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2021-03-31-accounts

/2 The Children's Society

The future can be what you want IL to be.

Annual report 2021

Contents

ontents
Introduction 4
Mission Vision Values 8
Strategic Report 10
Plans and Objectives for 2021/22 12
Achievements and performance 2020/21 13
Objective 1 14
Objective 2 18
Objective 3 20
Governance Structure and Management 22
Legal status and objects 22
Public beneft 22
Governance and management 23
Young trustees 24
Delegation and committees 25
Modern slavery 26
Principal risks and uncertainties 26
Our people 28
Volunteers 29
Remuneration 30
Fundraising and supporter engagement 30
GDPR 31
Energy and carbon reporting 31
Financial Review 32
Statement of Responsibilities 38
Independent Auditor’s Report 39
Financial Statements 44
Corporate Information 70
Thank you to supporters, partners and funders 74

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The Children’s Society

Introduction

The true impact of the global pandemic on young people’s lives will take years for us to understand fully.

They have missed out on so much, from school and friendships to freedom and choice. Levels of anxiety and loneliness have increased. Young people’s well-being was already at a 10 year low and now we face a mental health emergency.

Young people whose lives are toughest, and for whom hope matters the most, have lost even more. They’ve been locked down at home where no one could see or stop abuse or neglect, many haven’t had enough money for food, others are more vulnerable than ever to exploitation.

The Children’s Society threw its collective energy at the coronavirus crisis. Within weeks of lockdown, our practitioners had adapted their work with young people from face-to-face to online and our drop-in mental health services switched to phone-lines. I’m staggered at the speed with which digital transformation took place.

Our policy and research team turned their attention to listening and sharing the experiences of young people, practice and organisations on the ground. Their regular insight briefs were shared across the sector, and used at the highest levels of Government to inform decisionmaking. Our Chief Executive Mark Russell met with senior

Government and charity leaders every week to make sure children and young people were prioritised.

Our campaigning pivoted to focus on the most vulnerable in lockdown, ensuring families had enough money to survive. With the support of thousands of campaigners across the country, we helped secure £233 million from Government to support families across England and more than £20 million over two years in Wales to help the hardest hit families through the coronavirus crisis. When the Government suspended the ‘No Recourse to Public Funds’ condition during lockdown for lowincome migrant families and provided free school meals we welcomed their action but demanded this be made permanent. Nearly 20,000 campaigners took action and we continue to push for change on this important issue.

It’s estimated that during the pandemic sexual exploitation rose by 25% and criminal exploitation by more than 40%, with up to a quarter of cases involving young people. During lockdown, our Prevention team worked directly with over 13,000 professionals across policing, social care, health, business and others to prevent exploitation. In September the team launched #LookCloser, a national campaign to increase awareness of exploitation and encourage everyone to help safeguard children, with a further week of action in March 2021. This timely intervention engaged more

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than 45,000 partners with scores of online training sessions and we were thrilled when the team won the Children and Young People Now 2020 Award for partnership working.

The pandemic has not defined all of our work this year. Our long term focus on designing services that truly meet the needs of the most vulnerable young is paying dividends. Our Inside Out Programme, which offers intensive coaching for vulnerable young people who have experienced multiple moves in the care system, has seen excellent results. The number of times the young people in the programme have gone missing has been cut from 34 to just 6, placement moves have reduced by half, and offending fell by 60%. Young people in the programme said they were happier, more settled and more confident. Having the time and space to try new approaches with young people is an important part of our future.

As coronavirus became a reality for our supporters, many activities were cancelled – including the London marathon and other fundraising events. It hit our wonderful House Box network, our volunteers, donors, shop customers, and of course affected thousands of Christingle celebrations in churches and schools.

Our teams quickly switched the way supporters could get involved though virtual fundraising events, online coffee and chat, volunteering as part of our #LookCloser campaign and

a new partnership with the Church of England to hold a national online Christingle Service together with the Archbishop of Canterbury and our Royal President HRH The Duchess of Gloucester. We are thankful to all our supporters during this challenging year, especially those who supported our Emergency Lifeline Appeal. As the restrictions lift, we’re delighted to be able to welcome you back to The Children’s Society and look forward to seeing you in churches, at events and in our shops.

The closure of our shops and the curtailing of many fundraising events had a dramatic impact on our ability to generate income. Although we were able to benefit from the Government’s furlough scheme and retail premises rates relief, as well as securing a significant grant from the Home Office, the net impact was a £3 million reduction in our income during the financial year. The pandemic also meant we incurred additional, unbudgeted costs to keep staff safe and continue supporting young people despite the lockdowns.

Fortunately, the investment strategy that we put in place during 2017/18 has proved its worth. At that time, we had anticipated an extended period of market volatility, so our strategy was to mitigate risk by diversifying the portfolio across a number of investment managers who themselves are investing in a diverse range of assets, a significant proportion of which are intentionally inversely correlated in their risk

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profile. This strategy prevented a sharp decline in value when financial markets collapsed at the start of the pandemic, and has led to investment gains for the year of £4.8m. These gains mean that our overall net financial position for the year is favourable.

We cannot plan for investment gains each and every year. The future outlook for income remains very uncertain. Indeed, with the withdrawal of Government support it’s likely that the next financial year will be even more challenging. With this in mind, we’ve taken the difficult but extremely necessary decision to reduce our cost base to match our expectations for short and medium term income. This exercise is also helping us to align the organisation to deliver our new strategy and 10 year goal more effectively. At the time of writing, we have put about 90 roles at risk of redundancy and are aiming to reduce our annual expenses by about £4 million.

Young people’s voices in our work have continued to be heard this year – and it is our intention to turn up the volume for change in the decade ahead. Young people have shared their experiences online with supporters on a weekly basis throughout the pandemic. A brave group of young campaigners have channelled their experiences to run their own campaign to provide guardians to young unaccompanied refugees and migrants when they arrive in the UK. They continue to champion the cause and challenge the Home Office to provide this support.

In spite of the challenges posed by the pandemic, we have renewed our vision, goal and our strategy to achieve them, expressed through a refreshed brand and new website that brings to life why hope matters for children and young people. We envision a society built for all children – a future that our founder, Edward Rudolf, believed in profoundly when he set up The Children’s Society 140 years ago. And as the Good Childhood Report reaches its 10th anniversary this year it is fitting that we are focused on children and young people’s wellbeing, aiming to overturn the damaging decline in well-being and set a path for long-lasting growth by 2030.

We welcomed Michelle Clark, Executive Director for Diversity and Talent, to The Children’s Society, an important step in our commitment to diversity, equality and inclusion in our team. This demonstrates our determination to build the most talented team possible in order to deliver our 2030 goal. The rise of the Black Lives Matter movement in July following the murder of George Floyd in America put diversity firmly on the agenda for us all, and I’m proud The Children’s Society has committed to being an anti-racist charity. Challenging ourselves to ensure we are allies for all young people, irrespective of their race, religion or gender identity, will also be key to delivering our 2030 goal.

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The Trustee Board has met virtually throughout the pandemic and I look forward to being able to reconnect with my fellow trustees and the executive team again in person. This is particularly true for the new trustees who joined The Children’s Society this year, and I want to welcome Helen Keppel Compton to the board. I offer my sincere thanks to Dianne Smith who stepped down after 9 years of service as our Lead Trustee for Safeguarding.

As we all slowly emerge from the pandemic, we need hope in our lives more than ever before. It’s time to prioritise young people, to show them their hopes matter and that we’ll be with them until their lives and their well-being turn the corner.

Thank you

Janet Legrand QC (Hon) Chair of the Board The Children’s Society

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The Children’s Society

Vision, Goal and Values.

Our vision

A society built for all children

Our mission

By 2030, we will have overturned the damaging decline in children’s well-being, setting a path for long lasting growth.

Our values

We are brave, ambitious, supportive and trusted

We are brave – unafraid to

challenge injustice wherever and whenever we see it, fearless in our determination to ensure young people are heard. We try new things, we push boundaries and when we fail, we learn. And then we go again.

We are ambitious – for the

potential in all young people. For all that children can be in the future, and for the society that is built for all children. And we are ambitious about our role in bringing about that change – pioneering new projects, calling boldly for radical change.

We are supportive –

and always see the good in every young person we help, inspiring them to new and greater achievements, helping them out of bad situations to see where their lives can go and what they can become. We listen to and respect all young people.

We are trusted – delivering the best care and support available for young people. We never give up on them; we stay by their side through everything, no matter how hard things get, until things have changed for the better.

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Life is more do-able

The Children’s Society

Strategic report

Children’s happiness with their lives has been in decline since 2009. Fifteen year olds in England and Wales are less satisfied with their lives, have the lowest sense of purpose in life, and have the second highest levels of sadness compared to young people of the same age in Europe.[1] This decline is even starker amongst disadvantaged young people, and the pandemic has only made things worse.

In the face of this entrenched erosion of well-being, we have set ourselves a goal for the coming decade that reflects our determination not just to halt the decline but to give young people the chance to thrive.

Our new strategy, and our intended operating approach, is grounded in young people’s subjective well-being. It is young people themselves who know best how they feel, what they need, and what it would take to allow them to flourish. And through listening to their voices, we are able to identify inequalities, injustices, gaps in services and broken systems, and address the challenge head on.

Our new strategy responds to what young people have told us, identifying critical points and places where our support can provide safety, build resilience and foster hope. Equally, the approaches we deploy are broad – embracing awareness raising, policy change, systemic change, and direct work with young people – and we can adjust them as needed to create measurable and lasting impact. The strategic framework we deploy is summarised below:

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The focus of our work

The approaches we deploy

The outcomes we deliver

Setting a path to long lasting growth

Overturning the decline in well-being

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Plans and objectives for 2021/22

In the course of developing our strategy over the last turbulent year, we have recognised that our way of operating needs to hold good in an increasingly dynamic and volatile environment, where the rate of change occurring around us outstrips the ability of conventional structures to keep pace. This is particularly so in a year where we are hoping to exit the pandemic and transition into a new operating reality.

Accordingly, our focus is on creating a robust platform of versatile leaders, capable of displaying creativity, agility and comfort with ambiguity, so they can navigate through these uncertain times and target our resources where they deliver most value for young people. This being the first year of our strategy, we are simultaneously designing and restructuring, whilst beginning to deliver against new operating parameters. We will use both the strategy and operating parameters to guide us and to measure our performance. They include:

We aim to have devised a new operating platform to deliver our strategy and to have completed our transition by early Autumn, when we will set objectives for the second half of the financial year, and introduce quantifiable metrics to measure our impact and progress against our 2030 goal.

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Annual report 2021

Achievements and performance 2020/21

As the country went into lockdown, we triggered our busines continuity plan to have oversight of our response to the emerging situation. At this time, we:

The welfare of staff and volunteers and the continuity of support for young people were our predominant concern. While making the best use of furlough, we encouraged greater flexible working, provided support and infrastructure to enable remote working, and introduced switch off days, ‘non screen days’ and other initiatives to recognise the toll on individual well-being.

Throughout the year, communication was key. We used many channels to make sure that staff felt connected, involved and supported by the organisation. From a governance perspective, there were regular detailed briefings with chairs of each of the committees, as well as involvement in wider communication pieces.

Despite the multiple challenges, the organisation was able to operate as effectively as the circumstances allowed and the following paragraphs describe how we worked towards our objectives for the 20/21 financial year.

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The Children’s Society

Objective 1 We will tackle the underlying causes that prevent young people who face multiple disadvantage from thriving.

Reach at least 10,000 young people through our direct support.

Engage directly with at least 1,500 young people to gain insight

Deliver over

400,000 positive impacts for young people through policy and campaigning work

Impact on

180,000 young people through the professionals we support through systems change

Engaging directly with young people.

Throughout 2020-21 we continued to tirelessly fight to stop child exploitation, improve young people’s access to mental health and well-being support, and provide a safety net for children and families facing crippling poverty or destitution.

At the start of last year, the target for the number of young people we would support directly was increased from 8,000 to 10,000. However, the pandemic and the accompanying national and regional lockdowns ultimately meant that we had to alter the delivery of many of our support services, and we finish the year

having directly supported 6,860 young people. Along with this direct support, we reached a further 6,770 young people through activities like our online well-being sessions in schools or involving them in campaigns. This means that overall we reached more than 13,600 people through our direct work.

Before the Covid-19 pandemic, our services to young people were mainly delivered face-to-face. In response to the pandemic, we rapidly changed our service delivery models to engage young people in other ways, including phone, message and video support. Our Hand in Hand service works

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with children and young people aged between 10 and 18 who are at risk of, or are currently being, sexually or criminally exploited. In response to the restrictions imposed by the pandemic, they sent young people creative packs in the post that could then be completed with their practitioner via video call. Through video and phone calls, workers were able to continue to talk through the things that a young person is concerned about, build on their strengths, and advocate for them to ensure their voice is heard. By building understanding about the grooming process in this way, Hand in Hand was able to carry on helping young people to see that exploitation is not their fault and to recover.

Safe Zones , our mental health crisis support service in Manchester, has also sent young people colouring pens and paper, flash cards and exercise books. Finding ways for them to continue engaging with Safe Zones means young people have still had the opportunity to open up and talk about the problems they are facing, and described feeling more able to cope. We had to close our high street emotional and mental health walk-in services that provide drop in counselling in city centres and moved to web-based delivery of support. Feedback about these new ways of working has so far been positive.

Our latest Impact Report spotlights two of our mental health services, Safe Zones and Pause at the University of Birmingham, which supports the mental well-being of students aged up to 25 at the University. Over the last year, the service has adapted to provide a combination of face-to-face and virtual support, meaning that any University of Birmingham student can access support no matter where they are.

The pandemic forced us to work differently and innovatively, and in some cases gave us benefits that we will maintain once things return to normal. For example, our Nottingham Advocacy services were able to work with more young people than ever before because they did not need to drive to out of borough placements and used video and phone calls instead. We have also gained valuable understanding in relation to the preferences of young people, with some preferring more digital options for engagement.

Working in partnership with Barnardo’s we directly supported over 5,000 young people, parents and carers with therapeutic sessions, advice and guidance and supported them to re-enter education as part of the See, Hear, Respond programme set up by the DfE to support young people particularly affected by Covid-19.

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84% of young people said that their lives improved after working with us[*]

Delivering positive impacts for young people

Impact on 180,000 young people through the professionals we support through systems change

The Children’s Society strives to disrupt, change and impact the systems that surround young people to ensure that they receive the support they need, so that our impact moves beyond the individual to a much wider group of young people who we might never meet. This work is undertaken in partnership with others, such as police and social care colleagues. Using learning from our direct practice with young people, we are committed to finding solutions to systemic problems faced by young people, locally and nationally. One example from our Prevention Programme is work where frontline police officers are empowered to act differently and then change the way they might respond to young people. Raising awareness about victimhood and vulnerabilities has led to frontline officers better understanding young people’s behaviour and why they may not trust the police, and the police being better able to spot the signs of exploitation.

11 Based on a sample size of 1,833 young people

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Like many charities and

organisations, our work this year was hampered by the Covid-19 pandemic and face-to-face meetings and training sessions with professionals had to quickly become webinars and electronic resources. Nonetheless, we estimate we impacted 990,000 young people through our training, consultation and partnership work with over 28,000 professionals – a significant increase on the 14,500 professionals we worked with the year before.

Programmes including the national Prevention Programme, Tackling Child Exploitation Programme, Disrupting Exploitation Programme and Next Generation Nottingham work to identify

elements of systems that don’t work, and focus energy and resources, working in collaboration with external partners to fix them and improve service responses for children and young people. This might include changing the narratives around young people who are exploited so they are seen as victims rather than perpetrators of crime, or acting as a catalyst to drive forward and accelerate new strategic responses to prevent and disrupt child exploitation and abuse.

This year our Prevention Programme raised awareness about exploitation and abuse in all its forms nationally through the #LookCloser campaign , which is delivered in

partnership with the British Transport Police, the National County Lines Coordination Centre, Regional Organised Crime Units, and local police forces. It is estimated that the campaign reached 5.9 million people in 2020/21. The campaign recently won the award for Partnership Working at the 2020 Children and Young People Now Annual Awards. Led by The Children’s Society, it focuses on improving public and business sector awareness of exploitation and abuse that may be visible in public spaces and their role in spotting and reporting concerns. The campaign also works to challenge perceptions of the ‘perfect victim’ to ensure all child victims are recognised, and that they receive a safeguarding response from police.

Through our casework on our Disrupting Exploitation Programme, school exclusions were identified as a key issue in the meaningful and sustainable disruption of child exploitation. The programme listened to the views of young people, gathering their views and experiences of schools and collating these into a Youth Voice Report. The programme has also held a Youth Voice Webinar, sought the views of teachers and begun the development of a whole school ‘teacher pack’ on exploitation.

For more examples of how we are changing systems for and with young people see our Impact Report.

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Objective 2

We will grow the total contribution of our supporter base.

Deliver a rewarding experience for 85,000 active supporters.

Generate restricted income of £11.3m for delivery in year.

Generate gross unrestricted income of over £27.3m

Generating income

Delivering for supporters

Social restrictions imposed in response to Covid-19 required the closure of our charity shops for much of the year and many face-to-face fundraising activities were cancelled. This led to a drop in our traditional revenue streams, offset by various Government Covid-19 relief grants, and we raised £34.0m in total income in the year against our original plan of £38.6m. However, thanks to the incredible generosity of our supporters and partners, access to Government grants and tight control of our expenditure, we have managed to maintain our programmes and services for young people throughout the year, and secure commitments to fund our core projects in the year ahead. We also secured over £10.9m in restricted and ringfenced service delivery contracts in the year.

In such a year of turmoil, our supporters have amazed us with their dedication and generosity. After several years of decline in our active supporter numbers we saw a significant increase in support, engaging a fantastic 134,853 people supporting vulnerable young people by donating, fundraising, taking campaign actions and volunteering. Many engaged through our Emergency Coronavirus Appeal which we launched in April 2020, raising over £6m to ensure our frontline staff could still be a lifeline for children trapped at home, at risk of abuse and neglect, providing the urgent support they needed, while addressing some of the income lost due to social restrictions.

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In addition, we secured support from the Government and other institutional partners and funders that enabled us to maintain our services and make use of digital channels to be there for children. Thousands of supporters also engaged with our Christmas campaign; watching our TV ad, sharing on social media, and donating to our appeal. With restrictions in place around face-toface activity, we pivoted much of our activity online to raise vital funds. We launched three virtual running events, attracting 15,000 people to run 50 miles in a month, and for the first time in our history offering supporters the chance to hold virtual Christingle services, while also inviting them to join our online national Christingle service in partnership with the Church of England. 90,000 people tuned in, making it the second most watched service across advent. Where it wasn’t possible to pivot activity online, we paused fundraising until it was safe to resume – with many supporters in our House Box networks amazing us with their sheer dedication to start collecting again.

It has been the most challenging year ever for our retail team, which has had to close our charity shops three times for prolonged periods. The team remained resilient and focused on preparing for their return and planning to be able to bounce back as soon as the doors could open. During the year shop staff were furloughed, we topped up salaries to 100% and claimed the furlough grants in addition to available retail grants amounting to £990k in the year (£1.6M since the start of the pandemic).

We took care to ensure supporting us in this difficult year was as easy as possible and our supporters knew how they were making a difference to young people during the pandemic. We introduced our new bi-annual newsletter Society which our supporters have loved, and we refreshed our brand – highlighting the importance of keeping hope alive for young people. We also launched a new website which is easier to use, sent more update emails, established a regular virtual coffee and chat, and had some great phone conversations. We hope to build on this success in the next year, as restrictions ease further and we can resume community and retail activity. With so many more supporters onboard, we’re excited about what 2021/22 will bring in terms of our impact for young people.

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Objective 3 We will develop organisational capabilities that allow us to maximise our impact.

Optimise the use of working capital.

Improve our tech user experience.

Maintain a healthy balance of staff.

Optimising capital

Improving technology

Working capital and cash reserves, as always, remain key to our ability to continue to operate and drive impact for young people. We have monitored our cash position carefully over the year, especially in light of the unpredictability in income streams, and we continue to optimise our resources and generate returns from our asset base. We have paid all of our due costs on a timely basis, including rental payments to landlords, and met our obligations despite the financial pressures. We have also continued to work with our partners and funders to ensure timely receipts of monies.

We accelerated the roll out of technology to enable all staff to work from home during the pandemic. Users have been able to carry out their operational roles, collaborate virtually within their teams and to carry out frontline work with young people and supporters that would usually be face-to-face.

The Children’s Society’s staff now log over 12,500 hours on on video conferencing per month, including hundreds of video calls with young people – a significant part of our direct work with young people during lockdown.

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Our tech user experience metric, a composite of several key customer service SLAs, has continuously been above target of 90%, again indicating a much improved user experience (in 2019/20 this metric was recovering from a low of 70%).

We have also rolled out two modules of our new electronic customer relationship management system (eCRM) in 2020/21, allowing us to manage our sales and high value work more effectively, and recently went live with our volunteer management module. Our CRM project will continue in 2021 with a live volunteer portal in June 2021 followed by the migration of all supporter records to the new MS Dynamics 365 platform, scheduled to go live in February 2022.

In partnership with the National Lottery Community Fund, we continued our work in understanding more deeply how young people engage digitally so we can support them in different and more effective ways.

The rapid acceleration of our digital activity during Covid-19 supported us to achieve some of the objectives we had already established, which were improving digital practice and digital leadership respectively. We have now developed a clear definition of our ‘Blended Service Offer’ which integrates our virtual and face-to-face work into one seamless service to ensure the young people and families we work with can engage in a way that suits them.

We also described and committed to good practice principles and a clear process for co-designing digital-era services with young people, and established a testing framework or approach to collating ‘good practices’ in a form that makes them accessible and actionable across teams of practitioners.

With the easing of lockdown, face-to-face work with young people has returned, but the digital channels have continued to be used effectively.

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Governance structure and management

Legal status and objects

The Church of England Children’s Society (‘The Children’s Society’) is a company limited by guarantee and a charity registered in England and Wales. Our organisation was established in 1881 and incorporated in 1893. It is governed by its Articles of Association, last reviewed and revised in November 2018, which set out our principal objective: to care for and support children and young people in need, whether material, physical, mental, emotional, spiritual or otherwise.

Public benefit

The Trustees have a duty to report on how our organisation’s charitable objective has been carried out for the public benefit and to follow the guidance from the Charity Commission on the provision of Public Benefit requirement under the Charities Act 2011.

Our strategic report, above, demonstrates how we have met our principal objective. Children and young people experiencing multiple disadvantage are those who face issues that affect their physical or

mental well-being in more than one area of their life. Their needs are more urgent because they face risks to their safety and well-being, and the resources they need to flourish and thrive may be compromised or absent. For this reason, we prioritise our work on the needs of these young people, so we can have the maximum positive impact and bring lasting change not just for them, but for our entire society.

Understanding and measuring our impact on children and young people is of vital importance and is critical in ensuring we achieve our mission of fighting for change and supporting children and young people experiencing multiple and complex disadvantage to thrive, flourish and have better lives.

We set out specific details of our activities in our Impact Report, which demonstrates the substantial impact of our work and which complements this report.

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Annual report 2021

Governance and management

The Trustee Board are the charity’s trustees and the legal directors of the company. Members of the Board of Trustees serve a four-year term, after which they are eligible for re-appointment for a further four-year term.

The Trustee Board has the responsibility for the governance and strategic direction of The Children’s Society, ensuring that the charity upholds its ethos and values and delivers its key objectives.

Operational management is delegated by the Trustees to the Executive Leadership Team, which is accountable to the Trustee Board for

its stewardship of the charity. The Chief Executive and the Executive Leadership Team attend Board and Committee meetings.

Trustees are appointed through a transparent and rigorous recruitment and selection process. Our Young Trustees participate in this selection process, and their assessments are an integral part of the recruitment process, demonstrating our ongoing commitment to ensuring young people take part in decisions that affect them. This year, we recruited one new trustee through this process. We also recruited five new independent committee members to sit on our Board committees.

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New appointees are provided with a comprehensive induction programme which is tailored to their areas of expertise and includes meeting the Executive Leadership Team, completing mandatory online training, engaging with staff and volunteers and visiting our direct frontline services when possible.

Trustees deploy a wide range of skills, knowledge and experience essential to good governance and the balance of expertise is kept under review, including throughout the recruitment process. Collectively the Trustee Board must demonstrate responsible leadership and judgement.

Trustees, Committee Members, the Chief Executive and the Executive Leadership Team are expected to behave with the utmost integrity and professionalism, and to demonstrate their commitment to the goals and values of The Children’s Society at all times.

All our Trustees give their time voluntarily and receive no rewards or benefits from The Children’s Society.

The Trustee Board met virtually during the year, including four formal meetings, two Board strategy and development days and a number of ad hoc meetings to keep trustees fully informed. Trustees who served during the year are listed on page 71, together with information about their membership of Committees and attendance.

Young trustees

Young people from across the country who have previously accessed our direct services through one-to-one support, group work or participation groups are eligible to become a young trustee. Although they do not hold the legal status formally assigned to other trustees, they otherwise have equal status on the Board in terms of discussions and decisions attending Board meetings and away days. Each serves a two year term. Their significant contribution has been particularly visible this year as they have helped to shape the future of the organisation and its strategy.

As well as attending Board meetings, where we listen carefully to their input, our young trustees also support the organisation in a variety of ways depending on their particular interests. As a group they meet regularly and from time to time invite members of the Executive Leadership Team to join them. Their involvement this year included sitting on interview panels for new trustees and committee members, being members of campaign groups, writing blogs, recording a virtual conversation series for YouTube and providing feedback on different projects. The young trustees feed back on learnings they have developed in the role such as governance and leadership skills, how meetings are run and changes are made. The voices of the young trustees are heard and respected by all in our organisation.

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Annual report 2021

Delegation and committees

The Board maintains a written schedule of matters reserved for the Trustee Board and Committees which clearly defines specific areas for delegation. Committees report to the Board on a regular basis.

Risk, Audit and Compliance

Committee is primarily responsible for ensuring the effectiveness of the internal and external audit functions, the adequacy of risk management processes and the internal control environment. It considers any significant issues arising in respect of either internal or external audit or inspection arrangements. It monitors and reviews the implementation and compliance with safeguarding and health and safety policies. It oversees all systems, controls and processes, ensuring the charity’s ability to meet its key objectives.

Finance and Investment

Committee is primarily responsible for all aspects of the charity’s financial strategy and performance, ensuring that its resources are being properly and appropriately applied to its key objectives. It oversees the charity’s investments and ensures that these are managed so that they underpin the strategic objectives of the charity. The Committee has responsibility for safeguarding the charity’s assets and ensuring sufficient reserves to fund our work.

Organisational Development

Committee is primarily responsible for overseeing all matters concerned with the effective governance of The Children’s Society, supporting the CEO in building and sustaining an effective leadership team, and guiding and monitoring the effectiveness of key human resources policies for the organisation.

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The Children’s Society

Modern slavery

The Children’s Society is committed to full compliance with the Modern Slavery Act 2015.

Modern slavery is a crime resulting in an abhorrent abuse of human rights. It is constituted in the Act by the offences of ‘slavery, servitude and forced or compulsory labour’ and ‘human trafficking’. The Children’s Society will not knowingly support or deal with any businesses involved in slavery or human trafficking and has taken steps to ensure that slavery or human trafficking are not taking place in our business or supply chains. This includes having policy and procedures in place to address the risk of modern slavery in our supply chain, and a procurement policy confirming that it is the responsibility of all The Children’s Society Staff to prevent, detect and report modern slavery and trafficking in any part of our operations or supply chain.

In accordance with the Act, The Children’s Society has published its Modern Slavery Statement following the end of the financial year March 2021. This includes examples of modern slavery that we encounter in the work which we do. It can be downloaded from our website.

Principal risks and uncertainties

The Trustees of The Children’s Society have responsibility for ensuring that the charity maintains

comprehensive risk management systems and that appropriate actions are being taken to manage and mitigate risks. The Risk, Audit and Compliance Committee monitors and reviews these risk management arrangements and reports to the Trustee Board on their effectiveness.

A formal risk management strategy is in operation and provides a robust framework for developing the corporate risk register and subsequently managing risk across the charity. The Children’s Society has an established system of internal controls that governs all of its operations. These controls have been designed to provide a reasonable level of assurance against the risk of error, fraud, and inappropriate or ineffective use of resources.

The outsourced internal audit function reviews the Corporate Risk Register to ensure that audits are correctly focused. They evaluate the adequacy and effectiveness of controls across our activities, and report via the Risk, Audit and Compliance Committee to the Trustee Board.

The Risk, Audit and Compliance Committee use a Governance Risk Register in line the Charity Commission’s Guidance on ‘Charities and Risk Management.’ Individual risks are owned by the Trustee Board or one of its delegated committees. The Governance Risk Register is regularly reviewed by both the Risk, Audit and Compliance Committee and is approved by the Trustee Board.

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Annual report 2021

Children and young people are at the heart of all that we do. Particular attention is paid to the mitigation of safeguarding risk. This and other principal risks that have been identified in the Corporate Risk Register through their likelihood and impact on the charity are as follows:

Principal risk

Examples of mitigating actions

Principal risk Examples of mitigating actions
We experience a safeguarding All policy and procedures updated and communicated regularly
failure, or an instance of historic
abuse that afects our reputation.		 Safeguarding Group and Historic Abuse Working Group
meet monthly
Quality Framework requires all managers to assess
practice against standards at all 4-6 week supervisions
In an increasingly uncertain Business continuity plans and process in place
external environment, we fail Key site/ recovery plans in place, informed by Covid-19 crisis
to anticipate or respond to
threats, endangering our
stakeholders and our business.		 Scenario planning against possible outcomes
Partner relationships in place within/ beyond sector
Diverse portfolio of investment, and prudent budget
We fail to set ourselves up to Clear defnition of 'multiple disadvantage' and alignment
deliver against our strategy, of practice portfolio
or to harness the full potential Strategic Framework, Impact Plan and budget in place
of our people and partners. Lean programme to support process improvement
Focused technology, data and legal teams
Partnership framework and monitoring of key SLAs
We are unable to communicate Marketing approach and engagement frameworks
our strategy and engage Internal and external engagement surveys to gauge
external audiences. understanding
We are unable to generate Prioritisation of attraction and new supporter engagement
income to resource our strategy. Improved performance reporting and monitoring
Staf capabilities enhanced
Consolidated High Value team and sales
We fail to respond to funding and Annual compliance review and action plan
fnancial challenges in the sector. Supporter Engagement approached geared to new
market realities
Pensions advisors and FIC subgroup in place
Pension derisking strategy/Reserves policy reviewed regularly
We fail to meet our obligations Governance review action implemented, including Board
in respect of compliance, Terms of Reference, Trustee roles, subcommittee structure
regulatory requirements, Regulatory requirements built into practice standards
or good governance. Information governance strategy and oversight in place
Mandatory GDPR and data protection training
Framework and approach for managing crisis communications

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The Children’s Society

Our people

An intense spotlight was placed on all organisations to respond with clarity, care and compassion during a worldwide health pandemic. National lockdowns meant work practices having to change overnight, with many operations moving to a digital base. Continued legal changes in the employment arena have also meant that policy, processes and practice that would ordinarily take years to implement have had to change extremely quickly. The Children’s Society rose to this challenge and worked hard to create an environment of stability and support.

Getting the basics right has been fundamental to our people’s experience of working with us and at the outset of the year the formation of a new people-focused specialist function, Diversity and Talent, was enabled. Bringing together all component parts of our people agenda into one clear focus meant that that all important clarity could be provided. Furlough came into being and at the height of the first lockdown 34% of The Children’s Society’s people were furloughed. This continued in flux as we moved in and out of lockdowns, requiring clear information and understanding of individual impact. Providing information on the vision and direction for The Children’s Society was also crucial, and moving the regular ‘town hall’ meetings to a digital format enabled an accessible and levelled platform for all our

people to attend – be it in real time or when they were able to access the recording. Rebranded as TCS Live, a significant increase in attendance from our previous town hall briefings was achieved.

Pivoting our offerings around learning and development helped our leaders continue to enable and inspire their teams. Face-to-face learning interventions were converted to digital delivery and webinars were developed and delivered. The introduction of new digital learning also meant that mandated training continued to be supported with strong levels of engagement and compliance.

Responsive leadership has also been demonstrated through acting directly to feedback and picking up on the resilience needs of our people. To support this, the introduction of ‘Switch off’ days meant that all people were empowered to take a series of unified days off over and above annual leave entitlement. This was in direct response to the insight on the impact that intense screen time and working independently away from shared workspaces was having on the mental, emotional and physical wellbeing of individuals.

Creating a work environment where all The Children’s Society’s people feel valued has taken a priority focus this past year. Responding directly to the worldwide movement against racism, it was important to provide safe spaces for The Children’s

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Annual report 2021

Society’s people to be able to talk about what this meant to them and share their own lived experiences. From this a commitment to becoming an antiracist organisation was made and included three priority areas: keeping the conversation going; providing the opportunity to self-learn and educate; and a clear reminder on the formal frameworks in place. This also included the introduction of an additional anonymous whistleblowing hotline.

Getting a sense of how all people could feel included at The Children’s Society was also important and we undertook our first TIDE (Talent, Inclusion and Diversity Evaluation) assessment. The outcomes, which will feed into forward planning and development, have recognised that we are mobilised in some areas in our policy, process and practice but there is now much to do around embedding our practices into our default ways of working. Changes to our recruitment practices were also introduced with ‘blind’ recruitment, and external support to the ‘Show The Salary’ movement was given. Creating the opportunities for awareness and education have also continued with the organic development of employee-led network groups.

This past year has enabled us to create a solid base to build upon and we will continue to provide a caring based approach ensuring our people and teams work together as a star organisation and that individuals feel supported, motivated, can thrive and

be happy at work.

Volunteers

2020/21 was a year marked by considerable change and challenge for our volunteers, with national lockdowns severely restricting volunteering activity. Those who were able to continue or restart within the year experienced a very different day-to-day experience of volunteering, while many others were not able to return to their roles. This was also a year of innovation, learning and development in the volunteering space, and those same challenges have unlocked potential for volunteering that will enable The Children’s Society to better serve and support our volunteers in the years to come.

We prioritised engagement of our volunteers, driving forwards the ambition to communicate with them as an internal audience, and valued members of our team. We developed and rolled out our Volunteer

Community Hub to help them in their roles and support them to become more informed ambassadors for our work. We reached out by email and phone to keep them up to date with messages from the Chief Executive.

Our Community Awareness Network saw 379 supporters raise awareness within their networks and help keep young people safe. We secured funding from the Digital Transformation Fund to provide 36 volunteers matched with high need

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The Children’s Society

young people with smart phones so that they could continue to support remotely, preventing those young people from losing the vital lifeline of their support while they could not meet face-to-face. We developed processes to enable us to onboard, induct and train entirely remotely, welcoming 394 new volunteers; and we can take those ways of working with us into the future to make it easier and quicker for volunteers to join The Children’s Society and make a difference.

We have seen an increasing demand from young people to join our volunteering movement. We invested in the development of robust, safe and engaging volunteer journeys for those under 18, and as a result now have new youth volunteering models for Retail, Speakers and Campaign Champions, and a blueprint to involve more young people in more roles ongoing.

Overall, in the last year 8,303 volunteers supported us however they could, including 283 volunteers directly supporting children and young people in our services and 4,529 volunteers supported us in their local communities. Our shops have performed better than we could have expected in the periods they were able to open thanks to the amazing support of our retail volunteers.

Remuneration

Our pay structure is benchmarked against other charities as part of our commitment to having a fair and equitable pay structure. The pay structure is underpinned by the Living Wage Foundation. The Trustee Board oversees the pay, pensions and benefits of the Chief Executive and the Executive Leadership Team through the work of its Organisational Development Committee.

Fundraising and supporter engagement

We are grateful to all of our supporters and despite the challenges facing us all, we received gifts and funding from a wide range of sources to enable us to campaign and deliver our projects for young people around the country. Our voluntary income includes individuals supporting through regular and single cash gifts, church communities raising funds through virtual events and services, home collections, groups undertaking virtual challenge events, donations and purchases in our shops, and gifts made in people’s wills. We also continue to partner with professional funders and commissioners, companies, trusts and foundations to deliver our projects and services even in lockdown conditions.

Every interaction with our supporters is guided by our Supporter Promise – to keep our supporters up to date in ways that work for them,

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Annual report 2021

to ensure we always treat people respectfully and sensitively, and to meet and where possible exceed fundraising and data protection standards. We continue to comply proactively with the voluntary Fundraising Regulator regulation scheme, aligning all of our fundraising policies and practices with the Fundraising Code of Conduct, along with complying with all related legislation and marketing regulation. Following an audit of our compliance practices in 2020, we have implemented training programmes around fundraising compliance, data protection in fundraising and Gift Aid, developed a new policy around Acceptance and Refusal of donations and we have tightened our processes and training around cash and donation handling. We have also implemented further guidance to staff and supporters on how to recognise a supporter of the charity who may have additional care and support needs.

We received 117 complaints about fundraising in 2020/21 (85 in the previous year) all of which were resolved satisfactorily. The increase in complaints recorded is in part due to the implementation of a new complaints policy and process that highlighted the importance of formally recording complaints, and includes for the first time complaints received by the charity outside of a fundraising environment for the first time. We feel this system is now more robust and presents a more realistic picture of the number of complaints received.

GDPR

The Children’s Society has always been fully committed to protecting the data of all of our stakeholders and to following the requirements of the Data Protection Act We have oversight through an Information Governance Group which meets monthly. This group considers how we handle information relating to our beneficiaries, supporters and staff to ensure we are always honest and open about how we handle personal data, and that we take appropriate measures to keep it safe and secure. The group engages with any project in the organisation which involves personal data, such as the implementation of new systems or changed processes. Early in the year this included assessing the most appropriate online tools and platforms for use by young people, ensuring that they and their data remained safe.

Since the General Data Protection Regulation became effective we have continued to focus on information governance and we are committed to further strengthening our position in this area whenever appropriate. We can also confirm that there were no significant data breaches or concerns within the year.

Energy and carbon reporting

Total energy consumed in the year to 31 December 2020 was 1,039,055 KWh (2019: 2,773,997KWh), of which electricity is the largest single use, accounting for 75% (2019:70%) of the total. Although shops were closed for much of that year, it was still necessary to provide power for alarm systems and low level heating to prevent damage.

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Financial review

The financial year ending 31 March 2021 has been a challenging one, as the country faced an unprecedented set of circumstances. Despite significant retail and regional fundraising shortfalls, total income was only £3m lower than the prior year at £34.0m (2020: £37.4m) mainly due to the receipt of £6.9m of various Government funding initiatives such as the furlough scheme, retail premises rates relief, and a significant grant from the Home Office. The pandemic also meant we incurred additional, unbudgeted costs to keep staff safe and continue supporting young people despite the lockdowns. Nevertheless, expenditure significantly reduced from last year to £38.9m (2020: £52.6m). This is mainly because the prior year included an extraordinary payment of £11m to our defined benefit pension scheme to de-risk our future liabilities to the scheme.

Since the focus last year was on becoming a more agile organisation, increasing our digital capabilities and reducing our reliance on the traditional office-based structure, we were able to continue to deliver when the Government imposed lockdowns, and so most of the organisation’s operations continued despite restrictions. The main area affected

was retail, where we had to close the portfolio several times during the course of the year.

This year, our investment strategy has proved to be successful, and we have seen both market gains of over £4.8m and we also have had a piece of land revalued with a gain of over £1.7m. These two financial items mean that our overall net position is favourable despite the significant loss on retail and overall net reduction in income, with an overall surplus of £976k (2020: deficit of £13.6m).

Income

The Children’s Society has continued to benefit from the generosity of individuals, businesses and charitable bodies. Details of the amounts received in grants are shown in note 23 to the accounts; corporate sponsors of The Children’s Society are listed in our ‘thank you’ list on page 74-75.

Legacy income fell from last year to £4.3m (2020: £6.3m), representing final acts of generosity from longstanding supporters. Given the significant delays to the granting of probate caused by the pandemic, we believe this is a delay in the pipeline and not a long-term trend.

This year, our income was lower than last year for our unique Christingle events, which generated £0.6m of

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Annual report 2021

income (2020: £1.2m) while our dedicated House Box groups gave us £0.8m from their collections (2020: £1.3m). Both income streams were affected by restrictions on community and faith-based events. Other donations increased to £7.7m (2020: £6.2m) with innovative and new online or virtual events and an emergency appeal at the start of the pandemic being the main drivers of this increase.

Thankfully, we were able to raise £6.9m of Government grants related to the imposed lockdowns. This was a mixture of furlough receipts £2.1m (2020 £nil), retail premises rates relief of £1.0m (2020 £0.7m) and grants of £3.8m awarded by the Home Office.

Income from charitable activities was greater than last year, bringing in £10.9m of resources (2020: £9.5m) to be used in disrupting multiple disadvantages affecting young people and we were able to continue to deliver critical services to young people using a variety of approaches including digital resources. Contract funding is provided by national and local Government, police and crime commissioners and the NHS. Our grant income has continued to benefit from the long-standing relationship with the Big Lottery Fund as we have continued with our national programme to disrupt child exploitation and improving our digital capabilities in our practice base. Since the start of the lockdown in mid-March 2020, all of our practice base adopted virtual and online

interactions with young people as well as traditional methods, and we are able to provide a blended support offer now.

Our retail sales generated £2.8m in the year, which is £8.4m worse than the prior year (2020: £11.2m). This was a direct result of the pandemic closures and imposed social distancing. Our retail network is staffed by committed volunteers and led by professional management and provides a local link in over 100 high streets across England and Wales. The number of The Children’s Society retail shops was 106 shops (2020: 106).

Expenditure

Our biggest item of expenditure is staff costs. These were £25.9m (2020: £25.6m and £11m pension scheme contribution). Our payroll costs have increased from last year by £0.3m or 1.2%. We topped up salaries for all furloughed colleagues and increased salaries in line with the Living Wage. These costs were offset by a freeze in recruitment where possible as part of a series of cost saving initiatives implemented in the latter part of the year.

We continue to invest in our supporter engagement and the direct costs of fundraising were £6.8m (2020: £7.2m), in order to attract new supporters and provide innovative new fundraising solutions to our existing supporter base. The costs of the retail network have reduced in line

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The Children’s Society

with the income as we have saved on some running costs whilst remaining committed to meeting all of our rental obligations spending £7.9m (2020: £9.3m).

Costs of providing direct support to young people have decreased from last year to £20.8m (2020: £21.8m excluding a one off payment to the pension scheme of £11m) as we have reduced our spending on both direct support work and in changing Governmental and societal systems related to the pandemic through travel and premise costs. Of this, £5.5m of our expenditure in the year (2020: £5.2m) is the contribution made by our supporters to fund direct services, over and above the income received from Government and charitable funders.

Support and governance costs are marginally higher than the prior year at £7.4m (2020: £7.2m) Within support costs, we have continued to invest in our organisational design as well as our financial management capability to support greater organisational effectiveness and agility.

The future outlook remains very uncertain. Indeed, with the withdrawal of Government support it’s likely that the next financial year will be even more challenging. With this in mind, we’ve taken the difficult decision to reduce our cost base to match our expectations for short and medium term income. This exercise is also helping us to align the organisation to

deliver our new strategy and 10 year goal more effectively. At the time of writing, we have put about 90 roles at risk of redundancy and are aiming to reduce our annualised cost base by about £4 million.

Fixed assets

During the year we have continued to invest in appropriate technology across the whole organisation and are part way through delivering a new eCRM system as part of improving our data strategy and engagement with supporters.

We also conducted a review of our accounting policies and due to appropriate changes in technological advancement, have impaired or accelerated the depreciation on our equipment asset class. This has meant a reduction in the net book value of our assets by £1.3m.

Investments

At 31 March 2021, The Children’s Society held £39.4m of investments (2020: £33.5m) comprising general and endowment funds invested in a well-diversified range of short to long-term investments as well as investment land and buildings.

The investment market strategy is to mitigate risk by diversifying the portfolio across a number of investment managers who themselves are investing in a diverse range of assets, a significant proportion of which are intentionally inversely correlated in their risk

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Annual report 2021

profile. This strategy prevented a sharp decline in value when financial markets collapsed and has led to strong market gains for the year of £4.8m. Investment properties include a significant revaluation of Natland of £1.7m, which is land that we have contracted to sell in the next financial year.

Cash and working capital

We continue to manage our working capital effectively, ensuring that we pay suppliers within the terms agreed and collecting debts on a timely basis. The Children’s Society’s funded work is paid for mainly by local and national Government agencies and therefore represents a low credit risk.

Our operational activities absorbed £2.5m of cash (2020: £14.6m). The cash position of The Children’s Society has reduced from last year by £2.8m (2020: reduction of £ 6.6m).

Pensions

The pensions liability at 31 March 2020 was maintained at £0.2m (2020: £0.2m).

Our obligation to current and former employees and pensioner members of The Children’s Society Pension Scheme is one that we are committed to. As last year, the accounting treatment for the defined benefit scheme gives rise to a surplus which we have not recognised.

We continue to have a modest liability for a money purchase scheme known as the Growth Plan.

Reserves

Unrestricted funds

The trustees take a risk based approach to determining the adequacy of holding sufficient general funds to meet the liabilities of the Society as they fall due by considering stresses such as:

The trustees have considered these stresses and taken due consideration of the continuing uncertainties due to the progression of the pandemic.

They currently assess that the required level of reserves, taking into account the above risks, should be in the range £15-20m. As at 31 March 2021 the general unrestricted reserves were £16.2m (2020: 16.2m) which is within the accepted range.

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Designated funds

The Children’s Society holds two designated funds.

The designated property fund has reduced to £4.6m (2020: £4.9m) reflecting the investments in the eCRM system offset by the review of the depreciation policy and the additional impairment and accelerated deprecation. The assets are used for the Society’s primary purpose and the funds are not available for general use.

The designated strategy fund has decreased from last year and is now £7.2m (2020: £7.9m). It was set aside to ensure the financial stability of The Children’s Society through the management of legacy matters such as the pension deficit, the move to a new London workspace and other strategic investments identified by the Trustees. The fund will be used to maximise impact for young people in line with our strategic direction.

Pension reserve

The pension reserve reflects the long-term liability of The Children’s Society to meet the deficit in its final salary pension schemes, calculated in accordance with FRS 102 and does not take account of a surplus on any scheme. As permitted by the Charity SORP, this commitment is shown as a separate, negative reserve, equal in value to the net pension deficit of £0.2m.

Restricted funds

Restricted funds represent the unspent amounts arising from donations and grants where the activity funded is more specific than the general purposes of The Children’s Society. At 31 March 2021, the value of these funds was £0.5m (2020: £0.3m). Restricted funds are held in cash.

Endowment funds

Endowment funds represent the value of assets donated to

The Children’s Society from which the income may be spent while the underlying capital is maintained. The funds are invested in a portfolio of investments whose value at 31 March 2021 was £16.1m (2020: £14.5m). As part of our financial strategy, we are continuing to look at ways of sustainably unlocking funds from the endowment portfolio to support investments in impact for young people. This year we also recognised a new endowment – the Croghan fund set up to support young people in education.

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Outlook

Covid-19 continues to have a marked impact on the first quarter of the financial year, with income reduced with all of our shops closed until midApril and our community and events fund raising still facing some restrictions. As we come out of lockdown it is clear that income will be dependent upon the confidence of the public to shop or to participate in events, as well as the ability for us to re-engage more volunteers. We consider this to be an economic challenge and will continue to adapt our offer to maximise returns and accordingly impact.

The level of uncertainty continues, and we have taken measures to reduce and contain our cost base in light of our newly emerging strategy. This year, we will reshape the organisation to deliver its operations more effectively and intend to be operating a break even budget by next year. The trustees have reviewed several financial scenarios and considered the availability of both cash and reserves. Having carried out this review, the Trustees consider that the going concern basis is the appropriate basis for preparing these financial statements.

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The Children’s Society

Statement of Responsibilities

Statement of Trustees’ responsibilities in respect of the trustees’ annual report and 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 are required to prepare the financial statements in accordance with UK Accounting Standards and applicable law (UK Generally Accepted Accounting Practice), including FRS 102, The Financial Reporting Standard applicable in the UK and Republic of Ireland.

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:

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.

The Trustees are responsible for the maintenance and integrity of the corporate and

financial information included on the charitable company’s website. Legislation in the

UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Janet Legrand QC (Hon) Chair of Board of Trustees Opinion

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Annual report 2021

Independent Auditor’s Report

Opinion

We have audited the financial statements of The Church of England Children’s Society for the year ended 31 March 2021 which comprise the group Statement of Financial Activities, the Group and Parent Balance Sheets, the Group Cash Flow Statements and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

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 group 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.

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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’s or the parent 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 trustees are responsible for the other information. The other information comprises the information included in the Children’s Society Annual Report/other title and the Chair’s introduction. 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.

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.

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 group and the parent charitable company and its environment obtained in the course of the audit, we have not identified material misstatements in the Annual Report (which incorporates the strategic report and the directors’ report).

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

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Annual report 2021

accounting records and returns; or

Responsibilities of trustees for the financial statements

As explained more fully in the trustees’ responsibilities statement set out on page 38, the trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the trustees are responsible for assessing the group’s and the parent charitable company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the trustees either intend to liquidate the group or the parent charitable company

or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

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:

Based on our understanding of the group and the environment in which it operates, we identified that the principal risks of non-compliance with laws and regulations related to the regulatory requirements of the Charity Commission, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also

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considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, the Charities Act 2011, and the Statement of Recommended Practice for Charities (SORP).

We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to the potential posting of inappropriate journal entries and management bias in certain areas of management estimate. Audit procedures performed by the engagement team included:

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

Use of our report

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

Adam Halsey (Senior Statutory Auditor)

For and on behalf of Haysmacintyre LLP, Statutory Auditors

10 Queen Street Place London EC4R 1AG

Date: 8 October 2021

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The Children's Society Financial Statements 44

The Children’s Society

Consolidated statement of financial activities Year ended 31 March 2021

Unrest- Rest- Endow- Rest- Endow-
ricted ricted ment Total Unrest-ricted ricted ment Total
funds funds funds funds funds funds funds funds
2021 2021 2021 2021 2020 2020 2020 2020
Note £000 £000 £000 £000 £000 £000 £000 £000
Income and endowments from:
Donations and legacies 2 20,285 – – 20,285 15,785 – – 15,785
Charitable activities 3 7,316 3,550 – 10,866 6,323 3,204 – 9,527
Trading income 4 2,826 – – 2,826 11,960 – – 11,960
Investments 5 25 – – 25 253 – – 253
Other income 6 38 – – 38 (113) – – (113)
Total income and endowments 30,491 3,550 – 34,041 34,208 3,204 – 37,412
Expenditure on:
Raising funds 7 18,156 – – 18,156 19,675 – – 19,675
Charitable activities 8 17,470 3,320 – 20,790 29,101 3,716 – 32,817
Other uses – – – – 65 – – 65
Total expenditure 35,626 3,320 – 38,946 48,841 3,716 – 52,557
Finance costs 11 – – – – 125 – – 125
Netgains/(losses)on investments 13 4,858 – – 4,858 605 0 1,173 1,778
Net income (277) 230 – (48) (13,903) (512) 1,173 (13,242)
Other recognised gains / (losses):
Gains on revaluation of fixed assets 12 1,713 – – 1,713 – – – –
Actuarial (losses) / gains on defined benefit
pension schemes 11 (689) – – (689) (382) – – (382)
–
Net movement in funds 747 230 – 976 (14,285) (512) 1,173 (13,623)
Reconciliation of funds
Funds brought forward 28,759 309 14,473 43,542 43,045 821 13,300 57,166
Total funds carried forward 29,506 539 14,473 44,518 28,759 309 14,473 43,542
Summary of total income and expenditure
Total income 37,062 3,550 – 40,611 34,813 3,204 1,173 39,190
Total expenditure (36,315) (3,320) – (39,635) (49,098) (3,716) – (52,813)
Net income 747 230 – 976 (14,285) (512) 1,173 (13,623)

46

Annual report 2021

Group and Society balance sheets As at 31 March 2021

Company registration number 40004

----- Start of picture text -----
Group Society
2021 2020 2021 2020
Note £000 £000 £000 £000
Fixed assets
Charity Tangible fixed assets 12 4,562 5,042 4,562 5,042
Charity Investments 13 39,374 33,455 39,374 33,455
Total fixed assets 43,937 38,497 43,937 38,497
Current assets
Charity Debtors 14 5,109 5,587 4,744 4,988
Charity Properties held for sale 255 166 255 166
Charity Cash 2,833 6,624 2,729 6,524
Total current assets 8,197 12,377 7,728 11,678
Current liabilities
Creditors: amounts falling due within
Charity one year 15 (5,843) (5,923) (5,398) (5,919)
Net current assets / (liabilities) 2,354 6,454 2,330 5,759
Provisions for liabilities 16 (1,622) (1,226) (1,622) (1,226)
Net assets excluding pension deficit 44,669 43,725 44,644 43,030
Pension deficit 11 (150) (183) (150) (183)
Net assets 44,518 43,542 44,494 42,847
Unrestricted funds
General funds 19 16,201 16,168 16,177 15,473
Designated funds 19 11,790 12,774 11,790 12,774
Pension reserve 19 (150) (183) (150) (183)
Total unrestricted funds 27,840 28,759 27,816 28,064
Restricted funds 19 539 309 539 309
Endowment funds 19 16,139 14,474 16,139 14,474
Total funds 44,518 43,542 44,494 42,847
(976)
----- End of picture text -----

The notes on pages 49 to 69 form part of these financial statements

The financial statements were approved and authorised by the Board of Trustees on 28 July 2021 and signed on their behalf by

Chris Gillies

Honorary Treasurer

The result of the parent charity for the year was a net income of £1,507,000 (2020: net deficit of £13,259,000 including an £11m payment to the DB pension scheme)

Funds for the Group and Society include a revaluation reserve of £2,131,000 (2020: £418,000)

47

The Children’s Society

Group and Society cash flow statements Year ended 31 March 2021

Group Society
2021 2020 2021 2020
Note £000 £000 £000 £000
Net cashgenerated by operating activities A (2,548) (14,627) (2,553) (14,249)
Cash flows from investment activities
Investment income received 16 231 16 231
Purchase of investments (12) (2,767) (12) (2,767)
Proceeds from the sale of investments 349 20,188 349 20,188
Purchase of tangible fixed assets (1,787) (2,830) (1,787) (2,830)
Proceeds from the sale of fixed assets 190 276 190 276
Net cashprovided byinvestment activities (1,244) 15,098 (1,244) 15,098
Increase in cash (3,792) 470 (3,796) 849
Cash at the start of theperiod 6,624 6,154 6,524 5,675
Cash at the end of theperiod 2,833 6,624 2,729 6,524
Notes to the cash flow statements
A Reconciliation of net income to cash generated
by operating activities
Net income as reported in the statement of financial
activities (48) (13,242) (743) (13,259)
Adjustments for:
Net investment income receivable (16) (231) (16) (231)
Net interest cost on defined benefit pension liability (84) (125) (84) (125)
Depreciation charges 1,062 1,006 1,062 1,006
Impairment charges 1,281 – 1,281 –
(Gains) / losses on the sale of fixed assets (15) 124 (15) 124
Losses / (gains) on investments and assets (4,858) (1,778) (4,858) (1,778)
(Increase) / decrease in debtors 479 (728) 244 (672)
Increase in creditors (80) 899 (521) 1,238
Intercompany creditor – – 1,367 –
Increase inprovisions for liabilities 396 481 396 481
Net cash provided by operations before pension contributions (1,882) (13,594) (1,887) (13,216)
Pension contributions (666) (1,033) (666) (1,033)
Net cashgenerated by operating activities (2,548) (14,627) (2,553) (14,249)

48

Annual report 2021

Notes to the financial statements Year ended 31 March 2021

1 Accounting policies

The principal accounting policies adopted, judgements and key sources of estimation uncertainty in the preparation of these financial statements are as set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

a. General information

The Society is registered in England and Wales as a company limited by guarantee with registration number 40004. It is registered as a charity with the Charity Commission with registration number 221124.

The registered office of the Society is:

Whitecross Studios 50 Banner Street London EC1Y 8ST

b. Statement of compliance

These consolidated and separate financial statements are prepared on a going concern basis, under the historical cost convention, as modified by the recognition of certain assets measured at fair value.

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 Statement of Recommended Practice for Charities (SORP 2015) (Second Edition, effective 1 January 2019) and the Financial Reporting Standard applicable in the UK and Republic of Ireland (‘FRS 102’). The Society is a public-benefit entity as defined by FRS 102.

They also conform to the requirements of the Charities Act 2011 and the Companies Act 2006. No separate Statement of Financial Activities (‘SOFA’) has been presented for the Charity alone as permitted by the Charities SORP.

e. Subsidiaries and joint ventures

Entities related to the Society are treated as subsidiaries when the Society is able to control the entity. Subsidiaries that have been part of the group in the year are shown in note 21.

The Society and two other charities own one-third each of the share capital in a separate entity, CharITyshare Limited registered in England and Wales with company number 5260609. The transactions are not material and therefore CharITyshare is not treated as a joint venture for the purposes of the consolidated accounts and the share of costs incurred and prepaid charges associated with the activity is recorded in the accounts of the Society. CharITyshare Limited ceased trading on 30 June 2018. On 1 June 2020 Karen Spears and Matthew Haw of RSM Restructuring Advisory LLP were appointed as joint liquidators in a Members Voluntary Liquidation, a solvent wind up. The Children’s Society accounts directly for its share of the assets, liabilities and cash flows.

f. Income from donations, grants and legacies

Income from donations, grants and legacies is recognised when the Society is entitled to the income, when receipt is probable and the amount can be reliably estimated.

Gift Aid receivable is recognised at the same time as the related donations.

When donations are received other than in money, for instance as a donation of property or investments, the donation is recorded at the fair value of the items donated at the date of donation, with the relevant asset recorded at the same initial value.

If there is a requirement to repay a grant received as a result of not meeting the conditions of the grant, a liability is recognised for the repayment and recorded as a reduction in income in the period.

Government grant income includes the total amount claimed from HMRC under the Coronavirus Job Retention Scheme. The income is accounted for in the period in which the associated salary payments are made to furloughed staff.

c. Basis of consolidation

g. Income from contracts

The results of each of the Society’s subsidiary undertakings listed in note 21 have been consolidated into these financial statements, on a line-by-line basis. Uniform group accounting policies have been applied and transactions and balances between the undertakings are eliminated on consolidation.

d. Going concern and C-19

The accounting policies of The Children’s Society include the preparation of the accounts on the assumption that the Society will be a going concern for the 18 month period from the date of signing of the accounts. We have extended the view from 12 months due to the significant impact that the current pandemic has and will continue to have upon our activities. The nature of C19 is to increase the level of uncertainty for ourselves, the sector and the economy generally.

Income from contracts for the delivery of services is recognised on a straight-line basis over the period of time that the contract covers. Where the contract has a set value of expenditure to be met as well as covering a period of time, cumulative income is recognised in proportion to the cumulative value of expenditure. The amount of income recognised in a given reporting period is calculated as the difference between the cumulative income at the beginning and the end of the reporting period.

h. Donated goods

Valuation of donated goods for resale at the time of receipt is not practicable, due to the high volume of low value items received and the absence of detailed stock control systems. Instead, the value of the donated items is recognised as income when they are sold and their value is thus determined.

49

The Children’s Society

Notes to the financial statements (continued) Year ended 31 March 2021

1 Accounting policies (continued)

recorded as the employees earn entitlement to the benefits through their service.

i. Gifts in kind

Long-term employee benefits

The Society receives goods and services that are provided free of charge. When these replace expenditure that the Society would have made if not provided free of charge and the value can be measured reliably, the value of the goods or services received is recognised as donated income at the value that the Society would have paid a third-party supplier. The expenditure or asset arising is recognised at the same value in the appropriate section of the financial statements.

j. Volunteers

The Society benefits from volunteer support in its retail network, fundraising groups, working with children and young people, and in administration. If volunteers were not available, their roles would not be provided by salaried staff as it would be financially impractical. There is no ready market comparator for the roles they undertake and it is not possible to reliably measure the financial value of our volunteers. The financial value of the donated services and the related contributed activity are, therefore, not recognised in the financial statements.

k. Accounting for expenditure

Costs are recognised when the Society has an obligation, whether contractual, legal or constructive, to transfer funds to another person or entity. Costs are recorded at the total of the amount due plus any unrecoverable VAT associated with the cost.

Costs are recorded according the type of expenditure incurred and the charitable, income generation or support purpose to which they are put.

Support and governance costs are allocated to the activities of the Society using the following bases:

Cost group Allocation basis
HR and organisational Headcount
development
Property services Number of properties
managed
Information systems Number of users serviced
Financial processing and Headcount
management
Senior management Headcount
Governance Headcount

l. Leases

The cost of the minimum payments under an operating lease is recognised evenly over the non-cancellable period of the lease. To meet this policy, break points are assumed to be taken when calculating lease costs.

m. Employee benefits

Short-term employee benefits

Single employer defined benefit pension schemes

Scheme assets are measured at market value. Scheme liabilities are measured using the projected unit credit method and discounted at the current rate of high-quality corporate bonds with an equivalent term and the same currency as the liabilities.

Current service costs are recognised as the scheme members earn entitlement to benefits. Past service costs are recognised immediately in expenditure if the benefits have vested. The administration charges of the scheme are also included in expenditure as they fall due.

An interest cost arising from the unwinding of the discount on the scheme liabilities and an expected return from assets using the same discount rate are recognised in income and expenditure as a net income or cost.

Changes in the valuation of the scheme liabilities and assets caused by changing assumptions in the valuation of the liabilities and difference between expected and actual return on assets are recorded as actuarial gains and losses in the SOFA under ‘Other recognised gains and losses’.

Multi-employer defined benefit pension schemes

Where the scheme is in deficit and where the company has agreed to a deficit funding arrangement, the company recognises a liability for this obligation. The amount recognised is the net present value of the deficit reduction contributions payable under the agreement that relates to the deficit. The present value is calculated using the discount rate which is the equivalent single discount rates which, when used to discount the future recovery plan contributions due, would give the same results as using a full AA corporate bond yield curve to discount the same recovery plan contributions. The unwinding of the discount is recognised as a finance cost.

n. Taxation

The Society is a registered charity and, as such, is exempt from taxation of its income provided the income is applied for charitable purposes. Both subsidiary entities are subject to Corporation Tax. Taxable profits earned by the subsidiaries are distributed under the Gift Aid scheme to the Society so that taxable profits are eliminated, to the extent that the profits are available for distribution.

o. Accounting for funds

Monies received and expended are recorded as part of unrestricted general funds unless they meet the criteria to be recorded in one of the funds described below.

Income received that is required (whether by the donor, by written agreement or by the request made by the Society) to be used more narrowly than for the general purposes of the Society is recorded in a restricted fund. These funds are identified and held separately from the other funds of the Society.

Short-term employee benefits, typically salaries, paid holiday and contributions to money-purchase pension schemes, are 50

Annual report 2021

Notes to the financial statements (continued) Year ended 31 March 2021

1 Accounting policies (continued)

The Trustees may also set aside monies into a fund designated for a specific purpose. A fund of this kind remains part of the unrestricted funds of the Society, but not available for use for general purposes.

Expenditure to meet the purposes of a fund is recorded against the fund. The remaining balances of funds are carried forward for future use.

The Charities SORP permits and The Children’s Society uses a negative fund to represent the value of the pension deficit as separate from other funds.

p. Tangible fixed assets

Tangible fixed assets are physical and software assets controlled by the Society that are used in the delivery of charitable or support activities.

Tangible fixed assets are recorded when they have an aggregate cost of at least £2,500. They are recorded initially at cost including the costs of bringing them to location and state in which they can be used for their intended purpose.

The cost of the assets is depreciated evenly over their expected useful life with the Society to the expected residual value at the end of its useful life. Depreciation is charged from the point that the asset is ready for use. Initial depreciation rates are based on the following expected lives of assets:

Asset type Initial expected Initial expected
life residual value
Freehold land Infinite Cost
Freehold buildings 50 years Nil
Leasehold land & Lease life Nil
buildings including (application of
improvements policy to first
break of lease)
Vehicles 4 years Nil
Other Assets 4 years Nil
Software 4 years Nil

After purchase, freehold land and buildings are carried at their open market value. Valuations are carried out on a rolling threeyear programme by a Chartered Surveyor. Where market value is above carrying value, this amount is first applied as reversal of depreciation then as an increase in cost. Surpluses arising are transferred to a revaluation reserve as required by the Companies Act.

Where the market value is below carrying value, deficits arising are first treated as reversals of valuation then as additional depreciation. To the extent that the revaluation reserve has not been realised through depreciation, deficits arising are charged against the revaluation reserve.

q. Investments

Investment property is property held by the Society for the purposes of generating income and/or capital growth. These buildings are not used by the Society for its purposes. Investment property is recorded initially at cost and remeasured each year at its open-market value.

Gains and losses on remeasurement are reported in income and expenditure.

r. Current assets

Trade debtors are recorded at the amount invoiced in accordance with the agreement to which they relate, less any impairment of the asset.

Costs incurred that relate to future periods are carried as prepayments within current assets.

Income that has met the conditions to be recognised either as a result of being earned under an agreement or being a future donation or legacy, able to be recognised as set out above, is recorded within accrued income.

Cash at bank and in hand represents the value of all cash and bank holdings that are available for immediate use.

Where fixed assets have been put on sale and are expected to be sold within the next financial year, their cost or valuation and accumulated depreciation are removed from fixed assets and the asset recorded as an asset held for sale. Assets held for sale are carried at the lower of cost or valuation less accumulated depreciation at the date of being placed on sale or the net amount recoverable from the sale, less associated costs.

s. Impairment of assets

When external events relating to markets or technology or internal events relating to the plans and activities of the Society indicate that the value of an asset may be impaired, an impairment review is conducted. The review determines whether the recoverable value of the asset is above or below its carrying value, using external open-market values or other accepted valuation techniques.

If the recoverable amount of the asset is below its carrying value, the difference is written off. To the extent that the reduction in value represents the reversal of undepreciated revaluation surpluses, the reduction is treated as a reversal of the revaluation. Any further reduction is recorded as an impairment of the asset in depreciation.

t. Liabilities and provisions

Liabilities are recognised when the Society has a legal or contractual obligation to transfer resources to another party to settle that obligation. Liabilities are recorded at the best estimate of the amount that will be required to settle the obligation.

When the timing, value or both of the liability is uncertain, a provision is recognised at the best estimate of the amount to be paid.

Investments are recorded at cost when purchased. Where the market value of an investment can be determined by reference to an external market or a professional valuation, the investment is carried at its open-market value.

51

The Children’s Society

Notes to the financial statements (continued) Year ended 31 March 2021

1 Accounting policies (continued)

u. Financial instruments

The Society applies the provisions of sections 11 and 12 of FRS 102 in full.

Financial instruments are recorded initially at their transaction costs. Financial instruments held at fair value through profit and loss are subsequently measured and reported at their fair value. Changes in fair value from remeasurement are recorded in income and expenditure.

Financial instruments that are debt or financial liabilities are subsequently measured and reported at their amortised cost using the effective interest method. Remeasurement gains and losses are reported in income and expenditure.

v. Assets held on behalf of other charities

The Society from time to time holds assets on behalf of other charities. When such assets held are held separately from those belonging to the Society, they are not recorded in the financial statements. When the assets are combined with other assets of the Society, for example in pooled investments, the portion of the value of the assets held on behalf of the other charity is recorded as a liability. Income, expenditure, and gains and losses related to the portion of the assets held on behalf of the other charity are not reported in the statement of financial activities.

w. Uncertainties and judgements

The principal judgements made in the preparation of the financial statements have been in relation to:

The most important uncertainties that the Society faces in the preparation of the financial statements are:

52

Annual report 2021

Notes to the financial statements (continued) Year ended 31 March 2021

2 Income from donations and legacies

----- Start of picture text -----
Unrestricted Restricted Unrestricted Restricted
funds funds Total funds funds funds Total funds
2021 2021 2021 2020 2020 2020
£000 £000 £000 £000 £000 £000
Donations
Christingle 553 – 553 1,238 – 1,238
House boxes 760 – 760 1,349 – 1,349
Other donations 7,719 – 7,719 6,242 – 6,242
Legacies 4,322 4,322 6,256 – 6,256
Government Grant Income 6,930 – 6,930 700 – 700
Total income from donations and legacies 20,285 – 20,285 15,785 – 15,785
----- End of picture text -----

This year, Donations and Legacies include £6.9M of various government grants or covid relief initiatives awarded due to the pandemic and the impact on our operations. This is made up of £2.08m of furlough receipts, £0.99m of retail premise relief grants and the remainder from the Home Office as part of the covid relief initiatives. This is also displayed at the foot of the grant note (note 23 to the accounts). In the prioir year £700k was recieved from retail premise relief grants and was reported as other donations and so has been extracted to allow comparison.

3 Income from charitable activities

Unrestricted Restricted Unrestricted Restricted
funds funds Total funds funds funds Total funds
2021 2021 2021 2020 2020 2020
£000 £000 £000 £000 £000 £000
Providing direct support to children and young
people 7,246 2,007 9,253 5,507 1,691 7,198
Changing governmental and societal systems 70 1,543 1,613 816 1,513 2,329
Total income from charitable activities 7,316 3,550 10,866 6,323 3,204 9,527

4 Income from trading activities

Unrestricted Restricted Unrestricted Restricted
funds funds Total funds funds funds Total funds
2021 2021 2021 2020 2020 2020
£000 £000 £000 £000 £000 £000
Income from retail activities 2,694 – 2,694 11,194 – 11,194
Card sales 129 – 129 58 – 58
Event entry fees 3 – 3 8 – 8
Covid-19 releif grants – – – 700 – 700
Total income from trading activities 2,826 – 2,826 11,960 – 11,960

5 Income from investments

Unrestricted Unrestricted
funds Total funds funds Total funds
2021 2021 2020 2020
£000 £000 £000 £000
Income from financial investments 16 16 231 231
Income from investment properties 9 9 22 22
Total investment income 25 25 253 253

53

The Children’s Society

Notes to the financial statements (continued) Year ended 31 March 2021

6 Other income

Other income
Unrestricted Restricted Unrestricted Restricted
funds funds Total funds
funds		 funds Total funds
2021 2021 2021 2020 2020 2020
£000 £000 £000 £000 £000 £000
(Losses) / gains on disposal of fixed assets 15 – 15 (124) – (124)
Sundry income 23 – 23 11 – 11
Total income from other sources 38 – 38 (113) – (113)

7 Expenditure on raising funds

Direct Support Total Direct Support Total
costs costs costs costs costs costs
2021 2021 2021 2020 2020 2020
£000 £000 £000 £000 £000 £000
Direct fundraising 6,831 1,586 8,417 7,197 1,637 8,834
Costs of retail operations 7,887 1,853 9,740 9,325 1,516 10,841
Total expenditure on raising funds 14,718 3,438 18,156 16,522 3,153 19,675

8 Expenditure on charitable activities

Direct Support Total Direct Support Total
costs costs costs costs costs costs
2021 2021 2021 2020 2020 2020
£000 £000 £000 £000 £000 £000
Providing direct support to children and
young people 11,272 2,710 13,982 12,573 2,611 15,184
Changing governmental and societal
systems 5,510 1,298 6,808 5,174 1,459 6,633
Payment to the pension scheme – – – – 11,000 11,000
Total expenditure on charitable activities 16,782 4,007 20,790 17,747 15,070 32,817

Net income is arrived at after charging:

Net income is arrived at after charging:
2021 2020
£000 £000
Depreciation of tangible fixed assets 1,035 1,015
Rentals payable under operating leases 2,700 2,704
Auditor's remuneration
Audit of the Group's financial statements 42 43
Other fees payable to the auditor 2 –

54

Annual report 2021

Notes to the financial statements (continued) Year ended 31 March 2021

9 Support costs and their allocation to activities

2021 Direct Changing Donations
services systems & legacies Retail Total
£000 £000 £000 £000 £000
HR and organisational development 642 311 141 483 1,577
Property services 44 – – 278 322
Information systems 922 277 203 694 2,095
Financial processing and management 912 418 1,027 329 2,686
Senior management 183 55 40 69 348
Governance 6 238 174 – 418
Total support costs 2,710 1,298 1,586 1,853 7,447
The allocation basis for support costs is set out in note 1 Accounting policies
2020 Direct Changing Donations &
services systems legacies Retail Total
£000 £000 £000 £000 £000
HR and organisational development 623 359 148 503 1,633
Property services 103 – – 420 523
Information systems 554 543 424 117 1,638
Financial processing and management 1,015 353 896 393 2,657
Senior management 164 50 39 66 319
Governance 153 154 129 17 453
Total support costs 2,612 1,459 1,636 1,516 7,223
Governance costs are made up of:
2021 2020
£000 £000
External audit 42 43
Internal audit 95 108
Trustee Board administration 88 66
Trustee recruitment 31 30
Trustee expenses 2 3
Trustee meetings 1 12
Professional fees – 3
Senior Leadership Team 159 187
Totalgovernance costs 418 452

10 Trustees and staff

Trustees and staff
Group and Society
Average monthly number of full-time equivalent staff employed in: 2021 2020
Providing direct support to children and young people 226 236
Changing governmental and societal systems 110 76
Direct fundraising 81 74
Retail operations 190 190
Support services 79 66
Total 686 642

55

The Children’s Society

Notes to the financial statements (continued) Year ended 31 March 2021

10 Trustees and staff (continued)

tes to the financial statements (continued)
ar ended 31 March 2021
Trustees and staff (continued)
Average monthly number of staff employed in: 2021 2020
Providing direct support to children and young people 296 311
Changing governmental and societal systems 118 84
Direct fundraising 85 77
Retail operations 244 243
Support services 83 68
Total 825 783
Costs of staff 2021 2020
Group and Society £000 £000
Wages and salaries 21,460 19,871
Social security 1,883 1,747
Pensions 1,814 13,724
Redundancy and compensation for loss of office 274 137
Agency staffing 443 1,101
Total 25,874 36,580

The total amount paid in the year for redundancy and compensation for loss of office was £42,190 (2020: £123,243). The amount accrued for future redundancy payments at the balance sheet date was £231,687 (2020: £13,757 ).

Higher paid staff

The number of employees with remuneration in excess of £60,000 including redundancy and compensation for loss of office but excluding pension contributions is analysed into the following bands:

excluding pension contributions is analysed into the following bands:
2021 2020
Number Number
Between £60,001 and £70,000 9 7
Between £70,001 and £80,000 5 9
Between £80,001 and £90,000 1 1
Between £90,001 and £100,000 1 1
Between £100,001 and £110,000 2 2
Between £110,001 and £120,000 1 –

The Society paid pension contributions into a money purchase scheme of £90,530 (2020: £82,487) for 19 (2020: 20) of the higher paid staff.

Key management personnel

The key management personnel serving in the year comprise the Chief Executive Officer, Executive Director for Children and Young People, Executive Director of Finance and Corporate Services, Executive Director of Engagement and Income Generation and Executive Director of Diversity and Talent. The total remuneration paid to key management personnel was £510,526 (2020: £475,485).

The salary of the Chief Executive during the year ended 31 March 2021 comprised of salary £120,000 (2020: £74,545) and no agency fees (2020: £79,217). In addition, the company paid pension contributions of £4,800 (2020: £2,982) into a defined contribution scheme.

Trustee remuneration

No members of the Trustee Board received, or were entitled to receive, any remuneration. Where expenses were claimed, reimbursement was made. In the year, travelling expenses of £56 (2020: £2,289) were reimbursed to 1 trustee (2020: 7). Trustee indemnity insurance was purchased at a cost of £5,824 (2020: £5,824).

56

Annual report 2021

Notes to the financial statements (continued) Year ended 31 March 2021

11 Pensions

The Children’s Society operates three pension schemes, a defined contributions scheme, a defined benefits scheme and a multi-employer mixed defined benefit and money purchase scheme for additional voluntary contributions within The Pensions Trust Growth Plan (‘the Growth Plan’).

The defined contribution scheme was managed by Aberdeen Standard Life until 31 March 2019; from 1 April 2019 it is managed by Scottish Widows. The scheme is compliant with the pension reform rules for automatic enrolment. Contributions by the employee are matched by the employer up to a limit of 8% of salary and a salary sacrifice option is offered. The cost of employer contributions due as a result of service in the year was £997,475 (2020: £901,552).

The defined benefits scheme is externally funded and is contracted-in to the state second-tier of pension provision. Retirement benefits within this scheme are based on employees’ final remuneration and length of service. The scheme was closed to new members in June 2003 and is managed by The Pensions Trust and is covered in note 11(a).

"The Growth Plan" is a multi-employer scheme which provides benefits to some 950 non-associated participating employers. The scheme is a defined benefit scheme in the UK but is not possible for us to obtain sufficient information to enable us to account for the scheme as a defined benefit scheme. Therefore we account for the scheme as a defined contribution scheme. The scheme is subject to the funding legislation outlined in the Pensions Act 2004 which came into force on 30 December 2005. This, together with documents issued by the Pensions Regulator and the Financial Reporting Council, set out the framework for funding defined benefit occupational pension schemes in the UK. The scheme is classified as a 'last-man standing arrangement'. Therefore we are potentially liable for other participating employers' obligations if those employers are unable to meet their share of the scheme deficit following withdrawal from the scheme. Participating employers are legally required to meet their share of the scheme deficit on an annuity purchase basis on withdrawal from the scheme. This is covered in more detail in note 11(b).

11(a) Defined benefit scheme

An actuarial valuation was completed as at 30 September 2018 and the results of this have been updated to 31 March 2020 by a qualified actuary, independent of the scheme's sponsoring employer. The major assumptions used by the actuary are shown below. The most recently completed actuarial valuation showed a deficit of £15,277,000 as at 30 September 2018. The employer agreed with the trustees that it will aim to eliminate the deficit over a period of 4 years 6 months from 1 December 2019 by the payment of a one-off lump sum contribution of £11,000,000 by 31 December 2019 coupled with expected future investment returns.

The payment of £11,000,000 into the scheme by the employer, combined with expected future returns is expected to fully fund the Scheme on the Technical Provisions basis, based on the funding position at 11 November 2019. After this cash injection, the Trustees will adopt an investment strategy that minimises as far as possible the level of investment risk whilst supporting the Technical Provisions discount rate. This reduces the risk of the employer having to pay any further deficit contributions in future. The investment strategy that will therefore be implemented after the cash injection has an expected return of gilts + 1.1% p.a. and a Value at Risk (VaR) of 4% of liabilities. The Scheme’s Long Term Objective (LTO) is to be fully funded on gilts + 0.5% p.a. This is intended to happen automatically as the Technical Provisions converge to the LTO with the tapering of the discount rate.

In addition and in accordance with the actuarial valuation, the employer has agreed with the Trustee that with effect from 1 December 2019 it will pay 17.5% p.a. of pensionable earnings (previously 14.5% p.a.) in respect of the cost of accruing benefits for members who are not participating in the salary sacrifice arrangement and 27.5% p.a. of pensionable earnings (previous 24.5% p.a.) for members participating in the salary sacrifice arrangement and will pay £187,800 per annum to meet scheme expenses and levies to the Pension Protection Fund. Member contributions are payable in addition at the rate of 10.0% p.a. of pensionable earnings for members who are not participating in the salary sacrifice arrangement.

57

The Children’s Society

Notes to the financial statements (continued) Year ended 31 March 2021

11 Pensions (continued)

We have been notified by the pension scheme trustee that there may be a potential issue surrounding changes made to the scheme rules between 1995 and 2006, over which the trustee is seeking clarification from the courts. The matter is unlikely to be resolved before 2023 at the earliest, and as such it is not possible to determine with any accuracy what the impact might be of any direction the court may, or may not, give. Many factors will impact the future valuation of the pension scheme, none of which can be accurately predicted at the present time. No adjustment has therefore been made to the amounts included in the financial statements in respect of this potential issue.

The assumptions used by the actuary are the best estimates chosen each year from a range of possible actuarial assumptions which, due to the timescale covered, may not necessarily be borne out in practice.

2021 2020
Rate of increase in salaries 0.00% 0.00%
Rate of increase in pensions in payment 2.85% 1.85%
Discount rate 2.10% 2.30%
Inflation assumption 3.30% 2.70%
Rate of increase for deferred pensions 3.30% 2.70%

The rate of increase in salaries is assumed at 0% as pensionable salaries for active members were frozen as at 31 December 2013.

Life expectancy included in the valuation of the scheme is calculated using the SAPS S2 (All Pensioners - Pension Amounts) tables with a best estimate scheme-specific scaling factor of 112% (2018 - 96%). The base tables have been projected using the CMI_2019 projection model with a long-term improvement rate 1.25% for males and of 1.0% for females.

The resulting average life-expectancies in years (age at death) were:

Pensioners retiring: 2021 2020
Females Males Females Males
Now 23.5 (88.5) 21.6 (86.6) 23.8 (88.8) 22.0 (87.0)
In 20 years 25.0 (90.0) 22.9 (87.9) 25.0 (90.0) 23.4 (88.4)
Assets and liabilities of the scheme 2021 2020
£000 £000
Bonds 114,716 111,586
Equities 6,469 5,871
Property 13,309 12,546
Cash 3,126 501
Other 30,651 35,904
Scheme assets 168,271 166,408
Present value of scheme liabilities (157,901) (141,344)
Surplus/(Deficit) in the scheme - pension liability 10,370 25,064
Effect of asset ceiling (9,690) (24,152)
Eliminate FRS102 scheme surplus (680) (912)
Present value of Growth Plan provision (note 11(b)) (150) (183)
Netpension liability (150) (183)

58

Annual report 2021

Notes to the financial statements (continued) Year ended 31 March 2021

11 Pensions (continued)

11(a) Defined benefit scheme (continued)

Profit and loss impact

**11(a) ** Defined benefit scheme (continued)
Profit and loss impact
2021
2020
£000
£000
Current service cost
122
151
Past service cost
–
–
Expenses
194
208
Interest on obligation
3,188
3,501
Expected return on scheme assets
(3,764)
(3,629)
Total
(260)
231
Movement in defined benefit obligation
2021
2020
£000
£000
Opening defined benefit obligation
141,344
148,374
Current service cost
122
151
Past service cost
–
–
Expenses
194
208
Interest cost
3,188
3,501
Contributions by employees
13
13
Actuarial loss/(gain)
18,906
(5,681)
Benefits paid
(5,866)
(5,222)
Closing defined benefit obligation
157,901
141,344
Change in fair value of the scheme assets
2021
2020
£000
£000
Opening value of the scheme assets
166,408
147,658
Expected return
3,764
3,629
Actuarial (loss)/gain
3,618
8,001
Contributions by employer
334
12,328
Contributions by employees
13
13
Benefits paid
(5,866)
(5,222)
Closing fair value of the scheme assets
168,271
166,408
Actual return on scheme assets
7,382
11,630
Defined benefit costs recognised in other comprehensive income
2021
2020
£000
£000
Return on plan assets (excluding amounts included in net
interest cost)
3,618
8,001
Experience gains and losses arising on the plan liabilities
1,241
776
Effects of changes in the demographic and financial
assumptions underlying the present value of the plan
liabilities
(3,888)
4,905
Payment to eliminate deficit
–
11,000
Effect of asset ceiling
(980)
(24,152)
Eliminate FRS102 scheme surplus
(680)
(912)
(689)
(382)
Total amount recognised in other comprehensive income

59

The Children’s Society

Notes to the financial statements (continued) Year ended 31 March 2021

11 Pensions (continued)

11(a) Defined benefit scheme (continued)

Sensitivity analysis

Changes in assumptions would have the following indicative effects on the liabilities of the scheme:

Assumption change Effect on liabilities Decrease in discount rate by 0.1% 2% increase in liabilities Increase inflation linked assumptions by 0.1% per annum 2% increase of inflation linked liabilities Increase in life expectancy of 1 year 2-3% increase in liabilities

11(b) The Growth Plan

The Children’s Society participates in The Pensions Trust Growth Plan, a multi-employer scheme which provides benefits to some 950 non-associated participating employers. The scheme is a defined benefit scheme in the UK.

A full actuarial valuation of the scheme was carried out as at 30 September 2017. This valuation showed assets of £794.9m, liabilities of £926.4m and a deficit of £131.5m. To eliminate this funding shortfall, the Trustee has asked the participating employers to pay additional contributions to the scheme as follows:

Deficit contributions (relating to all 950 employers)

From 1 April 2019 to 30 September 2025:

£11,243,000 per annum (payable monthly and increasing by 3% each on 1st April)

The recovery plan contributions are allocated to each participating employer in line with their estimated share of the Series 1 and Series 2 scheme liabilities.

2021
2020
£000
£000
Present values of provision (only relating to The Children's Society)
150
183
2021
2020
£000
£000
Changes in provision
Provision at start of period
183
222
Unwinding of the discount factor (interest expense)
4
3
Deficit contributions paid
(38)
(37)
Remeasurements - impact of any change in assumptions
1
(5)
Remeasurements - amendments to the contribution schedule
–
–
Provision at end ofperiod
150
183
Profit and loss impact
Interest expense
4
3
Remeasurements – impact of any change in assumptions
1
(5)
Remeasurements – amendments to the contribution schedule
–
–
5
(2)
2021
2020
Assumptions
Discount rate
2.10%
2.53%

60

Annual report 2021

Notes to the financial statements (continued) Year ended 31 March 2021

12 Tangible fixed assets

Tangible fixed assets
Freehold Leasehold
land & land &
buildings buildings Vehicles Other Assets Software Total
£000 £000 £000 £000 £000 £000
Group and Society
Cost or valuation
At 1 April 2020 2,387 6,726 32 5,397 – 14,543
Transfer (712) 712 –
Additions 12 557 – 613 604 1,787
Disposals – (98) – (4) – (102)
Transfer to current assets (338) – – – – (338)
Transfer to investment properties (1,398) – – – – (1,398)
Revaluation 1,726 – – – – 1,726
At 31 March 2021 2,389 7,186 32 5,293 1,316 16,218
Depreciation
At 1 April 2020 944 4,747 29 3,783 9,501
Transfer (60) 60 –
Depreciation charged 51 566 3 442 – 1,062
Accelerated Depreciation – – – 946 – 946
Impairment – 335 – – – 335
Released on disposal (11) (81) – (1) – (93)
Transfer to current assets (83) – – – – (83)
Transfer to investment properties – – – – – –
Revaluation (13) – – – – (13)
At 31 March 2021 888 5,567 32 5,109 60 11,656
Net book value
At 31 March 2021 1,501 1,619 – 184 1,256 4,562
At 31 March 2020 1,444 1,979 3 1,614 – 5,042

Freehold land & buildings used by The Children's Society are revalued following the policy set out in note 1. Valuations are carried out by the Society's Estates Surveyor, Ian Birtwistle MRICS. The most recent valuations were carried out in 2021.

If the properties (including those held for sale and in investments) had not been revalued, they would be reported in the accounts with a cost of £2,510,977 (2020: £2,813,921) and accumulated depreciation of £650,753 (2020: £619,915) leaving a net value of £1,860,224 (2020: £2,194,006).

During the year to 31 March 2021, management conducted a detailed review of its fixed asset register due to the changes in working practices resulting from the pandemic and new ways of working impacting both building and technology usage. The review has resulted in an impairment of £335k of leased assets, and write down of IT and Other assets of £946k, the categories of assets affected by the review are highlighted below:

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The Children’s Society

Notes to the financial statements (continued) Year ended 31 March 2021

13 Investments

----- Start of picture text -----
Investment Listed
Group and Society properties investments Total
£000 £000 £000
At 1 April 2019 5,492 43,574 49,066
Purchases – 2,767 2,767
Transfer from fixed assets 11 – 11
Sales (4,936) (15,252) (20,188)
Realised and unrealised gains - Society (65) 1,843 1,778
Realised and unrealised gains - The Viney Trust – 21 21
At 1 April 2020 503 32,953 33,455
Purchases – 12 12
Transfer from fixed assets 1,398 – 1,398
Sales (349) – (349)
Realised and unrealised gains / (losses)- Society 45 4,726 4,771
Realised and unrealised gains - The Viney Trust – 87 87
At 31 March 2021 1,596 37,778 39,374
Debtors
Group Society
2021 2020 2021 2020
£000 £000 £000 £000
Trade debtors 1,095 976 730 517
Prepayments and accrued income 3,941 4,447 3,941 4,307
Taxation debtors 68 126 68 126
Other debtors 5 38 5 38
– – – –
Amounts due from subsidiary
Total debtors 5,109 5,587 4,744 4,988
----- End of picture text -----

14 Debtors

15 Creditors: amounts due within one year

Creditors: amounts due within one year
Group Society
2021 2020 2021 2020
£000 £000 £000 £000
Trade creditors 310 339 310 339
Accruals 1,719 1,575 1,715 1,575
Deferred income 3,261 2,726 2,275 1,917
Taxation and social security 508 471 508 471
Other creditors 45 812 44 811
Amounts due to subsidiary – – 546 806
Total creditors: amounts due within one year 5,843 5,923 5,398 5,919

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Annual report 2021

Notes to the financial statements (continued) Year ended 31 March 2021

15 Creditors: amounts due within one year (continued)

Deferred income arises as a result of payment or billing in advance for activities that are to be delivered in the future.

Movements in deferred income in the year have been

----- Start of picture text -----
Group Society
2021 2020 2021 2020
£000 £000 £000 £000
Deferred income at the start of the year 2,726 1,563 1,917 671
Deferred income brought forward released in the year (540) (69) (515) 425
Income deferred from the year 1,074 1,233 879 822
Deferred income at the end of the year 3,261 2,726 2,282 1,917
----- End of picture text -----

16 Provisions for liabilities

Group and Society

Property Total
dilapidations provisions
£000 £000
At 1 April 2020 1,226 1,226
Charged in the year 603 603
Used in the year – –
Released unused (207) (207)
Total provisions 1,622 1,622
Property Total
dilapidations provisions
£000 £000
Amounts due within one year 685 685
Amounts due after more than one year 938 938
Total provisions 1,622 1,622

Under the terms of operating leases for properties, the Society is required to make good any demerit in the condition of properties and to remove fixtures and fittings added to the building during the course of the lease. The amounts and timing of the amounts due are not certain, as leases may be curtailed or extended and the cost of works is not known until they are carried out. The value of works required is estimated by suitably qualified and experienced chartered surveyors.

63

The Children’s Society

Notes to the financial statements (continued) Year ended 31 March 2021

17 Commitments

At 31 March 2021, the Group and Society had £1.7m (2020: £1.1m) of authorised but not contracted capital commitments and £0.8m (2020: £1.5m) contracted capital commitments that had not been reflected in the financial statements.

Minimum payments under operating leases are:

Land and Motor Office
2021 buildings vehicles equipment Total
£000 £000 £000 £000
Amounts falling due:
within one year 2,177 63 7 2,247
between two and five years 6,335 32 – 6,367
after more than five years 2,788 – – 2,788
Total operating lease commitments 11,300 95 7 11,402
Land and Motor Office
2020 buildings vehicles equipment Total
£000 £000 £000 £000
Amounts falling due:
within one year 1,932 60 – 1,992
between two and five years 6,564 79 – 6,643
after more than five years 4,366 – – 4,366
Total operatinglease commitments 12,862 139 – 13,001

18 Contingent liabilities

In common with other charitable organisations, the Society receives legacies arising from wills where the executor has been unable to locate one or more beneficiaries. In these circumstances, the Society may provide an indemnity to the executor under which any funds required to be paid to the missing beneficiary or beneficiaries is recovered from the Society. At the date of these accounts the value of such indemnities provided totals £347,794 (2020: £348,315).

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Annual report 2021

Notes to the financial statements (continued) Year ended 31 March 2021

19 Funds

Group

Funds
Group
Balance at Other Balance at
31 March Expend- gains and 31 March
2020 Income iture (losses) Transfers 2021
£000 £000 £000 £000 £000 £000
Unrestricted funds
General Funds 16,168 30,491 (33,229) 3,089 (318) 16,201
Designated funds:
Property fund 4,858 – (2,397) 1,713 389 4,563
Strategyfund 7,916 – – – (689) 7,227
Total designated funds 12,774 – (2,397) 1,713 (300) 11,790
Unrestricted funds beforepension deficit liability 28,942 30,491 (35,626) 4,802 (618) 27,990
Pension deficit fund (183) – – 33 (150)
Total unrestricted funds 28,759 30,491 (35,626) 4,835 (618) 27,840
Restricted funds
Big Lottery Fund 506 811 (726) – – 591
Othergrants (197) 2,739 (2,594) – – (52)
Total restricted funds 309 3,550 (3,320) – – 539
Endowment funds
The Children's Society Fund 9,084 – – 593 – 9,678
Charnwood House 1,540 – – 100 – 1,640
Charnwood Forest 1,019 – – 67 – 1,086
Hampshire Girls and Boys Home 415 – – 27 – 442
The Children's Society 529 – – 35 – 564
The Spooner Trust 715 – – 46 – 761
The George and Marion Slack Fund 1,172 – – 80 – 1,253
The Croghan Fund – – – 98 618 716
Total endowment funds 14,474 – – 1,047 618 16,139
Total funds 43,542 34,041 (38,946) 5,882 – 44,518

Funds include revaluation reserves in relating to freehold land and buildings and investment properties of £1,803,000 (2020: £90,000) and relating to financial investments of £328,000 (2020: £328,000)

Transfers include a re-classification of a £618k fund (The Croghan Endowment fund) from general funds to endowments

Analysis of net assets by fund

Analysis of net assets by fund
Pension Endow-
General Designa- deficit Restric- ment
funds ted funds fund ted funds funds Total
£000 £000 £000 £000 £000 £000
Tangible fixed assets 1,619 3,423 – – – 5,042
Investments 9,630 9,351 – – 14,474 33,455
Total fixed assets 11,249 12,774 – – 14,474 38,497
Cash 6,498 (183) 309 – 6,624
Other current assets 5,753 – – – – 5,753
Total current assets 12,251 – (183) 309 – 12,377
Current liabilities (5,923) – – – – (5,923)
Net current assets 6,328 – (183) 309 – 6,454
Provisions for liabilities (1,226) (1,226)
Net assets excluding pension deficit 16,351 12,774 (183) 309 14,474 43,725
Pension deficit (183) – – – – (183)
Net assets 16,168 12,774 (183) 309 14,474 43,542

65

The Children’s Society

Notes to the financial statements (continued) Year ended 31 March 2021

19 Funds (continued) Group

Funds (continued)
Group
Balance at Other Balance at
31 March Expend- gains and 31 March
2019 Income iture (losses) Transfers 2020
£000s £000s £000s £000s £000s £000s
Unrestricted funds
General Funds 20,000 34,208 (36,095) 223 (2,167) 16,168
Designated funds:
Property fund 3,773 – (1,006) – 2,091 4,858
Strategyfund 20,210 – – – (12,294) 7,916
Total designated funds 23,983 – (1,006) – (10,203) 12,774
Unrestricted funds beforepension deficit liability 43,983 34,208 (37,101) 223 (12,370) 28,943
Pension deficit fund (938) – (11,234) (382) 12,370 (183)
Total unrestricted funds 43,045 34,208 (48,335) (159) (0) 28,759
Restricted funds
Big Lottery Fund 428 1,051 (973) – – 506
Othergrants 393 2,153 (2,743) – – (197)
Total restricted funds 821 3,204 (3,716) – – 309
Endowment funds
The Children's Society Fund 8,348 – – 736 – 9,084
Charnwood House 1,415 – – 125 – 1,540
Charnwood Forest 936 – – 83 – 1,019
Hampshire Girls and Boys Home 381 – – 34 – 415
The Children's Society 486 – – 43 – 529
The Spooner Trust 657 – – 58 – 715
The George and Marion Slack Fund 1,077 – – 95 – 1,172
Total endowment funds 13,300 – – 1,173 – 14,474
Total funds 57,166 37,412 (52,051) 1,014 (0) 43,542

Description of funds

General Funds represent the other assets available for the general purposes of the Society. The transfer of £63k represents the net movement of the other fund transfers.

Designated property fund represents the carrying value including revaluations of land and buildings held for use in the activities of The Children's Society. Transfers into this fund of £389k are in order to adjust the balance to match the value of the asset portfolio.The strategy fund represents amounts set aside by the Trustees to ensure the stability of The Children's Society through the management of legacy financial risks such as the pension deficits, for major changes such as the relocation of the Society's head office and other strategic investments identified by the Trustees. Transfers out of the fund represent costs charged against the strategy fund related to our pension conributions.

Restricted funds represent the remaining unspent amount of donations, grants and legacies given to be used for specific purposes or in specific areas. Details of grants received are in note 23.

Endowment funds have additional restrictions on the use of capital. The Children's Society Fund and The Spooner Trust are held to generate income to pay for the care of children. The George and Marion Slack Fund is held to provide educational opportunities for disadvantaged children and young people. Charnwood House, Charnwood Forest, Hampshire Boys & Girls Home and The Children's Society are held to generate income to provide care and support to children and young people in specific places in England. The Croghan fund is to support young people in education.

66

Annual report 2021

Notes to the financial statements (continued) Year ended 31 March 2021

20 Financial instruments

Financial instruments
Group Society
2021 2020 2021 2020
£000 £000 £000 £000
Financial assets measured at fair value through profit and loss
Financial investments 37,778 32,954 37,778 32,954
Debt instruments measured at amortised cost
Trade debtors 1,095 976 730 517
Other debtors 5 38 5 38
Amounts due from subsidiaries – – – –
Financial liabilities measured at amortised cost
Trade creditors 310 339 310 339
Accrued expenses 1,719 1,575 1,715 1,575
Other creditors 45 812 44 811
Amounts due to subsidiaries – – 546 806

21 Subsidiary undertakings

The Society owns the whole share capital of The Children's Society (Trading) Limited, registered in England and Wales no. 885496 whose principal activity is to carry out commercial activities that generate funds in aid of the Society, and The Children's Society (Services) Limited, registered in England and Wales no. 4545124, whose principal activity is to provide funded direct services for the beneficiaries of the Society.

Both companies have entered into an agreement to donate their taxable surplus each year to the Society under the corporate Gift Aid scheme.

A summary of the information disclosed in the companies' accounts for the year ended 31 March 2021 is:

Services Trading
2021 2020 2021 2020
Summarised profit and loss account
Income 4,403 4,279 93 75
Expenditure (4,083) (3,996) (74) (67)
Profit for the year 320 283 18 8
Gift Aid distribution to The Children's Society (320) (283) (18) (8)
Retained earnings – – – –
Summarised balance sheet
Current assets 982 1,509 7 16
Current liabilities (982) (809) – (16)
Amounts due from / (to) The Children's Society – – 19 –
Net assets – 700 26 –
Share capital – – – –
Retained reserves – – – –
Total reserves – – – –

67

The Children’s Society

Notes to the financial statements (continued) Year ended 31 March 2021

22 Related parties

Information on Trustees' expenses is set out in note 9.

The total amount of Trustee donations made, without conditions, was £20,875 (2020: £13,068).

The Children’s Society, Age UK and the Alzheimers Society have equal shares in a company called CharITyshare Limited which previously provided a shared IT service to the three charities. This company ceased to trade on 30 June 2018. On 1 June 2020 Karen Spears and Matthew Haw of RSM Restructuring Advisory LLP were appointed as joint liquidators in a Members Voluntary Liquidation, a solvent wind up.

The Children’s Society accounts directly for its share of the assets, liabilities and cash flows. The value of services from CharITyshare Limited in the year was nil (2020: £14,000) and at the balance sheet date the amount due from CharITshare Limited was £1,102 (2020: £1,000).

Transactions with subsidiary undertakings 2021 2020
£000 £000 £000 £000
Services Trading Services Trading
Balance sheet amounts
Amounts due to the parent undertaking – – – 16
Amounts due from the parent undertaking 526 19 822 –
Income
Donations from the parent undertaking – – – –
Expenditure
Donations to the parent undertaking 320 18 283 8

68

Annual report 2021

Notes to the financial statements (continued) Year ended 31 March 2021

23 Grants received

The following grants have been received in the year: £000
Reaching Communities Grants 1,242
The National Lottery Community Fund - Be more digital 167
Disrupting Exploitation 754
Essex - Community Hidden Harm Awareness Team 31
Lancashire-new Blackburn Lottery 63QL 110
Missing from Home Extension 50
Missing from Home Extension COVID-19 25
Programme against Child Sexual Exploitation - London 106
Grants from other charities and funders 861
Home Office EUSS 329
Paul Hamlyn - Voice and Influence project 20
The London Education Fund - Coordinated Crisis Support 50
Coordinated Crisis Support Other 95
Coordinated Crisis Support Lloyds 166
Coordinated Crisis Support CiN 100
BBC Children in Need - Safeguarding Children At Risk - Prevention and Action 38
BBC Children in Need - Safeguarding Children At Risk - Prevention and Action COVID-19 25
The Sir James Knott Trust - Safeguarding Children At Risk - Prevention and Action 15
Lankelly Chase Foundation - System Changers 24
Other grants from charitable bodies in the year amount to: 1,447
National Prevention Project CSE/A 595
Home Office CSA Transformation 137
British Transport Police Prevention 63
Safe Zones 450
Other (various) 202
Total 3,550
Government C-19 grants (note 2 to the accounts) related to the pandemic 6,930
COVID19 Relief Retail 993
Home Office 3,849
Furlough 2,089

69

The Children’s Society

Corporate Information

The Church of England Children’s Society

(A company limited by guarantee). Also known as The Children’s Society.

Registered Office:

Whitecross Studios 50 Banner Street London, EC1Y 8ST

Company Registration No. 40004 Charity Registration No. 221124 Telephone 020 7841 4400 Website childrenssociety.org.uk

Subsidiary companies:

The Children’s Society (Services) Limited, Company No. 4545124 The Children’s Society (Trading) Limited, Company No. 885496

The Children’s Society is not a grant making body

Royal President

HRH The Duchess of Gloucester GCVO

Presidents

The Most Reverend and Right Hon the Lord Archbishop of Canterbury Justin Welby The Most Reverend and Right Hon the Lord Archbishop of York Stephen Cottrell

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Annual report 2021

Vice-Presidents

Bishops of the Church of England Honorary Vice-Presidents Mrs A Lush MBE Mr D J Lush MBE Dr N de M Rudolf MA BM BCh FRSM

Trustee Board

Janet Legrand QC (Hon), Chair (b)(c) The Rt Rev’d Elizabeth Lane, Bishop of Derby, Vice-Chair (c) Christopher Gillies, Honorary Treasurer (a)(b) Amelia Torode (c) David Ramsden (b) Deborah Harris-Ugbomah (a) Appointed November 2019 Diane Blausten (c) Dianne Smith (a) Retired November 2020 Florence Kroll (a) Appointed November 2019 Helen Keppel-Compton (b) Appointed January 2021 Jim Clifford OBE (a) Nasima Patel (a) Sam Monaghan (c) Appointed November 2019 Sarah Payne (b) Appointed November 2019 Stuart Duncan (a) Theo Ricketts (b) Resigned July 2020

b. Member of the Finance and Investment Committee

c. Member of the Organisational Development Committee

71

The Children’s Society

Trustee Board and Committee attendance

----- Start of picture text -----
Name Trustee Finance and Organisational Risk, Trustee
Board Investment Development Audit and Board
Committee Committee Compliance away
Committee days
Trustee Board members
Janet Legrand (Chair) 6/6 4/4 4/4 2/2
+Libby Lane 4/6 3/4 2/2
(Vice Chair)
Chris Gillies 6/6 4/4 4/4 2/2
Amelia Torode 5/6 4/4 4/4 2/2
David Ramsden 6/6 4/4 2/2
Deborah Harris- 6/6 4/4 2/2
Ugbomah
Diane Blausten 6/6 4/4 2/2
Dianne Smith 3/3 1/2 2/2
Florence Kroll 6/6 4/4 2/2
Helen Keppel- 2/2 2/2 0/0
Compton*
Jim Clifford 5/6 4/4 2/2
Nasima Patel 5/6 2/4 2/2
Sam Monaghan 4/6 4/4 2/2
Sarah Payne 4/6 4/4 1/1 2/2
Stuart Duncan 5/6 0/4 1/2
Theo Ricketts 2/2 0/1 0/1
----- End of picture text -----

Non Trustee Committee members
Alison Hopkinson 3/4
Shivani Patel 4/4
Simon Foster 4/4

Appointed during the 2020/21 financial year *Retired or resigned during the 2020/21 financial year

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Annual report 2021

Young Trustees

Aya (deceased May 2020) Leanne Adil Bilkis Maryam Samia Taha Abby and Pepper

Members of committees

Shivani Patel (a) Alison Hopkinson (b) Simon Foster (b)

Executive Director, Youth Impact

Dara de Burca

Executive Director of Diversity and Talent

Michelle Clark

Executive Director of Social Impact

Joe Jenkins

Auditors

Chief Executive

Mark Russell

Company Secretary and Executive Director, Enabling Resources

Elizabeth Walker

Haysmacintyre LLP 10 Queen Street Place London EC4R 1AG

Bankers

Barclays plc 1 Churchill Place London E14 5HP

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The Children’s Society

Thank you to our supporters

This past year will live long in our collective memories. Covid-19 has impacted on every dimension of our lives – and the effects will endure for many years to come. As we embark on the 140th year of The Children’s Society, we have never been more grateful for the incredible support of people and communities standing alongside us, ready to face every challenge on behalf of the most vulnerable children and young people.

Throughout the past 12 months, individuals, groups, churches and organisations have stepped up time and again to help us be there for the children who need us most. We have been incredibly moved by the remarkable efforts of our supporters and partners – campaigning, fundraising, donating, volunteering and generally cheering us on. In some of our darkest times, inspiring messages of hope from our supporters have kept the light burning. The responses to our emergency appeals were amazing, while the efforts during Christmas to overcome lockdown restrictions and personal challenges to connect with each other and raise both funds and hope for children have ensured we can continue offering a lifeline for young people with nowhere else to turn.

It is our ambition this decade to overturn the damaging decline in children’s well-being – and we believe this is not only necessary, but entirely possible with our supporters alongside us. Together, we will continue to fight for hope. Thank you to everyone who joins with us, you are The Children’s Society.

74

Annual report 2021

Thank you to Corporate supporters

List of partners

Helpcards Ltd MSN Dove Amazon TD Securities Zidiac Three Coinstar Mercer Bupa UK Foundation Tesco Mobile Browns Beaches Ltd Jon Nurse and Annmarie Nurse CVC Foundation 3i PLC Parcelforce Ebay

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Every young person should have the support they need in order to enjoy a safe, happy childhood.

That’s why we run services and campaigns that make children’s lives better and change the systems that are placing them in danger.

The Children’s Society is bringing hope back to children’s lives.

Twitter: @childrensociety Tel: 0300 303 7000

© The Children’s Society 2021. The copyright of all material appearing in this publication belongs to The Children’s Society. It may not be reproduced, duplicated or copied by any means without our prior written consent. Charity Registration No. 221124 Photos: Francis Augusto, David Stock and Chris O‘Donovan. 202177a/1121