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2020-12-31-accounts

REGISTERED CHARITY NUMBER: 231508 (England and Wales)

REPORT OF THE TRUSTEES AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 FOR THE ROYAL ECONOMIC SOCIETY

Royal Economic Society 2 Dean Trench Street Westminster London SW1P 3HE

THE ROYAL ECONOMIC SOCIETY

CONTENTS OF THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Page
Report of the Executive Committee 1 to 12
Report of the Independent Auditors 13 to 15
Statement of Financial Activities 16
Balance Sheet 17
Cash Flow Statement 18
Notes to the Cash Flow Statement 19
Notes to the Financial Statements 20 to 33

THE ROYAL ECONOMIC SOCIETY

REPORT OF THE EXECUTIVE COMMITTEE FOR THE YEAR ENDED 31 DECEMBER 2020

The Executive Committee presents its report together with the Financial Statements of the Charity for the year ended 31 December 2020.

REGISTERED CHARITY NUMBERS: 231508 (England & Wales)

REFERENCE AND ADMINISTRATIVE DETAILS OF THE CHARITY, ITS TRUSTEES AND ADVISORS MEMBERS OF THE EXECUTIVE COMMITTEE AND CHARITY TRUSTEES

PRESIDENT: Prof Dame Carol Propper (from 6 May 2020) PAST PRESIDENT: Prof Dame Rachel Griffith (from 6 May 2020) (co-opted) PRESIDENT ELECT Prof Sir Tim Besley (from 6 May 2020) TREASURER: Mrs Susan Holloway SECRETARY GENERAL: Prof Denise Osborn EDITORS: Prof Gilat Levy (from 1 June 2020) Prof Jaap Abbring Prof Barbara Petrongolo (until 1 June 2020) COUNCILLORS: Tera Allas Prof Beata Javorcik Prof Mary Morgan Prof Imran Rasul Prof Miguel Costa-Gomes (from 6 May 2020) Prof Frank Windmeijer (until 6 May 2020) CO-OPTED: Prof Michael McMahon Helen Miller Prof Jo Swaffield Prof Denise Hawkes (from 1 January 2020) Assoc Prof Stefania Paredes-Fuentes (from 1 October 2020) Prof Almudena Sevilla (from 30 April 2020) Prof Sarah Smith (until 30 April 2020)

EXECUTIVE COMMITTEE MEMBER ALSO SERVING AS CHARITY TRUSTEE DURING AN EARLIER PART OF THE YEAR From 1 January to 6 May 2020: Prof Lord Nicholas Stern CHIEF EXECUTIVE (NON TRUSTEE) Mr Leighton Chipperfield HEAD OFFICE: 2 Dean Trench Street Westminster London SW1P 3HE AUDITORS: Sayer Vincent LLP Invicta House 108-114 Golden Lane London EC1Y 0TL

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BANKERS:

INVESTMENT MANAGERS:

NatWest Bank plc 143 High Street Bromley Kent BR1 1YZ Sarasin and Partners Juxon House 100 St Paul’s Churchyard London EC4M 8BU

REFERENCE AND ADMINISTRATIVE DETAILS

The charity was founded in 1902 and is registered with the Charity Commission under charity number 231508 (England and Wales). The reference and administrative details of the Charity are shown on page 1 of the Financial Statements above.

STRUCTURE, GOVERNANCE AND MANAGEMENT

Constitution

The Royal Economic Society is constituted by a Royal Charter of Incorporation dated 2 December 1902 as amended by a supplemental charter dated 26 January 1968 and byelaws as made in General Meetings of the Society from time to time, subject to the consent of the Privy Council. There are no specific restrictions imposed by the governing document.

The byelaws of the Society were revised by order of the Privy Council made on 20 December 2011 and taking immediate effect. Prior to that date the Council of the Society (rather than the Executive Committee) had responsibility for the general management of its affairs.

Appointment of Trustees

The charity trustees of the Society are the members of its Executive Committee, comprising a balance of honorary elected officers (President, Immediate Past President or President-Elect, and Treasurer), the Secretary General, Editors, five members appointed by the Council, and members co-opted by the Council on a proposal from the Executive Committee. At the AGM in 2016, as recommended by Council, it was agreed that the terms of the Presidency be altered to a triumvirate of three individuals serving as President, Immediate Past President and President Elect respectively. The member of the triumvirate who does not serve automatically as a trustee is automatically co-opted onto the Board. No charity trustee receives any remuneration in that capacity, but a minority are in receipt of honoraria in respect of specific offices held, under written agreement as to the terms of appointment made by the Executive Committee excluding the individuals concerned.

The trustees are legally responsible for the overall governance, management and policies of the Society, ensuring that the charitable objects for which it has been set up are met. The Executive Committee currently meets three times a year. The current size of the Executive Committee is 18, including 5 representatives from Council. Meetings of the Executive Committee are chaired by the President.

All new members of the Executive Committee receive the Charity Commission’s Information on the responsibilities of Charity Trustees. Executive Committee members receive a briefing and trustee induction pack on appointment, with further training undertaken on an ad-hoc basis as required.

Since May 2017, the day-to-day running of the Society is delegated by the Executive Committee to the Chief Executive, who reports to the Secretary General.

Members of the Council, which appoints some Executive Committee members as explained above, are nominated by members of the Society and considered by the Nominating Committee. The Nominating Committee comprises six elected members of Council (each of whom serves three years on the committee), the Presidential triumvirate and two Additional Members, with the Secretary-General acting as non-voting secretary. The Additional Members are either Life VicePresidents of the Society or individuals of high standing in the profession. The Nominating Committee draws up a list of candidates who are voted upon by the members of the Society to become members of Council for a term of five years. The Presidents Selection Committee, which nominates the in-coming RES President-Elect, comprises all members of the

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Nominations Committee excluding the Presidential Triumvirate.

Management and administration

In 2017 the Society relocated its office headquarters from the University of St Andrews to new offices in Westminster, London, and appointed its first directly-employed staff.

Key management personnel remuneration

The Executive Committee (through its Remuneration Committee) review annually the pay of the Chief Executive. In view of the nature of the Society, the remuneration is also benchmarked with similar charities or with reference to sector reports to ensure that the remuneration set is fair and not out of line with that generally paid for similar roles. For information purposes the Remuneration Committee also receive details of the salaries of the other key management personnel.

Principal risks and uncertainties

The trustees have given consideration to the Society’s major risks and satisfied themselves that systems or procedures are established in order to mitigate those risks. The major risks were considered to be: the new strategy not being properly implemented; the potential for trustees’ conflict of interest; the governance structure not being sufficiently effective; the ability of the office to continue its work during a prolonged period of remote working; and reduction in income from journal publications. Some of these risks have and will be mitigated as follows:

During the year, the key risks that might impact on the Society’s objectives and the internal procedures have been kept under review and a risk register is in place. This identifies external and internal risks. It is believed to be fully consistent with the guidance on risk published by the Charity Commission’s guidance on risk management (CC26).

In addition to the above, the key categories of risk relate to governance, finance and operations:

a) Governance Risks

b) Financial Risks

The fact that finance is a standing item of business for meetings of the Executive Committee and Council ensures that the appropriate financial information is regularly scrutinised. The Society’s investments are held in a variety of unit trusts in order to minimise systematic risk and the investment policy is reviewed against performance at least every three years. Internal risks are minimised by the implementation of procedures for authorisation of all projects and financial transactions. In 2018 a new Finance Committee was established, chaired by the Honorary Treasurer. This committee is charged with making recommendations to the Executive Committee on the Society’s reserves and investment policies; advising the Honorary Treasurer on working capital requirements; and reviewing the appointments of auditors and making recommendations to the Annual General Meeting.

Operational Risks

As the agent for the Executive Committee, the Chief Executive (working with the Secretary General) has the responsibility for maintaining a sound system of internal control that supports the achievement of the Society’s aims and objectives, whilst safeguarding its assets and ensuring proper application of its income to its charitable objects.

The system of internal control is designed to manage risk to a reasonable level rather than eliminate all risk of failure to achieve aims and objectives. It can therefore only provide reasonable and not absolute assurance of effectiveness. The system of internal control is based on an ongoing process designed to identify and prioritise the risks to the achievement

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of the Society’s aims and objectives, to evaluate the likelihood of those risks being realised and the impact should they be realised, and to manage them efficiently, effectively and economically. The system of internal control has been in place for the year ended 31 December 2020 and up to the date of approval of the annual report and accounts.

Volunteers

The Society could not achieve its charitable objectives without the commitment and hard work of its volunteers, both Members and non-Members, many of whom give freely of their time to act as journal reviewers, committee members and volunteers to support our events and activities. The Society wishes to thank all those who have supported it over the last year.

OBJECTIVES AND ACTIVITIES

Objects

The Royal Economic Society is established to promote and foster the study of economic science. The Society is also concerned with the application of the results of that study.

These objects are undertaken by means of publications, the Annual Conference, Postgraduate Conferences and helping to further the study of economics via free Public Lectures, a programme of various Grants and Projects, and an annual essay competition for Young Economists focused on schools.

The Executive Committee confirm that they have complied with the duty in section 17 of the Charities Act 2011, to have due regard to the Charity Commission’s general guidance on public benefit. The Executive Committee believes that social welfare is advanced by promoting and fostering the study of economic science, and that its activities serve to educate the public, and particularly that section of the public that is interested in issues of economic policy. The results of the economic research that the Society supports are widely disseminated through its publications. Although the benefits of the Society’s work are by no means restricted to its members, the subscription is deliberately set at a low level relative to that of most charitable learned societies so as to encourage a broad base of membership, including those on low incomes.

Strategies to Achieve Objectives

The Society meets its objects by undertaking the following activities:

1. Membership

2. Publications

The Society has two peer-reviewed journals, The Economic Journal and The Econometrics Journal. Publication of the journals transitioned to Oxford University Press at the beginning of 2019. Members of the Society can pay a higher fee to receive printed copies of The Economic Journal; members may also choose to receive a printed quarterly Newsletter. Increasingly, timely information of interest to members and the general public is being provided through the Society’s website and via social media channels. On-line access to The Economic Journal and The Econometrics Journal is available and is heavily used.

In addition, the Society has a commitment to publishing scholarly editions of classic works in economics. Its editions of the works of Ricardo, Malthus, Marshall, Edgeworth, and Keynes (also now available through online subscription) set an international standard in these matters.

3. Conferences, lectures and training

The Society organises several educational events during the year, subsidised primarily from the surplus generated by publication of the Economic Journal. The largest of these is the Annual Conference, which rotates around UK universities and is held around Eastertime. A student-led one-day Symposium of Early Career Researchers takes place immediately after the Annual Conference. An annual public lecture is also held in two different locations.

The RES Easter School, funded jointly with the Economic and Social Research Council, provides advanced training for doctoral students and young professional economists.

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  1. Grant funding of activities

  2. Members are eligible to apply for a range of grants or project sponsorship. The main grant schemes are all outlined in note 9 to the accounts. The main and postgraduate conference grant schemes provide support for individuals of limited means to meet the costs of attending these events. The Society provides significant financial support to the activities of the Economics Network based at the University of Bristol. This provides important resources on Economics to schools and school pupils, university students and, through its regular training events, to early career academic economists.

ACHIEVEMENT AND PERFORMANCE

Review of activities

In line with the objects of the Society the key achievements during the year ended 31 December 2020 were as follows:

Strategy

The Society now measures its achievements against these priorities, with many of its activities delivering on more than one priority.

The effect of the COVID-19 pandemic

In common with every other comparable organisation, the Society’s activities in 2020 were heavily curtailed by the global pandemic and subsequent lockdowns in the United Kingdom. The Society’s headquarters were temporarily closed when the first lockdown was announced in March, with staff working remotely and committee and Council meetings held virtually for the remainder of the year.

With regret, the Society chose to cancel its Annual Conference, Symposium of Early Career Researchers, Easter School, and Annual Public Lecture. Certain aspects of each event have been carried forward, with each planned to run virtually in 2021. At the same time the Society sought to support the community in other ways, including through the creation of a COVID webinar series and the initiation of a new COVID academic support fund; these are described below.

Membership

In 2020 the Society had a membership of 3,110 (2019: 3,989). 85% of members have an online membership (2019: 85%).

The primary reasons for the decline in membership were the cancellation of this year’s Annual Conference in Belfast (UK members declined from 1,776 in 2019 to 1,222 in 2020), and a higher number of Economic Journal authors choosing not to become members. The largest decline was in the number of one-year online members, which decreased from 1,562 in 2019 to 1,080 in 2020. The Society expects that the reinstatement of the Annual Conference in 2021 will at least partially reverse this reduction.

The impact of cancelling the Annual Conference is particularly noticeable in the geographical composition of the membership, with only 39% of members in the UK (2019: 45%). 24% were located elsewhere in Europe (2019: 23%), 17% in the United States or Canada (2019: 13%), 2% in Japan (2019: 2%) and 18% in the Rest of the World (2019: 18%).

All members have the option of receiving print copies of the RES Newsletter, which is available in both pdf and html formats across the Society’s website (www.res.org.uk). We aim to keep members and the general public more informed about RES news, events and grants and to continue to introduce new resources, especially in the education career and training sections, such as our links to the Economics Network. The website also has sections dedicated to the Economic Journal, the Econometrics Journal, the Annual Conference and to the broad range of Society activities.

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Enhancing the credibility and visibility of economics

COVID-19 webinar series

In discussion with the GES and the Bank of England, in April the RES launched a webinar series on the economic implications of the pandemic and the policy response. Speakers were drawn from academia, the public and the private sector and included Andy Haldane, Nicholas Stern, Angus Deaton, Anna Vignoles, Gus O’Donnell, Paul Johnson, Jean Tirole, Daron Acemoglu, Carol Propper and Rachel Griffith. Over four months the RES convened sixteen webinars with several thousand attendees joining live or viewing the recordings subsequently via the website.

Website

Following the launch of the Society’s new website in 2018, office staff have worked to further develop the content on the site. The website now includes a library of video recordings from previous Annual Public Lectures and digital versions of the Society newsletter dating back to 2015. The website received 142,000 (2019: 160,000) visitors during the year, with over 92,000 (2019: 55,000) views of RES videos on YouTube.

Social media

Over the last three years the RES has increased its use of social media, specifically Twitter. The Society maintains two Twitter accounts, one for the RES and its activities and the other for the Economic Journal. As a result of increased activity on both accounts, a total of over 8,900 new followers were added in 2020 (2019: 3,900). In 2020 the Society extended its use of social media by registering on LinkedIn, and currently has 700 registered followers.

Public outreach

The pandemic unfortunately led to the cancellation of this year’s RES Presents and Annual Public Lecture. The Society was however pleased to once again provide financial support for the Bristol Festival of Economics which ran as a virtual event in November. As in previous years the Society sponsored a session; this year’s speakers were John Kay and Mervyn King.

Young Economist of the Year competition

The Young Economist of the Year competition is open to A-Level students in Years 12 and 13. To make the competition more attractive to a wider range of students the format was changed in 2018, expanding the number of prizes and essay questions. This year saw 1,531 entries to the competition, an increase on previous years (2019: 1,339; 2018: 1,298; 2017: 1,046). This was the second year the Society had promoted the competition direct to schools. Katharine Rockett (Essex) oversaw the initial judging process, with a final judging panel (Rachel Griffith, Jagjit Chadha, Martin Sandbu, Michèle Belot and Gemma Tetlow) deciding the winner and runners-up. The Society again partnered with the Financial Times for this year’s competition, who provided the winner’s prize and published a version of the winning essay on their website.

Teaching

As in 2019, RES provided funding to CORE Economics Education to support activities to train and build networks among those who wish to begin using the open-access platform CORE.

Supporting economists

Membership

During 2020 the Society explored ways to increase membership and the income it derives from membership subscriptions. A working group was convened to consider the optimum ways to go about this. The Society initiated discussions with a number of organisations on possible group membership for their employees or students. An agreement was reached with the Institute of Fiscal Studies to provide RES membership for their employees, with arrangements with further organisations due to be announced in 2021. The Executive Committee also agreed to a recommendation from the working group that the RES should move to an income-based pricing model in line with some other organisations, but that implementation should be postponed until 2022 to limit the financial impact on members following the pandemic.

Journals

In 2018, Oxford University Press was selected as the Society’s new journal publisher for a five-year period from January 2019.

The Economic Journal had another successful year, with the total number of submissions (1,944) substantially higher than

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in 2019 (1,722). 67% of regular submissions that were sent to referees were returned to authors within four months of submission (2019: 61%); 16% took longer than six months (2019: 16%). The 2019 Impact Factor (released in June 2020) was 2.764, slightly lower than the 2018 Impact Factor, 2.926. In July 2020 the Journal introduced a short paper article type, with a maximum of 6,000 words and 5 exhibits. Short papers are held to the same quality standards as regular submissions, and the same editorial decision processes in terms of refereeing apply. The Economic Journal continues to be highly international, with 15% of author submissions from the United Kingdom (2019: 15%), 25% from United States and Canada (2019: 24%), 39% from Europe (2019: 37%) and 21% from the Rest of the World (2019: 23%).

New submissions to The Econometrics Journal increased to 150 (2019: 131), and accepted papers increased to 32 (2019: 30). The journal’s Impact Factor increased to 2.139, making it one of the highest-cited specialist econometrics journals in the field. The Journal’s five-year Impact Factor increased to 1.700 (from 1.358) in 2019 and its Article Influence Score increased to 2.067 (from 1.966).

In 2012, the Society published with Cambridge University Press the full 30 volumes of the Collected Writings of John Maynard Keynes in digital and paperback editions and, through a new arrangement with the publisher in 2013, the Society has provided the membership with free digital access to this important scholarly resource.

Newsletter

The Society again produced four issues of its popular newsletter, including features on the history of economic thought; the impact of COVID-19 on economics teaching and learning; and the Bank of England agenda for research. After many years of service Newsletter Editor Prof Peter Howells stood down at the end of the 2020. The Society warmly thanks Prof Howells for his invaluable efforts over many years.

Annual Conference and Symposium of Early Career Researchers

The Society took the difficult decision to cancel these events, which were due to have been held at Queen’s University Belfast in April 2020. The RES is most grateful for the understanding of those who had planned to attend or present research at the conference, and in particular for the support of Queen’s University and partner organisations in Belfast. The Society looks forward to returning to Belfast for a future conference.

Annual Easter School

The Society took the difficult decision to cancel this year’s Easter School, which was the last due to be held at the University of Essex under the directorship of Prof Eric Smith. The Society is most grateful to Prof Smith, to Prof Eliana La Ferrara (who was due to be the lecturer) and to UK Research and Innovation (who provide funding for the Easter School) for their understanding. The 2021 Easter School will take place virtually in conjunction with the University of Bristol, with Prof La Ferrara as lecturer.

European Job Market

The 3[nd] European Job Market was held from 14-18 December 2020, continuing the partnership between the European Economic Association, the RES, and the Spanish Economic Association. As a result of the pandemic, the job market was held virtually. 1130 candidates registered to attend, with 122 departments listed on the EJM website as supporters. In October the RES hosted a webinar entitled ‘Preparing to succeed in the European Job Market for Economists’. The webinar was chaired by Prof Sir Tim Besley, with 633 registrants.

Grant funding of activities

During the year the Society supported a large number of projects, spending a total of £43,857 (2019: £160,260) before the allocation of support costs. Individual members of the Society can apply for grants under the Special Project Grants, Conference Grants and the Small Budget Scheme. Authority to accept applications on these is delegated to the Secretary General (Special Project Grants) and Professor Sir Anton Muscatelli (Conference Grants and Small Budget Schemes), within financial limits and overall policy determined by the Executive Committee.

A total of 9 applications were made to the Special Projects Grants Scheme during 2019, of which 2 were granted funding totalling £4,000. These awards were made to people at 2 different institutions. Due to the pandemic, neither event was held as planned in 2020 and both are held over to a future date. Although three rounds of applications were available, no applications were received after the January round due to the pandemic. For comparison, the number of applications made to the scheme in 2019 was 19 of which 13 were successful, with awards totalling £32,600.

The number of applications for the Small Academic Expenses scheme decreased this year with 5 applications being

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received (2019: 10). The quality of the applications was high and the funds awarded were £2,250. The Conference Grant Scheme received 11 applications in 2020 – a decrease of 65% from 2019 (31 applications were received in 2019). A total of £2,490 was awarded to conference grants. Out of the 11 applications made 8 applications were successful, the vast majority of successful applicants being early career economists, at Ph.D or early post-doctoral level. The majority of applications came from the UK, 64% from the UK and 36% from overseas (7 UK and 4 Overseas).

The Society also used grants to promote economics through funding the CORE initiative and the Economics Network. The Network’s activities include organising a biennial conference on economics education; running GTA and early career workshops; and publishing the Economic Review, a magazine for A-Level students of economics.

During 2020 the Society conducted a review of its grant programmes. Changes were announced towards the end of the year that will better align the grant programmes with the Society’s strategic aims of supporting economists and improving diversity in the discipline. These include the introduction of RES Knowledge Transfer Projects (KTPs) grants and a Research Dissemination grants programme replacing the Special Project Grants. The Small Academic Expenses scheme will be discontinued. After many years managing the Small Academic Expenses and Conference Grant schemes, Prof Anton Muscatelli stepped down from this role at the end of 2020. The Society warmly thanks Prof Muscatelli for his invaluable work.

RES COVID Academic Support Fund

In 2020 the Executive Committee agreed to create a fund to support members who have been particularly affected by the impact of the COVID-19 pandemic on UK universities and academic departments, and to support innovations in teaching economics that have arisen from online/blended learning delivery during 2020. Applications will open in 2021 for the 20202021 and 2021-2022 academic years.

Conference of Heads of University Departments of Economics

CHUDE comprises Heads of Economics at universities in the UK. Its ultimate purpose is the promotion of research and teaching of Economics, and more generally of the significance and importance of Economics, in the UK. Bi-annual meetings offer a forum for discussion of issues of interest, have representatives from the Government Economic Service and the Bank of England, and offer a vehicle for widening engagement with Economics among schools, colleges and business. Its Chairperson (currently Prof Jo Swaffield) is co-opted to the Society’s Executive Committee.

Improving diversity

Discover Economics

The Society continued its support as a Founding Partner for Discover Economics, a campaign launched in 2019 to help change perceptions of economics among young people and attract students from under-represented groups. Although the pandemic delayed the rollout of the campaign’s schools ambassador programme, the campaign co-chairs Prof Sarah Smith and Prof Arun Advani and Campaign Manager Dr Maeve Cohen were able to complete an impressive range of activities. These included hosting a range of events in person (pre-Covid) and online reaching more than 500 students; launching a revamped website and continuing to build a social media presence; producing research on the career destinations of economics graduates; running social media campaigns during Black History Month and LGBT History Month; and setting up networks of Discover Economics Champions.

In 2021 the campaign intends to: produce research on the barriers to young people choosing economics A-level; work with partners to train more teachers to be able to deliver A-level economics across the UK; pilot a student ambassador scheme supporting undergraduate economists to go into schools and encourage young people to study economics; work with careers advisors to educate them of the benefits of young people studying economics; continue to support academics to run outreach events from their university; continue to build and support its network of champions.

Diversity Champion

Following a competitive process the Society appointed Assoc Prof Stefania Paredes-Fuentes in 2020 as its inaugural Diversity Champion. The remit of the role includes promoting and monitoring diversity across all activities of the Society, including membership of the Society and its committees, selection of speakers and appointment of editors, and advising RES committees, as appropriate, on promoting diversity through their activities. The Diversity Champion is a co-opted member of the Executive Committee.

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Ethnicity report

The RES partnered with the Institute of Fiscal Studies, CAGE, MiSoC and others to produce a report which shed light on levels of ethnic diversity within the academic economics profession in the UK. The report found nearly a quarter of UK academic economists (24 per cent) conducting research are from non-White backgrounds, an increase of 5 percentage points since 2012. It is also found clear differences in the type of roles held by ethnic minority staff compared to White employees, as is the case across much of UK academia. Black economists are 64 per cent less likely to work in Russell Group institutions than White economists, and ethnic minority economists are less likely to hold senior academic or managerial positions. The research reinforced the importance of the Discover Economics campaign and underscored the Society’s commitment to improving diversity in the field.

Women’s Committee

Regrettably the Women’s mentoring event and the Women’s Committee session at the RES Annual Conference also fell victim to the pandemic. Prof Almudena Sevilla succeeded as Prof Sarah Smith as Chair. New committee members were recruited and three new sub-committees created, dealing with Mentoring, Data Monitoring and Communication & Engagement.

Code of conduct

A working group was formed in 2020 to revisit the Society’s code of conduct and to consider the processes and possible sanctions that should be put in place in relation the code. The working group’s suggestions were approved by the Executive Committee, with recommendations on these matters due to be put to the Annual General Meeting in 2021.

Working effectively

Governance

In 2019 the Executive Committee convened a working group to benchmark its governance arrangements against modern best practice. The working group made a series of recommendations for improvements to the Society’s processes and governance documentation which were enacted in 2020. In 2020 the working group reviewed the structure of the Society’s trustee board and made recommendations for certain modifications. It is intended that these modifications will be put to the Society’s Annual General Meeting in 2021.

A new Education and Training Committee was convened and held its first meeting in 2020.

Annual General Meeting

The Society’s 2020 Annual General Meeting was held from 4-6 May 2020 as an online meeting. A total of 117 members took part in the meeting, by some distance exceeding the attendance at previous in-person AGMs. Following this success, the Society intends to hold future AGMs online.

Auditors

The RES undertook a review of its auditing arrangements, with a working group making recommendations to the Executive Committee. Following a competitive process, the Society selected Sayer Vincent as its auditor for the 2020 accounts; a recommendation was approved at the Annual General Meeting.

FINANCIAL REVIEW

Explanation of the Statement of Financial Activities and the Application of the Society’s Funds

The Executive Committee considers that the key figure in the Statement of Financial Activities (see page 15) is the deficit before asset revaluations of £59,054 compared with a £285,685 deficit in 2019. The Committee had budgeted for a deficit in this year of £(490,000). Journal and investment income were both higher than forecast. The cancellation of the conference and other events, which are usually subsidised by the Society, together with fewer applications for grants, all as a result of the pandemic, resulted in lower expenditure than anticipated. Journal income increased to £924,574 (2019: £844,768). Membership income fell to £88,369 (2019: £103,738), partly as a result of the conference cancellation, but the decrease was more than offset by Economic Journal submission fees which raised £95,908 (2019: £25,972).

Investment income recorded in the Statement of Financial Activities is £199,847 (2019: £167,798). Unrealised investment gains are not recognised as incoming resources for budgeting purposes. The Executive Committee regards operating deficits as sustainable as long as total funds continue to grow over the medium term, but is working to diversify income, in order to keep the level of deficit in balance with investment growth while continuing support activities which benefit.

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As usual, the major element of expenditure was on contracted publishing activities. The Economic Journal has produced a deficit for the year of £57,289 (2019: £27,519 surplus) after the apportionment of support costs. Revenue increased by £72,324 compared to 2019, while costs increased by £157,132. The Econometrics Journal produced a deficit of £92,917 (2019: £114,527 deficit) after the apportionment of support costs. Revenue increased by £7,482 and costs fell by £14,128.

The Society subsidises the Annual Conference which had a deficit of £40,756 (2019: £115,697 deficit). Payments received before cancellation were either refunded, held over to 2021 or donated. Some expenditure was unavoidable, although obviously much lower than usual, although a number of deposits are being held over for a future conference. No grants were made available to enable postgraduate students to attend, totalling £NIL in 2020 (2019: £42,279). The Society’s income also helped cover the much reduced expenditure on Postgraduate Activities of £658 (2019: £17,199) and the Society’s Annual Public Lecture was postponed, so the cost was £NIL (2019: £14,719) including support costs.

Grant funding decreased to £47,378 (2019: £72,404) on outreach and to a return of expenditure of £3,521 (2019: £87,856 grants) on the membership as detailed in note 9 to the accounts. The negative expenditure was the result of grants which were accrued from 2019 but subsequently not claimed as a result of the pandemic. This year’s spending included £38,299 on initiatives to promote diversity in the profession, and the Society continued to support the Economics Network and CORE. This expenditure is mostly discretionary, and so can readily be adjusted in the light of changes to the Society’s overall financial position.

All of these charitable activities directly support and promote the objects of the Society.

Use of Assets

In June 2019 the Executive Committee approved a new Investment Policy Statement prepared by the Finance Committee. This now includes an ethical investment policy statement. Sarasin & Partners manage the investment reserve, which is now held in three funds - a long-term portfolio in the Charity Assets Endowment Fund valued at £4,363,443, a mediumterm portfolio in the Charity Assets Income and Reserves fund valued at £1,258,929, and £783,201 in investment grade corporate bonds and cash to meet the short-term cash requirements of the Society. The Sarasin Charity Asset Investment Funds have a bespoke ethical policy.

The investments provide an important source of income to support the Society’s activities. Investment income currently accounts for 15.9% (2019: 12.3%) of annual gross income. The market value of the investment portfolio increased by £323,159 before fees of £37,455 (see note 14).

While the Society assesses the performance of its investment portfolio by reference to total return, considering one year, three year and five-year bases, only income is taken into account when budgeting, on a conservative basis and to avoid large fluctuations from year to year.

Performance of the Society’s investment portfolio (return on opening valuation) over the last five years has been as follows:

Calendar year Annual income Annual total return
One
year		 Three
year		 Five
year
2015 2.6% 4.9% 9.5% 6.9%
2016 2.8% 20.6% 11.0% 11.8%
2017 2.8% 13.6% 12.9% 12.5%
2018 2.8% -0.2% 11.0% 9.2%
2019 2.9% 23.0% 11.7% 12.0%
2020 3.2% 8.5% 10.0% 12.8%

These results are considered satisfactory, given the Society’s objects and performance in previous years. They will continue to be monitored annually by the Finance Committee, reporting to the Executive.

Significant events since the year end

Since the year end there have been no significant events that require reporting.

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Reserves policy

Total reserves at the balance sheet date are £6,838,823 (2019: £6,574,718). Of this, unrestricted free reserves available are £379,995 (2019: £454,549). The Executive Committee maintains the Society’s reserves to provide income to support the ongoing activities of the Society. In June 2019, the Executive Committee approved a new Reserves Policy, prepared by the Finance Committee. Given the continuing uncertainty over the impact of Plan S (an initiative from a consortium of funding agencies to accelerate a transition from journal subscriptions to an Open Access model), and the forecast deficits in the short term, the Executive Committee believes that the target level of reserves for 2020 and 2021 should be £6m - representing at least 36 months expenditure (£4.5m) plus £1.5m to cover additional discretionary expenditure over the next few years. This discretionary expenditure includes a £500,000 COVID Academic Support fund to be spent in 2021 to support members who have been particularly affected by the impact of the COVID-19 pandemic on UK universities and academic departments, and to support innovations in teaching economics that have arisen from online/blended learning delivery during 2020.

The Royal Economic Society holds significant reserves and has liquid assets in the form of investments which are readily available to convert into cash. Annual budgets are produced with prudent figures for both income and expenditure. For this reason the trustees are satisfied that the Society is a going concern.

PLANS FOR FUTURE PERIODS

During 2021, the Society will continue to focus on the four strategic priorities set out in its 2019-2023 strategy. These include the following initiatives:

Public Benefit

The trustees confirm that they have complied with the duties in Section 17(5) of the Charities Act 2011 to have due regard to the Charity Commission’s general guidance on public benefit.

We have referred to the guidance in the Charity Commission’s general guidance on public benefit when reviewing our aims and objectives and in planning our future activities. In particular, the trustees consider how planned activities will contribute to the aims and objectives they have set.

ACCOUNTING AND REPORTING RESPONSIBILITIES

The Executive Committee is responsible for preparing the Report of the Charity Trustees and the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

The law applicable to charities in England & Wales and in Scotland requires the Executive Committee to prepare financial statements for each financial year which give a true and fair view of the state of the affairs of the charity and of the incoming resources and application of resources of the charity for that period. In preparing these financial statements, the trustees are required to:

11

The Executive Committee is responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the charity and enable them to ensure that the financial statements comply with the Charities Act 2011, the Charity (Accounts and Reports) Regulations 2008, the Charities and Trustee Investment (Scotland) Act 2005, the Charities Accounts (Scotland) Regulations 2006 (as amended), and the provisions of the Royal Charter. The Executive Committee is also responsible for safeguarding the assets of the charity and so for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The financial statements have been prepared in accordance with the Statement of Recommended Practice: Accounting and Reporting by Charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) and the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (FRS 102) and the Charities Act 2011 and UK Generally Accepted Practice. The financial statements have been prepared to give a ‘true and fair’ view and have departed from the Charities (Accounts and Reports) Regulations 2008 only to the extent required to provide a ‘true and fair view’. This departure has involved following Accounting and Reporting by Charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) rather than the Accounting and Reporting by Charities: Statement of Recommended Practice effective from 1 April 2005 which has since been withdrawn.

………………………………………………… S Holloway Honorary Treasurer On behalf of the Executive Committee

Dated: 5 May 2021

12

REPORT OF THE INDEPENDENT AUDITORS TO THE TRUSTEES OF THE ROYAL ECONOMIC SOCIETY

Opinion

We have audited the financial statements of Royal Economic Society (the ‘charity’) for the year ended 31 December 2020 which comprise the statement of financial activities, balance sheet, statement of cash flows and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the charity in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on Royal Economic Society's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

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

Other Information

The other information comprises the information included in the trustees’ annual report, other than the financial statements and our auditor’s report thereon. The trustees are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters in relation to which the Charities (Accounts and Reports) Regulations 2008 requires us to report to you if, in our opinion:

13

REPORT OF THE INDEPENDENT AUDITORS TO THE TRUSTEES OF THE ROYAL ECONOMIC SOCIETY

Responsibilities of trustees

As explained more fully in the statement of trustees’ responsibilities set out in the trustees’ annual report, the trustees are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the trustees are responsible for assessing the charity’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 charity or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

We have been appointed as auditor under section 144 of the Charities Act 2011 and report in accordance with regulations made under section 154 of that Act.

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 are set out below.

Capability of the audit in detecting irregularities

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and noncompliance with laws and regulations, our procedures included the following:

14

REPORT OF THE INDEPENDENT AUDITORS TO THE TRUSTEES OF THE ROYAL ECONOMIC SOCIETY

Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.

A further description of our responsibilities is available 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 charity's trustees as a body, in accordance with section 144 of the Charities Act 2011 and regulations made under section 154 of that Act. Our audit work has been undertaken so that we might state to the charity's trustees those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the charity and the charity's trustees as a body, for our audit work, for this report, or for the opinions we have formed.

Date: 6 May 2021 Sayer Vincent LLP, Statutory Auditor Invicta House, 108-114 Golden Lane, LONDON, EC1Y 0TL

15

THE ROYAL ECONOMIC SOCIETY

STATEMENT OF FINANCIAL ACTIVITIES FOR THE YEAR ENDED 31 DECEMBER 2020

Notes
INCOME FROM
Donations
Charitable activities
Economic Journal
3
Econometrics Journal
3
Publishing Activities
3
Membership
Outreach
Annual Conference
Easter School
Discover Economics
3
Investment Income
4
Total
EXPENDITURE ON
Raising funds
5
Charitable activities
6
Economic Journal
Econometrics Journal
Publishing Activities
Newsletter
Membership
Outreach
Annual Conference
Postgraduate Activities
Job Market
Easter School
Discover Economics
Public Lecture
Total
Net expenditure before investment gains
Net gains on investments
NET INCOME
RECONCILIATION OF FUNDS
Total funds brought forward
TOTAL FUNDS CARRIED FORWARD		 31.12.20
Restricted funds
£
-
-
-
-
-
-
-
-
30,000
-
30,000
-
-
-
-
-
-
-
-
-
-
-
7,045
-
7,045
22,955
-
22,955
300
23,255
31.12.20

Unrestricted
funds

£

1,720

832,780

91,794

3,264

88,369

1,000

3,989

1,000

-
199,847

1,223,763

37,455

890,069

184,711

4,686

42,556

2,788

92,220

44,745

658

1,145

4,739

-

-

1,305,772

(82,009)
323,159

241,150

6,574,418

6,815,568










31.12.20
Total funds
£
1,720
832,780
91,794
3,264
88,369
1,000
3,989
1,000
30,000
199,847
1,253,763
37,455
890,069
184,711
4,686
42,556
2,788
92,220
44,745
658
1,145
4,739
7,045
-
1,312,817
(59,054)
323,159
264,105
6,574,718











31.12.19
Total restricted
& unrestricted
funds
£
-
760,456
84,312
3,046
103,738
1,000
231,883
12,000
300
167,798
1,364,533
16,477
732,937
198,839
1,697
41,993
132,637
106,204
347,580
17,199
3,158
36,778
-
14,719
1,650,218
(285,685)
820,433
534,748
6,039,970





























6,838,823 6,574,718

CONTINUING OPERATIONS

None of the Charity's activities were acquired or discontinued during the current and previous years.

Total Recognised Gains and Losses

The Charity has no recognised gains or losses other than the net incoming resources for the current and previous years.

In the previous year total funds included £300 of restricted income in relation to Discover Economics and no restricted expenditure.

These notes form part of these financial statements

16

THE ROYAL ECONOMIC SOCIETY

BALANCE SHEET AT 31 DECEMBER 2020

Notes
FIXED ASSETS
Tangible assets
12
Intangible assets
13
Investments
14
CURRENT ASSETS
Debtors
15
Cash at bank
CREDITORS
Amounts falling due within one year
16
NET CURRENT ASSETS
TOTAL ASSETS LESS CURRENT LIABILITIES
CREDITORS
Amounts falling due after more than one year
17
NET ASSETS
FUNDS
18
Unrestricted funds
Designated funds
Restricted funds
TOTAL FUNDS		 31.12.20
Total funds
£
3,339
115,383
6,405,573
6,524,295
418,572
362,280
780,852
(460,422)
320,430
6,844,725
(5,902)
6,838,823
379,995
6,435,573
23,255
6,838,823
6,838,823		 31.12.19
Total funds
£
2,774
130,760
6,119,869
6,253,403
348,669
388,512
737,181
(407,055)
330,126
6,583,529
(8,811)
6,574,718
454,549
6,119,869
300
6,574,718
6,574,718

The financial statements were approved by the Board of Trustees on 5 May 2021 and were signed on its behalf by:

............................................. S Holloway - Trustee

The notes form part of these financial statements

17

THE ROYAL ECONOMIC SOCIETY

CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2020

Notes
Cash flows from operating activities:
Cash used in operations
1
Net cash used in operating activities
Cash flows from investing activities:
Purchase of tangible fixed assets
Purchase of fixed asset investments
Sale of fixed asset investments
Interest received
Dividends received
Net cash provided by investing activities
Change in cash and cash equivalents in the
reporting period
Cash and cash equivalents at the beginning of
the reporting period
Cash and cash equivalents at the end of the
reporting period		 31.12.20
31.12.19
£
£
(224,708)
(431,586)
(224,708)
(431,586)
(1,371)
(370)
-
(6,820,249)
-
7,120,023
-
(3)
199,847
167,798
198,476
467,199
(26,232)
35,613
388,512
352,899
362,280
388,512

The notes form part of these financial statements

18

THE ROYAL ECONOMIC SOCIETY

NOTES TO THE CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2020

1. RECONCILIATION OF NET INCOME/(EXPENDITURE) TO NET CASH FLOW FROM OPERATING ACTIVITIES

Net income/(expenditure) for the reporting period
(as per the statement of financial activities)
Adjustments for:
Depreciation charges
Amortisation charges
Interest received
Dividends received
(Gain) / loss on investments
Portfolio management fees
(Increase) / Decrease in debtors
Increase / (Decrease) in creditors
Net cash provided by (used in) operating activities		 31.12.20
£
264,105
807
15,376
(199,847)
(323,159)
37,455
(69,903)
50,458
(224,708)		 31.12.19
£
534,748
801
15,376
3
(167,798)
(830,490)
16,477
(183,990)
183,287
(431,586)

The notes form part of these financial statements

19

THE ROYAL ECONOMIC SOCIETY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

2. ACCOUNTING POLICIES

Basis of preparing the financial statements

The financial statements of the charity, which is a public benefit entity under FRS 102, have been prepared in accordance with the Charities SORP (FRS 102) 'Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102), Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and the Charities Act 2011. The financial statements have been prepared under the historical cost convention with the exception of investments which are included at market value, as modified by the revaluation of certain assets.

The financial statements are prepared in Sterling, which is the functional currency of the charity. All amounts have been rounded to the nearest pound, unless otherwise indicated.

Going concern

The outbreak of COVID-19 which took place during the financial year, has still continued to have an impact post year ended 31 December 2020. This has resulted in a pandemic causing extensive disruption across the globe. The UK Government enforced a lockdown from 23 March 2020 and after gradually easing measures, enforced a second lockdown from 5 November 2020 until 2 December 2020. A further national lockdown was announced on 4 January 2021. The Society has continued to take consideration for the effects of the COVID-19 outbreak, and adapted the charities activities alongside the government lockdown and social distance measures, including hosting the 2020 annual conference virtually.

The trustees assess whether the use of going concern is appropriate i.e. whether there are any material uncertainties related to events or conditions that may cast significant doubt on the ability of the charity to continue as a going concern. The trustees make this assessment in respect of a period of at least one year from the date of approval of the financial statements. The Royal Economic Society holds significant reserves and has liquid assets in the form of investments which are readily available to convert into cash. Annual budgets are produced with prudent figures for both income and expenditure. For this reason the trustees are satisfied that the Society is a going concern.

Membership subscriptions

Subscriptions begin at the point of payment and are accounted for on an accruals basis.

Resources expended

Expenditure is accounted for on an accruals basis.

- Expenditure on raising funds

Expenditure on raising funds comprises those costs of generating income from all sources other than undertaking charitable activities.

- Charitable activities

Charitable activities are those costs incurred directly in carrying out the charitable objectives.

- Governance costs

Governance costs comprise the costs of running the charity, including strategic planning for its future developments, also external audit and the preparation of statutory accounts. Governance costs are apportioned on a percentage basis using the direct cost allocation.

- Support costs

All costs are allocated between the expenditure categories of the SOFA on a basis designed to reflect the use of the resource. Costs relating to a particular activity are allocated directly. Where support costs cannot be attributed directly, they are apportioned on a percentage basis using the direct cost allocation.

20

THE ROYAL ECONOMIC SOCIETY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

2. ACCOUNTING POLICIES contd.

Grants

Grants are treated as expenditure once they are approved and offered to the recipient, except in cases where the offer is conditional; such grants being recognised as expenditure only when the conditions are fulfilled.

Investment income

Investment income comprises distributions and interest received and receivable.

Investment reserve

All profits or losses on disposals and revaluation of investments are credited or debited to this account.

Investments

Quoted investments are stated in the financial statements as closing market value.

Intangible fixed assets

Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

Tangible fixed assets

Equipment has been written down at 25% on a reducing balance basis, purchases over £100 are capitalised. Software has been written down at 10 years straight line basis.

Financial instruments

The company enters into basic financial instruments that result in the recognition of financial assets and liabilities like trade and other accounts receivable and payable.

a) Trade and other debtors

Trade and other debtors are initially recognised at fair value and thereafter stated at amortised cost using the effective interest method, less impairment losses for bad and doubtful debts except where the effect of discounting would be immaterial. In such cases, the receivables are stated at cost less impairment losses for bad and doubtful debts.

b) Cash and cash equivalents

Cash and cash equivalents comprise cash at bank and on hand.

c) Impairment of financial assets

Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in profit or loss.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract .

d) Trade and other creditors

Debt instruments like loans and other accounts receivable and payable are initially measured at present value of the future payments and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade payables or receivables, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in case of an outright short-term loan not at market rate, the financial asset or liability is measured, initially and subsequently, at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

21

THE ROYAL ECONOMIC SOCIETY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

2. ACCOUNTING POLICIES contd.

Financial instruments - contd

d) Trade and other creditors - contd

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Employee benefits

a) Short-term employee benefits

Short-term employee benefits are expensed as the related service is provided. A liability is recognised for the amount expected to be paid if the charity has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

b) Defined contribution plans

Contributions to defined contribution pension schemes are charged to the Statement of Financial Activities as incurred

Accounting estimates

The preparation of the financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. These estimates inherently contain a certain degree of uncertainty. Actual results may differ from these estimates under different assumptions or conditions.

These estimates and assumptions affect the reported amounts of assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. We evaluate these estimates and judgments on an on-going basis and base our estimates on historical experience, current and expected future outcomes, third-party evaluations and various other assumptions that we believe are reasonable under the circumstances. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities as well as identifying and assessing the accounting treatment with respect to commitments and contingencies. We revise material estimates if changes occur in the circumstances or there is new information or experience on which an estimate was or can be based.

Estimates significantly impact financial instruments, and the presentation of items of income and expenditure and cashflows.

Fund accounting

General funds are available for use at the discretion of the general objectives of the organisation. All income and expenditure is shown in the Statement of Financial Activities.

Restricted funds can only be used for particular restricted purposes within the objects of the charity. Restrictions arise when funds are raised for particular restricted purposes.

Further explanation of the nature and purpose of each fund is included in the notes to the financial statements.

Operating Leases

Rentals payable under operating leases are payable over the lease term on a straight line basis.

22

THE ROYAL ECONOMIC SOCIETY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

3. INCOME FROM CHARITABLE ACTIVITIES

ECONOMIC JOURNAL
Sales of current volume to non-members
Sales of back numbers, royalties and misc.
Submission fees
JSTOR Revenue
ECONOMETRICS JOURNAL
Subscriptions
Sales of back numbers, rights and permission
PUBLISHING ACTIVITIES
From Publishers
Liberty Fund		 Year Ended
31.12.20
£
601,923
114,672
95,908
20,277
832,780
Year Ended
31.12.20
£
81,120
10,674
91,794
Year Ended
31.12.20
£
2,106
1,158
3,264		 Year Ended
31.12.19
£
606,836
101,019
25,972
26,629
760,456
Year Ended
31.12.19
£
81,055
3,257
84,312
Year Ended
31.12.19
£
2,402
644
3,046

The Liberty Fund receipt is the release of the 7 year licence fee received, which expires on 21 May 2022.

DISCOVER ECONOMICS
Grants		 Year Ended
31.12.20
£
30,000
30,000		 Year Ended
31.12.19
£
300
300

Total income for Discover Economics was £30,000 (2019: £300) of which £30,000 (2019: £300) was attributable to restricted funds.

4. INVESTMENT INCOME
Dividends receivable from investments and unit trusts		 Year Ended
31.12.20
£
199,847
199,847		 Year Ended
31.12.19
£
167,798
167,798

23

THE ROYAL ECONOMIC SOCIETY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

5. RAISING FUNDS

Investment management costs
Portfolio management
£37,455 (2019: £16,477) of the above costs were attributable to unrestricted funds.		 Year Ended
Year Ended
31.12.20
31.12.19
£
£
37,455
16,477

6. CHARITABLE ACTIVITY COSTS Current year

Economic Journal
Econometrics Journal
Publishing Activities
Newsletter
Membership
Outreach
Annual Conference
Postgraduate Activities
Job Market
Easter School
Discover Economics		 Direct costs
(See note 7)
£
563,510
116,943
2,967
26,943
5,286
-
28,328
417
725
3,000
7,045
755,164		 Support costs
(See note 8)
£
326,559
67,768
1,719
15,613
1,023
44,842
16,417
241
420
1,739
-
476,341		 Grant funding
of activities
(See note 9)
£
-
-
-
-
(3,521)
47,378
-
-
-
-
-
43,857		 Totals
31.12.20
£
890,069
184,711
4,686
42,556
2,788
92,220
44,745
658
1,145
4,739
7,045
1,275,362

£1,268,317 (2019: £1,633,741) of the above costs were attributable to unrestricted funds and £7,045 (2019: £nil) of the above costs were attributable to restricted funds.

Prior year comparatives

Economic Journal
Econometrics Journal
Publishing Activities
Newsletter
Membership
Outreach
Annual Conference
Postgraduate Activities
Job Market
Easter School
Public Lecture		 Direct costs
(See note 7)
£
499,671
135,556
1,157
28,628

2,568
-
236,958
11,725
2,153
25,073
10,035
953,254		 Support costs
(See note 8)
£
233,266
63,283
540
,
13,365
42,213
33,800
110,622
5,474
1,005
11,705
4,684
519,957		 Grant funding
of activities
(See note 9)
£
-
-
-
-
87,856
72,404
-
-
-
-
160,260		 Totals
31.12.19
£
732,937
198,839
1,697
41,993
132,637
106,204
347,580
17,199
3,158
36,778
14,719
1,633,741

24

THE ROYAL ECONOMIC SOCIETY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

7. DIRECT COSTS OF CHARITABLE ACTIVITIES

Current year

Current year
Editor and Total direct
editorial Retained by Other direct costs
services publisher costs 31.12.20
£ £ £ £
Economic Journal 267,911 128,987 166,612 563,510
Econometrics Journal 57,510 16,523 42,910 116,943
Publishing Activities - - 2,967 2,967
Newsletter 15,239 - 11,704 26,943
Membership - - 5,286 5,286
Annual Conference - - 28,328 28,328
Postgraduate Activities - - 417 417
Job Market - - 725 725
Easter School - - 3,000 3,000
Discover Economics - - 7,045 7,045
Public Lecture - - - -
340,660 145,510 269,006 755,164
Prior year comparatives
Editor and Total direct
editorial Retained by Other direct costs
services publisher costs 31.12.19
£ £ £ £
Economic Journal 233,165 127,329 139,177 499,671
Econometrics Journal 52,110 15,176 68,270 135,556
Publishing Activities - - 1,157 1,157
Newsletter 15,239 - 13,389 28,628
Membership - - 2,568 2,568
Annual Conference - - 236,958 236,958
Postgraduate Activities - - 11,725 11,725
Job Market - - 2,153 2,153
Easter School - - 25,073 25,073
Public Lecture - - 10,035 10,035
300,514 142,505 510,505 953,524

25

THE ROYAL ECONOMIC SOCIETY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

8. SUPPORT COSTS
MANAGEMENT
Professional Fees
Staff Costs
Office Costs
Comms Costs
Council and Committees
Bank Charges
Depreciation
Exchange Rate Variance
GOVERNANCE
Professional Fees
Council and Committees
Total
9. GRANT FUNDING OF ACTIVITIES
OUTREACH
Diversity
Conference grant scheme
Competitions & awards
Institutional grants - CORE
Institutional grants - Economics Network
Institutional grants - International Economic Association
Third Party Events
Total Expenditure
MEMBERSHIP
Conference grant scheme
RES events postgraduate grants
Small budget scheme
Special Project Grant Scheme
Total Expenditure		 Year Ended
31.12.20
£
18,475
354,563
32,981
39,913
82
588
16,184
(406)
10,992
2,969
476,341
Year Ended
31.12.20
£
8,299
-
5,462
15,000
21,510
(4,575)
1,682
47,378
Year Ended
31.12.20
£
250
-
2,223
(5,994)
(3,521)		 Year Ended
31.12.19
£
12,706
368,785
31,827
62,499
-
762
23,853
-
8,315
10,931
519,679
Year Ended
31.12.19
£
23,865
-
10,941
15,000
15,000
4,575
3,023
72,404
Year Ended
31.12.19
£
7,606
42,279
5,474
32,497
87,856

26

THE ROYAL ECONOMIC SOCIETY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

10.. EXECUTIVE COMMITTEE' REMUNERATION AND BENEFITS

The Executive Committee (who are also considered key management personnel) hold an Annual Dinner for those who serve the Society, the cost of which totalled £nil (2019: £602). The following trustees received remuneration for their services to the charity, in accordance with the governing documents:

Prof Jaap Abbring
Prof Gilat Levy
Prof Morten Ravn
Prof Barbara Petrongolo		 Year Ended
31.12.20
£
12,960
17,667
-
-
30,627		 Year Ended
31.12.19
£
12,960
-
11,250
26,950
51,160

Executive Committee expenses

Travel and subsistence expenses totalling £507 were reimbursed to 4 trustees (2019: £2,848 was reimbursed to 8 trustees).

11. STAFF COSTS

Wages and salaries
Social Security costs
Pension costs
Other Staff Costs
The average monthly number of employees during the year was as follows:		 Year Ended
31.12.20
£
302,109
28,239
22,836
7,816
361,000
Year Ended
31.12.20
8		 Year Ended
31.12.19
£
301,200
28,808
22,671
16,106
368,785
Year Ended
31.12.19
8

The total amount of employee benefits received by key management personnel is £196,223 (2019: £180,102). Key management personnel are considered to be the Chief Executive, Operations Manager and Communications and Engagement Manager.

One employee earned £70,000 - £80,000 in the year (2019: £70,000 - £80,000). Pension costs were £7,701 (2019: £7,004).

.

27

THE ROYAL ECONOMIC SOCIETY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

12. TANGIBLE FIXED ASSETS

COST
At 1 January 2020
Additions
At 31 December 2020
DEPRECIATION
At 1 January 2019
Charge for year
At 31 December 2020
NET BOOK VALUE
At 31 December 2020
At 31 December 2019		 Equipment
£
6,889
1,373
8,262
4,115
808
4,923
3,339
2,774

Fixed assets are held as unrestricted for the furtherance of the Charity's general charitable objectives and charged to project activity through depreciation charges in accordance with the accounting policies.

13. INTANGIBLE FIXED ASSETS

COST
At 1 January 2020 and 31 December 2020
AMORTISATION
At 1 January 2020
Charge for year
At 31 December 2020
NET BOOK VALUE
At 31 December 2020
At 31 December 2019		 Software
£
153,763
23,003
15,376
38,380
115,383
130,760

28

THE ROYAL ECONOMIC SOCIETY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

14. FIXED ASSET INVESTMENTS

4. FIXED ASSET INVESTMENTS
Listed
investments
£
MARKET VALUE
At 1 January 2020 6,119,869
Gains on investments 323,159
Settlement of fees (37,455)
At 31 December 2020 6,405,573
NET BOOK VALUE
At 31 December 2020 6,405,573
At 31 December 2019 6,119,869

At 31 December 2020 overseas investments had a market value of £2,436,510 representing 38% of the portfolio.

The basis of valuation is market value as at 31 December 2020 and is analysed as follows:

14. FIXED ASSET INVESTMENTS contd

Unit Trusts:
Sarasin & Partners
Long Term – Asset Allocation
Medium Term – Asset Allocation
Short Term – Asset Allocation
Cash Held by Investment Managers
5. DEBTORS
Trade debtors
Sundry debtors
Taxation and social security
Publishing		 Cost
Value
£
3,999,892
1,200,000
587,416
206,476
5,993,784
Year Ended
31.12.20
£
50,626
33,557
-
334,389
418,572		 Market Value
at 31.12.20
£
4,363,443
1,258,929
576,725
206,476		 Market Value
at 31.12.20
£
4,363,443
1,258,929
576,725
206,476
6,405,573
Year Ended
31.12.19
£
6,339
17,440
1,476
323,414
348,669

15. DEBTORS

Sundry debtors includes a balance of £7,000 which relates to a deposit paid for the 2024 Annual Conference. This deposit was originally for the 2020 Annual Conference but due to the effects of the pandemic, it has been confirmed that it can be held for a later date.

29

THE ROYAL ECONOMIC SOCIETY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

16. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

Trade creditors
Taxation and social security
Accruals and deferred income
Other creditors
Deferred income
Deferred income at 1 January 2019
Resources deferred in the year
Amounts released from previous periods		 Year Ended
31.12.20
£
108,714
5,705
344,906
1,097
460,422
Year Ended
31.12.20
£
16,181
15,425
(16,181)
15,425		 Year Ended
31.12.19
£
29,978
-
376,571
506
407,055
Year Ended
31.12.19
£
19,455
10,421
(13,695)
16,181

Deferred income is included within accruals and deferred income and relates to income received in advance for Journal membership subscriptions over a 3 year period.

17. CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

Deferred income
18. MOVEMENT IN FUNDS
Unrestricted funds
General fund
Designated Investment reserve
Designated fund – COVID Academic Support
Designated fund – Discover Economics
Restricted funds
Discover Economics
TOTAL FUNDS		 At 1.1.20
£
454,549
6,119,869

6,574,418
300
300
6,574,718		 Net movement
in funds
£
(44,554)
285,704
211,150
22,955
22,955
264,105		 Year Ended
31.12.20
£
5,902
Transfers
between funds
£
(30,000)
(500,000)
500,000
30,000
-
-
-
-		 Year Ended
31.12.19
£
8,811
At 31.12.20
£
379,995
5,905,573
500,000
30,000
6,815,568
23,255
23,255
6,838,823

30

THE ROYAL ECONOMIC SOCIETY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

18. MOVEMENT IN FUNDS contd

Net movement in funds, included in the above are as follows:

Income
Expenditure
£
£
Unrestricted funds
General fund
1,223,763
(1,268,317)
Investment reserve
-
(37,455)
1,223,763
(1,305,772)
Restricted funds
Discover Economics
30,000
(7,045)
30,000
(7,045)
TOTAL FUNDS
1,253,763
(1,312,817)
Comparative information in respect of the preceding period is as follows:
At 1.1.19
Net movement
in funds
£
£
Unrestricted funds
General fund
434,340
(285,985)
Designated Investment reserve
5,605,630
820,433
6,039,970
534,448
Restricted funds
Discover Economics
-
300
-
300
TOTAL FUNDS
6,039,970
534,748
Net movement in funds, included in the above are as follows:
Income
Expenditure
£
£
Unrestricted funds
General fund
1,364,233
(1,650,218)
Investment reserve
-
-
1,364,233
(1,650,218)
Restricted funds
Discover Economics
300
-
300
-
TOTAL FUNDS
1,364,533
(1,650,218)		 Gains and
losses
£
-
323,159
323,159
-
-
323,159
Transfers
between funds
£
306,194
(306,194)
-
-
-
-
Gains and
losses
£
-
820,433
820,433
-
-
820,433		 Movement in
funds
£
(44,554)
285,704
241,150
22,955
22,955
264,105
At 31.12.19
£
454,549
6,119,869
6,574,418
300
300
6,574,718
Movement in
funds
£
(285,985)
820,433
534,448
300
300
534,748

31

THE ROYAL ECONOMIC SOCIETY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

18. MOVEMENT IN FUNDS contd

Restricted Fund – Discover Economics

Discover Economics is a new three-year campaign aimed at changing perceptions of economics among young people and attracting students from under-represented groups. The first phase of the campaign (2020-21) will develop the website and ambassador programme and engage partner organisations to increase the range of opportunities for students.

Designated Investment reserve

Funds are held in an investment portfolio providing a source of income to support the Society’s activities.

Designated funds – COVID Academic Support

The Society has agreed to designate this amount to support members who have been affected by the impact of the COVID-19 pandemic.

Designated funds – Discover Economics

The Society agreed to match the funding received for the Discover Economics grant from its own reserves.

19. ANALYSIS OF NET ASSETS BETWEEN FUNDS

Fixed assets
Investments
Current assets
Current liabilities
Non-current liabilities
TOTAL FUNDS
Fixed assets
Investments
Net current assets
Current liabilities
Non-current liabilities
TOTAL FUNDS		 General Funds
£
118,722
-
727,597
(460,422)
(5,902)
379,995
General Funds
£
133,534
-
736,881
(407,055)
(8,811)		 Designated
Investment
Reserve
£
-
6,405,573
-
-
-
6,405,573
Designated
Investment
Reserve
£
-
6,119,869
-
-
-
6,119,869		 Restricted
Funds
£
-
-
53,255
-
-
53,255
Restricted
Funds
£
-
-
300
-
-
300		 At 31.12.20
£
118,722
6,405,573
780,852
(460,422)
(5,902)
6,838,823
At 31.12.19
£
133,534
6,119,869
737,181
(407,055)
(8,811)
454,549 6,574,718

32

THE ROYAL ECONOMIC SOCIETY

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

20. LEASE AGREEMENTS

Minimum lease payments under non-cancellable operating leases fall due as follows:

Within one year
Between one and five years		 Year Ended
31.12.20
£
1,138
-
1,138		 Year Ended
31.12.19
£
20,127
6,262
26,389

During the year £20,127 (2019: £15,095) was paid in connection to the lease of the London Office.

21. RELATED PARTY DISCLOSURES

During the year Stefania Paredes Fuentes, who is a trustee, received £3,801 (2019: £nil) in regards to a special projects grant. Stefania Paredes Fuentes took no part in the decision-making for this grant award.

There were no further related party transactions for the year ended 31 December 2020 (2019: NIL) other than those described in note 10.

33