## **THE LOAN FUND FOR MUSICAL INSTRUMENTS**
**TRUSTEES’ REPORT AND FINANCIAL STATEMENTS**
**FOR THE YEAR ENDED 31 MARCH 2022**
## **The Loan Fund for Musical Instruments**
## _**Vice-Presidents**_
DAME JANET BAKER, CH, DBE DANIEL BARENBOIM LEVON CHILINGIRIAN, OBE NICHOLAS DANIEL SIR ANDREW DAVIS, CBE
SIR ROGER NORRINGTON, CBE
SIR SIMON RATTLE, CBE
## _**Trustees**_
THE ARTS COUNCIL OF ENGLAND THE MUSICIANS’ UNION
THE ROYAL SOCIETY OF ARTS RODNEY SLATFORD, OBE, FRNCM, HON RCM THE WORSHIPFUL COMPANY OF MUSICIANS HELEN FAULKNER CATHERINE YATES
**Registered Charity Number** 277909
Page 1
**THE LOAN FUND FOR MUSICAL INSTRUMENTS**
## **Executive Committee of the Trustees**
Helen Faulkner, Chairman & Trustee
Chris Walters – Representative, Musicians’ Union, Trustee
Levon Chilingirian OBE – Representative, Worshipful Company of Musicians, Trustee Rodney Slatford, OBE, FRNCM, Hon. RCM, Trustee Catherine Yates (appointed 14 February 2022)
## _**Secretary to the Trustees**_
Hugh Lloyd
**Independent Examiner** Cara Turtington FCA DChA Saffery Champness LLP 71 Queen Victoria Street London EC4V 4BE
## **Bankers**
## **Investment managers**
Child & Co Bankers Cazenove Capital Management 1 Fleet Street Schroder & Co. Ltd London EC4Y 1BD 1 London Wall Place London EC2Y 5AU
Website: www.lfmi.org.uk
1, Speed Highwalk, Barbican, LONDON, EC2Y 8DX
Page 2
**THE LOAN FUND FOR MUSICAL INSTRUMENTS**
## **Forty second Annual Report of the Executive Committee of the Trustees For the year ended 31 March 2022**
The Trustees present their Annual Report for the year ended 31 March 2022, together with the financial statements of the Trust.
The financial statements comply with current legal requirements, the Charities Act 2011, Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102).
## **Constitution and Aims**
The sole aim of the Fund, set up under a Trust Deed in 1979, is to help talented young professional musicians to purchase instruments of the quality they need. Although the Fund is now widely known among such players, additional publicity for its activities is always very welcome.
## **Organisation**
The Fund is administered through the Executive Committee. Each of the four founding organisations is entitled to appoint a trustee. These organisations are: The Worshipful Company of Musicians, The Musicians’ Union, The Arts Council and the Royal Society of Arts **.** With the exception of the Arts Council of England, which has resiled from appointing such a representative and the Royal Society of Arts, the remaining founding trustees have each nominated an individual as a trustee. The power to appoint new trustees is vested in the existing trustees at the time.
All trustee representatives or individual trustees are members of the Executive Committee, which meets three times a year. The Trust is managed through the offices of the Worshipful Company of Musicians.
## **Trustees**
Catherine Yates was appointed as a trustee on 14 February 2022 and attended her first meeting in June 2022.
As at the date of the signing of the 2022 Report and accounts, the Executive Committee was as shown on page 2.
## **Trustees' responsibilities in relation to the financial statements**
Law applicable to charities in England and Wales requires the trustees to prepare financial statements for each financial year which give a true and fair view of the charity's financial activities during the year and of its financial position at the end of the year. In preparing those financial statements, the trustees are required to:
- select suitable accounting policies and then apply them consistently;
- observe the methods and principles in the Charities SORP (FRS 102);
- make judgements and estimates that are reasonable and prudent;
- state whether applicable accounting standards and statements of recommended practice have been followed subject to any departures disclosed and explained in the financial statements; and
- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the charity will continue in business.
Page 3
**THE LOAN FUND FOR MUSICAL INSTRUMENTS**
## **Annual Report continued**
The trustees are responsible for keeping accounting records which disclose with reasonable accuracy at any time the financial position of the charity and enable them to ensure that the financial statements comply with the Charities Act 2011. 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.
## **Reserves and Investment Policy**
Reserves are invested in the Cazenove Charity Multi-Asset Fund. In normal times, the trustees endeavour to maintain a balance between invested funds, on which they aim to obtain a market return, and funds lent to borrowers where the interest rate will be below the market rate, so that there are sufficient funds to make appropriate loans and grants, while maintaining the value of the portfolio so that it can be available for future generations. In addition the Trustees are prepared to add 1% of any capital gains of the portfolio to the money available for grants. In the short term, the Fund has resources to meet applications for loans and satisfy most of the appropriate applications for grants. The Loan Fund does not normally own instruments, but following the end of a 10 year part-ownership scheme which the player did not want to continue, it currently has a cello by Giovanni Grancino in New York seeking a buyer.
During 2020-21 the trustees suspended making any new loan or grant commitments until the effects of the Covid-19 pandemic on the value of the Fund’s investments could be assessed. The value of the investments had recovered sufficiently for grant and loan applications to be considered again in February 2021 and during 2021-22 they have returned to normal levels of funding commitments. Grants totalling £53,685 were awarded to 21 individuals (2020-21, £28,052 to 11 individuals).
By the end of the year the value of the Fund’s investments, managed by Cazenove, had recovered to £1,533,965 (2021, £1,444,747) and the Fund’s total net assets stood at £1,917,294 (£1,876,429). Total income was £62,556 (£61,165).
## **Risk Management**
The Fund does not regard itself as exposed to any material risks.
## **Public Benefit**
The Executive Committee has addressed the matter of the public benefit provided by the Fund, and believe that this is inherent, in that, subject to the rules, any professional musician may apply to the Fund for help in obtaining a suitable instrument with which to pursue his or her career.The financial help given to professional musicians to enable them to purchase high quality instruments helps to improve the standard of public concerts.
## **Review of activities**
The Fund's main activity is the lending of money to young professional musicians under the age of thirty six, for the purchase of an appropriate and specific instrument, over a period of up to five years, currently at 2.5% APR. Repayments are made monthly. Usually up to about 70 % of the cost of the agreed instrument is lent. Applicants have to give references, as well as demonstrating their professional career and their ability to repay. Most of the applications are in respect of string instruments, where the amount borrowed has normally been between £5,000 and £30,000. There are some fine contemporary makers and the Fund is keen to encourage British luthiers.
In addition the Fund considers applications for grants of up to one-third of the value of an instrument costing not more than £15,000 to students who have reached the third year of their full-time studies or until two years after graduating. Prudent management of the Fund’s financial resources usually allows annual grant offers of £45,000, but as reported above, from March 2020 until February 2021 the Fund decided not to make offers of grants and loans until the financial situation was clearer.
Page 4
**THE LOAN FUND FOR MUSICAL INSTRUMENTS**
## **Annual Report continued**
Applicants apply on a standard form, from which the Committee reaches a decision. During the year there were 3 applications for loans and 31 applications for grants. In some cases it is felt that a loan is more appropriate than a grant and 4 loan offers were made. Not all grants and loans are taken up and there is sometimes a considerable gap between an offer being made and a grant or loan being paid.
The Grant Scheme was introduced in 2004 and to date over £800,000 has been paid out. When the scheme was first introduced, concern was expressed in the Executive Committee as to whether all the students we helped would go on to play professionally. The three research exercises we have carried out on grantees since 2004 have shown that the majority do. In the extensive survey we carried out in 2016, the 148 grantees from 2005-2012 were identified on the internet and contacted. 128 replied to say that they were still in the music business, most with mixed careers involving playing and teaching.
Although the Fund is seldom able to award the total amount requested, and indeed encourages applicants to look elsewhere as well, we believe the Fund’s imprimatur is a valuable recommendation to other funding sources. In making loans, in addition to weighing the suitability of the instrument under consideration, the Executive Committee, mindful of its responsibilities not to overburden applicants by adding onerous interest to student debt payments, has maintained the rate at 2.5% APR. Probably as a result of the high level of debt held by musicians leaving their conservatoires, the size, although not the number, of individual loans applied for has reduced in recent years. Most are in the area of £10,000.
In addition to resuming awards of grants and loans, individuals with outstanding loans had been offered the option of making reduced payments or taking payment holidays until they were able to resume paid work. A number of people took up this offer and everyone with an outstanding loan has honoured their repayment commitments, either as originally scheduled or under subsequently agreed terms,
During the year the trustees worked on a formal Equality, Diversity and Inclusion policy. They are grateful to the Musicians’ Union for assistance with this and now have in place a formal policy stating:
LFMI is committed to encouraging equality, diversity and inclusion and opposes all forms of prejudice and discrimination. LFMI seeks to play an active role in creating a more diverse and inclusive music industry. Our aim is to be truly representative of all sections of society in our board of trustees and the musicians we assist.
We are collecting anonymised data from applicants about educational backgrounds and ethnicity. The information collected will be analysed at regular intervals.
Helen Faulkner Chair 31[st] October 2022
Page 5
**THE LOAN FUND FOR MUSICAL INSTRUMENTS**
## **INDEPENDENT EXAMINER’S REPORT TO THE TRUSTEES**
I report to the trustees on my examination of the accounts of the Loan Fund for Musical Instruments (the Trust) for the year ended 31 March 2022.
## **Respective Responsibilities of trustees and examiner**
As the charity trustees of the Trust you are responsible for the preparation of the accounts in accordance with the requirements of the Charities Act 2011 (‘the Act’).
I report in respect of my examination of the Trust’s accounts carried out under section 145 of the 2011 Act and in carrying out my examination I have followed all the applicable Directions given by the Charity Commission under section 145(5)(b) of the Act.
## **Basis of independent examiner’s report**
My examination was carried out in accordance with the general Directions given by the Charity Commission. An examination includes a review of the accounting records kept by the charity and a comparison of the accounts presented with those records. It also includes consideration of any unusual items or disclosures in the accounts, and seeking explanations from you as trustees concerning any such matters. The procedures undertaken do not provide all the evidence that would be required in an audit and consequently no opinion is given as to whether the accounts present a ‘true and fair view’ and the report is limited to those matters set out in the statement below.
## **Independent examiner’s statement**
I have completed my examination. I confirm that no material matters have come to my attention in connection with the examination giving me cause to believe that in any material respect:
1. accounting records were not kept in respect of the Trust as required by section 130 of the Act; or
2. the accounts do not accord with those records; or
3. the accounts do not comply with the applicable requirements concerning the form and content of accounts set out in the Charities (Accounts and Reports) Regulations 2008 other than any requirement that the accounts give a ‘true and fair view’ which is not a matter considered as part of an independent examination.
I have no concerns and have come across no other matters in connection with the examination to which attention should be drawn in this report in order to enable a proper understanding of the accounts to be reached.
Cara Turtington FCA DChA Saffery Champness LLP, Chartered Accountants 71 Queen Victoria Street, London, EC4V 4BE
Date: 2 November 2022
Page 6
**THE LOAN FUND FOR MUSICAL INSTRUMENTS**
## **STATEMENT OF FINANCIAL ACTIVITIES FOR THE YEAR ENDED 31 MARCH 2022**
|**Notes**
**Income**
Donations
Investment income
**2**
Loan interest
**Income for charitable application**
**Expenditure**
Cost of raising funds:
Investment management fees
Charitable activities:
Grants
**3**
Administration expenses
Office expenses
Governance costs
Independent examination
Professional Fees
**Total expenditure**
Recognised gains on investments
**5**
**Net income/(expenditure) and net movement in**
**funds**
Fund balance brought forward at 1 April 2021
**Fund balance carried forward at 31 March 2022**|**Unrestricted Funds**
**2022**
**2021**
**£**
**£**
273
267
59,103
58,281
3,180
2,617
62,556
61,165
3,594
3,258
53,685
28,052
13,430
13,351
878
385
2,060
1,630
227
-
73,874
46,676
52,183
238,192
40,865
252,681
1,876,429
1,623,748
1,917,294
1,876,429|**Unrestricted Funds**
**2022**
**2021**
**£**
**£**
273
267
59,103
58,281
3,180
2,617
62,556
61,165
3,594
3,258
53,685
28,052
13,430
13,351
878
385
2,060
1,630
227
-
73,874
46,676
52,183
238,192
40,865
252,681
1,876,429
1,623,748
1,917,294
1,876,429|
|---|---|---|
|||61,165|
|||3,258
28,052
13,351
385
1,630
-|
|||46,676|
|||238,192|
|||252,681
1,623,748|
|||1,876,429|
The Statement of Financial Activities contains all recognised gains and losses for the year. All activities are continuing
Page 7
**THE LOAN FUND FOR MUSICAL INSTRUMENTS**
## **BALANCE SHEET AT 31 MARCH 2022**
|**Notes**
**Fixed assets investments**
Listed
**5**
Cash
**Current assets**
Musical Instrument – Grancino Cello
**6**
Loans made for Musical Instruments
Cash at bank and in hand
Charities Official Investment Fund
**Current liabilities**
Creditors: Amounts falling due
within one year
Trade creditors
Sundry creditors
**Net current assets**
**Net assets**
**Funds**
Unrestricted|**£**
143,790
125,126
106,526
10,033
385,475
-
2,146
2,146|**2022**
**£**
1,533,965
-
1,533,965
383,329
1,917,294
1,917,294
1,917,294|**£**
143,790
154,002
91,766
47,019
436,577
3,330
1,600
4,930|**2021**
**£**
1,444,747
35|
|---|---|---|---|---|
|||||1,444,782|
|||||431,647|
|||||1,876,429|
|||||1,876,429|
|||||1,876,429|
The financial statements on pages 7 to 12 were approved on behalf of the Trustees by:
Helen Faulkner Chair 31 31st October 2022[st] October 2023
The notes on pages 10 to 12 form part of these financial statements.
Page 8
**THE LOAN FUND FOR MUSICAL INSTRUMENTS**
## **CASH FLOW STATEMENT FOR THE YEAR ENDED 31 MARCH 2022**
|**Net cash (outflow)/inflow from operating**
**activities (see A below)**
**Cash flows from lending activities:**
Issue of new loans to young musicians
Repayment of young musicians’ loans
**(Decrease)/increase in cash and cash**
**equivalents (See B below)**
**A**
**Reconciliation of gain/(loss) for the year**
**to net cash flow**
Net income for the year
Decrease in debtors
(Decrease)/increase in creditors
(Additions) to investments
(Gains)/losses on investments
**Net cash (outflow)/inflow from operating**
**activities**
**B**
**Analysis of changes in cash and cash**
**equivalents**
Balance at 1 April 2021
Net cash (outflow)/inflow
**Balance at 31 March 2022 (See C below)**
**C**
**Cash and cash equivalents**
Cash with brokers
Cash at bank
Charities Official Investment Fund
**Balance at 31 March 2022**|**2022**
**£**
**£**
(51,137)
(14,000)
42,876
28,876
(22,261)
40,865
-
(2,784)
(37,035)
(52,183)
(51,137)
138,820
(22,261)
116,559
-
106,526
10,033
116,559|**2021**
**£**
**£**
17,889
(58,000)
38,939
(19,061)
(1,172)
252,681
-
3,400
-
(238,192)
17,889
139,992
(1,172)
138,820
35
91,766
47,019
138,820|**2021**
**£**
**£**
17,889
(58,000)
38,939
(19,061)
(1,172)
252,681
-
3,400
-
(238,192)
17,889
139,992
(1,172)
138,820
35
91,766
47,019
138,820|
|---|---|---|---|
||||(1,172)|
||||252,681
-
3,400
-
(238,192)|
||||17,889|
||||139,992
(1,172)|
||||138,820|
||||35
91,766
47,019|
||||138,820|
Page 9
**THE LOAN FUND FOR MUSICAL INSTRUMENTS**
**NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2022**
## **1 Accounting policies**
The financial statements have been prepared under the historical cost convention, with the exception of investments which are included at open market value, and in accordance with the Statement of Recommended Practice – Accounting and Reporting by Charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (second edition), and the Financial Reporting Standard applicable in the United Kingdom and Republic of Ireland (FRS 102) and the Charities Act 2011.
The charity constitutes a public benefit entity as defined by FRS 102. The accounts are prepared in £.
The Trustees have assessed whether the use of the going concern assumption is appropriate in preparing these financial statements with respect to a period of at least one year from the date of approval of these financial statements including considering the impact of Covid-19 on the charity’s income, expenditure, investments and reserves; and its beneficiaries. They have concluded that there are no material uncertainties related to events or conditions that may cast significant doubt on the ability of the charity to continue as a going concern.
## **Donations and similar income**
Donations and similar income are included on the basis of amounts receivable in the year.
## **Interest and Investment Income**
Loan repayments are calculated by formula based on rate of interest and constant monthly payments. The interest element of each loan is credited to the accumulated fund as the interest is earned.
Investment income is stated on an accruals basis.
## **Expenditure**
Expenditure is included on an accruals basis.
Costs of raising funds comprise those costs directly attributable to managing the investment assets.
Grants awarded are charged in full to the SOFA when the offer is conveyed to the beneficiary, unless the offer is conditional and therefore recognised as expenditure when the conditions attached are fulfilled.
Grants approved by the trustees but not yet included in expenditure are disclosed in note 7.
## **Taxation**
The charity is a registered charity and is not liable to income tax or corporation tax on its charitable activities.
## **Investments**
Investments are stated at market value. Realised and unrealised gains and losses on investments are recognised in the Statement of Financial Activities in the period to which they relate.
## **Financial instruments**
The charity only has financial assets and financial liabilities of a kind that qualify as basic financial instruments. Basic financial instruments are initially recognised at transaction value and subsequently measured at their settlement value.
Page 10
**THE LOAN FUND FOR MUSICAL INSTRUMENTS**
.
## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2022**
|**2**
**Investment income**
**2022**
**£**
Income from investment portfolio
59,078
Deposit interest on managed funds
25
59,103
**3**
**Grants**
**2022**
**£**
Grants
53,685
During the year grants were made to 21 individuals (2021: 11 individuals).|**2021**
**£**
58,191
90|
|---|---|
||58,281|
||**2021**
**£**
28,052|
## **4 Staff costs and trustees’ remuneration**
The Fund is being administered by The Worshipful Company of Musicians and has no employees (2021: nil).
The trustees, who are the key management personnel, were not paid but they or their representatives were reimbursed expenses of £54 (2021: £nil) during the year. Meeting expenses were incurred totalling £56 (2021: £32).
## **5 Listed investment**
|**2022**
**£**
Market Value 1 April 2021
1,444,747
Additions
37,035
Realised/unrealised investment gains/(losses)
52,183
**Market value 31 March 2022**
1,533,965
**Historical cost 31 March 2022**
1,288,502
At the balance sheet date, the investment portfolio was invested as follows:
**2022**
**£**
UK Unit Trusts
1,533,965
**Market value at 31 March 2022**
1,533,965||**2021**
**£**
1,206,555
-
238,192|
|---|---|---|
|||1,444,747|
|||1,251,605|
|||**2021**
**£**
1,444,747|
|||1,444,747|
At the balance sheet date, 100% of the investment portfolio was invested in Schroder Charity MultiAsset Inc.
Page 11
**THE LOAN FUND FOR MUSICAL INSTRUMENTS**
## **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2022**
## **6 Musical Instrument (Grancino Cello)**
|Cost at 31 March 2021 and 31 March 2022|**£**
143,790|
|---|---|
Since March 2019, the Trustees have been committed to selling the cello and it is expected to raise an amount significantly in excess of its book value. However, given the time it is expected to take to sell such an instrument no increase in value has been recognised in these financial statements.
## **7 Commitments**
At 31 March 2022, the cash at bank, other deposit accounts and cash held by brokers totalling £116,559 are stated before deducting:
- (a) Loans of £8,500 (2021: £21,500) already approved by the trustees but not yet advanced.
- (b) Grants of £22,889 (2021: £23,146) approved by the trustees but not yet paid.
- (c) Applications for loans and grants still awaiting examination.
## **8 Related Party Transactions**
The trustees, who are the key management personnel, were not paid but they or their representatives were reimbursed expenses of £54 (2021: £nil) during the year. Meeting expenses were incurred totalling £56 (2021: £32).
There are no related party transactions requiring disclosure other than the transactions referred to above.
Page 12