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2023-08-31-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 2023

The Friends of the Royal Academy Reference and Administrative Information

Patron

Her Majesty The Queen Consort

Trustees

Clive Humby OBE (Chairperson) (resigned 27 March 2023) Siobhan Moriarty-MacDonnell (Chairperson from 27 March 2023) Nigel Abbas Beatrice El-Hage (appointed 12 September 2023) Verity Harding (resigned 12 September 2023) Katherine Jones RA (appointed 12 September 2023) Philip Long (appointed 12 September 2023) Fiona Mahon (appointed 12 September 2023) Andrea O'Keeffe (Treasurer) Richard Philipps (resigned 12 September 2023) Peter Randall-Page RA (resigned 12 September 2023) Axel Rüger Elle Todd (appointed 12 September 2023)

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 2023

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. The Charity’s objects are to support the work of two other charities: 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 Royal Academicians, who are appointed by the Royal Academy. The Secretary and 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 (company) 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 (although a member of the Board does not need to be a Charity Member).

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

The Board convenes regular meetings to discuss the strategic, financial, and operational performance of the Friends membership scheme and meets 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.

In September 2023, five new directors joined the Board. The induction pack provided to these new directors (and shared with continuing directors) was updated and made more comprehensive to provide a broader overview of the Royal Academy structure, strategy, and areas of activity. At its meeting on 12 September 2023, the Board received presentations on the governance of the Royal Academy as a whole, audience development, the creation and history of the Charity, and the role of the Charity in that context.

The Charity Chair meets regularly with key Royal Academy staff including the Director and Deputy Director of Audience and Experience and the General Counsel, who is the Charity’s Company Secretary, to plan for Board meetings and set agendas.

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.

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The Friends of the Royal Academy (A Company Limited by Guarantee) Trustees’ Report For the year ended 31 August 2023

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. The Charity’s activities include ensuring sound financial control; clear strategic direction; and the targeting of funds to improve the Friends experience and public benefit.

Public benefit and impact

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 2023 Trustees’ Report. Given that the Charity’s donation has this year provided nearly 29% (2022: 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 all that the Royal Academy has to offer. Friends are also kept up to date on news of the Royal Academy and the broader cultural scene via the quarterly RA Magazine and through regular email communications, tailored and targeted to individual Friends via Customer Relationship Management (“CRM”).

The Friends also offer a Young Person category of membership at a lower rate to enable younger people (up to 35) to access the benefits, including invitations to events tailored towards this younger demographic.

Aims for the coming year

The aims and objectives for the 2023/24 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.

Page: 3

The Friends of the Royal Academy (A Company Limited by Guarantee) Trustees’ Report For the year ended 31 August 2023

FINANCIAL REVIEW, ACHIEVEMENTS AND PERFORMANCE

Financial review

During the year, the Charity received total income of £12,024,165 (2022: £12,596,802), including membership income and Gift Aid of £11,984,676 (2022: £12,532,553) from a total membership of 77,775 (2022: 80,003) Friends.

After expenditure of £1,408,003 (2022: £1,439,515), a donation of £18,101 (2022: £nil) to the Royal Academy Trust and a £nil (2022: £57,967) donation to the Royal Academy Coronavirus Emergency Support Fund, net income amounted to £10,598,061 (2022: £11,099,320).

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 unrestricted legacy income received by the Charity (up to £100,000 per legacy) to be held in unrestricted funds to provide future support to the Royal Academy.

At its December 2020 meeting, the Board varied its March 2019 resolution, for the two financial years to 31 August 2022, to direct this legacy income to the Royal Academy Coronavirus Emergency Support Fund, rather than to the Royal Academy Trust. This resolution has now expired, and the previous arrangement (per the March 2019 resolution) has been reinstated.

The net income for the current year has been donated to the Royal Academy.

The net movement of funds for the year was £nil (2022: £nil). The Board does not recommend any transfer to or from reserves (2022: £nil).

Achievements and performance

The Charity closed the year with 77,775 Friends, just under 3% down from last year’s closing number of 80,003. Just over 8,500 new Friends joined in the year (2022: 8,300). The annual renewal rate was just under 87%, 3% lower than the previous year. The renewal rate was in line with the 87% achieved in the year to 31 August 2019, the last full financial year before the pandemic, albeit the Charity 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 as the Royal Academy continues to rebuild audiences in a significantly changed post-pandemic market and landscape. In the previous financial year, the Charity focused on its core audience; and this year on new, younger, and more diverse groups with whom the Royal Academy is keen to connect.

The nature of Friends membership scheme numbers is that the rate of annual churn means new acquisitions are always required to maintain a consistent level overall, upon which further growth is then built. Annual churn is inevitably likely to be higher at the point of renewal 12 months after increases driven by access to a specific exhibition, either for reasons of priority access or to enable multiple visits. With a significant increase in memberships, particularly Young Friends memberships, in advance of the Marina Abramovic exhibition which opened early in the 2023/24 financial year (Autumn 2023), the focus will be on retaining these in late Summer/early Autumn 2024 for which planning is already underway.

Thanks to the funding of the Bloomberg Digital Accelerator Fund to the Royal Academy, we have also been able to introduce several new features that improve digital access and user experience, particularly on

Page: 4

The Friends of the Royal Academy (A Company Limited by Guarantee) Trustees’ Report For the year ended 31 August 2023

mobile devices, for Friends. These are in line with the standard expectations of membership schemes such as ours and developing functionality will remain an ongoing need.

Bloomberg funding has also enabled the seasonal calendar of online and hybrid events, courses, and classes (including the monthly Sketch Club ) which all add to the menu of Royal Academy programming available to Friends. Support and attention have also been given to the catering and hospitality areas, with sustainability and wider menu options both priorities for Friends, as well as the perennial challenges of pricing.

For the coming financial year, combining as it does traditional programming (for example, Impressionists on Paper ) with lesser-known names to the Friends or more challenging, different subject matter for a traditional audience (including Marina Abramovic and Entangled Pasts ), Friends marketing will concentrate on those areas of most appeal and interest to our different Friends profiles as understood via CRM, and tailor our campaigns accordingly. As the Royal Academy continues its essential commitment to more inclusive and representative programming, the support of established Friends can be combined with the development of new groups and age groups in this way.

Total membership income and Gift Aid for the year of £11,984,676 represented a decrease of just over 4% on the previous year (2022: £12,532,553), which includes the impact of a small annual price increase in both 2023 and 2022.

The net income for the year before the donation to the Royal Academy (but after donations of legacy income to the Royal Academy Trust and Royal Academy) was £10,598,061; over 4.5% down on the previous year (2022: £11,099,320).

In making a donation of £10,598,061 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 2023 of £115,734 (2022: £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 15 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:

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The Friends of the Royal Academy (A Company Limited by Guarantee) Trustees’ Report For the year ended 31 August 2023

1) the risk of a reduction in Friends membership whether due to price sensitivity, the changing popularity of the exhibition programme, demographic factors, or economic and behavioural trends in the aftermath of the pandemic. Processes regarding marketing and stakeholder engagement are under scrutiny, particularly given the ongoing impact of the “cost of living crisis” reducing potential audiences. Furthermore, post the pandemic, Friends’ propensity to visit the Royal Academy, or London more generally, has shifted compared to previously seen patterns of behaviour;

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 advisers on technical issues and the impact of any changes in legislation.

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 Friends of the Royal Aodemy (A Company Umlted by Guarantee) Tntstee< Report For the year ended 31 Awist 2023 Audlt Infomiatlon So far as each of the trustees at the time the trustees, report is approved is aware: there is no relevant infomation of whKh the auditors are unaware: and they have taken all relevant steps they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that infomiation. Auditors A resolution to reappoint Moore Kingston Smith Lip as auditors will be put to the members at the Annual General Meeting. This report was approved by the trustees on.........-.................... and &gned on its behalf. bv: Slobhan Morf4rty*lacDonnell Chairperson 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 2023 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.

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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:

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

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

The objectives of our audit in respect of fraud are to identify and assess the risks of material misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses to those assessed risks; and to respond appropriately 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 with governance of the charitable company.

Our approach was as follows:

There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

Use of our report

This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company�s members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility 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 formed.

Andrew Stickland (Senior Statutory Auditor)

for and on behalf of Moore Kingston Smith LLP, Statutory Auditor

6th Floor 9 Appold Street London EC2A 2AP

Date: 13 December 2023

Page: 11

The Friends of the Royal Academy Statement of Financial Activities

(including an income and expenditure account) For the year ended 31 August 2023

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
2023
£
28,655
11,984,676
10,834
12,024,165
(1,408,003)
(18,101)
(10,598,061)
(12,024,165)
-
115,734
115,734		 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

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 Friends of the Royal Academy Balance Sheet as at 31 Au8USt 2023 2023 2022 Note Current assets Debtors li 315,554 368,437 rrent Ilabllftles Creditors- amounts falllng due within one year I199￿20) 1252,7031 Total assets less totsl Ilabllltles 115.734 {13,659) The fvnds of tho Charlty: Unrestricted 115,734 115.734 Total funds 115.734 115.734 The notss on pages 14 to 20 forni part of these financial statements. 13*L Approved and authorised for issue by the 8oard on................................................. Slobhan Morfarty-MacDonnell Company No.. 01291535 Page- 13

The Friends of the Royal Academy Statement of Cash Flows For the year ended 31 August 2023

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		 2023
£
-
-
-
-
-
-		 2022
£
-
-
-
-
-
-

Page: 14

The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2023

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.

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The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2023

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 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:

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. 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.

Page: 16

The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2023

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 the 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		 2023
£
10,104,000
1,880,676
11,984,676		 2022
£
10,359,022
2,173,531
12,532,553

Membership income relates to annual amounts paid to become a "Friend" of the Charity. Total membership as at 31 August 2023 was 77,775 Friends (2022: 80,003 Friends).

Page: 17

The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2023

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		 2023
2022
£
£
443,018
383,552
232,137
233,222
299,429
388,322
163,757
157,185
180,676
171,198
15,348
13,400
500
488
73,138
92,148
1,408,003
1,439,515

6 Donation to the Royal Academy of Arts

Donations of £10,598,061 (2022: £11,157,287) include £nil (2022: £57,967) for the Royal Academy’s Coronavirus Emergency Support Fund. In 2020, the trustees 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
Analysis of staff costs
Wages and salaries
Social security costs
Employers pension contributions
Total		 2023
£
15,348
500
2023
£
383,248
31,924
27,846
443,018		 2022
£
13,400
397
2022
£
334,023
27,501
22,028
383,552

8 Analysis of staff costs

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 (2022: 15).

No employees earned more than £60,000 in the year (2022: none).

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 2023

9 Trustees' remuneration, benefits and expenses

Axel Rüger, who is a trustee of the Charity, is paid remuneration by the Royal Academy, for which no recharge is made to the Charity. It is not possible to make a reasonable apportionment of his remuneration in respect of his service to the Charity. Accordingly, the disclosures regarding remuneration for key management personnel of the Charity include no amounts in respect of Axel Rüger. Remuneration excluding pension contributions paid by the Royal Academy to Axel Rüger was £230,134 (2022: £212,165). In addition, he received pension contributions totalling £20,921 (2022: £19,124).

The Charity's other 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 (2022: £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		 2023
£
6,028
192,940
103,626
12,960
315,554		 2022
£
1,518
246,433
107,544
12,942
368,437

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

Creditors - amounts falling due within one year
Trade creditors
Amounts due to R.A. Enterprises Limited
Taxation
Other creditors
Accruals
Total		 2023
£
19,596
119,658
44,035
-
16,531
199,820		 2022
£
25,673
139,526
71,345
2,754
13,405
252,703

Page: 19

The Friends of the Royal Academy Notes to the Financial Statements For the year ended 31 August 2023

13 Notes to the statement of cash flows

Net movement in funds:
Adjustments for:
- Decrease / (increase) in debtors
- (Decrease) / increase in creditors
Net cash (used in) / provided by operating activities
Financial instruments
Financial assets measured at amortised cost
Financial liabilities measured at amortised cost
Reconciliation of net movement in funds to net cash flow from
operating activities:		 2023
£
-
52,883
(52,883)
-
2023
£
198,968
155,785		 2022
£
-
(129,393)
129,393
-
2022
£
247,951
181,358

14 Financial instruments

15 Related party transactions

During the year the Charity donated £10,598,061 (2022: £11,157,287) to the Royal Academy and reimbursed expenditure of £623,694 (2022: £554,750), including staff costs recharged of £443,018 (2022: £383,552) and facilities charges of £180,676 (2022: £171,198) for the Charity's use of Keeper's House, being £151,000 (2022: £153,000) for rent and £29,676 (2022: £18,198) for utilities. At the year end, £192,940 was owed and included within debtors (2022: £246,433).

During the year the Charity purchased £299,429 (2022: £388,322) 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 £11,123 (2022: £8,362) on behalf of the Charity. At the year end, £119,658 (2022: £139,526) 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