royal Institute of International Affairs 14

Report to the Council Year to 31 March 2021

Achievements and Performance – Research and Publications (continued)

All published research papers and reports continue to be made freely available for online download to all visitors to the Chatham House website. There was a total of just over 3.4 million sessions on the website in 2020/21 – an increase of 10% on 2019/20. The Online Reader (provided as an alternative to downloading pdfs) increasingly provides support on multi-language publications, and over the past year has continued to gain in popularity.

Research, analysis and commentary are also disseminated via Chatham House’s academic journal International Affairs and its magazine The World Today, both of which are published six times per year, and the Cyber Policy Journal, published three times a year. Chatham House also creates and produces significant amounts of content for social media platforms and their audiences, including for LinkedIn, Twitter, Facebook and Instagram. These areas continue to grow as part of the Institute’s drive to improve the range and diversity of its audience.

Plans for Future Periods

Plans for Future Periods
Objective Measurement Target 2021/22
Research and Analysis Researchprojects 40*
Dissemination Publications 58**
Website Hits > 3,500,000
Media and Online Mentions >30,000
Debate Conferences / Events 180

* multi-year projects of over 18 months in length which provide an improved measure of analysis and impact.

Research and convening

Chatham House continues to deliver consistent standards of excellence and capacity for influence across its research. It is in the process of undertaking a small number of significant, cross-Institute projects which were initiated to coincide with the start of its second century. These projects offer innovative solutions to some of the seminal international challenges, which include: (1) delivering more equitable and sustainable economic growth; (2) preventing the escalation of national and geopolitical tensions into conflict; and (3) assessing how increased inclusivity in international governance systems can maximise the prospects for progress.

Measures will be taken to enhance the value of Chatham House’s role as a trusted convenor by engaging its prime audiences in more tailored scenario exercises and other activities to test decision-making assumptions and processes. Chatham House will continue to engage not only decision-makers and influencers, but also the interested public and younger people who are increasingly important to fulfilling the Institute’s mission, including harnessing new technologies.

The Royal Institute of International Affairs 15

Report to the Council Year to 31 March 2021

Plans for Future Periods (continued)

Equality, Diversity and Inclusion (EDI)

Over the past financial year, the Institute has evolved its Gender Working Group, specifically looking at gender in research, events, and communications. It has established the Equality, Diversity and Inclusion (EDI) Working Group which considers the Institute’s approach to EDI across five areas: Gender, LGBTIQ+, Socio-economic backgrounds, Race & Ethnicities and People with Disabilities. The EDI Strategy sets out the importance of EDI to Chatham House’s mission. A budget has been established to support the Institute’s future EDI work. Over the last six months, we have constructed the EDI framework to run the process at the house.

In the first three months of 2021, the EDI team detailed the key principles that will guide Chatham House’s approach to EDI. These are ‘intersectionality’, ‘an expertise-based approach’, ‘staff inclusion’ and ‘sustained prioritization of EDI’. In enacting this plan, the Institute ran a survey to understand staff priorities on EDI, held the first EDI Working Group meeting, and started the process of recruiting an EDI consultant to conduct an audit, construct a theory of change and multi-year timeline, and create monitoring and evaluation framework.

Responding to the COVID-19 pandemic

In line with government guidelines, Chatham House’s staff have predominantly worked from home since March 2020. The closing of the building has meant that the Institute has had to rethink how it convenes events and fulfil its obligations to its members and the general public. To this end, the Institute has successfully continued to hold regular research and member events via online platforms. Moreover, due to travel restrictions, the Institute has had to adjust how it conducts some of its research projects without in-person meetings outside the UK or fieldwork. Nevertheless, most projects have moved forward, enabling the Institute to continue to meet its public benefit obligation. It is likely the pandemic will have a permanent impact with a significant shift to working from home and convening using online/ hybrid formats. This will be beneficial in reducing Chatham House’s carbon footprint and maintaining the benefits of holding virtual/hybrid events, such as the reduced barriers to engaging speakers and participants from across the world.

Investments in digital infrastructure

Upgrades to the physical IT infrastructure continue alongside investments in equipment and services to ensure staff can work effectively either on site or remotely. The new contact relationship management (CRM) system and website, both brought into service in October 2020, have brought greater efficiencies to business processes while improving the user experience. Further core system-based investment projects include a new HR system in 2021 and a new Finance system in 2021/22. The Institute will also invest in physical infrastructure with some further maintenance of the physical premises to be carried out along with modernisation of the air conditioning system on the fourth floor of 10 St James’s Square.

The Royal Institute of International Affairs 16

Report to the Council Year to 31 March 2021

Financial Review

Results

This was a successful year for Chatham House despite the challenges posed by the coronavirus pandemic. After taking account of the movement on designated, restricted and permanently endowed funds, and receipt of the significant grant from MAVA Foundation, the consolidated statement of financial activities shows an overall surplus on net income before investment gains of £6,309,000 (2020 – surplus £9,774,000 before investment gains). Investment gains of £2,367,000 further increased the surplus to £8,676,000 (2020 – gain of £8,900,000 after investment losses of £874,000), of which £603,000 related to realised gains and £1,764,000 related to unrealised gains (2020 – realised gains of £116,000 and unrealised losses of £990,000).

Total income decreased from £28,897,000 in 2020 to £24,444,000 in 2021. If these figures are adjusted for the two large one-off donations received (£10,000,000 from the Stavros Niarchos Foundation in 2020 and £5,000,000 from the MAVA Foundation in 2021, as discussed below) then the comparative figures are £18,897,000 in 2020 and £19,444,000 in 2021. This increase is primarily due to the growth of research programmes (under Charitable Activities) and a particularly large FCDO funded project examining risks to the climate in China. Total expenditure reduced from £19,123,000 in 2020 to £18,135,000 in 2021. This is primarily caused by restrictions on events and travel imposed due to the coronavirus pandemic as is evident by the reduction in costs of trading activities from £1,145,000 in 2020 to £425,000 in 2021.

In March 2021, Chatham House was delighted to receive £5,000,000 from the MAVA Foundation to fund its future work on sustainability (the first instalment in a grant which will total £10,000,000). This was one of the largest gifts that the Institute has ever received in its 100-year history and will underpin one of its three second century research goals by establishing the new Chatham House Sustainability Accelerator (CHSA). The funds are planned to be spent down within 15 to 20 years, so as to have maximum impact on the environmental policy decisions needing to be taken in this window.

This £5,000,000 grant was the most significant contributor to the surplus. However, Chatham House’s research programmes also had a successful year as shown by the surplus of £1,038,000 on Charitable Activities under Restricted Funds (2020 – deficit of £314,000). Both 2021 and 2020 were successful years in terms of research fundraising with £12,616,000 of research income recognised in 2021 (2020 - £11,511,000).

This surplus has led to Chatham House holding net assets of £33,722,000 at 31 March 2021 (2020 - £25,046,000). This increase in net assets is reflected in the cash holdings which have increased from £2,896,000 at 31 March 2020 to £9,545,000 at 31 March 2021, predominantly due to the receipt of the Chatham House Sustainability Accelerator funds. The value of investments has also reached a historic high of £11,456,000 (2020 - £9,321,000).

The Royal Institute of International Affairs 17

Report to the Council Year to 31 March 2021

Financial Review (continued)

Results (continued)

Despite the overall improvement in the Institute’s overall financial position, the coronavirus crisis had a negative impact on the 2020/21 financial operating results and creates continued uncertainty for 2021/22. The main impact was on sponsored conferences where, due to the switch to virtual events, delegate income was only £31,000 compared to £461,000 in 2019/20. This reduction is due to the difficulty in selling delegate places for virtual conferences with many competitors not charging for attendance at virtual conferences. Furthermore, some individual donors deferred their donations due to the economic uncertainty.

These negative impacts on operating income were counterbalanced by strong financial performance by the research programmes which collectively increased their reserves by £1,038,000 (2020: deficit of £314,000). This was partly as a result of cost savings due to the pandemic’s impact on research projects. Moreover, the Institute managed to reduce its overall expenditure against budget through careful management of expenditure across the organisation, which has led to expenditure falling by 5% to £18,135,000 compared to 2019/20.

Savings were made from temporarily closing the building, furloughing a small number of staff, not replacing all roles when staff left, and not recruiting to certain budgeted roles. Some of this expenditure will be incurred again in future as in-person events return and the government’s Coronavirus Job Retention Scheme comes to an end.

As mentioned above, and disclosed on the face of the consolidated statement of financial activities, the Institute made use of the government’s Coronavirus Job Retention Scheme to support jobs which were heavily affected by the COVID-19 restrictions. During the financial year, £100,000 of furlough support was received to support 12 jobs, on either a full or flexible basis.

Looking to 2021/22, the major financial risks for Chatham House include not being able to hold physical sponsored conferences, retention of individual and corporate members, lower donations from major donors, the challenge of holding in-person/hybrid events which will increase expenditure, and reduced funds available from foundations and government for research projects as a result of cost-saving programmes. The Executive Leadership Team along with Council have carefully considered these risks and have implemented cost-saving measures, such as a holiday-purchase scheme and a ‘commitment-free’ day, following consultation with staff so as to increase further the Institute’s financial resilience through this uncertain period.

The results of the wholly-owned trading company, Chatham House Enterprises Limited, are shown in note 9. The company’s results were reasonable given the circumstances with £207,000 of profit transferred as gift aid to the charity despite income falling from £1,352,000 to £632,000. The fall in income was down to the impact of COVID-19 restrictions with a significant decline in conference delegate income as explained above and the postponement of the 2020 London Conference.

The Royal Institute of International Affairs 18

Report to the Council Year to 31 March 2021

Financial Review (continued)

Investment policy

The Chatham House Investment Committee manages the greater part of its non-cash investments though independent investment managers (Cazenove Capital Management), with the remaining amount held in a Vanguard Asset Management tracker fund. The policy is to invest all of its long-term permanently endowed funds, a considerable part of its general funds (£5,685,000 at 31 March 2021) and the £2,000,000 funds originally given for the Stavros Niarchos Foundation CoLab in equities and other long-term investments. Where practical and worthwhile, the remaining operational cash funds are put on deposit with the Institute’s bankers at money market rates. The grant from MAVA Foundation to support the Chatham House Sustainability Accelerator will be invested with Cazenove post year-end but was held as cash at 31 March 2021 as the funds were received that month.

The Institute also aims to ensure that its investments do not cause any harm to the Institute’s mission. The Institute has a policy that it does not directly invest in any companies and any indirect exposure to fossil fuel or tobacco companies through funds should be de minimus (less than 3% of the Institute’s portfolio).

Council’s Investment Committee also liaise closely with Cazenove to discuss how Cazenove are using their influence to achieve environmental, social and corporate governance goals. Moreover, at 31 March 2021, £807,000 of the Institute’s funds were invested with Cazenove’s Responsible Multi-Asset Fund with an expectation that the £5,000,000 Chatham House Sustainability Accelerator funds will also be invested here.

In respect of equity and other long-term investments, the Chatham House investment objective is to seek a total return (gain on investments plus the dividends / other income received) at least equal to CPI plus 4% over the longer term. As of 31 March 2021, Chatham House’s main portfolio held with Cazenove was ahead of this objective with growth of 7.6% per annum over the last five years compared to the CPI+4% benchmark of 7.0% per annum, following successful stewardship over the year to March 2021. A total return policy is adopted for investments and permanently endowed funds, as explained in note 16. For 2021/22, Chatham House has implemented an amended total return and unapplied return policy which will more closely monitor the level of unapplied return. As a result of this, the Institute will adopt a total return of 8% in 2021/22 (the total return rate has been 4% in recent years) given the persistently high level of unapplied return.

During the financial year 2020/21, there was a total return on the Cazenove portfolio of 25.9%. This compares with growth in the FTSE Equities All Share index over the same period of 23.5%. In 2019/20 there was a negative total return on the Cazenove portfolio of 7.2% compared with a fall in the FTSE Equities All Share index over the same period of 20.2%.

Interest earned on bank deposits was negligible at 0.06% due to the historically low rates on offer.

The Royal Institute of International Affairs 19

Report to the Council Year to 31 March 2021

Financial Review (continued)

Reserves policy and going concern

The reserves policy is kept under review by Council. The policy includes taking account of general unrestricted funds and the Research Grants and Donations Funds held within designated funds. This reflects the entirety of the monies at the disposal of Council rather than just the general unrestricted funds. The reserves policy aims to maintain these reserve funds at a level sufficient to cover future expenditure for six months but to also ensure that the minimum level does not fall below three months.

At the end of the current year, the free reserve figure was £2,732,000 (2020 – £187,000) and represented a little over three months’ worth of budgeted expenditure for the year to 31 March 2022. This significant improvement over the position at 31 March 2020 is due to the financial performance of the research programmes and the gains on investments. Council is of the opinion that this reserves position can be further improved over the medium-term through enhanced cost management and cost recovery across the Institute.

Council has reviewed Chatham House’s financial position and financial projections given the challenges presented by the economic impact of the COVID-19 crisis. The Institute’s reserves now exceed its minimum target, and a number of other factors support the assumption of the financial statements being prepared on a going concern basis.

Following this review, Council is satisfied that the financial statements should be produced on a going concern basis.

Designated funds (Note 15)

The designated funds totalling £21,115,000 (2020 - £19,178,000) comprise the Property and Equipment Fund, the Director’s Research Innovation Fund, the Research Grants and Donations Fund, the Second Century Fund, the Library Storage Fund and Life Membership Legacy Fund. The balance on the Research Grants and Donations Fund is usually retained by the individual research departments / programmes to help fund future project research

The Royal Institute of International Affairs 20

Report to the Council Year to 31 March 2021

Financial Review (continued)

Designated funds (Note 15) (continued)

work mainly in the form of ‘seed’ monies or to provide matching funds, or to cover future core research costs whilst funding is sought for new projects. Further details on each designated fund is set out in note 15.

Restricted funds (Note 15)

The restricted funds totalling £7,108,000 (2020 - £2,120,000) comprise the Research Grant and Donations Fund (project activity runs through this fund, while retained balances sit in designated funds), the Chatham House Sustainability Accelerator fund, the Stavros Niarchos Foundation Building Fund, the Stavros Niarchos Foundation Wing Fund, the Stavros Niarchos Foundation CoLab Fund, the Internships Fund and the Library Fund. Further details on each restricted fund is set out in note 15.

Risk assessment

The Council conducts an annual review of the major risks to which the Institute is exposed. These risks are subdivided into operational areas, and elements within each are assessed and categorised as to their severity, according to their likelihood and impact level. Systems and procedures are in place to mitigate each of these perceived risks which are then reassessed as to their likelihood and impact in the light of the mitigations.

A similar review is also carried out by the Institute’s Executive Leadership Team to review and identify those risks which could affect Chatham House on a more day-to-day, operational basis. Some of these risks link to the ones identified for Council, but are addressed at a more granular level. All these identified risks are regularly reviewed to ensure that the measures in place are still appropriate.

In line with GDPR, Chatham House continues to review the measures it takes to protect its data from intrusive attacks. It also continues to keep in close contact with the UK Government’s National Cyber Security Centre (NCSC) and uses the services of other reputable organisations in the field of cyber security for assistance and support where necessary. During the year, the Institute has further invested in an advanced protection service against data breaches, data theft and cyber attacks.

Like many other organisations, Chatham House also faces financial and health and safety risks from the ongoing coronavirus crisis. The financial risks are discussed in the Financial Review above. These risks have been reviewed by Council and the Institute’s Executive Leadership team, and measures to mitigate the risks are being implemented as appropriate. The crisis also poses risks to the health and safety of Chatham House’s staff and stakeholders. Following government guidance, the Chatham House building was closed in March 2020 and was reopened in July 2020 once appropriate mitigation measures were put in place following a detailed risk assessment. Following the spike in Covid cases in the autumn and again in December / January 2021, the building has been open only when government guidance has allowed it. In line with government advice, staff have been advised

The Royal Institute of International Affairs 21

Report to the Council Year to 31 March 2021

Risk assessment (continued)

to work from home where they can, no members or other guests have been hosted at the Institute, and the building has only been open a maximum of two days a week.

Linked to the challenges posed by the coronavirus crisis, as part of the risk assessment process, poor staff wellbeing and mental health was identified as an elevated risk with an increasing number of people across the UK feeling anxious and isolated working from home. This is an important focus for the ELT and Human Resources department with increased training on this for staff and managers, including a focus on this in the Strategic Review and ongoing engagement with Prospect, which is Chatham House staff’s recognised trade union.

Reporting serious incidents

The Charity Commission requires charities to report serious incidents. If a serious incident occurs then a full, frank and prompt disclosure to the Commission is made including what happened and how it is being dealt with. The responsibility for reporting serious incidents rests with the trustees but this is delegated to the Director and his Executive Leadership Team to handle in the first instance.

Approved by the Council on 22 June 2021 and signed on its behalf by:

Chairman Lord Jim O'Neill

Honorary Treasurer John Berriman

The Royal Institute of International Affairs 22

Independent auditor’s report Year to 31 March 2021

Independent auditor’s report to the trustees of The Royal Institute of International Affairs

Opinion

We have audited the financial statements of The Royal Institute of International Affairs for the year ended 31 March 2021 which comprise the consolidated statement of financial activities, the Group and Institute balance sheets, the consolidated cash flow statement, the principal accounting policies and the notes to the financial statements. 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).

In our opinion, the financial statements:

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 are independent of the charity in accordance with the ethical requirements that are relevant to our audit of the financial statements 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 to provide a basis for our opinion.

Conclusions relating 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 Institute’s ability to continue as a going concern for a period of at least twelve 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.

The Royal Institute of International Affairs 23

Independent auditor’s report Year to 31 March 2021

Other information

The trustees are responsible for the other information. The other information comprises the information included in the annual report and financial statements other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, 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, 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.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Charities Act 2011 requires us to report to you if, in our opinion:

Responsibilities of trustees

As explained more fully in the trustees’ responsibilities statement, the trustees 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 and the Institute’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 Institute or to cease operations, or have no realistic alternative but to do so.

The Royal Institute of International Affairs 24

Independent auditor’s report Year to 31 March 2021

Auditor’s responsibilities for the audit of the financial statements

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.

Irregularities, including fraud, are instances 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 extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:

We assessed the susceptibility of the Group financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:

The Royal Institute of International Affairs 25

Independent auditor’s report Year to 31 March 2021

To address the risk of fraud through management bias and override of controls, we:

In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:

There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the trustees and other management and the inspection of regulatory and legal correspondence, if any.

Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.

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.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

The Royal Institute of International Affairs 26

Independent auditor’s report Year to 31 March 2021

Use of this report

This report is made solely to the charity’s trustees, as a body, in accordance with section 144 of the Charities Act 2011 and with regulations made under section 154 of that Act. Our audit work has been undertaken so that we might state to the charity’s 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 charity and the charity’s trustees as a body, for our audit work, for this report, or for the opinions we have formed.

Buzzacott LLP Statutory Auditor 130 Wood Street London EC2V 6DL Date: 5 July 2021

Buzzacott LLP is eligible to act as an auditor in terms of section 1212 of the Companies Act 2006

The Royal Institute of International Affairs 27

Consolidated statement of financial activities Year to 31 March 2021

Notes Unrestricted funds Unrestricted funds Restricted
funds
£’000		 Permanent
endowment
funds
£’000		 2021
Total
funds
£’000		 2020
Total
funds
£’000
General
£’000		 Designated
£’000
Income and endowments from
Donations
1
Trading activities
9
Investments
2
Charitable activities
3
Other income – Coronavirus Job
Retention Scheme
Total income
Expenditure on
Raising funds
. Costs of generating donations
. Costs of trading activities
9
Charitable activities
Total expenditure
4
Net income before gains (losses) on
investments and transfers
7
Gains (losses) on investments
11
Net income before transfers
Transfers between funds
15
Net income and net movement in
funds
Reconciliation in funds
Fund balances brought
forward at 1 April
Fund balances carried forward
at 31 March
15		 4,232
494
64
1,295
89		 347
—
—
—
—		 5,055
138
42
12,616
11		 —
—
61
—
—		 9,634
632
167
13,911
100		 14,569
1,352
265
12,711
—
6,174 347 17,862 61 24,444 28,897
1,013
363
5,038		 4
—
77		 —
62
11,578		 —
—
—		 1,017
425
16,693		 979
1,145
16,999
6,414 81 11,640 — 18,135 19,123
(240)
1,246		 266
—		 6,222
164		 61
957		 6,309
2,367		 9,774
(874)
1,006
(131)		 266
1,671		 6,386
(1,398)		 1,018
(142)		 8,676
—		 8,900
—
875
187		 1,937
19,178		 4,988
2,120		 876
3,561		 8,676
25,046		 8,900
16,146
1,062 21,115 7,108 4,437 33,722 25,046

All the above results are derived from continuing activities. There were no other recognised gains or losses other than those stated above.

Comparative information displaying the consolidated statement of financial activities for the year ended 31 March 2020 by fund type is included at note 21.

The Royal Institute of International Affairs 28

Balance sheets As at 31 March 2021

Notes Group Group Institute Institute

2021
£’000		 2020
£’000		 2021
£’000		 2020
£’000
Fixed assets
Tangible fixed assets
8
Investments
11
Total fixed assets
Current assets
Debtors
12
Cash and cash equivalents
Total current assets
Liabilities
Creditors: amounts falling due
within one year
13
Net current assets (liabilities)
Total net assets
The funds of the charity:
Funds and reserves
Permanent endowment funds
Restricted funds
Unrestricted
. Property and equipment fund
. Other designated funds
. General funds
15
18,400

11,456		 18,399
9,321		 18,400
11,456		 18,399
9,321
29,856 27,720 29,856 27,720

5,258
9,545		 3,946
2,896		 5,014
9,544		 3,788
2,896
14,803 6,842 14,558 6,684

(10,937)		 (9,516) (10,694) (9,360)
3,866 (2,674) 3,864 (2,676)
33,722 25,046 33,720 25,044
4,437
7,108
18,400
2,715
1,062		 3,561
2,120
18,399
779
187		 4,437
7,108
18,400
2,715
1,060		 3,561
2,120
18,399
779
185

33,722		 25,046 33,720 25,044

Approved by the Council on 22 June 2021 and signed on its behalf by:

Chairman

Lord Jim O'Neill

Honorary Treasurer John Berriman

The Royal Institute of International Affairs 29

Consolidated statement of cash flows Year to 31 March 2021

Notes
2021
£’000		 2020
£’000
Cash flows from operating activities:
Net cash provided by operating activities
A
Cash flows from investing activities:
Dividends and interest from investments
Purchase of tangible fixed assets
Proceeds from sale of investments
Purchase of investments
Net cash used in investing activities
Change in cash and cash equivalents in the reporting period
Cash and cash equivalents at the beginning of the
reporting period
B
Cash and cash equivalents at the end of the reporting period
B
7,184
167
(934)
3,949
(3,717)		 10,095
265
(10,680)
2,533
(3,845)
(535) (11,727)
6,649

2,896		 (1,632)
4,528

9,545		 2,896

Notes to the cash flow statement for the year to 31 March:

A Reconciliation of net movement in funds to net cash flow from operating activities

Notes 2021
£’000		 2020
£’000
Net income for the reporting period
Dividends and interest from investments
2
Depreciation of tangible fixed assets
8
(Gains) losses on investments
Increase in debtors
Increase (decrease) in creditors
Net cashprovided by operating activities		 8,676
(167)
933
(2,367)
(1,312)
1,421		 8,900
(265)
779
874
(62)
(131)
7,184 10,095

B Analysis of cash and cash equivalent

Analysis of cash and cash equivalent
2021
£’000		 2020
£’000
Cash at bank and in hand
Notice deposits (less than three months)
Total cash and cash equivalents		 3,545
6,000		 2,463
433
9,545 2,896

No separate statement of changes in net debt has been prepared as there is no difference between the net debt and cash and cash equivalents of the group as disclosed above.

The Royal Institute of International Affairs 30

Principal accounting policies Year to 31 March 2021

The principal accounting policies adopted, judgements and key sources of estimation uncertainty in the preparation of the financial statements are laid out below. The financial statements are presented in sterling and rounded to the nearest thousand pounds.

Basis of preparation

These financial statements have been prepared for the year to 31 March 2021 with comparative information presented for the year ended 31 March 2020.

The financial statements have been prepared under the historical cost convention with items recognised at cost or transaction value unless otherwise stated in the relevant accounting policies below or the notes to these financial statements.

The financial statements have been prepared in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their financial statements in accordance with the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (FRS 102) (Charities SORP FRS 102), the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the Charities Act 2011.

The charity constitutes a public benefit entity as defined by FRS 102.

Critical accounting estimates and areas of judgement

Preparation of the financial statements requires the Council and management to make significant judgements and estimates.

The items in the financial statements where these judgements and estimates have been made include:

In addition to the above, the full impact following the emergence of the global coronavirus pandemic is still unknown. It is therefore not currently possible to evaluate all the potential implications for the group and the charity’s activities, beneficiaries, funders, suppliers and the wider economy.

Assessment of going concern

The Council has assessed whether the use of the going concern assumption is appropriate in preparing these financial statements. It has made this assessment in respect to a period of one year from the date of approval of these financial statements.

The Royal Institute of International Affairs 31

Principal accounting policies Year to 31 March 2021

Assessment of going concern (continued)

The Council members have concluded that there are no material uncertainties related to events or conditions that may cast significant doubt on the ability of the group and the charity to continue as a going concern. They are of the opinion that the group and the charity will have sufficient resources to meet its liabilities as they fall due. The most significant areas of judgement that affect items in the financial statements are detailed above. With regard to the next accounting period, the year ending 31 March 2022, the most significant areas that affect the carrying value of the assets held by the group and the charity are the level of investment return and the performance of the investment markets (see the investment policy and the risk management sections of the Report of the Council for more information). Council has reviewed Chatham House’s financial position and financial projections given the challenges presented by the economic impact of the COVID-19 crisis.

The Institute’s reserves now exceed its minimum target and a number of other factors support the assumption of the financial statements being prepared on a going concern basis. The Institute has completed a thorough cost-saving review and will make over £200,000 of savings from introducing benefits which give staff more flexibility, such as the opportunity to purchase additional holiday leave. The Institute also has £8,663,000 of deferred income at 31 March 2021 (2020 - £7,994,000), including £2,169,000 of which relates to unrestricted funds (2020 - £2,245,000) and will be recognised in full in 2021/22. Moreover, at 31 March 2021, there was £1,682,000 of unapplied return within permanently endowed funds (2020 – £807,000) which could potentially be reallocated to unrestricted funds if there was a pressing need. Chatham House would also be able to access healthy levels of cash in an emergency with £9,545,000 of cash at 31 March 2021 (2020 - £2,896,000), the ability to raise cash from banks by negotiating an overdraft or secured loan, and the ability to sell fixed asset investments in an emergency. Following this review Council is satisfied that the financial statements should be produced on a going concern basis.

Income recognition

Income is recognised in the period in which the group and the charity has entitlement to income, the amount of the income can be measured reliably and it is probable that the income will be received.

Investment income

Income receivable on deposits and investments is recognised on an accruals basis. Income from permanently endowed investments is calculated on a total return basis (see note 16).

Membership and journal subscriptions

Corporate and individual membership subscriptions, and subscriptions to journals, are each payable in respect of a twelve month period in advance. The unearned portion of income received relating to the period after 31 March is carried forward as subscriptions in advance. With regards to life membership, sufficient monies to cover the annual subscriptions of life members is transferred from the Life Membership Legacy fund to the general fund each year. Any donations that remain may ultimately be transferred to general fund by the Council.

The Royal Institute of International Affairs 32

Principal accounting policies Year to 31 March 2021

Research income and expenditure

Research income comprises mainly grants, together with some sponsorship, contract income and other miscellaneous income. All of this income is credited to the statement of financial activities when the charity is entitled to the income unless it relates to funding for specific future periods either via explicit or implicit time conditions within the grant agreement.

Donations

Donations are recognised when the charity has confirmation of both the amount and settlement date. In the event of donations pledged but not received, the amount is accrued for where the receipt is considered probable. In the event that a donation is subject to conditions that require a level of performance before the charity is entitled to the funds, the income is deferred and not recognised until either those conditions are fully met, or the fulfilment of those conditions is wholly within the control of the charity and it is probable that those conditions will be fulfilled in the reporting period.

In accordance with the Charities SORP FRS 102 volunteer time is not recognised.

Charitable activities

The income and costs relating to charitable activities are analysed into the headings of research, events and dissemination in order to reflect the objectives and activities of the Institute.

Expenditure recognition

Expenditure is accounted for on an accruals basis. All salaries and other costs directly attributable to specific activities are charged against these activities and are shown accordingly within the statement of financial activities. Research programmes make a contribution to the overheads of the Institute. Expenditure includes attributable VAT which cannot be recovered.

Liabilities are recognised as expenditure as soon as there is a legal or constructive obligation committing the group and the charity to make a payment to a third party, it is probable that a transfer of economic benefits will be required in settlement and the amount of the obligation can be measured reliably.

Support costs

Support costs are those indirect costs incurred in support of expenditure on the charitable activities of the Institute and are allocated on a per capita basis based on staff across all activities.

Leases

Payments under operating leases are charged to the statement of financial activities in equal annual installments over the period of the leases.

The Royal Institute of International Affairs 33

Principal accounting policies Year to 31 March 2021

Tangible fixed assets and depreciation

Tangible fixed assets costing more than £2,500 are capitalised and included at cost together with any incidental costs of acquisition.

Depreciation is provided, where required, on tangible fixed assets at rates calculated to write off the cost of each asset, less any estimated residual value, evenly over its estimated useful life, as follows:

♦ Building improvements - 10 – 20 years ♦ Furniture, equipment and hardware - 3 – 10 years ♦ Software 3 – 10 years

Assets are depreciated when they are brought into use.

Depreciation is not charged on the properties capitalised under long leasehold buildings as the Council believes the likely residual value of the properties concerned would result in an immaterial depreciation charge. Its value and condition are reviewed annually by the Council and if any impairment is identified, a provision is made.

Depreciation is not charged on freehold land.

Investments

Listed investments are a form of basic financial instrument and are initially recognised at their transaction value and subsequently measured at their fair value as at the balance sheet date using the closing quoted market price.

The charity only has financial assets and financial liabilities of a kind that qualify as basic financial instruments.

As noted above, the main form of financial risk faced by the group and the charity is that of volatility in equity markets and investment markets due to wider economic conditions, the attitude of investors to investment risk, the relative currency strength of sterling against other currencies, and changes in sentiment concerning equities and within particular sectors or sub sectors.

Realised gains (or losses) on investment assets are calculated as the difference between disposal proceeds and their opening carrying value. Unrealised gains and losses are calculated as the difference between the fair value at the year end and their carrying value at that date. Realised and unrealised investment gains (or losses) are combined in the statement of financial activities and are credited (or debited) in the year in which they arise.

Debtors

Debtors are recognised at their settlement amount, less any provision for non-recoverability. Prepayments are valued at the amount prepaid. They have been discounted to the present value of the future cash receipt where such discounting is material.

Cash and cash equivalents

Cash and cash equivalents represents such accounts and instruments that are available on demand or have a maturity of less than three months from the date of acquisition.

The Royal Institute of International Affairs 34

Principal accounting policies Year to 31 March 2021

Creditors and provisions

Creditors and provisions are recognised when there is an obligation at 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 settlement can be estimated reliably. Creditors and provisions are recognised at the amount the group and the charity anticipates it will pay to settle the debt. They have been discounted to the present value of the future cash payment where such discounting is material.

Pension costs

The Institute contributes to a number of defined contribution schemes. Contributions to the schemes are charged against the results of the year in which they occur.

Foreign exchange

Monetary assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at rates ruling at the date of transactions. Exchange differences are taken into account in arriving at the net incoming resources for the year.

Unrestricted general funds

These are funds which can be used for any purpose within the charitable objects of the group.

Designated funds

These are funds set aside by the Council out of unrestricted funds for specific future purposes.

Restricted funds

Restricted funds comprise monies raised for, or their use restricted to, a specific purpose, or contributions subject to donor imposed conditions.

Permanent endowment funds

These are funds received which are held permanently by the Institute as a capital fund. Income received on these may be spent on the charitable objects. Capital gains/(losses) derived from these assets are credited/(charged) to these funds. The charity operates a total return approach to its endowment funds. All income, gains and losses are taken to the part of the fund representing accumulated unapplied returns in the first instance. An amount reflecting the deemed investment return for the year is released to be spent as income (see note 16).

Financial instruments

The Institute only has financial assets and liabilities of a kind that qualify as basic financial instruments and are not considered to be of a financing nature. Such financial instruments, except for investments classified at fair value through profit or loss, are initially recognised at the transaction value and subsequently measured at their settlement value.

The Royal Institute of International Affairs 35

Notes to the financial statements Year to 31 March 2021

1 Donations

Donations
Permanent
Unrestricted funds Restricted endowment 2021
General
£’000		 Designated
£’000		 funds
£’000		 funds
£’000		 Total
£’000
Donations 1,147 347 5,055 — 6,549
Membership subscriptions 3,085 — — — 3,085
4,232 347 5,055 — 9,634
Permanent
Unrestricted funds Restricted endowment 2020
General
£’000		 Designated
£’000		 funds
£’000		 funds
£’000		 Total
£’000
Donations 1,337 144 10,042 — 11,523
Membership subscriptions 3,046 — — — 3,046
4,383 144 10,042 — 14,569

Volunteers

Chatham House utilises the contribution of volunteers to assist in running in-person members events. These volunteers are mostly university students studying international relations. The time commitment for the volunteers is usually 90 minutes per event and they benefit from access to the events and networking opportunities with members, staff and other volunteers. In the year ended 31 March 2021, there were no (2020 - 43) volunteers at Chatham House as the pandemic meant there were no in-person events.

2 Income from investments

Income from investments
Unrestricted funds Restricted
funds
£’000

 Permanent
endowment
funds
£’000		 2021
Total
£’000
General
£’000		 Designated
£’000
Interest on bank accounts and short-term
deposits
Dividends and interest on investments		 1
63		 —
—		 1
41		 —
61		 2
165
64 — 42 61 167
Unrestricted funds Unrestricted funds Restricted
funds
£’000

 Permanent
endowment
funds
£’000		 2020
Total
£’000
General
£’000		 Designated
£’000
Interest on bank accounts and short-term
deposits
Dividends and interest on investments		 30
97		 —
—
1

39		 —
98		 31
234
127 —
40		 98 265

3 Income from charitable activities

Unrestricted funds Unrestricted funds Restricted
funds
£’000


Permanent
endowment
funds
£’000



2021
Total
£’000
General
£’000		 Designated
£’000
Research
Events
Dissemination		 327
3
965		 —
—
—		 12,616
—
—
—
—
—
12,943

3

965
1,295 — 12,616
—
13,911

The Royal Institute of International Affairs 36

Notes to the financial statements Year to 31 March 2021

3 Income from charitable activities (continued)

Income from charitable activities(c ontinued) ontinued)
Unrestricted funds Restricted
funds
£’000


Permanent
endowment
funds
£’000



2020
Total
£’000
General
£’000		 Designated
£’000
Research
Events
Dissemination		 296
23
881		 —
—
—		 11,511
—
—
—
—
_— _
11,807

23

881
1,200 — 11,511
_— _
12,711

Chatham House receives funds in the form of project grants, directly and indirectly, from the UK and other national governments, other governmental agencies and international governmental bodies. These funds are tied to specific research-related activities in the course of the standard charitable activities of Chatham House. Chatham House does not receive any funding in the form of general government grants or assistance. Therefore, it is not felt to be necessary, useful or practical to disclose further analysis within these financial statements.

4 Total expenditure

Cost of
generating
donations
£’000
590
427
1,017		 Cost of
trading
activities
(note 9)
£’000		 Charitable activities
Dissemin-
Research
Events
ation

£’000
£’000
£’000
9,852
347
2,502
2,711
398
883
12,563
745
3,385		 Charitable activities
Dissemin-
Research
Events
ation

£’000
£’000
£’000
9,852
347
2,502
2,711
398
883
12,563
745
3,385		 2021
Total
£’000
Research

£’000		 Events
£’000
347
398
745
Activities undertaken
Support costs		 425
—		 9,852
2,711		 13,716
4,419
425 12,563 18,135
Cost of
generating
donations
£’000
535
446
981		 Cost of
trading
activities
(note 9)
£’000		 Charitable activities
Dissemin-
Research
Events
ation

£’000
£’000
£’000
10,257
299
1,984
2,984
514
959
13,241
813
2,943		 Charitable activities
Dissemin-
Research
Events
ation

£’000
£’000
£’000
10,257
299
1,984
2,984
514
959
13,241
813
2,943		 2020
Total
£’000
Research

£’000		 Events
£’000
Activities undertaken
Support costs		 1,145
—		 10,257
2,984		 299
514		 14,220
4,903
1,145 13,241 813 19,123

The analysis of expenditure by fund was as follows:

Cost of
generating
donations
£’000		 Cost of
trading
activities
(note 9)
£’000		 Charitable
activities
£’000		 2021
Total
£’000		 Cost of
generating
donations
£’000


Cost of
trading
activities
(note 9)
£’000



Charitable
activities
£’000

4,920

254

11,825

16,999

2020
Total
£’000

7,036

258

11,829

19,123
Unrestricted funds
. General
. Designated
Restricted funds
Total funds		 1,013
4
—		 363
—
62		 5,038
77
11,578		 6,414
81
11,640		 975
4
—
1,141

—

4
1,017 425 16,693 18,135 979
1,145

The Royal Institute of International Affairs 37

Notes to the financial statements Year to 31 March 2021

4 Total expenditure (continued)

Support costs breakdown by activity


 Cost of
generating
donations
£’000
Charitable activities
Charitable activities
Charitable activities
2021

Total

£’000

Research

£’000

Events

£’000		 Dissemina-

tion

£’000
Management
Administration
IT
Premises
Depreciation (note 8)
Governance
Total funds		 58
121
80
71
90
7
370

766

510

448

572

45
54

112

75

66

84

7
119

250

166

146

187

15
601

1,249

831

731

933

74
427
2,711
398
883
4,419

Cost of
generating
donations
£’000
Charitable activities
Charitable activities
Charitable activities
2020

Total

£’000

Research

£’000

Events

£’000		 Dissemina-

tion

£’000
Management
Administration
IT
Premises
Depreciation
Governance
Total funds		 81
118
76
91
71
9
543

789

506

611

474

61
94

136

87

105

82

10
174

254

163

197

152

19
892

1,297

832

1,004

779

99
446
2,984
514
959
4,903

Basis of allocation

Support costs above have been allocated on a per capita allocation based on staff across all activities.

5 Staff costs and numbers

Staff costs were as follows:

2021
£’000		 2020
£’000
Wages and salaries
Social security costs
Pension contributions (note 19)		 8,864
993
605		 8,202
903
548
10,462 9,653

The Royal Institute of International Affairs 38

Notes to the financial statements Year to 31 March 2021

5 Staff costs and numbers (continued)

The number of employees whose total remuneration was over £60,000 in the year were as follows:

follows:
2021
No.		 2020
No.
£60,001 - £70,000
£70,001 - £80,000
£80,001 - £90,000
£90,001 - £100,000
£100,001 - £110,000
£110,001 - £120,000
£120,001 - £130,000
£230,001 - £240,000
£250,001 - £260,000		 11
8
4
2
5
4
—
1
—		 12
7
3
4
3
—
2
—
1
35 32

The average monthly number of employees during the year was as follows:

Average
2021
No.		 Average
2020
No.		 FTE
2021
No.		 FTE
2020
No.
Research
Library
Publications
Membership and meetings
Conferences
Fundraising and public relations
General administration and support		 97
3
17
15
9
18
34		 93
3
15
13
11
19
31		 86
3
15
14
8
19
33		 84
3
14
13
10
19
30
193 185 178 173

The Royal Institute of International Affairs 39

Notes to the financial statements Year to 31 March 2021

5 Staff costs and numbers (continued)

The key management personnel of the charity responsible for directing and controlling the charity comprise of the Council members, the Director and other directors who comprise the Executive Leadership Team of the Institute. Total emoluments paid to key management personnel (defined as salary, and employer’s pension and NI contributions) were £1,716,000 (2020 - £1,713,000).

Redundancy payments totalling £81,000 were made to five employees during the year (2020 - £69,000 to four employees). In line with Chatham House’s accounting policy these payments were fully recognised at the date they were made.

No Council members received emoluments during the year for services provided to Chatham House (2020 - £nil). Further transactions with Council members are disclosed within note 17.

6 Taxation

The Institute has no corporation tax liability as all its income is charitable and is applied for charitable purposes and is therefore exempt, as are its capital gains.

The trading subsidiary, Chatham House Enterprises Limited, donates all of its otherwise taxable profits to the Institute. Accordingly no provision for current or deferred tax is required.

7 Net income before transfers

This is stated after charging:

Net income before transfers
This is stated after charging:
2021
Total
£’000		 2020
Total
£’000
Staff costs (note 5)
Auditor’s remuneration
- Statutory audit
- Other services
Depreciation (note 8)
Rental payments under operating leases
- Land and buildings		 10,462

23
15
933

7		 9,653
20
8
779
62

The Royal Institute of International Affairs 40

Notes to the financial statements Year to 31 March 2021

8 Tangible fixed assets (Group and Institute)

Freehold
land
£’000

Long-
leasehold
buildings
£’000
Building
Improve
-ments
£’000



Software
£’000

Furniture,
equipment
and
hardware
£’000

Total
£’000
Cost or valuation
At 1 April 2020
Additions in the year
Disposals in the year
At 31 March 2021
Depreciation
At 1 April 2020
Charge for the year
Depreciation on disposal
At 31 March 2021
Net book values
At 31 March 2021
At 31 March 2020		 94
—
—
12,855

33

—
6,648

128

—
1,994

493

(497)
3,523

280
(28)
25,114

934
(525)
94
12,888
6,776
1,990
3,775
25,523
—
—
—
—

—

—
3,263

344

—
1,304

176

(497)
2,148

413
(28)
6,715

933
(525)
—
—
3,607
983
2,533
7,123
94
12,888
3,169
1,007
1,242
18,400
94
12,855
3,385
690
1,375
18,399

The freehold building of Chatham House was gifted to the Institute in 1923 and is included in these financial statements at a cost of £nil. The property was last valued professionally in 1996/97 on an open market basis at £4,800,000. In 2006/07, part of the building (18 Ormond Yard) was disposed of for £925,000.

The Institute holds a collection of paintings which have been acquired over many years. All items in the collection represent individuals who have either lived in the building or are significant in the history of Chatham House and, therefore, relate to the objects of the Institute. The Institute has commissioned a professional valuation of these paintings and sculptures for insurance purposes. The wide range of potential values suggested by the valuation highlight the difficulty of attaching an accurate financial value to such assets. For this reason, these assets have not been included in the financial statements.

The Royal Institute of International Affairs 41

Notes to the financial statements Year to 31 March 2021

9 Subsidiary undertaking: Chatham House Enterprises Limited

The Institute has one wholly-owned trading subsidiary, Chatham House Enterprises Limited, incorporated in England and Wales (Company Number 02979061). Its operations include conferences, consultancy, sponsorship and room letting. The company transfers its taxable profits to The Royal Institute of International Affairs via a Gift Aid compliant deed of covenant. A summary of the trading results is shown below.

covenant. A summary of the trading results is shown below.
2021
Total
£’000		 2020
Total
£’000
Turnover
Cost of sales
Gross profit
Operating expenses
Profit on ordinary activities
Retained earnings at 31 March
Donation payable to parent undertaking under deed of covenant
Retained earnings at 31 March		 632
(421)		 1,352
(1,141)
211
(4)		 211
(4)
207
2
(207)		 207
2
(207)
2 2

Investments comprise of a holding of the entire 100 ordinary £1 shares in Chatham House Enterprises Limited.

Of the total turnover of £632,000, £494,000 was attributable to unrestricted income with the balance of £138,000 to restricted income (2020 - £1,352,000 of which £1,278,000 was attributable to unrestricted income with the balance of £74,000 to restricted income).

10 Chatham House Foundation

Chatham House Foundation (CHF) is a 501 (c) (3) tax-exempt charity founded in the United States in 1982 with its own board of trustees and completely independent of the Institute. As a result, the Foundation’s activities and assets are not consolidated within the financial statements of Chatham House. The purpose of the Foundation is to promote the study of international affairs. It helps to raise the profile of Chatham House in the US and it supports work at Chatham House that is of relevance to the US foreign policy debate. Chatham House received an amount of £215,176 from the Foundation during the year ended 31 March 2021 (2020 - £405,340) in donations and towards research projects.

The Royal Institute of International Affairs 42

Notes to the financial statements Year to 31 March 2021

11 Investments (Group and Institute)

Investments (Group and Institute)
2021
£’000		 2020
£’000
Market value at beginning of the year
Acquisition at cost
Disposals at book value (proceeds: £3,949,000; realised gains:
£603,000)
Net unrealised investment gains (losses) in the year
Market value at end of the year
Historical cost of investments		 9,321
3,717
(3,346)
1,764
8,883

3,845

(2,417)

(990)
11,456
9,321
9,588
9,271

The total accumulated unrealised gains as at 31 March 2021 constitutes movements on fair value through income and expenditure and are as follows:

value through income and expenditure and are as follows:
2021
£‘000		 2020
£‘000
Accumulated unrealised gains included above:
On investments
Total accumulated unrealised gains at 31 March
Reconciliation of movements in unrealised gains (losses)
Unrealised gains at 1 April
Less: accumulated (gains) losses in respect of disposals in the year
Add: net gains (losses) arising on revaluation arising in the year
Total accumulated unrealisedgains at 31 March		 1,868 50
1,868 50
50
(549)		 1,187
(263)
(499)
2,367		 924
(874)
1,868 50

The Royal Institute of International Affairs 43

Notes to the financial statements Year to 31 March 2021

11 Investments (Group and Institute) (continued)

Listed investment assets in the UK at the year end were as follows:
Held by Cazenove Capital Management
. Equities
. Bonds
. Hedge funds
. Multi-asset
. Property
. Private Equity
. Other
Held by Vanguard Asset Management
. Equities
Listed Investment assets outside the UK at the year end were as follows:
Held by Cazenove Capital Management
. Equities
. Bonds
. Multi-asset
. Private Equity
. Other		 2021
£’000
3,136
408
175
1,013
711
148
20
1,364
3,115
375
—
126
865
11,456		 2020
£’000
660
646
151
1,000
738
64
36
992
3,979
288
48
74
645
9,321

12 Debtors

Debtors
Group Institute
2021
£’000
3,218
428
1,470
142
5,258		 2020
£’000		 2021
£’000		 2020
£’000
Trade debtors
Prepayments
Accrued income
Gift aid recoverable		 2,536
453
831
126		 3,075
358
1,439
142		 2,430
401
831
126
3,946 5,014 3,788

13 Creditors

Creditors
Group
2021
£’000
2020
£’000
1,576
1,603
6,244
5,427
815
964
1,460
442
362
687
292
271
188
122
—
—
10,937
9,516		 Institute
2020
£’000
1,603
5,427
964
442
687
271
122
—
9,516		 2021
£’000		 2020
£’000
1,603
5,404
789
434
674
271
90
95
9,360
Subscriptions received in advance
Research income received in advance
Charitable events and services income
received in advance
Accruals
Trade creditors
Tax and social security
Other creditors
Amount due to subsidiary undertaking		 1,576
6,244
528
1,439
356
292
161
98
10,694

The Royal Institute of International Affairs 44

Notes to the financial statements Year to 31 March 2021

13 Creditors (continued)

Deferred income comprises annual subscriptions, income on research projects, income for publications and funds for capital expenditure, which were all received in advance.

Group Group Institute Institute
2021
£’000		 2020
£’000		 2021
£’000		 2020
£’000
Balance as at 1 April
Amount released to income
Amount deferred in year
Balance as at 31 March		 7,994
(5,959)
6,600		 7,864
(6,273)
6,403		 7,796
(5,836)
6,388		 7,671
(6,081)
6,206
8,635 7,994 8,348 7,796

14 Analysis of net assets between funds

Group Unrestricted funds Unrestricted funds Restricted
funds
£’000		 Permanent
endowment
funds
£’000		 Total
funds
£’000
General
£’000		 Designated
£’000
Tangible fixed assets
Investments
Net current (liabilities) assets
Net assets at 31 March 2021		 —
5,685
(4,623)		 18,400
—
2,715		 —
1,334
5,774		 —
4,437
—		 18,400
11,456
3,866
1,062 21,115 7,108 4,437 33,722
Group Unrestricted funds Unrestricted funds Restricted
funds
£’000		 Permanent
endowment
funds
£’000		 Total
funds
£’000
General
£’000		 Designated
£’000
Tangible fixed assets
Investments
Net current (liabilities) assets
Net assets at 31 March 2020		 —
4,608
(4,421)		 18,399
—
779		 —
1,152
968		 —
3,561
—		 18,399
9,321
(2,674)
187 19,178 2,120 3,561 25,046

The Royal Institute of International Affairs 45

Notes to the financial statements Year to 31 March 2021

15 Movements in funds

1 April
2020
£’000		 Income
£’000		 Expenditure
£’000
Net gains
on
investme
nts
£’000		 Transfers
£’000		 At
31 March
2021
£’000
General fund:
Designated funds:
Property and Equipment Fund
Second Century Fund
ife Membership Legacy Fund
ibrary Storage Fund
Director’s Research Innovation Fund
Research Grants and Donations Fund
Restricted funds:
ibrary Fund
nternships Fund
Sustainability Accelerator Fund
Stavros Niarchos Foundation Building Fund
Stavros Niarchos Foundation CoLab Fund
Research Grants and Donations Fund
Permanent endowment funds(note 16)
Total funds**		 187 6,174 (6,414) 1,246
(131)		 1,062
18,399
610
24
134
11
—		 —
—
—
—
347
—		 —
(72)
(4)
(5)
—
—		 —
—
—
—

—
—
1

—

—

—

—

1,670		 18,400
538
20
129
358
1,670
19,178 347 (81) —
1,671		 21,115
26
42
—
125
1,927
—		 —
55
5,000
—
42
12,765		 —
—
—
—
(262)
(11,378)		 —
—
—
—
164
—
—

—

—

(11)

—

(1,387)		 26
97
5,000
114
1,871
—
2,120 17,862 (11,640) 164
(1,398)		 7,108
3,561 61 — 957
(142)		 4,437
25,046 24,444 (18,135) 2,367
—		 33,722
*Permanent endowment funds*
breakdown:**		 1 April
2020
£’000		 Income
£’000		 Expenditure
£’000		 Net
gains on
investments
£’000

Transfers
£’000		 At
31 March
2021
£’000
Library funds
Lectureships
Hewlett Foundation
The Beryl Le Poer Power Fund
Stavros Niarchos Academy Fund
Asfari Centre Academy Fund
Asfari Centre Maintenance Fund
Other restricted funds		 370
373
632
130
756
481
226
593		 6
6
11
2
13
9
4
10		 —
—
—
—
—
—
—
—		 100
100
170
35
203
129
61
159		 (15)
(15)
(25)
(5)
(30)
(19)
(9)
(24)		 461
464
788
162
942
600
282
738
3,561 61 957 (142) 4,437
Permanent endowment funds:
Original value of endowments
Unapplied return		 2,754
807		 —
61		 —
—		 —
957		 —
(142)		 2,754
1,683
3,561 61 — 957 (142) 4,437

The Royal Institute of International Affairs 46

Notes to the financial statements Year to 31 March 2021

15 Movements in funds (continued)

1 April
2019
£’000		 Income
£’000		 Income
£’000		 Expenditure
£’000		 Expenditure
£’000
Net
(losses)
on
investme
nts
£’000
Net
(losses)
on
investme
nts
£’000		 Transfers
£’000		 Transfers
£’000		 At
31 March
2020
£’000
776 6,988 (7,036) (434) (107) 187
8,498
667
28
141
57
1,840		 —
129
—
—
15
—		 —
(186)
(4)
(7)
(61)
—		 —
—
—
—

—
—		 9,901
—
—
—
—
(1,840)
18,399

610

24

134

11
—
11,231 144 (258) — 8,061
19,178
26
—
144
—
—
—		 —
42
—
8,000
2,040
11,585		 —
—
—
—
(19)
(11,810)		 —
—
—
—
(94)
—		 —
—
(19)
(8,000)
—
225
26

42
125
—

1,927
—
170 21,667 (11,829) (94) (7,794) 2,120
3,969 98 —
(346)		 (160) 3,561
16,146 28,897 (19,123) (874) —
25,046
Income
£’000		 Net
(losses) on
investments
£’000

Transfers
£’000		 At
31 March
2020
£’000
Library funds
Lectureships
Hewlett Foundation
The Beryl Le Poer Power Fund
Stavros Niarchos Academy Fund
Asfari Centre Academy Fund
Asfari Centre Maintenance Fund
Other restricted funds		 413
416
704
145
841
537
252
661		 10
10
17
4
22
13
6
16		 —
—
—
—
—
—
—
—		 (36)
(36)
(61)
(13)
(73)
(47)
(22)
(58)		 (17)
(17)
(28)
(6)
(34)
(22)
(10)
(26)		 370
373
632
130
756
481
226
593
3,969 98 — (346) (160) 3,561
Permanent endowment funds:
Original value of endowments
Unapplied return		 2,754
1,215		 —
98		 —
—		 —
(346)		 —
(160)		 2,754
807
3,969 98 — (346) (160) 3,561

The Royal Institute of International Affairs 47

Notes to the financial statements Year to 31 March 2021

15 Movements in funds (continued)

For transfers from permanent endowment funds see note 16.

Purpose of designated funds

Property and Equipment This represents the net book value of fixed assets for
Fund ongoing use by the Institute. Transfers are made between
the Property and Equipment Fund and the General Fund
and other restricted and designated building funds to
ensure the Property and Equipment Fund equals the net
book value of tangible fixed assets.
Second Century Fund Funds raised through the Second Century Initiative to
support the Institute’s long term strategic objectives.
Life Membership Legacy To be used to provide the benefits of life membership to
Fund donors during their lifetime, the original donation ultimately
returning to the General Fund.
Library Storage Fund To be used to cover the ongoing costs of storing Library
materials offsite.
Director’s Research To provide funds to support specific projects or areas of
Innovation Fund research as designated by the Director.
Research Grants and This represents surpluses transferred from the restricted
Donations Fund Research Grants and Donations Fund and set aside to fund
future research work.

Purpose and use of restricted funds

Library Fund To provide support for the Library.
Internships Fund To provide support for paid internships.
Sustainability To provide funding to support the Institute’s efforts in
Accelerator Fund accelerating innovation towards a sustainable future. This
will focus on environmental sustainability. This fund will be
spent down over 15 to 20 years with up to 10% withdrawn
per year on the condition that no more than 50% is spent by
the end of year 8.
Stavros Niarchos To provide the funding to assist in purchasing the first and
Foundation Wing Fund second floors of Ames House to create the Stavros
Niarchos Foundation Wing. The transfer from this fund
represents the utilisation of these funds for this purchase.
Stavros Niarchos To provide funding for the refurbishment of the basement
Foundation Building and ground floor of Ames House and Chatham House.
Fund Transfers are made to the Property and Equipment Fund to
meet such costs.
Stavros Niarchos To provide funding to support Chatham House in
Foundation CoLab Fund experimenting with new ways of communicating and
engaging with wider audiences.
Research Grants and To provide funding for a number of specific ongoing
Donations Fund research projects currently being undertaken by the
Institute.

The Royal Institute of International Affairs 48

Notes to the financial statements Year to 31 March 2021

15 Movements in funds (continued)

Purposes and use of permanent endowment funds

Library Funds To provide support for the Library. Lectureships To provide income to support various meetings and lectures. Hewlett Foundation To provide income to support research at the Director’s discretion. The Beryl Le Poer Power To provide income for research into race relations. Fund Stavros Niarchos To provide support for fellowships within Queen Elizabeth II Academy Fund Academy for Leadership in International Affairs. Asfari Centre Academy To provide support for the Queen Elizabeth II Academy for Fund Leadership in International Affairs. Asfari Centre To provide support for the physical maintenance of the Maintenance Fund Asfari Centre. Other restricted funds The funds of the Institute include funds to provide matching funds for the Hewlett Foundation Fund, and which are to be used for the specific purposes set out under that grant.

16 Total return approach to investments

In January 2005, Chatham House received permission from the Charity Commission to adopt the total return approach to the investment of permanent endowment funds. During the year, the Institute discharged this order and adopted Charities (Total Return) Regulations 2013 based on power conferred by the Charities Act to adopt a the total return approach without requiring Charity Commission permission. The newly adopted regulations still means that income from the permanent endowment funds listed in note 15 can be taken from capital growth as well as dividends.

For this purpose it is necessary to identify the original and current value of permanent endowment funds held by Chatham House at 31 March 2021. The original value was established as £2,754,000 and the value at 31 March 2021 was £4,337,000 (2020 - £3,561,000) (as shown in note 15). In adopting this policy, permanent endowment funds will not be permitted to fall below the original value of £2,754,000.

The total return approach to investments has been implemented with effect from 1 April 2005. The Council adopted a total return of 4% for the year to 31 March 2021 (2020 - 4%). From 1 April 2021 a total return of 8% will be adopted. The value of the total return for the year to 31 March 2021 was £142,452 (2020 - £158,731). £92,986 of this has been transferred from permanent endowment funds to the general fund and £49,466 has been transferred from permanent endowment funds to restricted funds.

The Royal Institute of International Affairs 49

Notes to the financial statements Year to 31 March 2021

For the year to 31 March 2021, permanent endowment funds generated dividend income of £61,072 (2020 - £97,950) and the gain on investments for the year was £956,829 (2020 - loss of £346,198). The part of the total return transfer taken from accumulated capital growth, after taking account of dividend income for the year was £81,380 (2020 - £60,781).

17 Transactions with Council members

No Council member received emoluments for services provided to Chatham House (2020 - £nil).

No Council members received reimbursement of expenses during the year (2020 - £nil).

Council members made donations with a total value of £18,788 during the year (2020 - £13,975). All donations were unrestricted (2020 - All donations were unrestricted).

All members of the Council are members of Chatham House, either as individuals or as corporate nominees. Membership subscriptions paid by Council members are on an arm’s length basis.

18 Capital commitments

Capital commitments
2021
£’000		 2020
£’000
140
745
Authorised and contracted
Authorised but not contracted		 154
941

19 Pension costs

Pension costs comprised contributions to defined contribution schemes of £605,000 (2020 - £548,000) including £220,000 which was paid in employer contributions for 35 employees earning over £60,000 per annum (2020 - £199,000 for 32 employees).

20 Operating leases

The Institute has committed to the amounts of minimum lease payments at the balance sheet date under non-cancellable operating leases in the aggregate and for:

Groupand Institute Groupand Institute
2021
£’000		 2020
£’000
Land and buildings
The next year
Between two and five years
Between six and ten years		 12
49
54		 —
—
—
115 —

In September 2020, a new ten-year rental lease was entered into the year in respect of the Reception Area (South Side) No. 7, Ames House 6-7 Duke of York Street, London, SW1Y 6LA.

The Royal Institute of International Affairs 50

Notes to the financial statements Year to 31 March 2021

21 Comparative information: Consolidated statement of financial activities for the year to 31 March 2020

Notes Unrestricted funds Unrestricted funds Restricted
funds
£’000		 Permanent
endowment
funds
£’000		 2020
Total
funds
£’000
General
£’000		 Designated
£’000
Income and endowments from
Donations
1
Trading activities
9
Investments
2
Charitable activities
3
Total income
Expenditure on
Raising funds
. Costs of generating donations
. Costs of trading activities
9
Charitable activities
Total expenditure
4
Net (expenditure) income before gains
(losses) on investments and transfers
7
Losses on investments
11
Net (expenditure) income before transfers
Transfers between funds
15
Net (expenditure) income and net
movement in funds
Reconciliation in funds
Fund balances brought
forward at 1 April
Fund balances carried forward
at 31 March
15		 4,383
1,278
127
1,200		 144
—
—
—		 10,042
74
40
11,511		 —
—
98
—		 14,569
1,352
265
12,711
6,988 144 21,667 98 28,897
975
1,141
4,920		 4
—
254		 —
4
11,825		 —
—
—		 979
1,145
16,999
7,036 258 11,829 — 19,123
(48)
(434)		 (114)
—		 9,838
(94)		 98
(346)		 9,774
(874)
(482)
(107)		 (114)
8,061		 9,744
(7,794)		 (248)
(160)		 8,900
—
(589)
776		 7,947
11,231		 1,950
170		 (408)
3,969		 8,900
16,146
187 19,178 2,120 3,561 25,046

The Royal Institute of International Affairs 51