The Trustees of West Berkshire Mencap are extremely concerned about recent misleading statements that have appeared in the press. We would like to set the record straight.
ABOUT WEST BERKSHIRE MENCAP
West Berkshire Mencap is a specialist charity with highly trained and dedicated staff, supported by a fantastic team of volunteers. This means it is able to deliver high quality services on behalf of the Council at a much lower cost than the Council would be able to do itself – services that, for the most part, the Council is obliged to provide.
West Berkshire Mencap is a local success story. In the last 10 years it has grown nearly 400%, and more learning disabled people than ever before are now being supported. In some cases, because of the skill and dedication of its staff and volunteers, West Berkshire Mencap is the only organisation able to support those with the most challenging behaviour to live in the community – those who would otherwise be in expensive full-time residential care, funded by the Council.
The result is first class services that keep families together while providing excellent value for the Council and creating satisfying and worthwhile volunteering opportunities, especially for dozens of teenagers and young adults (recognised recently by the Queen’s Award for Voluntary Service). A true community organisation.
COUNCIL FUNDING
It is important to note that the Council pays West Berkshire Mencap under Service Level Agreements (contracts) as it would any other supplier, with contractually agreed funding levels and service delivery outcomes.
References in the press to the Council “giving” money to West Berkshire Mencap are misleading.
LETTER FROM WEST BERKSHIRE COUNCIL
In an unexpected letter dated 25th September 2015, West Berkshire Council gave six months’ written notice terminating its “Short Breaks for Disabled Children and Associated Respite Services” contract with West Berkshire Mencap.
Normally, consultation with the Council would be expected in advance of a step as drastic as termination of a contract, but on this occasion there was none.
It has been reported in the local press that that the Council’s plan to cut funding to West Berkshire Mencap is apparently only a “proposal” and that a consultation is to be held. But the letter received is unambiguous – it makes no reference to the contract termination being a proposal or to any plans for a consultation.
PROFITS
West Berkshire Mencap is a charity, so every penny of income received by West Berkshire Mencap goes towards supporting learning disabled children and adults, their families and carers.
It does not make profits, any more than the Council does. Any underspend or excess of income over expenditure in any one year is reinvested in services – for example, supporting services that West Berkshire Council has already de-funded by 55% in the last round of Voluntary Sector Prospectus funding.
Moreover, nearly £270,000 of funding for other (adult) services purchased from West Berkshire Mencap by the Council has not yet been confirmed for 2016/17. The Council’s Voluntary Sector Prospectus process may provide this funding in the end, but after 18 months the process is still not concluded and we have no certainty about the outcome.
Given the abrupt way in which the contract for Children’s Services has been terminated, the Trustees are understandably concerned that some of our Adult Services funding may be at risk too.
RESERVES POLICY
The Charity Commission requires a charity’s Trustees to demonstrate appropriate financial management and financial sustainability by establishing a prudent Reserves Policy, declare it in its accounts, and work towards maintaining that level, reviewing it regularly.
This is what we have done.
The last charity to fail to keep prudent reserves (Kid’s Company) went bust in spectacular style last month. We have no intention of allowing the same thing to happen to West Berkshire Mencap.
Our Balance Sheet at 30 June 2014 shows net current assets of £835,701 and free reserves of £141,921.
Net current assets (cash in the bank) £836,000
LESS: Designated fixed assets sinking fund (£ 92,000)
LESS: Restricted Funds:
Domiciliary Care Services (£224,000)
Adult Day Care Services (£209,000)
Children’s Services (£120,000)
Family Adviser Service (£ 50,000)
——–
Free reserves (available to spend) £141,000
========
In the table, sums have been rounded to the nearest £1,000 for ease of reading, which leads to minor rounding errors. Full details of the precise figures are in our published Annual Accounts, which are available online from the Charity Commission website.
RESTRICTED FUNDS VS. FREE RESERVES
Restricted funds are just that – funds restricted to specific purposes that cannot be spent on other things. Funds are restricted to the service area for various reasons – for example, if they are donated for a specified purpose or are earned in fees or other service-specific income. Restricted funds are very important for providing security for our existing projects and services and enabling us to develop and expand services in response to the needs of service users.
Our established Reserves Policy (approved by our Auditors in line with Charity Commission requirements) is to seek to maintain free reserves to meet working capital obligations for three months, a total of £430,000.
At the year-end, free reserves stood at just £142,000. It appears that the Council is advocating that this already low figure be reduced to virtually nothing.
If free reserves are spent next year, what happens the year after that?
Once these reserves are spent the charity will potentially be in an even worse position, the services de-funded by the Council will have to close in any event, and other services will then be put at risk.This is at odds with the Trustees’ over-riding legal obligation and responsibility to ensure the long term sustainability of the charity.
DIFFICULT DECISIONS
Charity Trustees have a legal obligation and responsibility to run the charity properly, in accordance with the law and following the requirements of regulators such as the Charity Commission.
Further, Trustees have a duty of care to their charity that extends beyond the current financial year and that requires Trustees to ensure long term sustainability. This means that sometimes very difficult decisions have to be taken.
At the moment we have no assurance of any funding for our Children’s Services beyond March 2016 which means that the services face closure. We have had to explain the position to those affected as soon as possible – our loyal and hardworking staff, our dedicated volunteers, and above all the families whose children use our services.
For and on behalf of WEST BERKSHIRE MENCAP
Julian Swift-Hook
Chairman
27th October 2015
