2021-08-31-accounts

THE FRIENDS OF THE ROYAL ACADEMY (A Company Limited by Guarantee)

Registered Charity No. 272926 Registered Company No. 01291535

ANNUAL REPORT AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED

31 AUGUST 2021

The Friends of the Royal Academy Reference and Administrative Information

Patron

HRH The Duchess of Cornwall

Trustees

Clive Humby (Chairperson) Nigel Abbas Nicola Bannister (resigned 31 August 2021) Verity Harding Siobhan Moriarty‐MacDonnell Andrea O'Keeffe (Treasurer) Richard Philipps Peter Randall‐Page RA (appointed 15 September 2020) Oliver Rawlins (resigned 19 September 2021) Axel Rüger Rebecca Salter RA (resigned 15 September 2020) Greg Sanderson (resigned 31 August 2021)

Company Secretary

Benedict Anstey

Auditors

Moore Kingston Smith LLP Devonshire House 60 Goswell Road London EC1M 7AD

Bankers

Lloyds Bank Plc 4th Floor 25 Gresham Street London EC2V 7HN

Solicitors

Macfarlanes LLP 20 Cursitor Street London EC4A 1LT

Withers LLP 16 Old Bailey London EC4M 7EG

Registered Office Burlington House Piccadilly London W1J 0BD

Registered Charity Number 272926

Registered Company Number 01291535

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The Friends of the Royal Academy (A Company Limited by Guarantee) Trustees’ Report For the year ended 31 August 2021

CONSTITUTION AND CHARITABLE OBJECTIVES

Constitution

The Friends of the Royal Academy (“the Charity”) is a registered charity, which was incorporated as a company limited by guarantee in December 1976 to support the work of The Royal Academy of Arts (“the Royal Academy”), a legally separate charity (registered charity number 1125383, company number 6298947) which has promoted the fine arts in the UK since 1768, and the Royal Academy Trust (registered charity number 1067270), which was established in 1981, to provide funds in support of the Royal Academy.

Governance and management

The Charity is an independent body governed by a board of directors (the “Board”), who are also the trustees of the Charity. In accordance with the Articles of Association, the number of directors shall be not less than seven and not more than 15. The Board shall have at least one and no more than two Academicians, who are appointed by the Royal Academy. The Secretary & Chief Executive of the Royal Academy is a member of the Board ex officio .

The Charity has a maximum of 25 Members (the Board may from time to time increase this number). New Charity Members may be admitted by approval of the Charity at a General Meeting, subject to the approval of the Royal Academy. Friends are “associate members” of the Charity but are not formal Charity Members. The Board may from time to time establish categories of Friends, the criteria for membership of each category, and the rights and privileges associated with such category.

On appointment as a director, the appointee is invited to become a Member of the Charity.

The Board convenes regular meetings to discuss the strategic, financial, and operational performance of the Friends’ membership scheme and meet frequently with the Royal Academy management team and other members of staff. Board members receive all relevant documentation relating to the constitution and operation of the Friends’ membership scheme on appointment and are provided with additional training as required thereafter.

Charity Governance Code

The Charity and its trustees take good governance seriously and are aware of the Charity Governance Code, including its seven main principles.

Remuneration of key management personnel

The Charity considers key management personnel to be the trustees who do not receive remuneration for their services. As noted below, the day‐to‐day management of the Charity is performed by staff employed by the Royal Academy.

Relationship with the Royal Academy

Although the Charity is governed by an independent body, the day‐to‐day management of the Friends’ membership scheme is through staff employed by the Royal Academy.

Objectives and activities

The objects of the Charity, as set out in the Articles of Association, are to support the charitable work of the Royal Academy and the Royal Academy Trust. Its activities include ensuring sound financial control; clear strategic direction; and the targeting of funds to improve the Friends experience and public benefit.

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The Friends of the Royal Academy (A Company Limited by Guarantee) Trustees’ Report For the year ended 31 August 2021

Public benefit and impact

The Charity exists to support the charitable work of the Royal Academy and to promote and to co‐operate with the Royal Academy and other charitable organisations in promoting the arts of design and the creation and appreciation of the arts.

In implementing the stated objectives through the strategies mentioned above, the Board has complied with the duty in Section 17 of the Charities Act 2011 and the guidance published by the Charity Commission, namely, to have due regard to public benefit.

The Charity donates its surplus to the Royal Academy in support of its charitable objectives and in doing so brings considerable benefit to members of the public who visit and participate in the activities of the Royal Academy. The impact and public benefit provided by the Royal Academy and the more formal impact assessment approach being undertaken, including identifying impact goals, and tracking and measuring impact, is considered in the Royal Academy’s 2021 Trustees’ Report. Given that the Charity’s donation has this year provided nearly 39% (2020: 29%) of the Royal Academy’s incoming resources from ongoing activities, the Charity is providing a significant contribution towards meeting these impact goals.

The Friends membership scheme is open to all members of the public and offers significant cost savings to ensure the Friend, an adult family guest and up to four family children can enjoy unlimited entry to experience and appreciate the art on display at the Royal Academy. Friends are also kept up to date on news of the Royal Academy and the art world through the quarterly RA magazine and Friends’ newsletters and emails, which are sent directly to each Friend.

The Friends also offer a Young Person category of membership at a reduced rate to enable young people to benefit from Friends membership at the Royal Academy and access to special events tailored towards the younger demographic.

Aims for the coming year

The aims and objectives for the 2021/22 financial year are as follows:

• To promote and enhance the appreciation of visual arts at the Royal Academy through the Friends’ membership scheme

• To maximise the charitable contributions raised for the benefit of the Royal Academy

• To increase public participation for the benefit of the Royal Academy.

The Charity will seek to achieve these objectives through the continuation of a successful programme of Friends’ events; campaigns to recruit new Friends; and measures to retain Friends through continued improvement of the visitor experience.

FINANCIAL REVIEW, ACHIEVEMENTS AND PERFORMANCE

Financial review

During the year, the Charity received total income of £12,723,673 (2020: £13,801,943), including membership income and Gift Aid of £12,022,318 (2020: £13,421,190) from a total membership of 79,976 (2020: 91,037) Friends.

After expenditure of £1,579,164 (2020: £1,917,417), a £nil (2020: £357,456) donation to the Royal Academy Trust and a £696,014 (2020: £nil) donation to the Royal Academy Coronavirus Emergency Support Fund, net income amounted to £10,448,495 (2020: £11,527,070).

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The Friends of the Royal Academy (A Company Limited by Guarantee) Trustees’ Report For the year ended 31 August 2021

It is the practice of the Board to make a donation to the Royal Academy of the income received after the deduction of expenditure, with the objective to increase the net contribution year on year. During the previous financial year, the Board approved that legacy income received by the Charity should going forward be donated to the Royal Academy Trust to be held in unrestricted funds to provide future support to the Royal Academy. In March 2020, the Royal Academy established a Coronavirus Emergency Support Fund. At its December 2020 meeting, the Board approved that legacy income received by the Charity for the next two financial years to 31 August 2022 should be donated to the Royal Academy’s Coronavirus Emergency Support Fund, rather than to the Royal Academy Trust, unless the terms of the legacy contained restrictions as to the use of the funds. The net income for the current year has been donated to the Royal Academy.

The net movement of funds for the year was £nil (2020: £nil). The Board does not recommend any transfer to or from reserves (2020: £nil).

Achievements and performance

Just over 6,400 new Friends joined in 2020/21 (2019/20: 14,200), despite the Royal Academy being closed physically to the public during three lockdowns amounting to half of the financial year. With an annual renewal rate of just under 81%, we closed the year with 79,976 Friends, over 12% down from last year’s closing number of 91,037. Despite the long periods of closure and disruption throughout the year due to the impact of Covid‐19, tailored positioning of Friends’ communications and strong relationship management was reflected in a renewal rate only 3% lower than the previous financial year, which had been impacted by the pandemic for less than half the financial year, and only 6% lower than the 2018/19 renewal rate of 87% (the last full financial year before the pandemic). As such, both the number of acquisitions and the renewal rate greatly exceeded expectations and represent an encouraging basis for diversifying channels of engagement with Friends and retaining their support, given the disruption to the Royal Academy’s physical exhibition programme during this period and its limited capacities.

2020/21 continued to build on the strength of e‐mail as a means of engagement and transaction and building on increasingly effective CRM and data capture to target and respond to different groups of Friends and their considerations. With all Friends now required to pre‐book, advance and follow‐up communications could be used to improve understanding and satisfaction. Additionally, considerations beyond those related to a physical visit were managed directly: for example, concerns of Friends regarding extensions or freezing of membership could be answered via tailored communications and converted to retention.

Friends and wider audiences continued to engage strongly with the Royal Academy’s digital content, both during the lockdowns and as a means of alternative access more generally. Although audience demand for longer online tours declined slightly over the year, there was a strong response to more interactive engagement, for example, live streaming of drawing classes (Saturday Sketch Club) and online talks. There was also high conversion to other forms of Royal Academy content and means of engagement including the RA Magazine, and commercial offers and promotions, including the Friends‐exclusive Varnishing Day Folio.

2020/21 necessitated focus on more purely philanthropic motivations for remaining or becoming a Friend. This was a crucially important means of support for the Royal Academy, as an independent, unfunded institution given the huge financial impact of the pandemic on even the most established and seemingly robust of organisations. The role and contribution of membership schemes such as the Friends, highlighted by events of the year, was translated in turn into effective, successful campaigns for support.

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The Friends of the Royal Academy (A Company Limited by Guarantee) Trustees’ Report For the year ended 31 August 2021

Total membership income and Gift Aid for the year of £12,022,318 represented a decrease of just over 10% on the previous year (2020: £13,421,190), which includes the full year impact of the price increase in February 2020. There was no price increase in February 2021.

The net income for the year before the donation to the Royal Academy (but after donations of legacy income to the Royal Academy and the Royal Academy Trust) was £10,448,495, down on the previous year (2020: £11,527,070).

In making a donation of £10,448,495 to the Royal Academy, the Charity has significantly contributed to the continuing development of the Royal Academy’s activities and awareness of its role in cultural life including the presentation of a world class exhibition programme; the post graduate education of artists in the Royal Academy Schools; the preservation and maintenance of the Royal Academy’s historic buildings and collections; and the celebration of art and culture for audiences at the RA and beyond.

Reserves policy

The Board has reviewed the reserves of the Charity, including its free reserves (those that are not restricted, designated, or invested in fixed assets). Having regard to the relationship with the Royal Academy and anticipated future cash flows, the current practice is to pass the entire annual net income to the Royal Academy and not to accumulate reserves. The Board considers that the actual level of free reserves as at 31 August 2021 of £115,734 (2020: £115,734) is appropriate.

Related party transactions

None of the trustees receives remuneration or other benefit from their work with the Charity. Transactions with related parties are disclosed in note 16 to the financial statements.

Risks

The Board, advised by specialist committees, the Royal Academy Senior Leadership Team, and the Royal Academy General Counsel, evaluates and monitors risks and ensures that systems and controls are in place and are subject to review. Where appropriate, management action is undertaken to mitigate those risks. The trustees have reviewed the risks to which the Charity is exposed, and the mitigating actions planned to address them.

The major risks identified include: 1) the risk of a reduction in Friends membership whether due to price sensitivity, the changing popularity of the exhibition programme, or demographic factors. This risk has been exacerbated by the impact of Covid‐19, which has resulted in the closure of the Royal Academy to the public for half of the financial year with the national lockdowns, and much reduced capacity in the Royal Academy’s exhibition galleries, by virtue of the application of social distancing and other safety measures, when it has been possible to open the galleries. Furthermore, the pandemic has also impacted Friends’ propensity to visit the Royal Academy, with Friends likely to have greater concerns and anxieties in visiting London for some while after the dangers have technically abated. A significant proportion of our Friends, many of whom live outside London, rely on public transport and as such, this is likely to be a further barrier to attending the Royal Academy’s exhibitions; 2) the risk of failure of the database software and security due to several factors, including outdated software from a lack of resource deployment or investment or cyber‐attacks; and 3) risks generated from having to adhere to strict tax legislation and HMRC guidelines.

The Senior Leadership Team is undertaking strategies to limit the exposure to these risks and to mitigate them as far as is achievable. Mitigation steps include 1) continued review and improvement to the Friends’

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The Ffiends of the Royal Academy (A Company Limited by Guarnntee) Tntstees. Report For the year ended 31 August 2021 sltor experfence and periodic Friends membershlp prKing reVitr•￿. 2) contin￿￿ development and enhancement of software. a focus on data protertTron: and 31 Intemal tax compliance controls and procethres. together with adwce from extemal tax advisors on technical i55ues and the Impact of any changes in legislation. In direct response to Covi&19. erygement through vnaSls and the provision of dt8ltal conten( Indudlre virtual exhibition tou￿ has been s18n1f￿an￿Y enhanced. Slatement of trustees, respDrts*llltles The trustees (who are also dlrectors of The Friend5 of the Royal Academy for the purpose of company lawl are responsllAe for preparing the trustees, report and the financial statements In accordance with the applicable law and Un6ted Klngdom Accounting Standards (Unlted Klrbgdom Generally Accepted Accountln8 Practlcel. Company law reqLires dI￿rtoIS to wepore finarKlal ststements for each financial year whlth 8lve a true and fair view of the state of the affalrs of the Charitab￿ company and of the in¢omSng re50urce5 and appllcatlon of resource5. includlng the income and expenditure of the charitsble company for that perlod. In preparirhg these financial statements. the directOfS are required to: select 5Uitable accountin8 poliaes and then apply them con5tstently; make lud8ments and estimates that are reasonable and prudenL' state whether applicable UK Accounting Stsndards have been followed. subject to an¥ materlal departures disdosed and eyplained In the fmwndal ststements; prepare the financial ststements on the golng ccncern ba515 unle55 it Is Inapproprlate to presume that the charity WIN conunue In busines5: obseNe the methods and pmciples wi the Charltles SORP. The trustees are responsI￿e for keeping proper accoun￿￿ records that disclose with reasonable accurary at any time the financial p051tion of the charlty and enable them to ensure that the financial ststements comply with the Cornpanies Art 2CI)6. They awe also responsvtsle for safeiuardin8 assets of the chartty and hence fortèking re450nable steps for the pre¥entlon and detection of fraud and other Irre8ularltle5. Audlt Infornialion So far a5 each of the trustees at the time the trustees. report is approved is aware: there is no relevant Inforn)atlon of which the audltors are unaware: and they have taken all relevant steps they ought to have taken to make themselves aware of any relevant audit inf¢rmatlon and to establish that the aLKlitors are alvare of that infomiation. Audllors A resolutlon to reappoint Moore ￿ngStOn Smith LLP as auditors wlll be put to the membets at the Annual Gener31 Meetlng. This report was apwoved by the tn￿ee5 on A?. . ￿1.. and SiBned on its behalf. br. Cll¥e Hymby chalrperson Page: 6

The Friends of the Royal Academy Independent Auditors' Report to Members of The Friends of the Royal Academy

Opinion

We have audited the financial statements of The Friends of the Royal Academy ("the charitable company") for the year ended 31 August 2021 which comprise of the Statement of Financial Activities, the Balance Sheet, the Statement of Cash Flows and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

• give a true and fair view of the state of the charitable company’s affairs as at 31 August 2021 and of its incoming resources and application of resources including its income and expenditure, for the year then ended;

• have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

• have been prepared in accordance with the requirements of the Companies Act 2006.

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 auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the charitable company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

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

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

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

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditors' report thereon. The trustees are responsible for the other information contained in 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.

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The Friends of the Royal Academy Independent Auditors' Report to Members of The Friends of the Royal Academy (continued)

Other information (continued)

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matter prescribed by the Companies Act 2006

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

• the information given in the trustees’ annual report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the trustees’ annual report has been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

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

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

• adequate and sufficient accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

• the financial statements are not in agreement with the accounting records and returns; or

• certain disclosures of trustees’ remuneration specified by law are not made; or

• we have not received all the information and explanations we require for our audit.

Responsibilities of trustees

As explained more fully in the statement of trustees’ responsibilities set out on page 6, the trustees (who are also the directors of the charitable company for the purposes of company law) are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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

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The Friends of the Royal Academy Independent Auditors' Report to Members of The Friends of the Royal Academy (continued)

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

• identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error; design and perform audit procedures responsive to those risks; and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the charitable company’s internal control.

• evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the trustees.

• conclude on the appropriateness of the trustees’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the charitable company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the charitable company to cease to continue as a going concern.

• evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

• obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit report.

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

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

Irregularities, including fraud, are instances of non‐compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below.

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The Frlends of the Royal A(ademy Independent Authtorf Report ta Members of The Frfends ofthe Royal Academy (contlnued) Emplanatlon as to what extent tl&e aU￿rt was totisi￿ capable of detÉrting Irreylaiide¥ Indudww fr•ud I￿ntinued The obie¢tl¥es of ow audlt In respert of frawl are tu Odentify and a55ess the risk5 of material mi55tatement of the financlal statements due to fraud: to obtain sufficient appropriate audlt evidence regardlng the assessed rtsks of materlal misstatement due to fraud, through de￿enIng and Implernentln8 appropriate re5PDn5e5 to those a55e55ed risks: and to re5PryKI appropriately to insLince5 of frawj or suspected fraud identified durlng ihe audlt However, the prlmary responslbllity for the pre¥entlon and detectSon of fvaud rests wlth l)oth rnana8ernEnt and those char8ed V•ryth &o¥ernance oftheth￿tsble companv. I￿r •pproath was asfollow5: we obtained an understanding of the legal and regulatory requirefflents applicable to the charitsble company and consldered that the most slgnbflcant arè the COmpan￿S Act 21XJ6. the Charities Art 2011. the Charlty SORP. and UK financial reportin8 5tandard5 as iswed by the Financial Reporti￿ Councll: . we obtalned an undwrtandng of how the charltable company c¢Mplles wlth these rewwements by dlscu55ion5 wilh mana6ement and those charged with governance." we assessed the risk of materfal m15Statement of the financlal statements. 5ncludlng the rlsk of material m155tatement due to fraud and Iw)w it mi8hi or￿r. by hofding disCU55ion5 Wlth rnanagement and th05• charged with Bovernance," • we Inq￿red of management and those tharged wlth governan￿ as to any knovm in5tanre5 of nun- compliancè or Suspèct￿ non-ttsmKAiante with laws and regulatH)ns: based on this understsndin& we designed specifK appmpriate audit procedures to •dentSfy I￿13￿5 of non- compllano wlth laws and re8ulatithis Thls indwled makin8 enquiries of management and those tharsed with 8o¥emance and obtainimd additional ￿￿rI￿tIve e￿dEn￿ a5 wequlred. There are Inherent 1Smltatlons In the audt procedwes desulbed ab￿. We are less Ilkely to betthne aware of instances of non-com￿18￿0 with laws and rel￿alIDn5 that are not (k)5ety related to events and transartions refiected in the financial Statements. Also. the risk of detecting a materlal mlsstatement due to fraud Is hlgher than the rlsk of not detetting one re5ulfjng fram error. as frnud may involve deliberate concealment by. for example. forgery or intentional misrepresentations or thrO￿h collusiorL Use of our report This report Is made solety to the tharitable ¢ornpans members. as a body. in accordance wlth Chapter 3 of Part 16 of the Companles Act 21JJ6. Our audlt work has been undertaken so that we mlght stste to the tharitable ¢ompanV5 members those matter5 we are rEquired to 5tste to thEm in an auditor5. report and for no other purpose. To the fullest extent permltted by law. ￿ do not xcept or assume responslblllty to any party other than the chaTltable cDmpany and tharitsbk comporfs member5 a5 a body. for our wjdit for thls report. or for the opinions we have formed. Andrew Stkkland (5enhr Ststutwy AW11￿ for and on behalf of Moore KIWon Smfth LLP, Ststutory Autht Devonshire Hous 60 Goswell Road London ECIM 7AD 30 IV U toll Page: 10

The Friends of the Royal Academy Statement of Financial Activities

(including an income and expenditure account) For the year ended 31 August 2021

Note Income from: Donations and legacies Charitable activities 4 Other income Total income Expenditure on: Charitable activities Members' activities 5 Donation to Royal Academy Trust Donation to The Royal Academy of Arts 6 Total expenditure Net income / (expenditure) 7 Total funds brought forward Total funds carried forward	Unrestricted funds 2021 £ 698,084 12,022,318 3,271 12,723,673 (1,579,164) ‐ (11,144,509) (12,723,673) ‐ 115,734 115,734	Unrestricted funds 2020 £ 361,392 13,421,190 19,361
		13,801,943
		(1,917,417) (357,456) (11,527,070)
		(13,801,943)
		‐ 115,734
		115,734

All gains and losses are included in the Statement of Financial Activities and derive from continuing activities.

The notes on pages 14 to 20 form part of these financial statements.

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The Frlends ￿the Royal Acadernv Balance Sheet as at 31 Au8115t 2021 2020 Current a55ets Debtors Cash at bank and in hand li 16 291,010 239.044 291.010 Current liabHitie5 Credltors- amounts falliw dwwlthln one year 11243101 1175,2761 Totsl assets less totsl Nabilitles 115.734 115.734 The funds ofthe Ch¥ltr. Unrestricted 115,734 Total funds I￿.734 115.734 The note5 on P￿e5 14 to 20 form part of these financral 5tatemonts. Approved and authorlsed for Issue by the Board on_ Cllve Humby Company No: 01291535 Pa8e.' 12

The Friends of the Royal Academy Statement of Cash Flows

For the year ended 31 August 2021

Note Cash (used in) / provided by operating activities 13 Increase / decrease in cash equivalents in the year Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year	2021 £ ‐ ‐ ‐ ‐	2020 £ ‐
		‐ ‐
		‐

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The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2021

1 General information

The Friends of the Royal Academy ("the Charity"), is a registered charity, which is incorporated as a company limited by guarantee.

The Charity was established to primarily support the charitable work of The Royal Academy of Arts ("the Royal Academy") and to promote and to co‐operate with the Royal Academy and other charitable organisations in promoting the Arts. The address of its registered office is Burlington House, Piccadilly, London.

2 Summary of significant accounting policies

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

The financial statements are prepared in sterling which is the functional currency of the Charity. Monetary amounts in these financial statements are rounded to the nearest pound.

The Charity is a Public Benefit Entity as defined by FRS 102.

a. Basis of preparation

The financial statements have been prepared on a going concern basis, under the historical cost convention.

The principal accounting policies applied in the preparation of these financial statements are set out in the notes below. These policies have been consistently applied to all the years presented, unless otherwise stated.

b. Going concern

The trustees have assessed whether the use of the going concern basis is appropriate and have considered possible events or conditions that might cast significant doubt on the ability of the Charity to continue as a going concern. The trustees have made this assessment for a period of at least one year from the date of approval of the financial statements and have considered the potential ongoing impact of the Covid‐19 pandemic. In particular, the trustees have taken account of pressures on Friends membership income. However, as the principal expenditure is donations, and these are only made out of funds available, the trustees have concluded that there is a reasonable expectation that the Charity has adequate resources to continue in operational existence for the foreseeable future. The Charity therefore continues to adopt the going concern basis in preparing its financial statements.

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The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2021

2 Summary of significant accounting policies (continued)

c. Funds structure

Unrestricted income funds are sub analysed between designated funds, where the trustees have set aside amounts to be used for specific purposes or which reflect the non‐binding wishes of donors; and unrestricted funds, which are used at the trustees' discretion in furtherance of the general objectives of the Charity.

d. Income

All income is recognised once the Charity has entitlement to the resources if it is probable (more likely than not) that the resources will be received and the monetary value can be measured reliably.

Membership income and related Gift Aid is accounted for on receipt of the income and is stated exclusive of any VAT.

Donations are accounted for when these are received.

Ticket sales made in relation to events taking place in the next financial year are included as deferred income.

e. Legacies

Legacies are accounted for as income where there is clear entitlement; the amounts can be measured reliably; and receipt is probable.

Receipt is probable when:

‐ Confirmation has been received from the representatives of the estate(s) that probate has been granted;

‐ The executors have established there are sufficient assets in the estate to pay the legacy; and

• All conditions attached to the legacy have been fulfilled or are within the Charity's control.

f. Expenditure

All expenditure is accounted for on an accruals basis and has been classified under headings that aggregate all costs related to each category of expense shown in the Statement of Financial Activities.

g. Employee benefits

i. Pension costs

Pension costs reflect the employer pension contributions recharges from the Royal Academy. There is no liability for the Charity with regards to defined benefit pension scheme funding or any associated liabilities, with reference to its inclusion being provided in these financial statements, merely to provide clarity with regards to the recharged pension contributions.

ii. Termination payments

Termination benefits are payable when employment is terminated by the Royal Academy before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. Termination payments reflect the costs recharged from the Royal Academy.

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The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2021

2 Summary of significant accounting policies (continued)

h. Charitable activities

Costs of charitable activities comprise the expenditure associated with supporting the Charity members and making donations to the Royal Academy and Royal Academy Trust.

Included within charitable activities are governance costs. These are costs incurred in the governance of the Charity and its assets. These are primarily concerned with constitutional and statutory requirements.

i. Financial instruments

i. Cash and cash equivalents

Cash and cash equivalents include cash at bank and in hand.

ii. Debtors and creditors

Debtors and creditors receivable or payable within one year of the reporting date are carried at their transaction price. Debtors and creditors that are receivable or payable in more than one year and not subject to a market rate of interest are measured at the present value of the expected future receipts or payment discounted at a market rate of interest.

3 Critical accounting judgments and estimation uncertainty

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

4 Income from charitable activities Membership income Gift Aid Total	2021 £ 10,189,031 1,833,287 12,022,318	2020 £ 11,352,160 2,069,030
		13,421,190

Membership income relates to annual amounts paid to become a "Friend" of the Charity. Total membership as at 31 August 2021 was 79,976 Friends (2020: 91,037 Friends).

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The Friends of the Royal Academy Notes to the Financial Statements

For the year ended 31 August 2021

5 Analysis of expenditure on members' activities Staff costs (see note 8) Printing and mailing Magazine Marketing, research and acquisitions Facilities charges Audit fees Accountancy fees Other costs Total	2021 £ 598,875 194,497 489,648 33,217 203,365 13,400 397 45,765 1,579,164	2020 £ 556,180 259,570 567,311 206,858 193,837 13,650 530 119,481
		1,917,417

6 Donation to the Royal Academy of Arts

Donations of £11,144,509 (2020: £11,527,070) include £696,014 (2020: £nil) for the Royal Academy’s Coronavirus Emergency Support Fund. The trustees have approved that legacy income received by the Charity for the two financial years to 31 August 2022 should be donated to this emergency support fund, unless the terms of the legacy contain restrictions as to the use of the funds.

7 Net income / (expenditure) This is stated after charging: Auditors' remuneration: Audit services Other services 8 Analysis of staff costs Wages and salaries Social security costs Employers pension contributions Redundancy costs Total	2021 £ 13,400 397 2021 £ 376,720 38,448 32,033 151,674 598,875	2020 £ 13,650 530 2020 £ 476,249 46,817 33,114 ‐
		556,180

Staff costs represent the costs of staff employed by the Royal Academy and recharged to the Charity. The Charity engaged an average of 15 permanent staff (2020: 18).

The Charity was recharged £151,674 (2020: £nil) in redundancy costs during the year. £102,629 of this (2020: £nil) was related to ex‐gratia payments. These recharges arose from a restructuring and have been accounted for on an accruals basis.

One employee earned more than £60,000 in the year (2020: nil). The employee was in the band of £60,000 to £69,999 (2020: nil) and had pension contributions of £1,328 (2020: nil).

The trustees have concluded that the board of trustees comprise the key management personnel of the Charity.

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The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2021

9 Trustees' remuneration, benefits and expenses

The Charity's trustees give their time freely and receive no remuneration for the work that they undertake as trustees. However, they can claim expenses to reimburse them for costs that they incur in fulfilling their duties.

No trustee was reimbursed for any costs incurred in fulfilling their duties (2020: £nil).

10 Taxation

The Charity has suffered no tax charge, as it is not subject to UK corporation tax on its charitable activities.

11 Debtors Trade debtors Amounts owed by The Royal Academy of Arts Recoverable taxes Prepayments Total	2021 £ 453 81,635 142,244 14,712 239,044	2020 £ 1,006 ‐ 275,421 14,583
		291,010

Amounts owed by related undertakings are unsecured, interest free, have no fixed date of repayment and are repayable on demand.

12 Creditors ‐ amounts falling due within one year Trade creditors Amounts due to The Royal Academy of Arts Taxation Accruals Deferred income (see below) Total	2021 £ 30,992 ‐ 92,075 243 ‐ 123,310	2020 £ 35,155 41,343 69,708 22,778 6,292
		175,276

Deferred income relates to ticket sales made in relation to events taking place in the next financial year.

Balance brought forward at 1 September Amount released to income Amount deferred in the year Balance at 31 August	2021 £ 6,292 (6,292) ‐ ‐	2020 £ ‐ ‐ 6,292
		6,292

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The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2021

13 Notes to the statement of cash flows

Net movement in funds: Adjustments for: ‐ Decrease in debtors ‐ (Decrease) in creditors Net cash used in / provided by operating activities Reconciliation of net movement in funds to net cash flow from operating activities:	2021 £ ‐ 51,966 (51,966) ‐	2020 £ ‐ 19,725 (19,725)
		‐

14 Financial commitments

The Charity had the following future minimum lease payments under non‐cancellable operating leases for each of the following periods:

Payments due: Not later than one year 15 Financial instruments Financial assets measured at amortised cost Financial liabilities measured at amortised cost	2021 £ 15,845 2021 £ 82,088 31,235	2020 £ 18,900
		2020 £ 1,006
		99,276

16 Related party transactions

During the year the Charity donated £11,144,509 (2020: £11,527,070) to the Royal Academy and reimbursed expenditure of £802,240 (2020: £750,017), including staff costs recharged of £598,875 (2020: £556,180) and facilities charges of £203,365 (2020: £193,837) for the Charity's use of Keeper's House, being £175,000 (2020: £175,000) for rent and £28,365 (2020: £18,837) for utilities. At the year end, £81,635 was owed and included within debtors (2020: £41,343 outstanding and included within creditors).

During the year, the Charity donated £nil (2020: £357,456) to the Royal Academy Trust to be held in unrestricted funds to provide future support to the Royal Academy.

During the year the Charity purchased £489,648 (2020: £567,311) of goods from R.A. Enterprises Limited, a subsidiary of the Royal Academy, related to costs for the quarterly RA magazine. R.A. Enterprises Limited sold subscriptions with a value of £14,444 (2020: £7,229) on behalf of the Charity. At the year end, £nil (2020: £nil) was outstanding.

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The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2021

16 Related party transactions (continued)

In order to optimise cash management efficiency, the current accounts of the Charity and the Royal Academy and its subsidiary undertakings are pooled, such that overnight all cleared debit and credit balances on the current accounts of these entities are set off into a single Royal Academy account. The debtor and creditor balances between each of the entities in this pooling group at the year end in part reflects this pooling arrangement.

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