ARC minutes 2024-09-05

ARC meeting minutes | Tuesday 10th Sep., 5 pm - 7 pm [online]

Welcome and Apologies

Present: Adrian Beidas (AB), Lucy Crompton-Reid (LCR), Belvin Tawuya (BT), Sharon Mitcheson (SM), Daria Cybulska (DC), Martin Christy (MCH) (Observer), Michelle Ferris (MF) (Auditor, Albert Goodman), Chuks Ogbonna (CO) (minuting).

Apologies: Mark Cruickshank (MC)

2023/24 Audited Accounts:

MF introduced herself and her role as partner at Albert Goodman and Head of Charities, she mentioned that the audit work was completed during the early summer, and she requested that members feel free to ask questions as they deem fit.

Audit Findings Report

MF reminded the Trustees that they were responsible for preparing the accounts, and she confirmed a clean and unmodified audit finding of the accounts. She proceeded to give a rundown of the accounts and presented them as reported and taken in the reports. She stressed the importance of the criteria from the SORP and talked about the recognition of the multi-year grant from the WMF and that it would no longer need to be recognised in 2023/24 accounts. A letter was obtained from the Wikimedia Foundation which clarified that the income received for 2024/25 in 2023/24 was only allowed to be spent in 2024/25 and therefore could be deferred.

There were prior period adjustments made in 2 areas, she said this has not impacted the surplus from the previous year, this relates to the subsidiary, Cultural Outreach (based on substance, rather than the value of £1) and to Gifts in Kind which would need to be shown as Restricted. In terms of Legacies, she touched on the anticipated John Wakely income, explaining that there was no evidence to show that this would need to be recognised in 2023/24 as we still did not know the final value of this.  

Some risks identified included the small executive team that exists within Wikimedia UK, revenue recognition which is not an issue as there are clear processes in place here, and the recognition of Gifts in Kind (GiKs) which she said is not also significant. The audit  showed that WMUK had very stringent and clear accounting policies and processes in place. In terms of going concern, the auditors recorded that they did not find any issue with the organisation going concern.  

In terms of internal controls, the audit noted the items from low to high priority;

Low Priority: Low priorities include the Fixed assets register and opening balances from previous that are incorrect, this is due to the movement to Xero cloud software.

Medium Priority: The medium priorities included grant income recognition, schedules of prepayments and accruals(quarterly basis), Declarations of Interest, and Co-op live bank feeds for better efficiency.

High Priority: Nil

MF also highlighted that as it is their first engagement, they are not so surprised with some of the adjustments and recommendations.  

On Independence, MF stated that she feels very sufficiently independent to enable them to sign off on the accounts.

External Developments:

• MF gave updates from the Charity Commission that requires trustees to have log ins to view the accounts of their organisations, she does not anticipate this to happen immediately but just something to be aware of at this point.

• Update to Charity Financial reporting standards from SORP, timeline being 2027.

Comments from members

• AB asked SM if there are any of the recommendations that she feels we are not able to implement immediately and SM answered that she is confident we will be able to implement these immediately and she does not anticipate that they will come up going forward. AB thanked the auditors, expressed how pleased he was with the audit and commended SM and CO for their work.
• LCR noted that SM has talked about the good relationship that has formed between the Auditors and Wikimedia UK so far and said she expects the relationship to be long lasting.

• 2023-24 Draft Accounts

The accounts were presented to the committee, and the report according to the auditors give a true and fair view of the financial position of Wikimedia UK.

The Letter of Representation was taken and all questions asked.

Decision: Nothing to report

• 2023-24 Draft Report to the Trustees

The Auditor left at 17:53

LCR asked for a recommendation from ARC to the board, if everyone is in agreement, that the accounts be approved and AB responded for everyone to take some time to go through the accounts and respond to the request via email.

The regular ARC meeting resumed

Declaration of Interests: None

Approval of previous minutes

The minutes were approved as read.

Update on actions arising at the last meeting

Nil

QFMR Q2 2024-25 and Commentary

Based on the report, SM presented an unrestricted surplus for the quarter of £22k against the budgeted £12k for the quarter, with £4k of restricted funding carried forward for the rest of the year.

The Balance sheet shows Current Total Cash deposits £630k, with £221k relating to the 24/25 grant which is deferred for the rest of the year, Prepayments are mainly still made up of CRM costs for the year. As of 31/07/24 the current creditors are less than 30 days old and are all due to be paid in full, the majority of which are now paid.

General Unrestricted Reserves as at the quarter end is £380k, out of which £20k is a surplus different from when the accounts were presented the last time. Also, notice that the WMF grant has been removed from Designated Reserves. There’s the intention to spend down the £14k Designated Funds on Programme activities by the end of the year. On Restricted Reserves, the amount of £4,430 is broken down in tab 4 from rows 16 to 26.  

SM also said that 50% of the WMF grant (£442k) has been recognised at the end of the second quarter, GA is slightly under for the quarter but SM stressed that we anticipate overachieving in other fundraising areas. Regular giving and Individual donors stand at £109k which is £6k below budget. There was legacy income of £20k for the quarter. The Gifts in Kind of £74k entirely relates to Wikimedians-in-Residence, see breakdown in tab 3.  

On earned income, SM mentioned that we hope to reach the final year target which feels achievable based on previous years.

There has been spend in all departments, with a higher than expected spend in Partnerships Programme which balances out over the course of the year.  The underspend in External Relations is due to moving this direct project spend to Staffing where it is more relevant in External Relations & Advocacy.  The variance in Staffing is due to more staff time being covered by restricted funds. The designated fund is expected to be spent down by the end of the financial year.  

2024/25 Reforecast

SM continued to talk ARC through the re-forecast for the year, emphasising that this would now replace the Budget Comparison when looking at Q3 and Q4.  SM went on to say the forecast shows a surplus of £25k by the end of the financial year but strongly emphasised that this was based on us securing two highly competitive grants from Trusts & Foundations. We did not want to reduce our targets in these areas so have kept them in.

Reforecasted Income:

Apart from two outstanding grants, all of the restricted income for the rest of the year has now been confirmed.  Additionally, we are expecting income from the Meliore Foundation for the Climate Residency which we are very confident about - this is not showing in the restricted income and would contribute towards unrestricted core and also core staffing.  SM went on to say that 30% of earned income has been achieved so far this year and we are confident to reach the remaining target.  Additionally, we have reduced the target for individual giving but with two large legacies almost confirmed, we are confident we will reach our overall targets in fundraising.  These legacies are not showing in the reforecast.

Reforecasted Expenditure

SM explained that the increase in spend in Partnerships Programmme reflects some additional income received here.  The reduced spend in External Relations is due to the change in direct project spend, moving £10k for Advocacy into Core Staffing, where most of Lucy and Daria’s time is spent and it is more relevant here.  The change in Staffing is due to some small savings in Robin’s role which won’t be recruited till approximately November time and also moving some spending to Restricted which we didn’t know would be covered by Restricted Grants when we budgeted.

• AB asked about the Forecast, on the income side, he suggested there’s a reasonable reduction from what was budgeted and a bit lower on the costs side, SM answered that we thought the VSN and Meliore would be spent down in 2023/24, but instead this was carried forward (shown in the B/F Restricted income figure).  The expenditure would show as increasing but the income wouldn’t, however, the spend would be covered by the income carried into this financial year.  Additionally, the target for income looks lower in the reforecast but. SM emphasised that the Gifts-in-Kind is the main cause of this as one of the residencies hasn’t started.
• MCH asked what the impact would be if the GiKs don’t come in and SM answered that it just means that we may look for a residency elsewhere, LCR added that we could have taken these secured funds out of our reporting but for transparency sake we decided to add them.
• JM asked what the logic is of not keeping the original budget but instead replacing it with the forecast, SM answered that it’s because we have a better understanding of how we think the finances will go at this stage of the year and therefore it makes more sense for narrative to compare the rest of the year with this reforecast and the variances will make better sense.

ACTION: Nil

Fundraising and Development Report (BT)

BT gave the report, and he summarised our grant applications pipeline and fundraising work that has been going on during the quarter, there are some applications submitted which are being waited on in December and there have been two unsuccessful ones for some small grants. There’s currently a large application for a grant of £90k and another one for £150K from the NLHF which he puts at a 70% success rate.

He also talked about some activities with work done in collaboration with Effusion LLP, he shared about regular fundraising email campaigns targeting regular donors to drive up monthly donations which he believes are effective. In July there was another one targeted campaign for Major Donors (over £1k). There has also been some optimisation going on on our website to make it more interesting, attracting more traffic and converting visitors into donors and supporters.  

On storytelling, there is an updated web page featuring dynamic and engaging animations that explain our work in simplified terms. There's also work in progress regarding the development of a corporate fundraising strategy with GC. A draft corporate fundraising framework document will be shared with trustees once that ready.

Risks Register (LCR)

LCR reported that all risk owners had reviewed the Risk Register and added additional narrative comments as appropriate, but that there had been no changes to the overall risk ratings this quarter.

AOB

The Treasurer (AA) noted his thanks and appreciation for the high quality of work undertaken by the new auditors.

LCR thanked Julian for his contribution over the past 3 years on the committee and wished him well as he takes on a new job in New York.

The meeting ended at 6:37 PM

Next meeting dates in 2024 (all 5 - 7 pm)

• Thursday 28th November