OpenCharities

This text was generated using OCR and may contain errors. Check the original PDF to see the document submitted to the regulator.

2022-08-31-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 2022

The Friends of the Royal Academy Reference and Administrative Information

Patron

HRH The Duchess of Cornwall (until becoming Her Majesty The Queen Consort on 8 September 2022)

Trustees

Clive Humby (Chairperson) Nigel Abbas Verity Harding Siobhan Moriarty‐MacDonnell Andrea O'Keeffe (Treasurer) Richard Philipps Peter Randall‐Page RA Oliver Rawlins (resigned 19 September 2021) Axel Rüger

Company Secretary

Benedict Anstey

Auditors

Moore Kingston Smith LLP 6th Floor 9 Appold Street London EC2A 2AP

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

Page: 1

The Friends of the Royal Academy (A Company Limited by Guarantee) Trustees’ Report For the year ended 31 August 2022

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.

Page: 2

The Friends of the Royal Academy (A Company Limited by Guarantee) Trustees’ Report For the year ended 31 August 2022

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 2022 Trustees’ Report. Given that the Charity’s donation has this year provided nearly 26% (2021: 39%) 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 2022/23 financial year are as follows:

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.

In September 2022, the Charity announced that its Young Person category of membership was to be extended, such that people up to the age of 35 can benefit from a reduced rate and other events tailored to this demographic. This membership category was previously available up to the age of 25. This change is part of a wider Royal Academy initiative to attract younger people to visit the Royal Academy to experience the art on display and to encourage a lifetime habit of visiting visual art.

Page: 3

The Friends of the Royal Academy (A Company Limited by Guarantee) Trustees’ Report For the year ended 31 August 2022

FINANCIAL REVIEW, ACHIEVEMENTS AND PERFORMANCE

Financial review

During the year, the Charity received total income of £12,596,802 (2021: £12,723,673), including membership income and Gift Aid of £12,532,553 (2021: £12,022,318) from a total membership of 80,003 (2021: 79,976) Friends.

After expenditure of £1,439,515 (2021: £1,579,164) and a £57,967 (2021: £696,014) donation to the Royal Academy Coronavirus Emergency Support Fund, net income amounted to £11,099,320 (2021: £10,448,495).

It is the practice of the Board to donate to the Royal Academy income received after the deduction of expenditure, with the objective to increase the net contribution year on year.

In March 2019 the Board resolved to donate to the Royal Academy Trust any legacy income received by the Charity to be held in unrestricted funds to provide future support to the Royal Academy.

At its December 2020 meeting, the Board resolved to donate legacy income received by the Charity for the two financial years to 31 August 2022 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 (2021: £nil). The Board does not recommend any transfer to or from reserves (2021: £nil).

Achievements and performance

We closed the year with 80,003 Friends, only marginally up from last year’s closing number of 79,976. Just over 8,300 new Friends joined in the year (2021: 6,400), despite the continued impact of the pandemic, particularly in the period to early January 2022. The annual renewal rate was just under 90%. The renewal rate was nearly 9% better than the previous year, which had long periods of closure and disruption due to the pandemic, and 6% better than the year to 31 August 2020, which was impacted by the pandemic for less than half the financial year. The renewal rate was also higher than the 87% achieved in the year to 31 August 2019, the last full financial year before the pandemic, albeit we closed that year with 92,273 Friends.

Both the number of acquisitions and the renewal rate were broadly in line with expectations and represent an encouraging outcome given the continued impact of the pandemic during this period.

Following the reopening to the public in May 2021, with the closures and unprecedented uncertainty that followed due to the pandemic, focus was centred on building back visitor confidence across all audiences, including Friends; on driving return visits to the Royal Academy and encouraging existing Friends to renew and new Friends to join by means of co‐ordinated loyalty, commercial, and campaign marketing.

Alongside the retention of existing Friends, a key focus for this year has been establishing the groundwork for future growth and longer‐term audience development and diversification. As the broader leisure market continues to change, and with pressure on discretionary spend choices ever greater, the future success of the Friends membership is dependent on anticipating and optimising audience appetite. Research of market demand resulted in recommendations, subsequently approved by the Board, to extend the Young Person category of membership up to the age of 35, having been up to 25 previously. This change which came into effect in September 2022 is part of a wider Royal Academy initiative to encourage younger people to visit the Royal Academy, which additionally includes offering half‐price tickets for adults up to the age of 25.

Page: 4

The Friends of the Royal Academy (A Company Limited by Guarantee) Trustees’ Report For the year ended 31 August 2022

Continued efforts to enhance customer service, data operations, insight and CRM delivered a range of improvements to transactional efficiency for Friends and is creating new opportunities for income.

The previous financial year had necessitated focus on more purely philanthropic motivations for remaining or becoming a Friend. For this and the next financial year, greater emphasis has and will be given to the consistently excellent quality of the Royal Academy’s exhibition and other programme of events and the Friends’ membership as a means of accessing and supporting exceptional programming of lesser known artists, as well as established names. As the Royal Academy continues its commitment to more inclusive and non‐traditional programming, the support of established Friends can be combined with the development of new groups and age bands.

Total membership income and Gift Aid for the year of £12,532,553 represented an increase of just over 4% on the previous year (2021: £12,022,318), which includes the impact of a small price increase in February 2022. 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) was £11,099,320; over 6% up on the previous year (2021: £10,448,495).

In making a donation of £11,099,320 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 Royal Academy 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 2022 of £115,734 (2021: £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 the pandemic. Following the Covid‐19 restrictions, the ability to drive a return of visitors is key both to the Charity and the Royal Academy. Processes regarding marketing and stakeholder engagement are under scrutiny, particularly given the risk of the “cost of living crisis” reducing potential audiences. 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

Page: 5

The Friends of the Royal Academy (A Company Limited by Guarantee) Trustees’ Report For the year ended 31 August 2022

have technically abated; 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’ visitor experience and periodic Friends membership structure and pricing reviews; 2) continuous development and enhancement of software, with a focus on data protection; and 3) internal tax compliance controls and procedures, together with advice from external tax advisors on technical issues and the impact of any changes in legislation. In direct response to the pandemic, engagement through e‐mails and the provision of digital content, including virtual exhibition tours, has been significantly enhanced.

Statement of trustees’ responsibilities

The trustees (who are also directors of The Friends of the Royal Academy for the purpose of company law) are responsible for preparing the trustees’ report and the financial statements in accordance with the applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Company law requires directors to prepare financial statements for each financial year which give a true and fair view of the state of the affairs of the charitable company and of the incoming resources and application of resources, including the income and expenditure of the charitable company for that period. In preparing these financial statements, the directors are required to:

The trustees are 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 Companies Act 2006. They are also responsible for safeguarding the assets of the charity and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Page: 6

The Frfends of the Royal Acaden IA Company Limited by Guarantee) Trustee< Report For the year ended 31 August 2022 Audlt Inl•)rn)atlon So far as each of the trustees at the time the trustee5' report is approvèd is awarè= there is no relevant Snfomiation of which the auditors are unaware- and they have taken all rdevant steps they ought to have taken to make themselves aware of any relevant audit Information and tr) establish that the auditofs are aware of that informatlon. Auditors A resolution to reappolnt Moore Kingston Smith LLP as auditors will be put to the members at the Annual General Meeting. IL LL This report was approved by the trustees on . . and si8ned on its behalf. bv- Cll¥e Hymby Chalrper50n Page.. 7

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 2022 which comprise the Statement of Financial Activities, the Balance Sheet, the Cash Flow Statement and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 "The Financial Reporting Standard Applicable in the UK and Republic of Ireland" (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 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 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.

Page: 8

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:

Matters on which we are required to report by exception

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

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

Responsibilities of trustees

As explained more fully in the 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.

Page: 9

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:

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.

Page: 10

The Friends of the Royal Academv Independent Auditors. Report to mernbe￿ of The Fr•ends of the Royal Academy {continued) Explanation as to what extent the •utht Twa5 ¢onsidered ¢apble of ¢letertiwd wre8ylarltle¥ Indudln8 Ivaud Icontln¥¢dl The objectives of ow audit in respect of fraud are to identify and asse￿ the risks of material misstatement of the financial statements due to fraud.. to obtain sufficient appropriate audit evidence re8ardinE the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks.. and to respond appropn"ately to instances of fraud or suspected fraud identified during the audit. However, the primary responsibility for the prevention and detection of fraud rests with both management and those charged wsth 8o¥ernan¢e ofthè chantable company. Our approath was as follows: we obtained an understandir8 of the legal and regulatory requirernents applicable to the tharitable company and cOn￿dered that the most Si8nrficant arè the Companies Art 21X)6. the Charities Act 2011. the Charity SORP. and UK financial reporting standards as issued by the Finanaal Reporting Council,. we obtained an understsnding of how the tharitsble company complies with these requirements bv discussions with mana8ement and those charged governance.. we assessed the risk of material misstatement of the financial Statements, indudin8 the risk of material mi$5tatement due to fraud and how it mht occur, by hokling discuss1c￿$ with mana8ement and those charged with governance: • we inquired of management and those thar8ed with governance as to any known Instances of n(￿- compliance or suspected non-complian￿ wth law5 and re8ulations.' based on this understsndin& we designed specrfic appropriate audit procedure5 to identify instances of non- Complian￿ with laws and regulation5. This included making enquiries of management and those chafged with governance and obtainin8 additional ¢(roborative evidence as req￿red. There are Inherent limitations in the audit procedures desuibed above. We are less likely to become aware of Istances of non-compliance laws and regulation5 that are not dosety ￿lated to events and transactions reflected in the financial statements. Ajso. the risk of not detectin8 a material misststement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may In¥0￿e deliberate concealrnent bv, for example, forgery or intentional misrepresentations. or through Collusion. Use ol our report This report Is made solely to the tharitable companvs member5, as a body, in accordance with Chapter 3 of Part 16 of the Cornpanie5 Act 2Cth. Our audtt work has been undertaken so that we might state to the companrfs members those matters we are required to state to them in an auditors, ￿pOrt and for other purpose. To the fullest extent permitted by law, we do not accept or assume reswnsibility to any party other than the charitable company and Charitable Company's members as a body. for our audit work. for this report, or for the opinions we have fornied. Andrew*l¢kland (Senlor StstuttryAUdlt￿> for and on behalf of Moore Kirt8Ston smith LLP. st3t￿oryAUdItOr 6th Floor 9 Appold Street London EC2A 2AP Date: Deu 2oZZ Pa8e.' 11

The Friends of the Royal Academy Statement of Financial Activities

(including an income and expenditure account) For the year ended 31 August 2022

Note
Income from:
Donations and legacies
Charitable activities
4
Other income
Total income
Expenditure on:
Charitable activities
Members' activities
5
Donation to The Royal Academy of Arts
6
Total expenditure
Net income / (expenditure)
7
Total funds brought forward
Total funds carried forward		 Unrestricted
funds
2022
£
58,624
12,532,553
5,625
12,596,802
(1,439,515)
(11,157,287)
(12,596,802)
‐
115,734
115,734		 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

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.

Page: 12

The Frlends of the Royal A&￿emY Balance Sheet a5 at 31 August 2022 2012 2021 Current assets Oebtors li 437 239,044 Current Ilabllltles Credstors- amounts falling due within one year 12 125170J) 1123,3101 Total assets les5 trf•l liab511tles 115.734 115.734 The fvnd5 of the Charlty: Unrestricted 115,734 IIS.734 Total funds 115,734 IIS.734 The notes on pages 14 to 20fomi part of these finantial statements. Approved and authorised for issue by the Board on..... aive Humby Company No.. 01291535 Page.. 13

The Friends of the Royal Academy Statement of Cash Flows

For the year ended 31 August 2022

Note
Cash (used in) / provided by operating activities
13
Net cash used in investing activities
Net cash used in financing activities
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		 2022
£
‐
‐
‐
‐
‐
‐		 2021
£
‐
‐
‐
‐
‐
‐

Page: 14

The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2022

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 primarily to 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 consider that there are no material uncertainties about the Charity's ability to continue as a going concern. The Charity therefore continues to adopt the going concern basis in preparing its financial statements.

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.

Page: 15

The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2022

2 Summary of significant accounting policies (continued)

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

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.

Page: 16

The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2022

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.

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		 2022
£
10,359,022
2,173,531
12,532,553		 2021
£
10,189,031
1,833,287
12,022,318

Membership income relates to annual amounts paid to become a "Friend" of the Charity. Total membership as at 31 August 2022 was 80,003 Friends (2021: 79,976 Friends).

Page: 17

The Friends of the Royal Academy Notes to the Financial Statements

For the year ended 31 August 2022

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		 2022
£
383,552
233,222
388,322
157,185
171,198
13,400
488
92,148
1,439,515		 2021
£
598,875
194,497
489,648
33,217
203,365
13,400
397
45,765
1,579,164

6 Donation to the Royal Academy of Arts

Donations of £11,157,287 (2021: £11,144,509) include £57,967 (2021: £696,014) 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		 2022
£
13,400
488
2022
£
334,023
27,501
22,028
‐
383,552		 2021
£
13,400
397
2021
£
376,720
38,448
32,033
151,674
598,875

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 (2021: 15).

In 2021, the Charity was recharged £151,674 in redundancy costs, of this, £102,629 was related to ex‐gratia payments. These recharges arose from a restructuring in 2021 and were accounted for on an accruals basis. There were no such costs in 2022.

No employees earned more than £60,000 in the year (2021: 1). In 2021, the employee was in the band of £60,000 to £69,999 and had pension contributions of £1,328.

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

Page: 18

The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2022

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 (2021: £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		 2022
£
1,518
246,433
107,544
12,942
368,437		 2021
£
453
81,635
142,244
14,712
239,044

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 R.A. Enterprises Limited
Taxation
Other creditors
Accruals
Total		 2022
£
25,673
139,526
71,345
2,754
13,405
252,703		 2021
£
30,992
‐
92,075
‐
243
123,310

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
Balance at 31 August		 2022
2021
£
£
‐
6,292
‐
(6,292)
‐
‐

Page: 19

The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2022

13 Notes to the statement of cash flows

Net movement in funds:
Adjustments for:
‐ (Increase) / decrease in debtors
‐ Increase / (decrease) in creditors
Net cash used in / provided by operating activities
Reconciliation of net movement in funds to net cash flow from
operating activities:		 2022
£
‐
(129,393)
129,393
‐		 2021
£
‐
51,966
(51,966)
‐

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		 2022
£
‐
2022
£
247,951
181,358		 2021
£
15,845
2021
£
82,088
31,235

16 Related party transactions

During the year the Charity donated £11,157,287 (2021: £11,144,509) to the Royal Academy and reimbursed expenditure of £554,750 (2021: £802,240), including staff costs recharged of £383,552 (2021: £598,875) and facilities charges of £171,198 (2021: £203,365) for the Charity's use of Keeper's House, being £153,000 (2021: £175,000) for rent and £18,198 (2021: £28,365) for utilities. At the year end, £246,433 was owed and included within debtors (2021: £81,635).

During the year the Charity purchased £388,322 (2021: £489,648) 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 £8,362 (2021: £14,444) on behalf of the Charity. At the year end, £139,526 (2021: £nil) was outstanding.

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.

Page: 20