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2021-12-31-accounts

Charity No. 258348 (England and Wales)

Royal Watercolour Society

Trustees’ report and financial statements for the year ended 31 December 2021

Royal Watercolour Society

Reference and administrative details For the year ended 31 December 2021

Page
General information 3
Report of the Council 4
Independent examiner’s report 11
Statement of financial activities 12
Balance sheet 13
Notes to the financial statements 14

Page 2

Royal Watercolour Society

Reference and administrative details For the year ended 31 December 2021

Registered charity number 258348
Charity name Royal Watercolour Society is the working name of the
registered charity Royal Society of Painters in Water Colours
Council At the date of signing:
Jill Leman (President)
Mark Raggett (Senior Vice President)
Jim Hunter (Junior Vice President)
James Faure Walker (Hon Curator)
Liz Butler
Chloe Fremantle
David Hamilton
John Crossley
Jane Lewis
Lisa Traxler
Paul Regan
John Duffin
Administrative office Bankside Gallery
48 Hopton Street
Blackfriars
London
SE1 9JH
Bankers National Westminster Bank Plc
91 Westminster Bridge Road
London
SE1 7HW
Solicitors Pinsent Masons LLP
30 Crown Place
London
EC2A 4ES
Investment advisers Cazenove Capital Management Limited
12 Moorgate
London
EC2R 6DA
Independent examiner Cara Turtington FCA DChA
Saffery Champness LLP
71 Queen Victoria Street
London
EC4V 4BE

Page 3

Report of the members of the Council For the year ended 31 December 2021

Royal Watercolour Society

Introduction

The Council is pleased to present the annual report and financial statements of the Royal Watercolour Society for the year ended 31 December 2021. The financial statements have been prepared in accordance with the accounting policies set out in note 1 to the accounts and comply with its own Laws and Regulations, the Charities Act 2011 and 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.

Structure, governance and management

Governing document and legal status

The Royal Watercolour Society was founded in 1804 and received its Royal Patronage in 1881. The Society has administered its affairs and exhibited as an independent body since its foundation. The Society is an unincorporated association, governed by an internally approved set of Laws. The Society is a registered charity No. 258348.

Related parties

The Royal Watercolour Society and The Royal Society of Painter-Printmakers are jointly and equally owners of Bankside Gallery, a company limited by guarantee and a registered charity. The Royal Watercolour Society works regularly in partnership with The Royal Society of Painter-Printmakers and Bankside Gallery to pursue its charitable purposes, and shares some common Council/Board members.

The Society is party to an indemnity in favour of Bankside Gallery which commits the Society to offering continuing financial support and assistance to the Gallery for periods of two years at a time. Further details can be found in the notes to these financial statements.

Organisational structure

The governance and strategic planning of the Society are carried out by a Council of Members (acting as trustees of the charity) that meets quarterly. The Council comprises the officers of the Society elected by ballot, together with eight Members who serve for three years. There are also four Custodian Trustees, of which the President is one. The officers of the Society comprise the President, two Vice Presidents, a Secretary, and a Treasurer who provides financial reports to Council.

Administrative matters relating to the Society are carried out by one part-time member of staff previously employed by Bankside Gallery, but now employed by the RWS.

An Exhibitions Committee is responsible for considering Society exhibitions and a Hanging Committee is responsible for their display. The Director of Bankside Gallery is charged with finding suitable artists or organisations to hire the Gallery for exhibitions when it is not being used for shows by Members of the two Royal Societies. To ensure the requisite standard of work, all external proposals are reviewed by the two Society Presidents.

Page 4

Royal Watercolour Society

Report of the members of Council (continued) For the year ended 31 December 2021

Recruitment and appointment of Council members

Council members are elected to carry out defined roles; in addition to the usual officer duties, these are Exhibitions, Membership, PR & Advertising, Website, Friends, Mailing list and Education. Appointments are for a term of three years, with the possibility of re-appointment.

Members of the Council are elected at an Annual General Meeting. A limited number of new members may be co-opted by the President.

Investment powers and management

All funds requiring investment are, in the absence of any special direction by a General Meeting of the Society, applied or invested by the Council, who have authority to effect transactions of stocks and shares held by them for the Society.

Funds are managed, on behalf of the Council, by Cazenove Capital Management Limited.

Risk assessment

Council reviews annually the major risks to which the charity is exposed, and takes action as appropriate to manage and mitigate those risks.

The principal risk faced by the Society is its limited sources of income which, in recent years, have been insufficient to cover the cost of its activities. Council is working to reduce this risk by implementing tighter controls over expenditure and by seeking ways to increase the Society’s income in the future. Future plans include the opening of a new Gallery to display the Society’s Diploma Collection, which will provide significant opportunities to earn additional income for the charity. Extensive fundraising has been undertaken in order to support the ongoing costs of the new space. Until such time as the Society is able regularly to cover its costs, calls are made on the Society’s designated funds to prevent the General Fund falling into deficit.

The Society is also vulnerable to the high cost of exhibitions, and to the susceptibility of painting sales to economic conditions and increasing competition for sales of artworks. Council mitigates these risks through careful planning of its exhibitions, and through working closely with Bankside Gallery in the promotion of its exhibitions to the public.

In the light of taking on the additional venue, the Royal Watercolour Society has employed one member of staff to support the Council in delivering Society activities. The Society also continues to work closely with Bankside Gallery staff in the relevant areas.

Reserves policy

Council has reviewed the Society’s need for reserves in line with the guidance issued by the Charity Commission. Council currently recognises the need to set aside amounts to ensure the continuance of the following activities, for a minimum period of two years, in the event that funding should become unavailable from current surpluses:

Page 5

Royal Watercolour Society

Report of the members of Council (continued) For the year ended 31 December 2021

Reserves policy

(continued)

A sum is also retained in reserves as a contingency against adverse fluctuations in the value of its investments.

At 31 December 2021, the Society held total reserves of £974,069 (2020: £809,551), comprising unrestricted reserves of £679,167 (2020: £507,027), restricted reserves of £256,090 (2020: £264,569) and an expendable endowment of £38,812 (2020: £37,955). Council is of the opinion that, in light of its future plans to mitigate the risks faced by the Society, the reserves held at the end of the year were sufficient to enable the Society to work successfully towards fulfilling its aims and objectives.

Restricted Funds comprise the Peter de Wint Capital Fund, the Peter de Wint General Fund and the Whitcomb Street Fund. The Peter de Wint funds are held for long-term use in accordance with the donor's intentions. The Whitcomb Street Fund is for the development of the new gallery space. During the year a transfer out of the restricted fund took place in relation to capital works to improve the gallery building. This has been capitalised as a tangible fixed asset held in in a designated fund and will be depreciated over the life of the lease.

Designated Funds fall into two broad categories; firstly, funds set aside by Council to absorb future depreciation costs of recent capital projects - the balances on these funds will reduce though annual depreciation charges in accordance with the depreciation policy set out in Note 1.4 until such time as the related assets have been fully written down; secondly, funds donated to the Society or set aside by Council either to be used for a particular purpose, or to record funds used and remaining in respect of a particular legacy or donation - the balances on these funds will be used up over varying timescales as projects or needs dictate.

During the year the leasehold improvement works on the Whitcomb Street property were capitalised as a tangible fixed asset and are held in a designated fund.

Summaries of movements in all funds during the year, together with a detailed description of the purposes for which the various funds may be used, are contained in the notes to the accounts.

Accounting records

The preparation of the Society’s accounting records is outsourced to a bookkeeper who is suitably qualified for the task. Internal controls, appropriate for a charity of this size, have been put in place to protect the Society’s funds and to ensure their proper application.

Objectives and activities

Objectives

The main objectives of the Society are the advancement of education and the improvement of public taste in art by means of the encouragement of watercolour painting.

Activities

The Royal Watercolour Society aims to achieve its objectives through the following activities:

Page 6

Royal Watercolour Society

Report of the members of Council (continued) For the year ended 31 December 2021

Public benefit

Council has paid due regard to the Charity Commission’s guidance on public benefit in deciding what activities the charity should undertake. The Royal Watercolour Society recognises and welcomes the need to carry out its charitable activities for the benefit of the general public, and retains this aim at the centre of its strategic planning. The Society continues to offer free admission to all of its exhibitions and is working to increase the amount and breadth of education work it carries out in the local community and beyond, seeking to involve people from the widest possible range of backgrounds and abilities.

Achievements and performance

The Royal Watercolour Society has worked hard to develop a programme of exhibitions, talks and events in support of its charitable aims and objectives. At a time when public funding of the Arts has been squeezed by other pressing concerns, the Society has stood firm and strengthened its efforts in the important task of promotion of the Arts, and the Visual Arts and works on paper in particular.

Council seeks to preserve the Society's nationally important historic legacy in the form of its Archive and Diploma collection, as well as being a significant cultural voice speaking on behalf of the Visual Arts and of the UK's tradition of works on paper and that of watercolour in particular, for which the Society is internationally recognised. Council continues to challenge itself to be bold in its mission to promote its artistic and charitable aims through exhibitions and educational outreach.

Achievements against objectives

The Royal Watercolour Society set out, at the start of 2021, to carry out the following activities:

Page 7

Royal Watercolour Society

Report of the members of Council (continued) For the year ended 31 December 2021

Financial review

Sources of funding and financial position

The Royal Watercolour Society funds its activities and administrative costs through membership subscriptions, grants, donations, bequests, income from exhibitions and education events, royalties from publications, and investment income and gains generated on its invested funds.

The financial position of the Charity is set out in the Statement of Financial Activities on page 12 and the Balance sheet on page 13.

During the year under review, total income amounted to £228,316 (2020: £200,925).

The cost of raising funds in the year was £21,113 (2020: £17,137), the total costs of charitable activities was £137,830 (2020: £118,114), of which support costs and governance costs (see note 3) amounted to £57,536 (2019: £41,255) and £5,092 (2020: £4,655) respectively.

Before investment movements, the Society made a net surplus from activities of £90,485 (2020: net surplus £82,181). After investment gains of £74,033 (2020: gains £21,744), the Society’s Total Funds showed net surplus for the year of £164,518 (2020: net surplus: £103,925).

Investment performance

Investments are held in intermediate risk funds which provide opportunities for a good income return and also some growth of capital in real terms.

The coronavirus pandemic and the associated market volatility has had an impact on investment performance.

Fund transfers

As described in note 12, a net transfer from restricted funds to a designated fixed asset fund of £6,300 (2020: 163,339) has been made during the year. This relates to capital works on Whitcomb Street. The funds for this project were raised in the Whitcomb Street Restricted Fund. The capital works have been capitalised as an unrestricted tangible fixed asset held in a designated fund.

Plans for future periods

During 2022, the Society plans to carry out the following activities:

Page 8

Royal Watercolour Society

Report of the members of Council (continued) For the year ended 31 December 2021

Impact of the coronavirus pandemic

Council’s responsibilities in relation to the financial statements

The charity’s trustees are responsible for preparing a trustees’ annual report and 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 and Wales requires the charity’s trustees to prepare financial statements for each year which give a true and fair view of the state of affairs of the charity, and of the incoming resources and application of resources, of the charity for that period. In preparing the financial statements, the trustees are required to:

Page 9

Royal Watercolour Society

Report of the members of Council (continued) For the year ended 31 December 2021

The trustees are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the financial position of the charity and to enable them to ensure that the financial statements comply with the Charities Act 2011, the applicable Charities (Accounts and Reports) Regulations, and the provisions of the Trust deed. They are also responsible for safeguarding the assets of the charity and taking reasonable steps for the prevention and detection of fraud and other irregularities.

The trustees are responsible for the maintenance and integrity of the charity and financial information included on the charity’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements.

By Order of the Council

Jill Leman President

5th October 2022

Page 10

Royal Watercolour Society

Independent Examiner’s report to the trustees of the Royal Watercolour Society For the year ended 31 December 2021

I report to the trustees on my examination of the accounts of the Royal Watercolour Society (the Charity) for the year ended 31 December 2021.

Respective Responsibilities of trustees and examiner

As the trustees of the Charity you are responsible for the preparation of the accounts in accordance with the requirements of the Charities Act 2011 (‘the Act’).

I report in respect of my examination of the Charity’s accounts carried out under section 145 of the 2011 Act and in carrying out my examination I have followed all the applicable Directions given by the Charity Commission under section 145(5)(b) of the Act.

Basis of independent examiner’s report

My examination was carried out in accordance with the general Directions given by the Charity Commission. An examination includes a review of the accounting records kept by the charity and a comparison of the accounts presented with those records. It also includes consideration of any unusual items or disclosures in the accounts, and seeking explanations from you as trustees concerning any such matters. The procedures undertaken do not provide all the evidence that would be required in an audit and consequently no opinion is given as to whether the accounts present a ‘true and fair view’ and the report is limited to those matters set out in the statement below.

Independent examiner’s statement

I have completed my examination. I confirm that no material matters have come to my attention in connection with the examination giving me cause to believe that in any material respect:

  1. accounting records were not kept in respect of the Charity as required by section 130 of the Act; or

  2. the accounts do not accord with those records; or

  3. the accounts do not comply with the applicable requirements concerning the form and content of accounts set out in the Charities (Accounts and Reports) Regulations 2008 other than any requirement that the accounts give a ‘true and fair view which is not a matter considered as part of an independent examination.

I have no concerns and have come across no other matters in connection with the examination to which attention should be drawn in this report in order to enable a proper understanding of the accounts to be reached.

Cara Turtington FCA DChA 17 October 2022 For and on behalf of Saffery Champness LLP 71 Queen Victoria Street Chartered Accountants London EC4V 4BE

Page 11

Royal Watercolour Society

Statement of Financial Activities For the year ended 31 December 2021

Unrestricted
General
Funds
Note
£
Income and endowments
from:
Donations and legacies
2
134,405
Charitable activities
2a
84,112
Investments
2,087
Total
220,603
Expenditure on:
Raising funds
18,029
Charitable activities
90,923
Total
3
108,952
Net income/(expenditure)
before (losses)/gains on
investments
111,651
Net gains on
investments
41,005
Net income/(expenditure)
for the year
152,656
Transfers between funds
11
(3,129)
Net movement in funds
149,527
Reconciliation of funds
Total funds brought forward
49,357
Total funds carried forward
198,884		 Designated
Funds
£
-
-
-
-
-
5,567
5,567
(5,567)
18,751
13,184
9,429
22,613
457,670
480,283		 Restricted
Expendable
Funds
Endowment
Funds
£
£
6,250
591
-
-
871
-
7,121
591
2,440
644
18,227
2,000
20,667
2,644
(13,546)
(2,053)
11,367
2,910
(2,179)
857
(6,300)
-
(8,479)
857
264,569
37,955
256,090
38,812		 Total
Funds
2021
£
141,246
84,112
2,958
228,316
21,113
116,717
137,830
90,485
74,033
164,518
-
164,518
809,551
974,069		 Total
Funds
2020
£
132,509
59,948
7,838
200,295
17,137
100,977
118,114
82,181
21,744
103,925
-
103,925
705,626
809,551

The Statement of Financial Activities includes all gains and losses in the year.

All of the above amounts relate to continuing activities.

The notes on pages 14 to 28 form part of these financial statements.

Page 12

Royal Watercolour Society

Balance sheet As at 31 December 2021

Unrestricted
Note £
Fixed assets
Tangible assets
4
243,787
Investments
5
1,042,737
1,286,523
Current assets
Debtors
7
9,045
Cash at bank and in
hand
(61,233)
(52,188)
Creditors: amounts
falling due within
one year
8
(72,161)
Net current (liabilities)/
assets
(124,349)
Creditors: amounts due
after more than one
9
(483,007)
year
Net assets
679,167
Charitable funds
Unrestricted income
funds
11
679,167
Restricted income funds
12
Expendable endowment
13
Total funds
679,167		 Restricted
£
-
162,822
162,822
-
93,268
93,269
-
93,268
-
256,090
256,090
256,090		 Expendable
Endowment
£
-
40,039
40,039
-
(1,227)
-
(1,227)
-
(1,227)
-
38,812
38,812
38,812		 2021
Total
£
243,787
1,245,598
1,489,384
9,045
30,808
39,853
(72,161)
(32,308)
(483,007)
974,069
679,167
256,090
38,812
974,069		 2020
Total
£
240,924
1,170,462
1,411,386
7,444
40,284
47,728
(99,588)
(51,860)
(549,975)
809,551
507,027
264,569
37,955
809,551

The notes on pages 14 to 28 form part of these financial statements.

These financial statements were approved and signed by a member of the Council and authorised for issue on 5th October 2022.

Jill Leman President Charity No. 258348

Page 13

Royal Watercolour Society

Notes to the financial statements For the year ended 31 December 2021

1. Accounting policies

1.1 Basis of accounting

The accounts have been prepared under the historical cost convention with items recognised at cost or transaction value unless otherwise stated in the notes to these accounts. 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) second edition issued in October 2019, and the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (FRS 102) and the Charities Act 2011.

The accounts (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) issued on 16 July 2014 rather than the Accounting and Reporting by Charities: Statement of Recommended Practice effective from 1 April 2005 which has since been withdrawn.

Advantage has been taken of the exemption for charities with income less than £500,000 from preparing a cash flow statement.

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

Council is of the opinion that there are no material uncertainties about the charity’s ability to continue as a going concern. The Council has considered the impact of the coronavirus pandemic and do not believe this has an impact on the going concern status of the charity.

1.2 Income

All income is recognised once the charity has entitlement to the income, it is probable that the income will be received and the amount of income receivable can be measured reliably.

Donations are recognised when the charity has been notified in writing of both the amount and settlement date. In the event that a donation is subject to conditions that require a level of performance before the charity is entitled to the funds, the income is deferred and not recognised until either those conditions are fully met, or the fulfilment of those conditions is wholly within the control of the charity and it is probable that those conditions will be fulfilled in the reporting period.

Membership income is treated as a donation as the benefits of membership are not of significant monetary value and the fee paid is therefore treated as a donation to the charity’s general funds.

Page 14

Royal Watercolour Society

Notes to the financial statements (continued) For the year ended 31 December 2021

1. Accounting policies

(continued)

1.3

Expenditure

Liabilities are recognised as expenditure as soon as there is a legal or constructive obligation committing the charity to that expenditure, it is probable that settlement will be required and the amount of the obligation can be measured reliably.

Expenditure is recognised on an accruals basis. All expenses including support costs and governance costs are allocated or apportioned to the applicable expenditure headings. Costs in respect of future events or exhibitions are charged when the relevant events or exhibitions take place.

Support costs have been allocated between support costs and governance costs. Governance costs comprise all costs involving the public accountability of the charity and its compliance with regulation and good practice. All support costs are allocated to charitable and fundraising activities on the basis of time spent.

1.4

Tangible fixed assets and depreciation

Expenditure on improvements, furniture and equipment that exceeds £1,000 is capitalised. Fixed assets are stated at cost less accumulated depreciation. Provision for depreciation of fixed assets held for use by the charity is made at annual rates calculated to spread the cost of each asset over its expected useful life. The depreciation rates currently in use are:

Leasehold property and improvements - Evenly over the remainder of the lease Furniture and equipment - 20% straight line on cost

1.5 Investments

Investments are a form of basic financial instrument and are initially recognised at their transaction value and subsequently measured at their fair value as at the balance sheet date using the closing quoted market price. The statement of financial activities includes the net gains and losses arising on revaluation and disposals throughout the year.

1.6 Historic assets

The Society’s Historic Assets (note 4) are not capitalised as the Members of Council consider that the cost of obtaining valuations would outweigh the benefit to users of the financial statements.

1.7 Taxation

No tax provision is included in the financial statements on the basis that all income for the registered charity is derived from wholly charitable activities.

1.8

Fund accounting

The charity has restricted funds, where the donor has specified that they can only be used on specific projects in the future. All other funds are unrestricted.

Where funds are received via gift or legacy to support the longer term work of the charity these will be treated as an endowment. An endowment will be classed as permanent when the donor specifies that the capital must be maintained in perpetuity and as expendable in all other circumstances.

Page 15

Royal Watercolour Society

Notes to the financial statements (continued) For the year ended 31 December 2021

1. Accounting policies

(continued)

Fund Accounting (continued)

Designated funds have been nominated by the Council to represent their intentions to fund future projects or to reflect a wish of donors that was not legally binding at the time a gift was made. These funds can be undesignated and applied to any of the charitable activities in the future at the Council’s absolute discretion.

2. Donations and legacies

General
Designated
Funds
Funds
£
£
Membership income
24,375
-
Legacies received
110 000
-
Grants and donations
30
-
Election fees
-
-
134,405
-
onations and legacies
General
Designated
Funds
Funds
£
£
Membership income
24,440
-
Grants and donations
2,040
-
Election fees
640
-
27,120
-		 Restricted
Expendable
Funds
Endowment
£
£
-
-
-
-
6,841
-
-
-
6,841
-
Restricted
Expendable
Funds
Endowment
£
£
-
-
105,389
-
-
-
105,389
-		 2021
Total
£
24,375
110,000
6,871
-
141,246
2020
Total
£
24,440
107,429
640
132,509		 2020
Total
£
24,440
-
107,429
640
132,509

Donations and legacies

2a Charitable activities – Property income

Property income 2021
£
83,037
83,037		 2020
£
58,597
58,597

Page 16

Royal Watercolour Society

Notes to the financial statements (continued) For the year ended 31 December 2021

3.
Expenditure
Direct
Support
Governance
costs
costs
costs
£
£
£
Raising funds
21,113
-
-
Charitable activities:
Running the RWS
12,912
57,536
5,092
Support of Bankside Gallery 23,850
-
-
Whitcomb St development
17,327
-
-
Total charitable activities
54,089
57,536
5,092
Total expenditure
75,202
57,536
5,092
Expenditure 2020
Direct
Support
Governance
costs
costs
costs
£
£
£
Raising funds
17,137
-
-
Charitable activities:
Running the RWS
18,120
41,255
4,655
Support of Bankside Gallery 22,854
-
-
Whitcomb St development
14,093
Total charitable activities
55,067
41,255
4,655
Total expenditure
72,204
41,255
4,655
Net income/(expenditure) is stated after charging:
Depreciation
Examiner’s remuneration:
- independent examination (Saffery Champness LLP)
- preparation of accounts and advice (Saffery Champness LLP)		 2021
Total
£
21,113
75,540
23,850
17,327
116,717
137,830
2020
Total
£
17,137
64,030
22,854
14,093
100,977
118,114
2021
£
3,437
1,348
3,634		 2020
Total
£
17,137
64,030
22,854
14,093
100,977
118,114
2020
£
3,437
1,200
1,720

Page 17

Royal Watercolour Society

Notes to the financial statements (continued) For the year ended 31 December 2021

4. Tangible fixed assets

Cost
At 1 January 2021
Additions
At 31 December 2021
Depreciation
At 1 January 2021
Charge for the year
At 31 December 2021
Net book value
At 31 December 2021
At 1 January 2021		 Equipment
1,106
-
1,106
1,106
-
1,106
-
-		 Leasehold Leasehold
property improvements
£
£
150,345
163,339
-
6,300
150,345
169,639
72,760
-
3,437
-
76,198
-
74,148
163,639
87,585
163,339		 Leasehold Leasehold
property improvements
£
£
150,345
163,339
-
6,300
150,345
169,639
72,760
-
3,437
-
76,198
-
74,148
163,639
87,585
163,339		 Total
£
314,790
6,300
321,090
73,866
3,437
- 77,304
163,639
163,339		 243,787
240,924

The leasehold property relates to the Gallery and Office premises at 48 Hopton Street, which is owned on a 60-year lease from the Corporation of London Borough of Southwark that expires on 27 August 2044. The lease was professionally valued in 2005, by Drivers Jonas, at £425,000.

Leasehold improvement additions relate to capital works under construction on the Whitcomb Street property.

Historic Assets

The Society’s Historic Assets are insured for the sum of £2.5m and comprise the following:

i) Diploma Collection:

The Diploma Collection comprises paintings acquired from Members on their election to the Society; ownership of these is inalienable as the Society's Laws do not permit their disposal.

ii) Other Works of Art:

Through bequests, the Society has acquired some other works which are mainly held for historical, educational and artistic reasons.

Page 18

Royal Watercolour Society

Notes to the financial statements (continued) For the year ended 31 December 2021

5. Investments

Market value
At 1 January 2021
Contribution of funds
Funds withdrawn
Income less fees
Realised and unrealised
gains
At 31 December 2021		 2021
£
1,170,889
60,000
(62,464)
(265)
77,438
1,245,598		 2020
£
578,008
836,921
(258,789)
(7,452)
22,201
1,170,889

At 31 December 2021, 12% of investments were held in UK Equity and Bond funds (2020: 19%), 52 % in Equity and Bond funds outside the UK (2020: 46%), 21% in Hedge and Alternative Funds (2020: 15%), and the remaining 15% in cash (2020: 20%).

No investments were considered to be material in the context of the market value of the portfolio.

6. Council expenses

No Council member received any emolument or payment for professional or other services during the year, but one Council members (2020: four) received reimbursement of £517 (2020: £481) for travel, subsistence and telephone expenses incurred during the course of carrying out their duties as charity trustees.

7. Debtors

Trade debtors
Other debtors
Amount due from Bankside Gallery
Prepayments		 2021
£
148
10
-
8,887
9,045		 2020
£
325
-
600
6,519
7,444

Page 19

Royal Watercolour Society

Notes to the financial statements (continued) For the year ended 31 December 2021

8.
Creditors
Amounts falling due within one year
Trade creditors
Amount due to Bankside Gallery
Sundry creditors and accruals
Deferred income
9.
Creditors
Amounts falling due after more than one year

Deferred income dues after more than one yera
Deferred Income
Balance brought forward
Income deferred to the following year
Deferred income released during the year
Balance carried forward
The deferred income is expected to be recognised as follows
Within 1 year
Within 1 to 2 years
Within 2 to 5 years
After more than 5 years		 2021
£
2,757
-
7,054
62,350
72,161
2021
£
483,007
483,007
611,083
-
(66,968)
544,115
61,108
61,108
183,324
238,575
544,115		 2020
£
33,225
-
5,256
61,108
99,589
2020
£
549,975
549,975
-
611,083
-
611,083
61,108
61,108
183,324
305,543
611,083

Deferred income relates to rental income received in advance. Rental income was received for a period of 10 years in advance for the Whitcomb Street property, with the lease commencing on 13 February 2020.

Page 20

Royal Watercolour Society

Notes to the financial statements (continued) For the year ended 31 December 2021

10. Contingent Liabilities

The Society is party to an indemnity, jointly with the Royal Society of Painter-Printmakers, to provide Bankside Gallery Limited with continuing financial support and assistance as may be agreed with the company for periods of two years at a time, and to make good any shortfall in the company’s annual budget over the same period.

No liability under the indemnity arose for the year ended 31 December 2021 and, based on the financial statements and budgets of Bankside Gallery Limited, Council is of the opinion that it is unlikely that any substantial liability will arise from the indemnity within two years.

11. Financial commitments

In February 2020 the charity signed a lease for a property on Whitcomb Street. The lease has a length of 250 years. The annual commitment is a peppercorn rent. This constitutes a long-term commitment for the charity.

Page 21

Royal Watercolour Society

Notes to the financial statements (continued) For the year ended 31 December 2021

12. Unrestricted funds Unrestricted funds Unrestricted funds
President’ David Elizabeth Collections Mezzanine Diploma Whitcomb Arthur Wise Total General Total
s Fund Gluck Scott Designated Dep’n Fund Room Dep’n Street Whitcomb Designated Funds unrestricted
Fund Moore Fund Fund Refurbishment Street Funds funds
Fund Fund Fund
£ £ £ £ £ £ £ £ £ £ £
At 1 January 647 97,955 11,143 - 27,666 28,096 163,339 128,824 457,670 49,357 507,027
2021
Income from - - - - - - - - - 220,604 220,384
donations and
charitable
activities
Investment - - - - - - - - - - -
income
Expenditure on - - - (3,129) (1,154) (1,283) - - (5,567) (108,952) (108,952)
charitable
activities
Transfers - - - 3,129 - - 6,300 - 9,429 (3,129) (3,129)
between fund
Investment - 7,968 906 - - - - 9,877 18,751 41,005 59,756
gains
At 31 647 105,923 12,049 (0) 26,512 26,813 169,639 138,701 480,283 198,884 678,947
December
2021

Page 22

Royal Watercolour Society

Notes to the financial statements (continued) For the year ended 31 December 2021

Unrestricted
At 1 January
2020
Income from
donations and
charitable
activities
Investment
income
Expenditure on
charitable
activities
Transfers
between fund
Investment
gains
At
31
December
2020		 Funds (2020 comparative)
President’
s Fund
David
Gluck
Fund
Elizabeth
Scott
Moore
Fund
Collections
Designated
Fund
Mezzanine
Dep’n Fund
Diploma
Room Dep’n
Fund
Whitcomb
Street
Refurbishment
Fund
Arthur Wise
Whitcomb
Street
Fund
Total
Designated
Funds
General
Funds
Total
unrestricted
funds
£
£
£
£
£
£
£
£
£
647
98,955
11,143
-
28,820
29,379
-
128,824
297,768
29,167
326,935
-
-
-
-
-
-
-
-
-
87,068
87,068
-
-
-
-
-
-
-
-
-
6,231
6,231
(1,000)
-
(3,079)
(1,154)
(1,283)
-
-
(6,516)
(80,251)
(86,768)
-
-
-
3,079
-
-
163,339
-
166,418
(3,079)
163,339
-
-
-
-
-
-
-
-
-
10,221
10,221
647
97,955
11,143
-
27,666
28,096
163,339
128,824
457,670
49,357
507,027

Page 23

Royal Watercolour Society

Notes to the financial statements (continued) For the year ended 31 December 2021

11. Unrestricted funds

(continued)

The income and capital bequests received from Mrs Elizabeth Scott Moore, Mr David Gluck and the JE Eddison Trust may be used at the discretion of the Council in accordance with its Reserves Policy as set out in the Report of the Council that introduces these financial statements.

The Elizabeth Scott Moore Fund no longer has a deficit balance but continues to be monitored by Members of Council.

The David Gluck Fund is invested in the Society’s General Fund portfolio and not held in a separate and distinct investment portfolio or bank account; investment income is not currently reallocated from the General Fund to the David Gluck Fund.

The President’s Fund is designated to be used at the discretion of the President.

The purpose of the Collections Designated Fund varies over time, depending on the Council’s priorities. All unrestricted income raised for the purpose of maintaining the Society’s collections, together with all related expenditure, is recorded in the Fund in order that an overview of activities in this area can be clearly seen. However, from time to time, Council agrees that certain elements of this expenditure may be financed from other funds, such as the General Fund, or the David Gluck Fund – in these cases, appropriate transfers are made from those funds to provide the agreed subsidy.

The Diploma Room Depreciation Fund was established to record funds used to build the Diploma Collection Storage Room at Bankside Gallery, and depreciation charged in respect of this work. The room is used for the unrestricted purpose of education and learning about the Society’s Collections.

The Mezzanine Depreciation Fund was established to record funds used to build the mezzanine floor in the archive room at Bankside Gallery, and depreciation charged in respect of this work.

The Arthur Wise Whitcomb Street Fund was established using part of a legacy received from the estate of Arthur Wise in 2017 and 2018.

The Whitcomb Street Asset Fund relates to capital improvements at the Whitcomb Street property. These will be depreciated over the lift of the lease.

Page 24

Royal Watercolour Society

Notes to the financial statements (continued) For the year ended 31 December 2021

12. Restricted funds

At 1 January 2021
Income
Expenditure on charitable
activities
Transfers between funds
Investment gain/(losses)
At 31 December 2021		 Peter De
Wint Capital
Fund
£
4,551
-
-
-
-
4,551		 Peter de Wint
General Fund
£
150,062
871
(2,440)
-
11,367
159,860		 Whitcomb
Street Fund
£
109,956
6,250
(18,227)
(6,300)
-
91,679		 Total
£
264,569
7,121
(20,667)
(6,300)
11,367
256,090

The Peter De Wint Funds are held to provide relief of distress among members (including honorary retired members) of the Royal Watercolour Society.

The Whitcomb Street Fund is raising funds for the refurbishment of the new Gallery space. During the year a transfer out to a designated fund occurred to capitalise additional leasehold improvements which took place during the year.

Restricted funds (2020)

At 1 January 2020
Income
Expenditure on charitable
activities
Transfers between funds
Investment gain/(losses)
At 31 December 2020		 Peter De Wint
Capital
Fund
£
4,551
-
-
-
-
4,551		 Peter de Wint
General Fund
£
146,023
1,607
(5,978)
-
8,410
150,062		 Whitcomb
Street Fund
£
182,501
105,389
(15,867)
(163,339)
1,272
109,956		 Total
£
333,075
106,996
(21,845)
(163,339)
9,682
264,569

Page 25

Royal Watercolour Society

Notes to the financial statements (continued) For the year ended 31 December 2021

13. Expendable endowment

At 1 January 2021
Income
Expenditure on charitable activities
Transfers between funds
Investment gains
At 31 December 2021		 Total
2021
Total
2020
£
£
37,955
45,616
591
-
(2,644)
(9,501)
-
-
2,910
1,840
38,812
37,955

Part of a legacy received from the estate of Arthur Wise has been used to establish a prize fund for watercolour paintings in his memory.

14. Staff

One member of staff is directly employed by the Society who is supervised by Members of the Council and the President. The staff member was not paid more than £60,000 in the current or preceding financial year.

15. Related party transactions

As described in the Report of the Council earlier in these financial statements, the charity has a close working relationship with the Royal Society of Painter-Printmakers and with Bankside Gallery Limited. Bankside Gallery Limited manages Bankside Gallery, 48 Hopton Street, London, on behalf of both the Royal Watercolour Society and the Royal Society of Painter-Printmakers.

The outstanding balances with related parties at the year-end are disclosed in Notes 7 and 8 above. The Royal Watercolour Society makes a donation to Bankside Gallery to cover a proportion of the running costs of the gallery, in recognition of Bankside Gallery’s role in helping the Society achieve its charitable aims. Donations may also be made if the Society decides to promote any exhibitions beyond its regular annual programme.

A summary of these donations during the year follows:

Donation towards running costs of Bankside Gallery 2021
£
23,850		 2020
£
22,854

This expenditure is included in the Statement of Financial Activities under outgoing resources.

Page 26

Royal Watercolour Society

Notes to the financial statements (continued) For the year ended 31 December 2021

As recorded in Note 4 above, the Royal Watercolour Society owns a lease from the Corporation of London Borough of Southwark on 48 Hopton Street, London. Bankside Gallery is afforded full rentfree occupation and use of these gallery and office premises in return for granting an indemnity to the Royal Watercolour Society in respect of all outgoing and covenant obligations under the Lease. The value of this donation is not included in these accounts but is estimated to be £38,770 per annum.

16. Comparative information

The information below is an analysis by fund for the year ended 31 December 2020

Income and endowments from:
Donations and legacies
Charitable activities
Investments
Total
Expenditure on:
Raising funds
Charitable activities
Total
Net income/(expenditure) before
(losses)/gains on investments
Net gains/(losses) on investments
Net income/(expenditure) for the year
Transfers between funds
Net movement in funds
Reconciliation of funds
Total funds brought forward
Total funds carried forward		 Unrestricted
General
Funds
£
27,120
59,948
6,231
93,299
3,084
77,168
80,252
13,048
10,221
23,269
(3,079)
20,190
29,167
49,357		 Designated
Funds
£
-
-
-
-
-
6,516
6,516
(6,516)
-
(6,516)
166,418
159,902
297,768
457,670		 Restricted
Funds
£
105,389
-
1,607
106,996
6,552
15,293
21,845
85,151
9,682
94,833
(163,33
9)
(68,506)
333,075
264,569		 Expendable
Endowment
Funds
£
-
-
-
-
7,501
2,000
9,501
(9,501)
1,840
(7,661)
-
(7,661)
45,616
37,955		 Total
Funds
2020
£
132,509
59,948
7,838
200,295
17,137
100,977
118,114
82,181
21,744
103,925
-
103,925
705,626
809,551

Page 27

Royal Watercolour Society

Notes to the financial statements (continued) For the year ended 31 December 2021

16. Comparative Information (continued.)

The information below is a columnar balance sheet from the previous period

Fixed assets
Tangible assets
Investments
Current assets
Debtors
Cash at bank and in hand
Creditors: amounts falling
due within one year
Net current (liabilities)/
assets
Net assets
Charitable funds
Unrestricted income funds
Restricted income funds
Expendable endowment
Total funds		 Unrestricted
£
240,924
867,938
1,108,862
7,444
40,284
(99,588)
(51,860)
507,027
507,027
-
-
507,027		 Restricted
Expendable
Endowment
£
£
-
-
264,569
37,955

264,569
37,955

-
-
-
-
-
-
-
-
264,569
37,955
-
-
264,569
-
-
37,955
264,569
37,955		 2020
Total
£
240,924
1,170,462
1,411,386
7,444
40,284
(99,588)
(51,860)
809,551
507,027
264,569
37,955
809,551

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