Boom and Bust

While Googling for references to use in the previous post I was a bit miffed to find a BBC page slamming the RSPCA for keeping reserve funds in case of unforeseen disaster still lurking out there. After all, in 1999 it was obvious to anyone that the dot com boom was going to keep going for ever, wasn't it?

On money, myths, donations and dogs

The St Bernards saga has provoked the usual "how dare the RSPCA ask for donations" chorus over at Petstreet (which is actually an interesting site except for the way it's been taken over by people with axes to grind). I must confess that I only visit occasionally out of respect for my blood pressure. 

However, as it's Monday, I'll try to address a few of the perennial myths and misrepresentations.

National RSPCA funds. A figure of £200 million is always bandied about as if this was sitting in a bank account somewhere. In fact, just under half of this is the value of buildings used for RSPCA animal welfare activities (shelters, hospitals etc.). The rest is approximately the amount of money which would be needed to keep the RSPCA going for a year if something catastrophic caused income to dry up entirely. In reality, the society wouldn't just run for a year, then disband; the reserves would be used to buy time to close down everything except absolutely core activities, so that a reduced organisation could continue indefinitely.

Donating pet food instead of money. The reasoning behind this seems to be that by giving food, donors can ensure that their generosity doesn't simply go towards lining someone's pockets. The problem with this is that food is only relatively small proportion of the cost of caring for animals. If a large number of animals need to be taken in, they'd normally be spread about among a combination of animal homes owned and run by the National Society or its branches; ordinary private boarding kennels and volunteer fosterers. 

Donated food is very useful for our own animal homes and our fosterers (who would otherwise buy in food). It can be a bit of an imposition for private boarding kennels (because it means we're asking them to take an assortment of food, calculate its value, and knock the amount off their invoice to us). From their point of view, we're asking them to do extra work when it would be much simpler just to use their normal supplier. 

When you consider that we're probably also asking them to accept animals at odd hours; take animals to and from the vet, and deal with adopters asking to view animals you can see that it may not be sensible for us to ask them to use donated food as a way of saving money.

If you'd like to donate pet food, cat food is generally more useful than dog food (because cats are more likely to be fostered than dogs), and RSPCA-owned shelters are more likely to be able to make good use of food than branches who don't have their own animal centre.

You can find your closest RSPCA-owned animal centre via the main website. (Enter your own post code and pull down the menu to "Rehoming"). Most branches without animal centres rehome via private boarding kennels, and most animal centres use private kennels as "overflow" capacity.

Not so cool for cats

Cats Protection have put out a statement about their investments in Iceland:

"In August 2005, the charity identified that Kaupthing Singer and Friedlander, a UK bank, was a bank where it could invest with confidence as it had a high credit rating. Kaupthing Singer and Friedlander is owned by an Icelandic bank, Kaupthing. Consequently, some of Cats Protection’s cash reserves were placed with them on a 90 day arrangement. Our deposits amounted to £11.2 million.

The credit ratings of the various banks the charity uses are checked periodically and quite recently, Kaupthing Singer and Friedlander’s rating remained sound.

“In the light of the demise of some major banking institutions, Cats Protection decided that it should diversify even further and on 17 September 2008, the charity gave 90 days notice to KSF of its intention to withdraw these deposits.

“On Wednesday afternoon, 8 October, Cats Protection received news that the bank had been put into administration. Some of the deposits held within the Kaupthing bank group have been rescued under a deal set up by the UK treasury. However, at present the future of other deposits, CP’s included, is uncertain. Many local authorities and councils find themselves in similar positions and we and they are exerting pressure on the Treasury to act."

Very worrying.

Some people seem to be taking the view that CP shouldn't have had reserves of that size in any case, and it's worth pointing out that (like us) they handle thousands of cats every year — and also help low income cat owners with vouchers for pet neutering and grants towards emergency vet bills. It's a lot of money, but spread over that number of cases, it doesn't represent a huge amount per individual cat. Setting up a new shelter doesn't leave much change out of several million pounds when you consider that a suitable site could cost at least half a million and would require at least as much again to kit it out with suitable buildings. Even paying just the minimum wage staff costs would be at least £80,000 p.a. to have a rotation to cover holidays and time off and still have someone on the premises 24/7.

Reserve funds again

Trepidation about the general state of the economy. I think it's unlikely that there's any risk that the funds in our bank account could be lost however bad things get, but it's not looking good for our charity shop income if customers aren't spending because they're worried about the safety of their jobs. The CEO of the national RSPCA (as opposed to the local branches) must be feeling pretty glum about invested funds as those do go up and down in value along with the Stock Market (and in this case, down). 

We are extremely fortunate to have received legacy income this year and without it things would be looking very bleak indeed.

Things are already looking very serious for the Rabbit Residence Rescue where most of our branch rescue rabbits are fostered. Please consider sponsoring a rescue rabbit, or adopting a pair of rabbits who are suitable for rehoming (not all of the rabbits featured on the web page came to Rabbit Residence from the RSPCA).

Branch Reserves Policy

Now that we actually have some reserves (the result of a generous legacy, which pulled us back from a very dicey hand-to-mouth situation) we need to have a policy about the way we manage them, and at our committee meeting this week we agreed the formula below.

“Owing to the nature of our activities and supporter base, branch income is composed of a fairly regular component from fundraising activities and clinic fees and an unpredictable legacy component. This means that we receive occasional very large amounts which need to be used gradually to support the regular income rather than being spent during the year in which we receive them. We aim to keep our free reserves between an upper limit set at twice our annual operating costs and a lower limit fixed at the amount which would permit 12 months continued activity at current levels of regular earned income. 

At any point when free reserves dip below this 12 month safety limit we will have to begin cutting back the level of service which we provide.

At current income and expenditure rates the lower reserve limit is £41,000 and the upper limit is £260,000.”

In other words, if our steady income from the shops, clinic fees, collection tins etc. is £3,000 a month short of what we currently spend, we can calculate how long it would take before our saved funds ran dry. If the remaining time drops to 12 months we need to make emergency cuts until spending is in balance with the steady income. 

Our free reserves at the moment (after allowing for outgoings which we know will take place at the year end) amount to £120,000. This would sustain our current expenditure for three years provided our regular income stays at its existing levels. It means our work is reasonably secure, but there isn't much scope for "capital" projects (such as building an extension to our clinic for a "sluice room", which is one of the things we'd like to do).