## **THE LOAN FUND FOR MUSICAL INSTRUMENTS** **TRUSTEES’ REPORT AND FINANCIAL STATEMENTS** **FOR THE YEAR ENDED 31 MARCH 2023** ## **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, OM 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 Rodney Slatford, OBE, FRNCM, Hon. RCM, Trustee Levon Chilingirian OBE – Representative, Worshipful Company of Musicians, Trustee Catherine Yates ## _**Secretary to the Trustees**_ Hugh Lloyd **Independent Examiner** Alex Spofforth FCA Spofforth Partners Limited Chartered Accountants Byne Cottage, Manley’s Hill Storrington, West Sussex RH20 4BN ## **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 2023** The Trustees present their Annual Report for the year ended 31 March 2023, 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** As at the date of the signing of the 2023 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 own instruments, however it owned a cello by Grancino which was the result of a previous arrangement for part-ownership. This instrument was sold for £211,917 resulting in a net profit over the book valuation of £68,127. Following a suspension of loan and grant-making during the first year of the Covid-19 pandemic, the Fund resumed its activity in 2021-22. Activity has since shown a gradual return to pre-pandemic levels. During 2022-23 the Fund paid grants of £47,955 (2021-22, £53,685). A total of 30 eligible applications were considered for grants of which 23 (2021-22, 21) were successful. 3 loans totalling £50,400 were awarded (2021-22, £14,000 to 3 individuals). By the end of the year the Fund’s investments, managed by Cazenove stood at £1,556,834 (£1,533,965 in 2022). Net assets were £1,858,491 (£1,917,294 in 2022). Total income was £68,298 (£62,556 in 2022). ## **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 original activity was the lending of money to young professional musicians under the age of thirty six, for the purchase of an appropriate and specific instrument. This continues with loans made over a period of up to five years. The interest rate is currently at 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. Page 4 **THE LOAN FUND FOR MUSICAL INSTRUMENTS Annual Report continued** 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. Applicants apply on a standard form, from which the Committee reaches a decision. In some cases it is felt that a loan is more appropriate than a grant. 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. The Fund has in place a formal Equality, Diversity and Inclusion policy. This states that 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 currently looking at a more effective method of collecting and analysing anonymised data from applicants. Helen Faulkner Chair 13[th] November 2023 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 2023. ## **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’). We 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** Our 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** We have completed my examination. We 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. We 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. Spofforth Partners Limited Chartered Accountants Byne Cottage Manley’s Hill, Storrington West Sussex RH20 4BN Page 6 **THE LOAN FUND FOR MUSICAL INSTRUMENTS Date:** ## **STATEMENT OF FINANCIAL ACTIVITIES FOR THE YEAR ENDED 31 MARCH 2023** |**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 (losses)/gains on investments
**5**
Gain on sale of asset - Grancino Cello
**6**
**Net (expenditure)/income and net movement in**
**funds**
Fund balance brought forward at 1 April 2022
**Fund balance carried forward at 31 March 2023**|**Unrestricted Funds**
**2023**
**2022**
**£**
**£**
230
273
65,142
59,103
2,926
3,180
68,298
62,556
3,573
3,594
47,955
53,685
13,790
13,430
909
878
1,200
2,060
1,170
227
68,597
73,874
(126,631)
52,183
68,127
-
(58,803)
40,865
1,917,294
1,876,429
1,858,491
1,917,294|**Unrestricted Funds**
**2023**
**2022**
**£**
**£**
230
273
65,142
59,103
2,926
3,180
68,298
62,556
3,573
3,594
47,955
53,685
13,790
13,430
909
878
1,200
2,060
1,170
227
68,597
73,874
(126,631)
52,183
68,127
-
(58,803)
40,865
1,917,294
1,876,429
1,858,491
1,917,294| |---|---|---| |||62,556| |||3,594
53,685
13,430
878
2,060
227| |||73,874| |||52,183
-| |||40,865
1,876,429| |||1,917,294| 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 2023** |**Notes**
**Fixed assets investments**
Listed
**5**
Cash
**Current assets**
Musical Instrument – Grancino Cello
**6**
Debtors
**7**
Loans made for Musical Instruments
Cash at bank and in hand
Charities Official Investment Fund
**Current liabilities**
Creditors: Amounts falling due
within one year
Sundry creditors
**Net current assets**
**Net assets**
**Funds**
Unrestricted|**£**
-
360
132,050
58,817
111,120
302,347
1,200
1,200|**2023**
**£**
1,556,834
510
1,557,344
301,147
1,858,491
1,858,491
1,858,491|**£**
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| The financial statements on pages 7 to 12 were approved on behalf of the Trustees by: Helen Faulkner Chair 13[th] November 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 2023** ||||**2023**|||**2022**|| |---|---|---|---|---|---|---|---| |||**£**||**£**|**£**||**£**| ||**Net cash inflow/(outflow) from operating**||||||| ||**activities (see A below)**|||60,812|||(51,137)| ||**Cash flows from lending activities:**||||||| ||Issue of new loans to young musicians|(50,400)|||(14,000)||| ||Repayment of young musicians’ loans|43,476|||42,876||| |||||(6,924)|||28,876| ||**Increase/(decrease) in cash and cash**||||||| ||**equivalents (See B below)**|||53,888|||(22,261)| |**A**|**Reconciliation of net (expenditure) or**||||||| ||**income for the year to net cash flow**
||||||| ||Net (expenditure)/income for the year|||(58,803)|||40,865| ||(Decrease) in creditors|||(946)|||(2,784)| ||Increase in debtors|||(360)|||-| ||(Additions) to investments|||(149,500)|||(37,035)| ||Losses/(gains) on investments|||126,631|||(52,183)| ||Sale of instrument|||211,917|||-| ||Gain on sale of instrument|||(68,127)|||-| ||**Net cash inflow/(outflow) from operating**|||60,812|||(51,137)| ||**activities**||||||| |**B**|**Analysis of changes in cash and cash**||||||| ||**equivalents**||||||| ||Balance at 1 April 2022|||116,559|||138,820| ||Net cash inflow/(outflow)|||53,888|||(22,261)| ||**Balance at 31 March 2023 (See C below)**|||170,447|||116,559| |**C**|**Cash and cash equivalents**||||||| ||Cash with brokers|||510|||-| ||Cash at bank|||58,817|||106,526| ||Charities Official Investment Fund|||111,120|||10,033| ||**Balance at 31 March 2023**|||170,447|||116,559| Page 9 **THE LOAN FUND FOR MUSICAL INSTRUMENTS** **NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2023** ## **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. 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 2023** |**2**
**Investment income**
**2023**
**£**
Income from investment portfolio
63,142
Deposit interest on managed funds
2,000
65,142
**3**
**Grants**
**2023**
**£**
Grants
47,955
During the year grants were made to 18 individuals (2022: 21 individuals).|**2022**
**£**
59,078
25| |---|---| ||59,103| ||**2022**
**£**
53,685| ## **4 Staff costs and trustees’ remuneration** The Fund is being administered by The Worshipful Company of Musicians and has no employees (2022: nil). The trustees, who are the key management personnel, were not paid but they or their representatives were reimbursed expenses of £111 (2022: £54) during the year. Meeting expenses were incurred totalling £109 (2022: £56). ## **5 Listed investment** |**2023**
**£**
Market Value 1 April 2022
1,533,965
Additions
149,500
Realised/unrealised investment (losses)/gains
(126,631)
**Market value 31 March 2023**
1,556,834
**Historical cost 31 March 2023**
1,438,001
At the balance sheet date, the investment portfolio was invested as follows:
**2023**
**£**
UK Unit Trusts
1,556,834

**Market value at 31 March 2023**
1,556,834||**2022**
**£**
1,444,747
37,035
52,183| |---|---|---| |||1,533,965| |||1,288,502| |||**2022**
**£**
1,533,965| |||1,533,965| 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 2023** ## **6 Musical Instrument (Grancino Cello)** |Cost at 31 March 2022
Sale Proceeds
Profit on sale|**£**
143,790
(211,917)| |---|---| ||68,127| Since March 2019, the Trustees had been committed to selling the cello and it was expected to raise an amount significantly in excess of its book value. However, given the time that it took to sell such an instrument no increase in value was recognised in the financial statements. The cello was finally sold in November 2022. ## **7 Debtors** |Interest receivable|**2023**
**£**
360
360|**2022**
**£**
-| |---|---|---| |||-| ## **8 Commitments** At 31 March 2023, the cash at bank, other deposit accounts and cash held by brokers totalling £169,433 are stated before deducting: - (a) Loans of £nil (2022: £8,500) already approved by the trustees but not yet advanced. (b) Grants of £27,783 (2022: £22,889) approved by the trustees but not yet paid. - (c) Applications for loans and grants still awaiting examination. ## **9 Related Party Transactions** The trustees, who are the key management personnel, were not paid but they or their representatives were reimbursed expenses of £111 (2022: £54) during the year. Meeting expenses were incurred totalling £109 (2022: £56). There are no related party transactions requiring disclosure other than the transactions referred to above. Page 12