Year Book 2018-19 Contents
Trust Funds - Untapped Pots of Gold?
There exist certain trust funds whose purpose is funding chess, often for specific purposes or under certain terms laid down by the donor, and are “policed” by trustees. As pressures on ECF funding become ever tighter, efforts have been made to explore the possibility of persuading trustees to dish out their funds’ capital, rather than just their income from investment dividends and bank interest.
There is nigh on £1 million held in trust funds run under the umbrella of the ECF itself, but if you look at the detail, there is in fact no crock of gold which can sensibly be dipped into, unless of course the trustees disregarded their responsibilities. Tapping into trust-fund capital does of course not cure the financial illness, merely alleviates the symptoms for a while, so any such idea needs to be linked to a solution to a cure which can soon be implemented.
A discuss at the NCCU AGM prompted compilation of the following.
As at 31/08/2018, the trust funds to which the ECF had potential access, subject to restrictions laid down by donors and the discretion of trustees, amounted approximately to the following:
The “£252,941” is what was originally in the BCF’s PIF 1, and the unrestricted/restricted split is unclear.
The following is an extract from the 2011 BCF accounts:
“Permanent Invested Fund. [aka “PIF 1”]
The investments in the Permanent Invested Fund are held by trustees under a deed dated 1929 which is perpetuated by supplementary deeds every 21 years (next renewal 2013) whereby the income is paid to the Federation and the trustees may make distributions of capital in exceptional circumstances of urgent need provided the money is for the benefit of “the objects” of the Federation, but only on the authority of a resolution of Council.” (My bold letters.)
An example of “urgent need” was when a one-off payment to the ECF of £10,000 was made in 2011, following the loss of the DCMS grant, which was stated to have been £60,000 in papers for the 2011 ECF Finance Meeting. PIF 1 includes “The Chess Centre Limited” which was ultimately controlled by the BCF, but whose purpose and activities evade me. A point to note is that the Chess Centre Ltd had to pay tax on its income.
The 2011 BCF accounts continued:
“John Robinson [aka John Robinson bequest, or simply “PIF 2”]
A separate fund was established out of the legacy from the late John Robinson that was paid to the BCF. The trustees manage the two funds in order to be able to provide £5,000 funding towards the British Chess Championships each year.”
The John Robinson bequest was specifically for the promotion of junior chess, but it normally contributed £5,000 annually to the junior elements of the British Chess Championship.” Note that the John Robinson Bequest to the BCF (PIF 2) is not the same as the John Robinson Youth Trust.
Prior to 2015, the only trust funds or chess charities the ECF could appeal to for money were PIF 1 and PIF 2. Then in 2015 the Chess Trust was set up as a “Charitable Incorporated Organisation”, charity number 1160881. This is not “owned” by the ECF, but its constitution affords the ECF a strong influence. This provides a vehicle for donations etc to be handled though a charity rather than the ECF, which lacks certain benefits as it it is not a charity.
When the ECF was formed, the PIFs 1 & 2 were retained by the BCF due to a perceived necessity regarding the different constitutional statuses of the ECF and BCF, but that view changed. Accordingly, in May 2018, PIF 2 (John Robinson bequest) was transferred to the Chess Trust, with the same restrictions as regards its application.
At the end of August 2018, the Chess Trust accounts showed £680,571 of restricted funds (mainly investments valued at cost) which would include PIF 2, which was presumably the £155,382 of income shown (or most of it). The accounts showed only £2,267 of unrestricted funds. The restricted funds include those derived from the bequest of over £450,00 for junior chess from Richard Haddrell who died on 30/09/2016, and those derived from the bequest to provide a bursary from Neil Carr who died on 25/05/2015.
In October 2018, PIF 1 was transferred to the Chess Trust, which as a charity would not incur tax on its income from the Chess Centre Ltd. PIF 1 was valued at about £250,000 in investments, and it had £2,941 in cash, so the Chess Trust’s “unrestricted” balance must have moved to something like £255,000.
The 2017/18 income (dividends and interest) on the “restricted funds” was £9,596 which is roughly 1.4%. So, the £255,000 unrestricted funds would yield about £3,570, which only about 2% of probable annual membership income at present rates, so making little impact on membership fee increases currently running at 12.5% at Bronze level. So people look at persuading the trustees to spend capital.
The current trustees of the Chess Trust are
Mike Truran, and
The transference of PIF 1 and PIF 2 meant the BCF became fully dormant, and will no longer pay corporation tax, as it had been doing before. Thus all the BCF/ECF trust funds have been bundled into the Chess Trust, on which the restrictions applying to original bequests are still in force, saving some income tax and corporation tax as a result.
The John Robinson Youth Trust, charity number 1116981, from which the White Rose Chess Academy has had modest financial contributions, is of course wholly separate from the BCF/ECF and again specifically targeted at junior chess (people under 21). Whereas PIF 2 seems meant for funding to ECF activity, the JRYT is aimed at the wider chess public but also provides some funding to ECF activities.
The Chess Trust and the John Robinson Youth Trust are thus the primary chess trusts to which the ECF can go, cap-in-hand, requesting money.
Item 5 of the 22/04/2017 Extraordinary General Meeting of the ECF was to consider the following motion:
"The British Chess Federation Council recommends to the Trustees of the John Robinson Youth Trust that:
(a) The Trustees give due consideration to requests for funding for junior chess made by the English Chess Federation; and
(b) When determining whether such requests should be accepted, they are prepared to make payments by way of grant out of the capital of the Trust Fund and do not limit the acceptance of such requests to such amounts as can be funded out of the income received by the Trust Fund."
The trustees were averse to reducing the capital, and were more interested in “new” or one-off spend, rather than funding the core junior activity of the ECF.
I am personally sceptical about running down trust funds. It does not cure the disease but merely alleviates the symptoms, so to be viable it has to be linked to a strategy to increase income by other means (e.g. sponsorship, not a reliable solution, or increasing membership fees) or to reduce expenditure (e.g. no significant expenditure above sponsorship on international activity). “By how much?” and “For how long?” are the obvious questions on running down trust capital. £25k for 10 years? £50k for 5 years? Then what do you do?