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2021-12-31-accounts

The Benevolent Fund of the Institution of Mechanical Engineers

Annual Report and Accounts For the year to 31 December 2021

Annual Report and Accounts For the year to 31 December 2021

Company Registered in England No.130981 Registered Charity No: 209465

The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

Report of the Trustees 2 -16
Independent Auditor's Report to the Members of 17-20
the Benevolent Fund of the Institution of
Mechanical Engineers
Statement of Financial Activities 21
Balance Sheet 22
Statement of Cash Flows 23
Accounting Policies 24-26
Notes to the accounts 27-31

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The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

INTRODUCTION

The Trustees are pleased to submit their annual report which incorporates the Director's Report and accounts for the year ended 31 December 2021. In preparing this report the Trustees have complied with the Charities Act 2011, the Companies Act 2006, Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in UK and Republic of Ireland (FRS102), and the company's Articles of Association governing document.

REFERENCE AND ADMINISTRATIVE DETAILS

The Benevolent Fund of The Institution of Mechanical Engineers (also known as, and now operating under, the working title of 'Support Network') was founded in 1913 and is registered with the Charity Commission for England and Wales as charity number 209465. Support Network is also a Company Limited by Guarantee; and is registered with Companies House as company number 130981. The Trustees, Officers and professional advisers of the charity are listed on page 15 of this report. Support Network operates throughout the United Kingdom and internationally, wherever there are members (or former members) of the Institution of Mechanical Engineers (IMechE). Although close ties exist between Support Network and the IMechE, it should be noted that they are separate and distinct registered charities and companies, with different objectives, funds and management structures.

STRUCTURE, GOVERNANCE AND MANAGEMENT OF THE CHARITY

Support Network is a charitable company limited by guarantee, established under a Memorandum of Association, now revised as Articles of Association (January 2020) which sets out the objects and powers of the charitable company and all governance provisions relating to the same. A copy of the current version of the Articles of Association are filed with both the Charity Commission for England and Wales and at Companies House. The Directors of the company are also charity Trustees for the purposes of charity law. The governing body of Support Network is the Trustee Board, and the Trustees are jointly responsible for its governance.

Support Network's charitable objectives are the relief and prevention of poverty. In December 2019, permission was given to expand the existing charitable objectives to include assistance to both individuals and organisations, these being:

Support Network has four full-time equivalent staff (who either work from home or from the office base in London) and relies on a large network of volunteers, who themselves are mostly members of the IMechE and thus also form part of the eligible 'community' of users of the organisation’s services. Volunteers assist with casework through making home visits and/or telephone or online calls for financial verification or anti-loneliness purposes, plus our international volunteers act as in-country representatives to provide a wider context to member applications. Volunteers are thereby involved with the majority of the welfare interventions and casework undertaken by the organisation. They are therefore a mainstay of Support Network's

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The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

activities and the principal point of contact with new applicants and existing beneficiaries. As presently constituted, Support Network could not operate without them. Purely in terms of hours of casework, Support Network would require at least two extra full-time staff if there were no volunteers.

Trustees are responsible for setting the organisation strategy and for ensuring that this is implemented by the Chief Executive. To assist with this work there are three sub-committees which are accountable to the main Trustee Board. There are also additional remote grant decision making panels, and members of each committee and panel are listed on page 15. A diagram of the structure of the organisation is shown below:

Trustee Board:

The Trustee Board, when complete, consists of at least ten and not more than thirteen individuals. The President and the Chief Executive of the IMechE are Patrons of the charity. The current Board comprises 12 elected and co-opted members. The vacancy that was being held to recruit a Trustee who could assist with foundation grant giving has been filled. Recruitment of the next ‘Young Member/Newly Qualified’ Trustee will occur during the spring of 2022, with the incumbent serving a three year term in this capacity from July 2022-July 2025. There is a stipulation that not more than three Trustees shall at any time also be Members of the IMechE Trustee Board, and currently none of the Support Network Trustees are also IMechE Trustees.

The Trustees serve for a fixed period of three years, after which time they are eligible to stand to serve for a further three years, after which they must retire for at least one year, before being eligible to serve on the board again, unless they hold the office of Chair or Deputy Chair at the time that their retirement would fall to be effective, at which point they may serve for an additional consecutive 12 months before being time barred. This is in order to facilitate

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The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

succession planning. Candidates to be considered for election to the Board are invited to submit statements of application against the Person Specification required that year, and to attend an interview either with the Chair and a Deputy Chair, or otherwise the full Appointments Panel (comprising the Chair, Deputy Chair and one other Trustee, who is usually a member of the Personnel Committee). New trustees are elected by the full Trustee Board, and usually take office with effect from the date of the July Trustee Board meeting, which is also usually the first Trustee Board meeting that they attend.

The elected Trustees are often already familiar with either: 1) the purpose and practical work of Support Network, (as they have largely been recruited from those who have demonstrated a commitment to the aims and ethos of the charity by volunteering to act as 'Visitors'); or 2) with the work of the IMechE, as candidates are usually IMechE members, undertake volunteer activities for the IMechE, or are employed in a role which brings additional expertise to the Support Network board e.g. communications experience.

All Trustees are recruited in accordance with adding the required skills and experience to the board, on the basis of a skills audit of all Trustees, and associated succession planning exercise. Requirements in respect of the Code of Governance, especially those in respect of Diversity and Inclusion are considered when planning for and undertaking the recruitment of new Trustees.

As part of their induction, each new Trustee is provided with all the necessary reference documents, policies and procedures for them to play an effective role on the Trustee Board. These include copies of the governing document, Charity Commission publications, terms of reference for committees, business plan, risk register, latest full statutory accounts, and the previous year of Trustee Board minutes and financial statements. Policy documents are reviewed and revised regularly, and as appropriate, with the latest editions posted on an internal Extranet, accessible via a password protected area of the governance section within the Support Network website pages. New Trustees are invited to meet with the Chief Executive (either online or at the company's registered office in London), in order to familiarise themselves with the charity, to undertake to meet the other members of the staff team, and to talk through the role and requirements in more depth. They are also required to attend external training sessions, provided by specialists in governance, to include the role, duties and responsibilities of a Trustee; finance and investment skills for Trustees; and other governance related training as applicable.

Grant Committee:

The Grant Committee usually meets as required, usually twice a year, with the purposes of deciding awards/loans in presented cases within the grant making framework of policies and guidelines agreed by the Trustee Board, plus overseeing grant making procedures to individuals. It also monitors the awards given via other decision making routes, and discusses and develops and/or new provider recommendations to the Trustee Board regarding emerging patterns of need and appropriate responses and/or new service provision. The Grant Committee is usually chaired by one of the Deputy Chairs, and includes up to four other Trustees, together with members of staff. New volunteers are invited to attend as part of their induction training. Other volunteer visitors may also be asked to attend if one or more of their cases are being considered and especially if those are thought to be quite complex, requiring additional discussion in person to assist with the decision-making process. All new Trustees are asked to attend at least a Grant Committee meeting during their first year of appointment as part of their induction. Trustees who do not undertake application related visits are especially encouraged to attend Grant Committee meetings in order to understand part of the core service provision and the related risks and /or strategic elements of the same.

Finance Committee:

The Finance Committee meets as required to consider specific finance areas. On an annual basis, usually in February, it receives investment manager presentations in respect of the

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The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

performance of funds during the preceding year. The Finance Committee is comprised of up to five Trustees, including the Treasurer, Chair, a Deputy Chair and two other Trustees. All matters of strategic finance, investment portfolio, fundraising targets and financial procedures can be considered by this committee, which then reports to the Trustee Board. Whilst the committee has a stated membership, an open invitation is extended to all Trustees in respect of attending to hear investment manager presentations. This full invitation is also extended to any Finance Committee which attended by the auditor to present the annual audit findings and to receive questions from Trustees as part of the statutory accounts agreement and signing process. An opportunity is provided for the auditor and Trustees to meet without staff being present. All new Trustees are asked to attend the first Finance Committee after their appointment as part of their induction.

Personnel Committee:

The Personnel Committee meets as required to consider specific personnel related issues, and at least annually (usually in December) when it considers the appraisals and performance of the staff team during the past year, their objectives for the coming year, and sets their individual remuneration. The Trustee Board delegates matters of staff administration, pay awards, benefits and organisation to the Personnel Committee. Issues, policies and/or procedures relating to volunteers are also considered here in the first instance. This committee is comprised of four Trustees, including the Chair and a Deputy Chair of the Trustee Board. Care is taken to ensure that members of the Personnel Committee do not completely change between meetings to ensure continuity of decision making. The work of the committee is often progressed by email, on a subject specific basis, in between meetings. Policies and procedures in relation to safeguarding, and compliance with the General Data Protection Regulation 2016/679 (GDPR) is within the remit of the Personnel Committee. The Appointments Panel, which interviews potential candidates to be considered for election to the Trustee Board is a sub-set of the Personnel Committee.

Remote Grant Decision Making Panels:

Referrals to the employment coaching service, the New Application Panel, Student & Apprentice Panel, Office Decisions process and decisions made by the Chair, Chief Executive or Operations Manager, are all additional decisions making routes which enable grant award decisions to be taken without applicants experiencing undue delay. All decisions are made within limits of type and financial amount that have been previously agreed and delegated by the Trustee Board. All awards determined by the remote grant decision making panels are reported to the following Grant Committee meeting for verification.

Foundation Funding:

At present all decisions relating to which organisations to award foundation funding to and at what level/duration etc are made by the full Trustee Board. Designated Trustees and/or working groups have been used to link to specific projects to help with progression and management. The formation of a specific sub-group for this work will be considered during 2022.

RISK MANAGEMENT

The Trustees have identified the major strategic risks to which Support Network is exposed, and have considered controls and actions to mitigate them. The Trustees also take appropriate steps to moderate and manage the operational risks to which volunteers and staff of Support Network are exposed. The risk register is reviewed in full on an annual basis, usually at the October Trustee Board meeting. Competence based training for Trustees & volunteers, employer's indemnity insurance and monitoring of new legislative requirements are all examples of steps that are routinely undertaken. Authority for the day to day management of risk is delegated by the Trustee Board to the Chief Executive. In addition, the Chief Executive, who is also the Company Secretary, undertakes regular reviews of governance related risks, to

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The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

complement those reviewed by the sub-committees. Work on the format of the risk register will be undertaken during 2022.

The Trustees have identified specific key risks to the charity and the actual steps taken to mitigate those risks. The risk value is calculated as: Impact x Probability, where 1= low and 5 = high. Save for the risk shown below, all other risks have a value of 3 or less:

MAIN RISKS:

Trustees feel that whilst the pandemic has brought uncertainties to our operating environment, these have largely been met without any long-term risks arising. However, a chosen activity, namely the introduction of foundation funding has brought associated yet not fully anticipated organisational risks. This is because this work is in its infancy for us – a contrast to the 109 year period we have of working with helping individuals. The year of 2021 was our first complete operational year of trying to meet our charitable objectives in this way – accordingly we are undertaking some work for the first time and are learning all the time. We are mitigating the risks through referencing the ACF (Association of Charitable Foundations) guidance and best practice publications and undertaking due diligence activities of the organisations and projects that we wish to fund. We place value on meeting the organisations directly, and in having regular contact with them to provide support to them where we are able to do so, and to also have early indication of any changes that might need to be made, e.g. timescales slipping, change of key personal etc.

CHARITY ACTIVITIES AND PUBLIC BENEFIT

Support Network is a charity which was established in 1913 for "the prevention and relief of poverty." In guidance concerning public benefit ('Public benefit: the public benefit requirement (PB1)'; 'Public benefit: running a charity (PB2)'; 'Public benefit: reporting (PB3) and 'Public benefit: rules for charities' February 2014) the Charity Commission recognised that for charities which have these charitable objectives, the rules relating to 'public' benefit are different in that:

"...in general, for a purpose to be charitable it must satisfy both the 'public' and 'benefit' aspects of public benefit. However, if the purpose is to prevent or relieve poverty, the position is different. In the case of charities for the relief (and in some cases the prevention) of poverty the courts consider the public benefit requirement can be met by satisfying the 'benefit' aspect only. In these cases there is no separate consideration of the 'public' aspect. Legal requirement: only charities with a purpose to relieve (and in some cases to prevent) poverty can define who can benefit by reference to: their family relationship (that means their descent from one individual); their employment by an employer; their membership of an unincorporated association"

('Public benefit: the public benefit requirement' Charity Commission, September 2013)

At 31 December 2021, there were over 115,000 current Members of the IMechE in over 140 countries around the world. Taken together with partners, widows, widowers, children, relatives and other dependants of such members and/or former members who are also eligible, the number of people eligible for assistance from Support Network is estimated to be in the order of at least 250,000 across the world. In its' guidance concerning charitable purposes ('Charitable Purposes', issued in September 2013 and updated in September 2014) the Charity Commission recognised that generally, the relief of poverty includes its prevention and the prevention of poverty includes its relief:

"... There can be no absolute definition of what 'poverty' might mean since the problems giving rise to poverty are multi-dimensional and cumulative. It can affect individuals and whole communities. It might be experienced on a long or short-term basis. Poverty can both create, and be created by, adverse social conditions, such as poor health and nutrition, and low achievement in education and other areas of human development…The prevention or relief of poverty is not just about giving financial assistance to people who lack money;

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The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

poverty is a more complex issue that is dependent upon the social and economic circumstances in which it arises. The commission recognises that many charities that are concerned with preventing or relieving poverty will do so by addressing both the causes (prevention) and the consequences (relief) of poverty.

“…Not everyone who is in financial hardship is necessarily poor, but it may still be charitable to relieve their financial hardship under the description of purposes relating to 'the relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantage. In most cases, the commission will treat the relief of poverty and the relief of financial hardship the same. Generally speaking, it is likely to be charitable to relieve either the poverty or the financial hardship of anyone who does not have the resources to provide themselves, either on a short or long-term basis, with the normal things of life which most people take for granted. Examples of ways in which charities might relieve poverty include: grants of money; the provision of items (either outright or on loan) such as furniture, bedding, clothing, food, fuel, heating appliances, washing machines and fridges; payment for services such as essential house decorating, insulation and repairs, laundering, meals on wheels, outings and entertainment, child-minding, telephone line, rates and utilities; the provision of facilities such as the supply of tools or books, payments of fees for instruction, examination or other expenses connected with vocational training, language, literacy, numerical or technical skills, travelling expenses to help the recipients to earn their living, equipment and funds for recreational pursuits or training intended to bring the quality of life of the beneficiaries to a reasonable standard; the provision of money management and debt counselling advice are examples of the ways in which charities might help prevent poverty... "

('Charitable Purposes', Charity Commission, September 2013)

Accordingly, to meet its poverty related objects, Support Network aims to prevent or relieve poverty by providing financial grants and/or non-financial support services to eligible individuals in 'need' due to experiencing difficulties in their lives, such as poor mental health, accidents, ill health, disability, bereavement, unemployment, relationship breakdown, the separation of families, meeting the care needs of others, and/or subsequently returning to employment after attending to any of the same. Thus in addition to cash grants and interest-free secured loans, Support Network also provides specialist advice, information, guidance, facilitated peer mentoring, employment coaching, counselling, loneliness support, respite breaks, and memberships of autism and dyslexia support groups. At a detailed level this can include:

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The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

In deciding what assistance to offer, Support Network assesses the needs of each applicant against their individual circumstances, including their social and economic conditions. We recognise that poverty is a relative concept, and what constitutes poverty in an affluent society is very different in absolute terms from poverty in a developing country. In this regard, and especially as much more can be understood from a face to face conversation at the applicant’s home, the organisation places considerable weight on the report and recommendations made by the Visitor, recognising that, particularly internationally, those based locally are better able to judge what is an appropriate and reasonable standard for the basic necessities of life. Mental health difficulties are also taken into account, and very often, a series of visits will be required to fully support applicants for whom mental health difficulties are an ongoing issue. Where possible all services are equally available, irrespective of geographical location, e.g. Support Network uses an employment specialist partner that can provide their services on a worldwide basis through the use of digital resources, email and/or online meetings and contact.

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The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

In seeking to expand the charitable objectives, the Trustees had due regard to the Charity Commission guidance on public benefit and accordingly decided to commence funding projects which would increase the reach of those assisted to be beyond the defined eligible group of IMechE members and their relatives. As such, the charity can now reach further in undertaking work to meet its objectives, and in 2021 made additional foundation funding grants to build on the first one that was made in 2020.

ACHIEVEMENT AND PERFORMANCE

Projects planned for 2021 were:

PRIORITISE MENTAL HEALTH INITIATIVES: In addition to promoting positive and/or preventative measures to maintain good mental health and wellbeing, we expanded our current offering to take a wider interpretation of mental health issues. The Sleepstation service was introduced to help address sleep disturbance both as an issue in itself but also as a way to address the underlying issues that might be causing sleep disturbance – many of which have a mental health root.

ASSIST WITH ENGINEERING CAREER FUTURES: We continued to focus on our Student, Apprentice, and Newly Qualified grant programmes, plus our employment training, career break return and mentoring support. We realised in year that providing engineering training support as a continuation to the employment coaching would be of value and accordingly introduced that. The number of student applications was lower than in 2021, largely due to many students continuing their studies at home rather than away from it.

FOUNDATION GRANT-MAKING: Support Network developed the foundation funding stream of our work in order to rise to the challenge of using more of our resources for relieving poverty and improving the world through engineering. Accordingly, we can now fund organisations working in a STEM related way in the areas of international development, education, and/or engineering innovation – areas chosen to also align with the objectives of the IMechE. Grants are either made to the organisation working in these areas or to an overarching body which works in partnership with the recipient community to facilitate the use of funds on the ground. We were pleased that during the year we were able to build on our 2020 work and to make more grants. As such we made awards and/or allocated funds to Global GreenGrants UK; Ecologia Youth Trust; Remap and EcoWorld to enable:

We look forward to seeing how these initiatives develop during 2022, plus extending our funding into more areas, with education in the round being a priority for new initiatives.

PLACE DIVERSITY & INCLUSION AT THE HEART OF ALL THAT WE DO: During 2021 we recruited an international Trustee to our Board. This has helped us to extend our reach into the wider IMechE membership, and to have a wider perspective at strategic level. We would like to recruit more international Trustees during the coming years. Holding meetings online is something that we will retain and use as our default method of meeting, as we have found that this also increases the participation possibility for Trustees who are in full-time employment an/or have other needs which prevent them from travelling so much. In our casework we take care to ‘listen between

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The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

the lines’ to be aware of whether cases might contain an element of discrimination and/or financial abuse. We have supported members to challenge instances of workplace bullying.

PANDEMIC RESPONSE: During 2021 we continued to meet the challenges brought by the effects of the COVID-19 pandemic on our service users, donors, grantees, volunteers and organisation. The main impact of this was shifting the core volunteer service largely online, as the possibility to visit people face-to-face continued to be limited. We are grateful to our volunteers for maintaining this important and ongoing contact with our applicants and longer-term beneficiaries. We found that whilst the number of new applications and general requests for assistance were lower than in 2020, the depth and nature of the presenting need was often greater, requiring more casework and longer term support.

SERVICE USER FEEDBACK

Service users regularly tell us that our interventions make a positive difference to them and their family. An example received during 2021 was:

“My apologies for the late reply, the past few weeks have been extremely busy with interviews and interview prep. And it all paid off! I was offered two jobs and accepted one a couple of days ago. Since then there's been a lot of paperwork to fill in so I've gone from one type of busy to another! I'm really excited to start my new role and I'm looking forward to the relief it will bring for both me and my partner. The last few months were becoming harder and it was taking everything to remain positive and keep ploughing on. The Renovo experience has been so, so, positive and I believe I got out of it what I put in. It's really important to dedicate the time to career prep for long lasting changes and as a result I've learned so much. Working with my career coach helped me to understand myself better in a professional capacity and to build my confidence. A really good opportunity that I would recommend to everyone.

Your loan to help pay off my debts has helped greatly: my monthly payments are much smaller now so the money I have saved from servicing the fees and interest charges can go towards our household shopping. It has been tough and we've had to scrape by at times but we're coming out of it now with my new job on the horizon which will bring with it financial security and a chance to pay off the remaining debt. The grant I was awarded to see my dad has helped greatly and I have been able to take him to his hospital appointments and spend quality time with him where he's comfortable at home. I went to the dentist (and also had my eyes tested), the wait lists for dentist appointments very long right now but I have been able to get some treatments done so far. I hope this information has helped to provide an idea of just how much of a difference Support Network has made to me and my partner. We wouldn't be where we are right now, which is in a positive and promising place, without this help and support. Thank you to you and the team. We really appreciate it. And it makes me so proud to be an IMechE chartered engineer”.

FINANCIAL REVIEW

Support Network has three main sources of income: (a) donations received from IMechE members during the year, with associated Gift Aid receipts where applicable; (b) legacy and in memoriam gift donations; and (c) investment portfolio gains, received as dividend income. (Capital gains are also obtained from the investment portfolio, and where funds are held as 'accumulation units' any receipts are automatically reinvested into the investment holding, rather than drawn as income per se, in order for the same to hold long-term value against changes in inflation over time). Support Network has an unrestricted investment fund which is invested to provide a regular and reliable source of income for Support Network. The Trustees are legally bound to promote the best long-term interests of Support Network and to make adequate provision for both present and future beneficiaries. The overall investment policy is to obtain the best financial return from Support Network's assets, consistent with acceptable risk. To achieve this, the given powers of investment will be exercised so that the assets yield the best long-term return by way of both income and capital appreciation, judged in relation to the risks of investment. The portfolio is diversified in respect of asset class, geographical

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The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

exposure and investment managers.

1) Results

The net surplus for the year ended 31 December 2021 was £3,838,677. Expenditure was £729,425.

2) Voluntary income

Voluntary income, comprising donations and bequests, were received at a value of £299,030. 2020: £288,368). In 2021, dividends and interest from the investment portfolio amounted to £968,508 (2020: £901,425). The Trustees continue to have a preferred strategy of holding Support Network's equity-based investments in accumulation units, (rather than drawing an income stream from the same), in order to offset any losses in capital value, and hence to help to preserve funds for the future, save for the COIF Charifund holding where the dividend was drawn in order to provide greater operational income during the financial year. The Trustees again decided to meet any final operational deficit at the year end, through drawing from the reserves, rather than limiting grant or service provision expenditure in year. From the total expenditure 99% was spent on charitable activities (99% in 2020). This included charitable grants of £364,494 (2020: £346,514).

3) Investment Portfolio

The allocation of Support Network's investment portfolio at the close of 2021 was:

VALUE ASSET INVESTMENT BENCHMARK
30% Equities M&G Charifund FTSE All Share Index
36% Equities M&G Global Dividend Fund FTSE All Share Index
14% Equities Fidelity Institutional Funds FTSE All Share Index
10% Multi Asset Cazenove Charity Multi Asset
FTSE All Share Index
Fund
6% Property Charities Property Fund HSBC PUT Index
3% Equities COIF Investment Fund FTSE All Share Index
1% Cash COIF Deposit Fund London Interbank Rate
0% Bonds COIF Fixed Interest Fund WM Co. UK Bonds

We do not have any control over how the JP Dudin Trust is invested, though we receive dividends from it, so it is not shown in the investment portfolio above.

Given the low interest rates now offered on cash deposits, the amount held in the COIF Deposit Fund has been maintained at a low level.

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The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

In the annual review of investment policy for the charity, the Trustees considered whether there should be any social, environmental or ethical considerations to impose constraints on where Support Network should invest, and decided that this should be fully reviewed during 2022. Trustees discussed the potential for positive screening, (e.g. to directly invest in mechanical engineering companies), plus the possibility of exclusions of certain assets with a decision made to explore the current holding to establish an internal benchmark building to a full ESG (environmental, social and governance) alignment during the 5 year cyclical review of the organisation’s investments which is due to be held in 2023.

5) Reserves Policy and Designated Fund

Support Network is a 'closed' charity in that it does not actively seek funding from outside the membership of the Institution of Mechanical Engineers. Each year, a significant proportion of the charity's income is derived from annual and irregular donations, and bequests. Legacy income, however, is very uncertain, as are the levels of donations per se, and it cannot be guaranteed that voluntary donation levels will be repeated (or increased) year on year. In order to safeguard the ongoing provision of grants to current beneficiaries, and to cover nondiscretionary expenditure, (such as salaries, pension contributions, rent), the Trustees hold reserves at a minimum level of one year's average expenditure. In anticipation of increased grant giving and/or social investment initiatives, it has been agreed to increase the level of reserves from £1,000,000 to £2,000,000.

Additionally, during 2020, Trustees agreed to create a designated fund to meet operational expenditure ‘in perpetuity’ and set this fund at £8,000,000. As at 31 December 2021, total funds exceeded this combined £10,000,000 amount. Accordingly, the funds are held to ensure future needs can be met, especially if there is an unexpected large-scale event requiring additional resources to be provided e.g. a significant downturn in a sector of the mechanical engineering industry at a future date.

Accordingly, the Trustees are confident that the introduced foundation giving approach can be further implemented and established, as the level of immediate and long-term reserves has been more than achieved, and that this is an active strategy in order to best use some of these resources. The reserves policy is reviewed annually, taking into account the latest forecasts of income, expenditure and changes in grant making policy.

6) Grant Making Policy

All grants made in 2021 were for the benefit of individuals, save for the foundation funding grants that are detailed below. In 2021, 275 members contacted us for the first time, their requests including help with finances, employment coaching, dyslexia support, social visits or legal advice. During the year 751 grant payments were made. The majority of grants and support decisions were either determined/confirmed by the Grants Committee, (which met twice during the year); through the remote decision making panels; or were initially made by the staff team, and subsequently authorised by a designated Trustee through the Office Decisions process. All proposed Office Decisions were made available on a password restricted basis to Trustees via the Extranet, to allow Trustees to see whether they agreed with the decisions made by the staff. Where the Chair, CEO or the Operations Manager made grant funding decisions, these were made within the agreed delegated limits of both value and type of award, and were reported to the subsequent Grant Committee meeting.

Considerable care is taken to ensure that applicants are able to apply for all welfare benefits, state support and/or other third party assistance that they might be entitled to, before

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The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

charitable grants are made. Support Network aims to make a positive impact and difference on the lives of people who are assisted, and accordingly at the outset of providing support, the avoidance of creating long-term dependency is paramount, so that wherever possible, people are helped to help themselves.

Examples of grants awarded included: allowances towards fuel and utility costs; travelling expenses for visiting people in hospital or nursing care; television licence fees; telephone calls; computer equipment, broadband and wifi access; crisis payments to relieve sudden unanticipated financial needs; replacement items such as washing machines, cookers, fridges, heating appliances; health and medical equipment; powered mobility vehicles; essential house repairs and insulation; adaptations to the homes of disabled people; gardening costs for older people; care help at home; personal emergency alarms; arrangements for respite care and the costs of respite breaks; and assistance towards residential and care home care costs.

A separate programme of grants is available for disabled or disadvantaged Apprentices, undergraduates, and other students who are IMechE members, irrespective of where in the world they live or study. A ‘Newly Qualified’ fund is available for IMechE members in the first three who have completed their studies or training in the immediate past three years, which seeks to ease the transition into the world of work.

The foundation funding element of our work is divided into the areas of international development; education; and engineering innovation. We want our work in these areas to ideally have a STEM (science, engineering, technology, mathematics) focus and to also align with the work of the IMechE. We additionally frame these areas within the UN Sustainable Development Goals. Whilst we have a preference for making award to or through UK based charitable organisations (as we feel that in the initial stages of our entering this work this is a close ‘fit’ for undertaking our due diligence process) this is not a fixed requirement, especially where we feel that the ultimate outcomes and impact of the funded work will help us to meet our expanded charitable objectives in respect of using engineering to relieve poverty.

7) Pension Funds

All current Support Network staff are enrolled in the IMechE's contribution based pension scheme which is operated by Scottish Widows plc. During 2021, the employer rate was 10% (2020: 10%). The company used to operate a defined benefit scheme which is now closed. As prescribed by FRS 102, the funding level of the defined benefit pension fund must be disclosed. After an actuarial report carried out for the IMechE consolidated accounts to 31st December 2021, the pension fund was 100% funded.

8) COVID-19 AND ITS IMPACT ON THE CHARITY

In common with most investors, during the Spring of 2020 the organisation experienced a significant decrease in the value of our portfolio, though with good stewardship we were able to recover the ground lost to finish the financial year in roughly the same place that we had started it. In 2021 our portfolio gained ground again and as such the charity has not experienced a long-term financial detriment. As the mechanical engineering sector was not one of those which saw long-term and/or widespread limitations, we accordingly did not have a peak period of requests but rather a pattern of those who needed help, needing more support than had previously usually been the case at the initial point of contacting us. As such we were mostly able to meet these needs and work with members to achieve positive solutions for them. Based on this past experience, at date, we feel that COVID-19 will not adversely affect the charity going forward.

Statement of Trustees' responsibilities in respect of the Trustees' annual report and

Page 13 of 31

The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

the financial statements

The Trustees are responsible for preparing the Trustees' Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Trustees to prepare financial statements for each financial year. Under that law they have are required to prepare the financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice).

Under company law the Trustees must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the charitable company and of the excess of income over expenditure for that period. In preparing these financial statements, the Trustees are required to select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charitable company will continue its activities.

The Trustees are responsible for keeping adequate accounting records that are sufficient to show and explain the charitable company's transactions and disclose with reasonable accuracy at any time the financial position of the charitable company and enable them to ensure that the financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the charitable company and to prevent and detect fraud and other irregularities.

Each of the persons who is a Trustee at the date of approval of this report confirms that:

The trustees have taken advantage of the small companies exemption in preparing the trustees’ annual report and the financial statements.

PLANS FOR FUTURE PERIODS

During 2022 Support Network plans to continue our core work whilst responding to additional needs and challenges faced by members and their families. As such we will work to:

Page 14 of 31

The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

to support programmes that enable STEM focussed work experience programmes and/or remove barriers to entering the mechanical engineering profession.

IN APPRECIATION

The Trustees would like to convey their sincere thanks to the many volunteers who have so generously given their time in support of Support Network, and especially for their continued adaptability and commitment during the extended periods of lockdown and enforced online ‘visiting’. They would also like to express their thanks to the staff, who have continued to work effectively throughout the year including largely working from home and being away from colleagues. The combined team of staff and volunteers make it possible to continue the charity's essential work of relieving poverty whilst minimising administrative overheads. Gratitude is also expressed to IMechE colleagues for their support and assistance throughout the year. With the continued contribution of this combined team, Support Network looks forward with confidence to enhancing the lives of IMechE members and their dependents who find themselves in need of assistance, and additionally to extending and expanding our foundation funding work and associated impact.

This report was approved by the Trustees on 29 July 2022 and signed on their behalf by:

B Dagley B Dagley (Sep 29, 2022 13:09 GMT+1)

Bruce Dagley, Chair

Andrew Rowland (Sep 30, 2022 09:26 GMT+1)

Andrew Rowland, Treasurer

Page 15 of 31

The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

Reference and Administrative Information

Name: The Benevolent Fund of the Institution of Mechanical Engineers (Support Network)

Charity Reg. No.209465 Company Reg. No.130981 Registered Office: 3 Birdcage Walk, London SW1H 9JJ

ROLE NAME COMMITTEES 2021 TB
MEETINGS
ATTENDED		 NOTES
Chair Bruce Dagley 1,2,3,7 4
Deputy Chair Anne Woodbridge 1,2,6 4
Deputy Chair Christian Young 1,7 4
Treasurer Andrew Rowland 1,3 2
Trustee Farah Baksh 1,5 4
Trustee Christine Clark 1,3,7,8 4
Trustee John Cornforth 1,6,8 4
Trustee Tony Frater 1,7 4
Trustee Chris Taylor 1,2,7 4
Trustee Nicole Rinaldi 1,4 2 Retired July 2021
Trustee Sarah Templey 1,2,9 2 Retired July 2021
Trustee Elisabeth Wilson 1,10 2 Elected July 2021
Trustee Chukwuma Onunkwo 1,7 2 Elected July 2021
Trustee Chirantan Shukla 1,3,11 3 Retired Jan 2022
Trustee Al Peasland 1 0 Co-opted Jan 2022
CEO & Co. Sec. Anni Broadhead 1,2,3,4,5 4

Key to Committees

Key Management Personnel

The Trustees have delegated significant authority and responsibility in the day-to-day running of the charity to the Chief Executive, Anni Broadhead.

Investment Managers:

Cazenove Schroder & Co. Limited, 31 Gresham Street, London EC2V 7QA CCLA Investment Management Limited, 80 Cheapside, London EC2V 6DZ Cordea Savills LLP, 33 Margaret Street, London W1G 0JD

Fidelity International, 130 Tonbridge Road, Tonbridge, Kent, TN11 9DZ M&G Ltd, Laurence Pountney Hill, London EC4R 0HH

Bankers: NatWest Bank plc, 38 Strand, London WC2N 5JB Auditors: Moore Kingston Smith LLP, Devonshire House, 60 Goswell Road, London, EC1M 7AD

Solicitors: Bircham Dyson Bell, 50 Broadway, London SW1H OBL

Page 16 of 31

The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF THE BENEVOLENT FUND OF THE INSTITUTION OF MECHANICAL ENGINEERS

Opinion

We have audited the financial statements of The Benevolent Fund of the Institution of Mechanical Engineers (‘the company’) for the year ended 31 December 2021 which comprise the Statement of Financial Activities, the Summary Income and Expenditure Account, the Balance Sheet, the Cash Flow Statement] and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 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 charitable company 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 charitable company'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.

Other information

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

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of 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 themselves. 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

Page 17 of 31

The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the trustees’ annual report.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

Responsibilities of trustees

As explained more fully in the trustees’ responsibilities statement set out on page 12, the trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

Auditor’s Responsibilities for the audit of the financial statements

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 aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs (UK) we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

Page 18 of 31

The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

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.

The objectives of our audit in respect of fraud, are; to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the charitable company.

Our approach was as follows:

Page 19 of 31

The Benevolent Fund of the Institution of Mechanical Engineers Report of the Trustees For the year ended 31 December 2021

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

Use of our report

This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members 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 any party other than the charitable company and charitable company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Luke Holt (Senior Statutory Auditor) for and on behalf of Moore Kingston Smith LLP, Statutory Auditor

Devonshire House 60 Goswell Road London EC1M 7AD

Page 20 of 31

The Benevolent Fund of the Institution of Mechanical Engineers

Statement of Financial Activities For the year ended 31 December 2021

Notes
Income and Endowments from:
Donations and Legacies
Donations, bequests
1
Investments
Interest & dividends
2
Total
Expenditure on:
Raising funds
Charitable activities
3
Total
Net gains / (losses) on investment assets
9
Net income / (expenditure)
Transfers
14
Net movement in funds
Reconciliation of funds:
Total funds brought forward
14
Total funds carried forward
14		 Total
(Unrestricted)
General Funds
2021
£
299,030
968,508
1,267,538
7,799
721,626
729,425
3,300,564
3,838,677
-
3,838,677
23,147,999
26,986,676		 Total
(Unrestricted)
Designated
Funds
2021
£
-
-
-
-
-
-
-
-
-
-
8,000,000
8,000,000		 Total
(Unrestricted)
Funds
2021
£
299,030
968,508
1,267,538
7,799
721,626
729,425
3,300,564
3,838,677
-
3,838,677
31,147,999
34,986,676		 Total
(Unrestricted)
Funds
2020
£
288,368
901,425
1,189,793
7,242
698,036
705,278
(506,436)
(21,921)
-
(21,921)
31,169,920
31,147,999

All income and expenses derive from continuing operations and relate to general funds.

The notes numbered 1 to 21 form part of these accounts.

Page 21 of 31

The Benevolent Fund of the Institution of Mechanical Engineers

Balance Sheet

Balance Sheet
As at 31 December 2021
Notes
Fixed Assets
Tangible assets
8
Investments:-
Stock Market Investments
9
Total fixed assets
Current Assets
Debtors
12
Cash at bank and in hand
11
Loans (due after more than one year)
10
Total current assets
Liabilities
Creditors: - amounts falling due within one year
13
Net current assets
The funds of the charity:
Unrestricted funds
Designated funds
Total assets less current liabilities		 Total
Funds
2021
£
1
33,825,841
33,825,842
39,203
81,818
1,110,548
1,231,569
70,735
70,735
1,160,834
34,986,676
26,986,676
8,000,000
34,986,676		 Total
Funds
2020
£
1,322
30,137,262
30,138,584
54,934
83,776
1,003,277
1,141,987
132,572
132,572
1,009,415
31,147,999
23,147,999
8,000,000
31,147,999

.

The accounts have been prepared in accordance with the special provisions relating to small companies within Part 15 of the Companies Act 2006 and in accordance with the provision of the Financial Reporting Standard 102

These financial statements were approved by the Trustee Board on 29 July 2022 and signed on its behalf by:-

B Dagley B Dagley (Sep 29, 2022 13:09 GMT+1) Bruce Dagley, Chair

Andrew Rowland (Sep 30, 2022 09:26 GMT+1) Andrew Rowland, Treasurer.

Members of the Trustee Board

The notes numbered 1 to 20 form part of these accounts.

Company Number 130981

Page 22 of 31

The Benevolent Fund of the Institution of Mechanical Engineers

Statement of Cash Flows For the year ended 31 December 2021

Notes
2021
£
Cash flows from operating activities:
Net cash used in operating activities
(582,451)
Dividends and interest from investments
715,493

Bank interest received
10
Purchase of tangible fixed assets
-
Purchase of Investments
(100,000)
Proceeds from sale of investments
-
Change in cash held by investment
manager
11
(35,010)
580,493
(1,958)
83,776
81,818
Net (expenditure)/income for the period
£
Net income for the reporting period
3,838,677
Adjustments for:
Dividends, interest from investments
(968,508)
Depreciation charges
1,321
Decrease / (increase) in debtors
(91,540)
Increase / (decrease) in creditors
(61,837)
Gains / (losses) on investments
(3,300,564)
Net Cash used in operating activities
(582,451)
At 01/01/21
Cashflows
Non-cash
Net Debt Note
£
£
£
Cash
83,776
(1,958)
-
83,776
(1,958)
0
Cash and cash equivalents at the end of the reporting
i d
Cash flows from investing activities:
Net cash provided by investing activities
Change in cash and cash equivalents in the reporting
i d
Cash and cash equivalents at the beginning of the reporting period		 2020
£
(542,018)
`
569,223
77
-
-
5,284
(10,101)
564,483
22,465
61,311
83,776
£
(21,921)
(901,425)
1,585
(134,119)
7,426
506,436
(542,018)
At 31/12/21
£
81,818
81,818

Page 23 of 31

The Benevolent Fund of the Institution of Mechanical Engineers

Accounting Policies For the year ended 31 December 2021

ACCOUNTING POLICIES

The Charity is a private limited company (Charity Reg. No 209465, Company Reg. No 130981), which is incorporated and domiciled in the UK and is a public benefit entity. The address of the registered office is: 3 Birdcage Walk, London SW1H 9JJ.

A Summary of the accounting policies which have been applied consistently is set out below.

a) BASIS OF ACCOUNTING

The accounts (financial statements) have been prepared in accordance with the Charities SORP (FRS102) applicable to charities preparing their accounts in accordance with FRS102 the Financial Reporting Standard, including Update Bulletin 2, applicable in the UK and Republic of Ireland, the Companies Act 2006, and the UK Generally Accepted Practice as it applies from 1 January 2015. The accounts comply with applicable charity and company law in England and Wales.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest pound. The financial statements have been prepared on the historical cost convention, modified to incorporate the revaluation of investments.

b) GOING CONCERN

The financial statements have been prepared on a going concern basis. The financial statements do not include any adjustments that would result from the company not being able to continue for the next 12 months. There are no material uncertainties about the company's ability to continue as a going concern. The trustees have assessed whether the use of the going concern basis is appropriate and have considered possible events or conditions that might cast significant doubt on the ability of the entity to continue as a going concern. The trustees has considered the impact of COVID-19 on the investment portfolio and investment income generation to be short term. The trustees have made this assessment for a period of at least one year from the date of approval of the financial statements. The trustees conclude there is a reasonable expectation that the Fund has adequate resources and unrestricted reserves/cash balances to continue in operational assistance for the foreseeable future. The Fund therefore continues to adopt the going concern basis in preparing its financial statements.

c) FUND ACCOUNTING

The financial statements make reference to Total Funds. These funds are unrestricted and therefore can be drawn on when required.

All monies received, subject to the express direction otherwise by the donor or testator, will be added to these funds. As at the 31 December 2021, the Trustee board received no monies that are subject to express direction.

d) FINANCIAL ASSETS

The Charity has elected to apply the provisions of Section 11 "Basic financial instruments" of FRS102 to all of its financial instruments. Financial assets are recognised in the company's statement of financial position when the Charity becomes party to the contractual provisions of Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.

Page 24 of 31

The Benevolent Fund of the Institution of Mechanical Engineers

Accounting Policies For the year ended 31 December 2021

Loan and receivables

Life-time interest free loans are made to approved beneficiaries which are repayable only from the estate of the beneficiary or, in the case of joint loans, from the estate of the second surviving partner. These are accounted for at cost.

Impairment of financial assets

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. The impairement loss is recognised in the statement of financial i i i

e) FINANCIAL LIABILITIES

Basic financial liabilities are initially measured at transaction price, unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Other financial liabilities classified as fair value through profit or loss are measured at fair value.

f) INVESTMENTS

Investments are stated at fair value at the balance sheet date. The statement of Financial Activities includes the net gains and losses on revaluation and disposals of investment funds throughout the year.

g) TANGIBLE FIXED ASSETS

Tangible fixed assets are stated at cost (a capitalisation limit is in place of £1,000) less depreciation calculated at rates intended to write off their cost less estimated residual value over the period of their estimated useful lives at the following rates:

Furniture 20% per annum on written down value Equipment 33% per annum on cost

h) RESOURCES EXPENDED

Expenditure is accounted for on an accruals basis inclusive of any VAT which cannot be recovered. Expenditure is recognised once there is legal or constructive obligation to transfer economic benefit to a third party, it is probable that a transfer of economic benefits will be required in settlement and can be measured reliably. Grants payable are charged in the year when the offer is conveyed to the recipient except in those cases where the offer is conditional, such grants being recognised as expenditure when the conditions attaching are fulfilled. Grants offered subject to conditions which have not been met at the year end are noted as a commitment, but not accrued as expenditure. Support costs are allocated between the categories of expenditure depending on their nature.

Page 25 of 31

The Benevolent Fund of the Institution of Mechanical Engineers

Accounting Policies For the year ended 31 December 2021

i) INCOMING RESOURCES

Incoming resources are recognised in the period in which the charity is entitled to receipt, the amount can be measured reliably and likelihood of receipt is probable. Bank interest is accounted for in the period for which the charity is entitled to receipt.

Legacies are recognised when all the criteria have been met; entitlement when probate has been granted and the executor(s) of the estate have established that there are sufficient assets in the estate, after settling liabilities to pay legacy income; the value is reliably measured and the likelihood of receiving the legacy is probable.

j) POST-RETIREMENT BENEFITS

The charitable company has associated member status in the pension scheme operated by the Institution of Mechanical Engineers which provides benefits based on final pensionable pay. The assets of the scheme are held separately from those of the charitable company. The charitable company is unable to identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis and therefore, as required by FRS102, accounts for the scheme as if it were a defined contribution scheme. As a result, the amount charged to the Statement of Financial Activities represents the contributions payable to the scheme in respect of the accounting period.

k) CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

In the view of the trustees in applying the accounting policies adopted, no judgements were required that have a significant effect on the amounts recognised in the financial statements, nor do any estimates or assumptions made carry a significant risk of material adjustment in the next financial year.

Page 26 of 31

The Benevolent Fund of the Institution of Mechanical Engineers

Notes to the Financial Statements For the year ended 31 December 2021

1
Incoming Resources
JP Dudin Bequest
2
Investment Income
Bank Interest
3
Charitable Activities
Grants for the relief of poverty
Foundation grants
Donations & Gift Aid Reclaim
Dividends & loan stock interest - UK investments
Allocation from support costs (note 4)		 2021
£
296,808
2,222
299,030
2021
£
968,498
10
968,508
2021
£
307,024
57,050
357,552
721,626		 2020
£
285,453
2,915
288,368
2020
£
901,348
77
901,425
2020
£
346,514
351,522
698,036

Grants made to individuals were for the relief of poverty. During the year there were 201 beneficiaries (2020: 417).

Analysis of Grants
Grants to
institutions
Grants for the relief of poverty
-
Foundation grant: Ecologia
46,943
Foundation grant: Rapid Foundation
108
Foundation grant: Remap
10,000
Total
57,051
4
Support Cost
Training Volunteers
Staff Costs
Grants committee expenses
Visiting beneficiaries
Publications
Printing & Stationery
Postage & telephone
Communications & database
Depreciation
Extranet for use by Volunteers
Accommodation charges
Accounting & Computer Services
Travel & subsistence
Bank charges
Subscriptions to professional bodies
Sundry
Loan write off
Homeworking costs
Allocation from governance costs (note 5)		 Grants to
Individuals
307,024
-
-
-
307,024		 Support
Costs
301,523
46,102
106
9,821
357,552
2021
£
5,710
253,063
98
282
995
1,241
2,230
30,968
1,321
1,590
8,693
25,601
130
1,038
2,612
1,573
-
1,268
19,139
357,552		 Total
608,547
93,045
214
19,821
721,627
2020
£
2,188
238,746
23
915
1,044
1,734
2,663
29,261
1,585
204
25,806
25,524
362
1,375
2,020
1,899
-
-
16,173
351,522

The reason for the allocation of support and governance costs here is that the significant proportion of these costs relate to Charitable activities.

Page 27 of 31

The Benevolent Fund of the Institution of Mechanical Engineers

Notes to the Financial Statements For the year ended 31 December 2021

5
2021
£
13,166
Legal Fees
-
Committee expenses
3,193
Compliance costs & insurance
2,780
19,139
6
Staff
2021
Staff costs comprise:-
£
Salaries and other emoluments
208,649
Social security costs
20,014
Other pension costs
21,750
Training
2,650
253,063
2021
£60,001 to £70,000
-
£70,001 to £80,000
1
Other: governance costs
Audit fee (current year inc VAT)
No payments have been made to the auditor or their associates in respect of non-audit work
year.
Those earning over £60,00 in the year are:		 2020
£
9,920
1,776
2,502
1,975
16,173
2020
£
194,180
18,845
24,666
1,055
during the
238,746
2020
-
1

The total amounts paid in respect of key management personnel in 2021 : £82,158 (2019: £80,759) and pension contribution of these high paid employees was in 2021 £8,457 (2020: £6,703).

The average number of persons employed by the entity under contracts of service was 4 (2020: 4)

7
Trustee Board
Travel and subsistence expenses paid
Number of members who claimed		 2021
£
3,193
No.
6		 2020
£
2,502
No.
8

No member of the Committee received any remuneration in respect of services to the Fund for the year.

8
Cost
At 1 January
Additions
Depreciation
At 1 January
Amount provided
At 31 December
Net Book Value at 31 December 2021 and 31 December 2020
Fixed Assets - Furniture and Office Equipment
At 31 December		 2021
£
43,052
-
43,052
41,730
1,321
43,051
1		 2020
£
43,052
-
43,052
40,145
1,585
41,730
1,322

Page 28 of 31

The Benevolent Fund of the Institution of Mechanical Engineers

Notes to the Financial Statements For the year ended 31 December 2021

9
£
Total
-
2006
Income
Purchases and accumulations
Disposal proceeds
-
10Loans
Additions
Repayments
Written off
Carried forward 31st December
Brought forward 1st January
Charity Property Fund Income Units
CCLA COIF Charities Investment Fund Income Units
CCLA COIF Fixed Interest Fund Units
All investments are listed UK securities.
Movements of investments
Market value at 1 January
Net investment gain/(loss)
Cash with investment manager
Market value at 31 December
Historic costs at 31 December
Unrealised investment gains at 31 December
Cazenove Charity Multi Asset Fund Income Units
Investments (at market value)
J P Dudin income account
M&G Chari Fund Accumulation Units
M&G Global Dividend Fund Accumulation Units
Fidelity Fund Shares		 2021
£
-
10,125,682
12,407,051
4,602,757
3,316,281
2,157,386
1,039,130
-
33,648,287
2021
Capital
£
29,994,718
353,005
-
3,300,564
33,648,287
177,554
33,825,841
19,753,985
14,071,856
2021
£
1,003,277
158,439
(51,168)
-
1,110,548		 2020
£
-
8,930,862
10,864,626
4,314,304
3,117,705
1,952,738
814,483
-
29,994,718
2020
Capital
£
30,174,313
332,125
(5,284)
(506,436)
29,994,718
142,544
30,137,262
19,400,980
10,736,282
2020
£
861,708
165,465
(23,896)
-
1,003,277

These loans are interest free and are repayable to the Benevolent Fund from the estate of the beneficiaries in more than one year. The amount of provided unsecured loans in 2021 was £82,236 (2020: £126,020).

11
2021
£
81,818
177,554
259,372
12 Other Debtors
Amounts due from the Institution of Mechanical Engineers
Other debtors
Cash at bank and in hand
Cash with investment manager -
see note 9
Analysis of Changes in Cash		 Cash flow
£
(1,958)
35,010
33,052
2021
£
7,889
31,314
39,203		 2020
£
83,776
142,544
226,320
2020
£
7,651
47,283
54,934

Page 29 of 31

The Benevolent Fund of the Institution of Mechanical Engineers

Notes to the Financial Statements For the year ended 31 December 2021

13
Creditors
Amounts due to the Institution of Mechanical Engineers
Audit fees
Accruals
14 Analysis of Funds at 31 December 2021
1 January
2021
Income
Expenditure
£
£
Unrestricted
Designated Funds
8,000,000
-
-
Untrestricted Funds
23,147,999
1,267,538
(729,425)
Total funds
31,147,999
1,267,538
(729,425)		 2021
£
55,547
11,500
3,688
70,735
Gains /
losses
£
-
3,300,564
3,300,564		 2020
£
119,018
9,500
4,054
132,572
Transfers
£
-
-
-		 31
December
2020
£
8,000,000
26,986,676
34,986,676

During 2020, Trustees agreed to create a designated fund to meet operational expenditure 'in perpetuity' and set this fund at 8,000,000.

15 Financial Commitments

The Trustee Board has given outline approval to help certain beneficiaries during the coming year. Because actual circumstances will vary, it is not possible to accurately quantify the amount at this time but the level is not expected to be material.

16 Pensions

All current employees participate in the Institution of Mechanical Engineers contribution based pension scheme. In 2021 the Institution matched employee contributions to this plan up to a maximum of 10% of salary (2020: 10%).

The Benevolent Fund has associated member status in the defined benefit pension scheme operated by the Institution of Mechanical Engineers, which is now closed to new members. The latest full actuarial valuation was carried out at 1 December 2015 and updated to 31 December 2019 by a qualified independent company of actuaries, and can be found in the consolidated accounts of the Institution. As prescribed by FRS102, the funding level of the pension fund must be disclosed; after an actuarial report carried out for the Institution of Mechanical Engineers consolidated accounts to 31 December 2021, the pension fund was 100% (2020: 86%) funded.

The Benevolent Fund is therefore exposed to actuarial risks associated with the scheme operated by the Institution of Mechanical Engineers and and is unable it identify its share of the underlying assets and liabilities of the scheme on a consistent and reasonable basis and therefore, as required by Section 28 of FRS 102 "Employee benefits", accounts for the scheme as if it were a defined contribution scheme. As a result, the amount charged to the income and expenditure account represents contributions payable to the scheme in respect of the accounting period. The Benevolent Fund has entered into an agreement whereby the Fund recognises a liability for contributions payable that arise from the agreement ("Deficit Recoverable Plan") to the extent that they relate to the deficit and resulting expense in the income and expenditure account. As at 31 December 2020 no such "Deficit Recoverable Plan" was in place and as a result no liability has been recognised in these financial statements relating to this.

Page 30 of 31

The Benevolent Fund of the Institution of Mechanical Engineers

Notes to the Financial Statements For the year ended 31 December 2021

17 Taxation

The Benevolent Fund is considered to pass the tests set out in Paragraph 1 Schedule 6 Finance Act 2010 and therefore it meets the definition of a charitable trust for UK income tax purposes. Accordingly, the charity is potentially exempt from taxation in respect of income or capital gains received within categories covered by Part 10 Income Tax Act 2007 or Section 256 of the Taxation of Chargeable Gains Act 1992, to the extent that such income or gains are applied exclusively to charitable purposes.

18 Ultimate parent

In the opinion of the trustees there is no controlling party.

19 Related Party Transactions

There were no related party transactions in both 2021 and 2020, other than trustees' travelling and subsistence expenses reported in Note 7.

20
Land and Buildings
Payments in less than one year
Payments in one to five years
Operating Lease Commitments		 2021
-
10,410
10,410		 2020
22,712
10,410
33,122

21 Company Limited by Guarantee

The charity is a company limited by guarantee and has no share capital. The liability of each member in the event of winding up is limited to £1.

Page 31 of 31