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The Institute of Economic Affairs
(A Charitable Company Limited by Guarantee)
TRUSTEES' REPORT AND FINANCIAL STATEMENTS

31 December 2012

,------------------··-------~

CHARITY COfVlMISSION
FIRST CONTACT

2 0 JUN2013
RECEIVED

------------·
ACCOUNTS
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Company Registration Ne:).7
02
Registered Charity N . 235351
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 The Institute of Economic Affairs
TRUSTEES'REPORT
Company Registration Number:

755502

Charity Registration Number:

235351

TRUSTEES
Professor DR Myddelton
Kevin Bell
Robert Boyd
Michael Fisher
Michael Hintze
Professor Patrick Minford
Professor Mark Pennington
Neil Record
Professor Martiri Ricketts
Linda Whetstone

Chairman

DIRECTOR GENERAL
Mark Littlewood
EDITORIAL AND PROGRAMME DIRECTOR
Professor Philip Booth
SECRETARY
C Rusbridge
REGISTERED OFFICE
2 Lord North Street
Westminster
London SWIP 3LB .
AUDITOR
Baker Tilly UK Audit LLP
Chartered Accountants
The Pinnacle
170 Midsummer Boulevard
Milton Keynes
Bucks
MK91BP

BANKERS
Barclays Bank pie
Pall Mall Corporate Banking Centre
Pall Corporate Group
PO Box 15163
London SWIA IQD

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The Institute of Economic Affairs
TRUSTEES'REPORT
The Trustees present their report together with the accounts of the Institute of Economic Affairs for the
financial year 2012.
STATUS
The Institute of Economic Affairs (IEA) is a charitable company limited by guarantee. The Institute was
established through a trust deed in November 1955 and incorporated in 1963. It was set up under a
Memorandum of Association which set out its objects and powers and governed under its Articles of
Association. It is a registered charity [No. CC/235351 ].

GOVERNANCE
The IEA is managed by its Director General, Mark Littlewood, who oversees all aspects of its affairs and
is responsible for achieving its goals. He reports three times a year to the full Board of Trustees and more
frequently to its Finance and General Purposes Committee. Decisions about the level and mix of activities
are made by the Trustees; about detailed day-to-day operations by senior staff, sometimes with advice
from the Finance and General Purposes Committee. Three of the Trustees, the Chairman of the Board, the
Treasurer, Robert Boyd, and the Chairman of the Finance and Gen~ral Purposes Committee, Kevin Bell,
together form a sub-committee which reviews the Director General's performance annually; and they also
serve as a Nominations Committee and as an Audit Committee.
OBJECTIVES AND ACTIVITIES
The charity's main aims are to promote learning by means of research into economics and politics and to
improve public understanding thereof.
We try to achieve our objectives by means of the activities listed below, which include allocated costs of
Administration and Research.
·
·
Academic programmes:

i·

•
•
•
•

Publications
Student/teacher outreach
Lectures, conferences, seminars and special events
Communication and distribution, including website

Fundraising and subscriber support
PUBLIC BENEFIT
As detailed above,the charity's main aims are to promote learning by means of research into economics
and politics and to improve public understanding thereof. We bring analysis of issues relating to political
economy to the public's attention through our various academic programmes and other activities. The
Trustees confirm that, in exercising their powers and fulfilling their responsibilities in pursuit of the aims
described above, they have paid due regard to the guidance on public benefit published by the Charity
Commission.
REVIEW OF ACHIEVEMENTS
Our mission is: "To improve understanding of the fundamental institutions of a free society by analysing
and expounding the role of markets in solving economic and social problems."
We aim to achieve our mission by undertaking the various activities listed above.
Ordinary donations were some 7% higher than ,n 2011. We continue to seek flexibility in responding to
potential changes, ho.th in income and in programme opportunities.
Over the year, visits to the website (www.iea.org.uk) were up by 38% to 828,000.
publications were each downloaded more than 1,000 times.

Fourteen IEA

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 The Institute of Economic Affairs
TRUSTEES'REPORT
We continued to expand the student/teacher outreach programme, under Dr Steve Davies, our Director of
Education. The IEA intern programme reached new highs, with a record number of students spending up
to eight weeks working on research projects. The students are regularly invited to our main events and a
number of special events - exposing them to the ideas of academic economists - were organised for them.
One of these was Freedom Week, which we are now running jointly with the Adam Smith Institute and
which had a record number of applications in 2012.
Our sixth-form event in Oxford was attended by 200 students. As a result of the high demand, we are
organising a new series of regional sixth-form conferences at schools across the UK for the coming year.
The IEA State of the Economy Conference was attended by more than 60 students, financed by bursary
donations from IEA supporters.
The IEA completed sponsorship of a PhD student, Kristian Niemietz. His second Research Monograph:
"Redefining the Poverty Debate", published in late 2012, was widely covered in the media.
The IEA published or co:-published six titles in print in 2012, together with three editions of our journal,
Economic Affairs. A further fourteen titles were published in our Main Web series. Many IEA
publications that were previously out of print have also been made available through our print-on-demand
system. In all we published about 150 authors across our monographs, web papers and journal and our
triannual student/teacher supplement reached 2,000 individuals or educational establishments across the
UK. In addition we co-published five boo~s with trade publishers.
The IEA organised about 100 events in 2012, including major conferences and many lunch, dinner and
evening events, including lectures, seminars, interviews, debates, book launches and other special events.
Our annual Hayek Memorial Lecture was delivered by Nobel Prize winner Elinor Ostrom in March 2012
and attracted an audience of over 500. (Sadly she died soon afterwards.) The renowned US economist Art
Laffer also attracted an audience of some 200 in a specially-staged Autumn lecture.
The IEA also contin~ed to expand its media coverage, with senior IEA staff and fellows making nearly
1,400 media appearances across print, radio and television - L!P17 per cent on the previous year. In
addition, more than 3,000 people now follow the IEA on Facebook and 2,500 follow us on Twitter.
Our objectives are essentially long-term in nature and it remains extremely difficult to assess from year to
year the extent of 'public understanding' and changes therein. We measure the volume of many of our
activities; and we aim to maintain or improve their quality.
All our main publications are refereed by independent scholars and we benefit from a network of
distinguished academic advisers, to whom we are mo'st grateful. There is a formal meeting of academic
advisers once a year, under the chairmanship of Professor Martin Ricketts, one of our Managing Trustees.
Continuing themes are over-regulation, much of it stemming from the European Union; systemic problems
in the welfare state, Jncluding social security, education and health services; corruption, both intellectual
and financial, in public life; and other pervasive aspects of government interference. In early 2013, as this
Report is being written, the UK government is still incurring enormous annual deficits. Yet appreciation
of the urgent need to cut back significantly the scope of government remains limited. Hence the IEA 's role
in spreading public understanding is as ii:nportantas ever.
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FINANCIALREVIEW
,
Total incoming resources during the year were £1,059,000 and total resources expended were £1,194,000
leaving net resources expended of£ 135,000. Restricted income was £319,000 compared with resources
expended on restricted projects of £406,000. The net increase in funds was £54,000, after allowing for
realised and unrealised gains and losses on investments. Investment income on the Ralph Harris Fund
during the year amounted to £70,000. The accounts, together with the notes thereto, expand on these
outline details.

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 The Instituteof Economic Affairs
TRUSTEES' REPORT
1/

Our income mainly comprises donations from individuals, companies, foundations and personal trusts,
together with revenue from sales of publications and from conferences and income from investments. We
do not accept donations or grants from government. It is a feature of the modem UK scene that all too
many so-called "charities" do receive much - in many cases most - of their funds from government (that
is, from taxpayers).
The Finance and General Purposes Committee, and the full Board of Managing Trustees, regularly review
the amount of donations. There has been a 7% increase in the amount of donations in 2012 and we are
grateful to all our donors for supporting our work.

GRANT MAKING POLICY
The Trustees make occasional grants to individuals to support their research and to attend conferences.
These are often from restricted funds donated specifically for such purposes. From time to time grants
may be made to other Institutes where the Trustees think it appropriate. All such projects are assessed by
reference to our mission.
INVESTMENT AND RESERVES POLICIES
The Institute's educational mission has a long-term orientation, as noted above, whereas our ability to
carry out our work depends on attracting annual donations in a highly competitive fund-raising
environment. Accordingly the Trustees' policy is to invest conservatively, largely in equity funds, fixed
interest funds and government securities. The Ralph Harris Fund is invested with a long-term time
horizon. Income on investments is used to support the IEA 's work. The Treasurer and the Finance and
General Purposes Committee regularly review investment results.
The Trustees' policy on reserves, which is reviewed annually, is to have sufficient liquid funds on hand, or
backed by firm commitments at the beginning of each year, to cover two months of budgeted expenditure.
The Trustees do not seek to accumulate reserves, but rather to apply donations in support of the Institute's
programmes in accordance with donors' intent.
The free reserves of the charity as at 31 December 2012, defined as being unrestricted, undesignated funds
not represented by tangible fixed assets, amounted to £164,000 (2011.: £127,000).

RISK REVIEW
The primary risks and uncertainties to which the IEA is exposed are reputational, loss of key personnel,
and financial.
Reputational risk centres on the quality and integrity of the Institute's research and publications and other
activities. As noted above, all the IEA's major publications are peer reviewed under a system managed by
the Editorial and Programme Director, Professor Philip Booth, and supervised by the Chairman of our
Academic Advisory Board, Professor Martin Ricketts. The IEA maintains strict independence from
commercial, party political or other interests. It does not accept commissions to perform research on
behalf of others.
The performance of key personnel is reviewed at least annually, either by the Director General or by a
small committee of Trustees, led by the Chairman, to assess whether both the employer's and employee's
objectives are being satisfied. As with any small organisation, it is not possible completely to protect
against the loss of key people.
Financial risks and uncertainties are largely covered by the Reserves and Investment policies noted above.
The Trustees examine at least once a year the major strategic, operational and financial risks and
uncertainties which the Institute faces, either at regular or special Board meetings, or through the Finance
and General Purposes Committee.

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 The Instituteof Economic Affairs
TRUSTEES'REPORT
FUTURE PLANS
The Institute intends to enhance its activities in 2013 and beyond, continuing our long-established
programme of publications and conferences, focusing especially on developing our website and
student/teacher outreach.
We recognise our need to attract new readers, listeners and viewers (and new authors). Currently our main
focus for research is on the welfare state, the impact of regulation and the causes and effects of high levels
of government spending.

!'

TRUSTEES
The following were trustees (who are directors for the purposes of company law) at the time of signing this
report and financial statements. They all held office throughout the year 2012.
Professor DR Myddelton
Kevin Bell
Robert Boyd
Michael Fisher
Michael Hintze
Professor Patrick Minford
Professor Mark Pennington
Neil Record
Professor Martin Ricketts
Linda Whetstone

Chairman

None of the Trustees has an interest, direct or indirect, in any contract entered into by the Institute. The
Trustees may from time to time, and at any time, appoint any person to be a Trustee, up to the prescribed
maximum of twelve. Appointments are normally made on the recommendation of the Nominations
Committee. Any Trustee so appointed retains office until the next Annual General Meeting, and is then
eligible for re-election on a three-year rotating basis.
New Trustees are 'trained' mostly on the job by attending meetings of Trustees. They are provided with
notes covering the institute's mission, history, organisation, governance and details of the other Trustees,
together with the latest Trustees' report and accounts. Newly appointed Trustees will usually already have
substantial board level or departmental management experience in either the commercial or academic
arena.
TAXATION STATUS
The charitable company is a registered charity and, as such, for taxation purposes is entitled to exemption
under the Income and Corporation Taxes Act 1988.
AUDITOR
Following a re-tendering exercise in 2012, Baker Tilly UK Audit LLP were reappointed as auditors. A
resolution to reappoint Baker Tilly UK Audit LLP, Chartered Accountants, as auditors will be put to the
members at the annual general meeting.
This report has been prepared in accordance with the Statement of Recommended Practice: Accounting
and Reporting by Charities (issued in March 2005).
By order

~1?5' ..~

Professo~~
Chairman

l} M~

2013

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 The Instituteof Economic Affairs
TRUSTEES'REPORT

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TRUSTEES' RESPONSIBILITIES
The Trustees (who are also directors of the Institute of Economic Affairs for the purposes of company law)
are responsible for preparing the Trustees' Report and the financial statements in accordance with
applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted
Accounting Practice).
Company law requires the Trustees to prepare financial statements for each financial year which give a
true and fair view of the state of affairs of the charitable company and of the incoming resources and
application of resources, including the income and expenditure, of the charitable company for that period.
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;

•

make judgements and estimates that are reasonable and prudent;

•

state whether applicable UK accounting standards have been followed, subject to any material
departures disclosed and explained in the financial statements;

•

prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the company will continue in business.

The Trustees are responsible for keeping proper accounting records that disclose with reasonable accuracy
at any time the financial position of the charitable company and enable them to ensure that the financial
statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of
the charitable company and hence for taking reasonable steps for the prevention and detection of fraud and
other irregularities.
In so far as the Trustees are aware:
•

there is no relevant audit information of which the charitable company's auditor is unaware; and

•

the Trustees have taken all steps that they ought to have taken to make themselves aware of any
relevant audit information and to establish that the auditor is aware of that information.

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 The Institute of Economic Affairs
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE INSTITUTE OF
ECONOMIC AFFAIRS
For the year ended 31 December 2012

We have audited the financial statements of the Institute of Economic Affairs for the year ended 31 December
2012 on pages 8 to 19. The financial reporting framework that has been applied in their preparation is
applicable Jaw and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting
Practice).
This report is made solely to the charitable company's members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the charitable
company's members those matters we are required to state to them in an auditor's report and for no other
purpose. To the fullest extent pennitted by law, we do not accept or assume responsibility to anyone other than
the charitable company and the charitable company's members as a body, for our audit work, for this report, or
for the opinions we have fonned.
Respective responsibilities of trustees and auditors
As explained more fully in the Statement of Trustees' Responsibilities set out on page 6, the trustees (who are
also directors for the purposes of company Jaw) are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable
law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the
Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB's website at
www. {re.org.uklapblscope/private.cfm.
Opinion on financial statements
In our opinion the financial statements:
give a true and fair view of the state of the charitable company's affairs as at 31 December 2012 and of
its incoming resources and application of resources, including its income and expenditure, for the year
then ·ended;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting
Practice;
have been prepared in accordance with the Companies Act 2006.
Opinion on other requirement of the Companies Act 2006
In our opinion the infonnation given in the Trustees' Report for the financial year for which the financial
statements are prepared is consistent with the financial statements.

Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
the charity has not kept adequate accounting records, or returns adequate for our audit have not been
received from branches not visited by us; or
the financial statements are not in agreement with the accounting records or returns; or
certain disclosures of Trustees' remuneration specified by law are not made; or ·
we have not received all the infonnation and explanations we require for our audit.,

~"'ker'-rlb. \Jl,( A~il- UP .
SARAH MASOJ<'(Senior Statutory Auditor)
·
For and on behalfofBAKER TILLY UK AUDIT LLP, Statutory Auditor
The Pinnacle
..
.
170 Midsummer Boulevard
Milton Keynes
Bucks
MK9 IBP

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 The Institute of Economic Affairs
STATEMENT OF FINANCIAL ACTIVITIES
(INCLUDING AN INCOME AND EXPENDITURE ACCOUNT)
For the year ended 31 December 2012

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Total

2012
£000

2011
£000

831

772

18

8

52
35

51
40

33
90

37
112

319

1,059

1,020

97

86

183

154

209
41
34
35
1

481
166
213
130
21

461

406

l, 194

l, 178

(135)

(158)

179

218

(71)

(29)

(29)

(1 l)

(61)

150

54

(240)

75

(75)

Restricted
funds

Endowment
fund

£000

£000

£000

594

237

Notes

,/

Total

Unrestricted
funds
INCOMING RESOURCES
Incoming resources from
generated funds
Voluntary income
Activities for generating
funds
Investment income
Dividends receivable
Interest receivable
Incoming resources from
charitable activities:
Academic programme:
Publications and
subscriptions
Events

18

33
90
740

Total incoming resources
RESOURCESEXPENPED
Charitable activities:
Fundraising and subscriber
Support
Academic programme:
Publications
Student/Teacher outreach
Events
Communications
Governance

3

272
125
179
95
20

Total resources expended

2

788

NET RESOURCES
EXPENDED/EXPENDITURE
Other recognised gains and
losses:
Unrealised (losses)/gains on
investments
Realised (losses) on disposal
of investments

49
33

3
2

--

181

226
136
20

-4

(48)

13

8

NET MOVEMENT lN
FUNDS

(35)

Transfers between funds

(87)

26

TOTAL FUNDS BROUGHT
FORWARD

11,12
13,14

l, 133

615

2,367

4,115

4,355

TOT AL FUNDS CARRIED
FORWARD

11,12
13,14

1,098

629

2,442

4,169

4,115

==

===

All of the above results are derived from continuing activities.

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 The Instituteof Economic Affairs
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Company Registration No. 755502
Registered Charity No. 235351

BALANCE SHEET
As at 31 December 2012

Notes

FIXED ASSETS
Tangible assets
Investments

7
8

2012

2011

£000

£000

693
3,392

636
3,386

4,085

4,022

1,

CURRENT ASSETS
Debtors
Cash at bank and in hand

61
118

211
8

9

179

219

10

CREDITORS: Amounts falling due within one year
NET CURRENT ASSETS

TOTAL ASSETS LESS CURRENT LIABILITIES

(135)

(86)

84

93

4,169

4,115
=---=-

FUNDS
Endowment funds

11

2,442

2,367

Restricted funds

12,14

629

615

Unrestricted funds
Designated funds
General funds

13,14
13

932
166

1,004
129

4,169

14

TOTAL FUNDS

4,115

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The financial statements on pages 8 to 19 were approved by the Trustees and authorised for issue on
~ 2013 and are signed on its behalf by:

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 The Instituteof Economic Affairs
ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The financial statements have been prepared under the historical cost convention modified to include the
revaluation of fixed asset investments at market value, and in accordance with the Companies Act 2006
and follow the recommendations in Accounting and Reporting by Charities: Statement of Recommended
Practice, issued in March 2005. The Trustees consider that there are no material uncertainties that may
cast doubt upon the charity's ability to continue as a going concern and hence the financial statements have
been prepared on this basis.
TANGIBLE FIXED ASSETS
Fixed assets are stated at historical cost.
Depreciation is provided on tangible fixed assets, other than freehold land, at rates calculated to write each
asset down evenly over its expected useful life, as follows:Freehold property
Office equipment

over 40 years
over 3 years

Expenditure of a capital nature below £1,000 is not capitalised, but charged to the Statement of Financial
Activities in the year of expenditure.

STOCKSAND WORKIN PROGRESS
No value for accounts purposes is attributed to stocks of unsold publications.
PENSION CONTRIBUTIONS
The Institute operates a defined contribution scheme. Contributions are charged to the Statement of
Financial Activities as incurred.
INCOMING RESOURCES
Income from donations is included in incoming resources when these are receivable, except:
• when donors specify that donations given to the charity must be used in future accounting
periods, the income is deferred until those periods;
• when donors impose conditions, which have to be fulfilled before the charity becomes entitled to
use such income, the income is deferred and not included in incoming resources until the preconditions for use have been met.
Subscription income is credited to incoming resources for the subscription period covered.
All other income including income from investments is credited to incoming resources when receivable by
the charity.
RESOURCES EXPENDED
All expenditure is accounted for on an accruals basis and has been classified under headings that aggregate
all costs related to the category.
Charitable expenditure comprises those costs incurred by the charity in the delivery of its activities and
services for its beneficiaries. It includes both costs that can be allocated directly to such activities and
those costs of an indirect nature necessary to support them.
Governan~e costs include those costs associated ·with meeting the constitutional and statutory requirements
of the charity and include the audit fees and costs linked to the strategic management of the charity.

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All costs are allocated between expenditure categories on a basis designed to reflect the use of the
resource. Costs relating to a particular activity are allocated directly. Support costs include central
functions and have been allocated to activity cost categories on a basis consistent with the use of resources
e.g. by floorspace. Staff costs have been allocated according .to the tim_e spent on each activity.

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 The Institute of Economic Affairs
ACCOUNTING POLICIES (continued)
FOREIGN CURRENCY
Assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the
balance sheet date. Transactions in foreign currencies are recorded at the rate ruling at the date of the
transaction. All differences are taken to the statement of financial activities.

RESEARCHEXPENDITURE
Research expenditure is written off in the accounts as it is incurred.

:

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UNRESTRICTED FUNDS
Unrestricted funds comprise those funds which the trustees are free to use for any purpose in furtherance of
the charitable objectives. Designated funds are unrestricted funds which the trustees have currently
designated for specific purposes. General funds are unrestricted funds for which no specific purposes have
been designated.

I

RESTRICTED FUNDS
Restricted funds are those donated to the Institute for one or more specific purposes.

ENDOWMENTFUND
The Ralph Harris Fund is an expendable endowment fund whose use is restricted to financial support for
the position of the Director General, including employment and support costs.
INVESTMENTS
Investments held as fixed assets comprise equities, open-ended funds, fixed interest securities and currency
and are stated at year end market value.
Property is stated at the Trustees' assessment of year-end market value. No depreciation is charged on the
property in accordance with SSAP 19. This departure from the requirements of the Companies Act 2006,
which requires all properties to be depreciated, is, in the opinion of the Trustees, necessary for the financial
statements to give a true and fair view in accordance with applicable accounting standards.

Page 11

 The Instituteof Economic Affairs
NOTES TO THE FINANCIAL ST A TEMENTS
For the year ended 31 December 2012
2012
£000

2011
£000

237
594

93
679

831

772

DONATIONS (VOLUNTARY INCOME)

i:

Foundations, corporate and individuals
Restricted
Unrestricted

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2

ALLOCATION OF COSTS 2012

Fundraising and subscriber support
Publications
Student/Teacher Outreach ..·
Events
Communications
Governance

Direct
Costs
£000

Support
costs
£000

2012
Total
£000

183
481

27
15

153
271
93
127
103
6

441

753

l, 194

30
210
73

86

166
213
130
21

ALLOCATION OF SUPPORT COSTS 2012
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Personnel costs
Office costs
Pr.operty costs
· Travel costs

675
90
(22)
10
753

Support costs have been allocated as follows:

Fundraising and subscriber support
Publications
Student/Teacher Outreach
Events
Communications
Governance

Support
costs

Personnel
Costs

14%
28%
24%
24%
IO%
0%

21%
37%
11%
16%
14%
1%

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 The Institute of Economic Affairs
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2012

2

ALLOCATION OF COSTS 2011

i

Fundraising and subscriber support
Publications
Student/Teacher Outreach
Events
Communications
Governance

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Direct
costs
£000

Support
costs
£000

2011
Total
£000

17
179
72
81
21
14

137
282
109
145
115
6

154
461
181
226
136
20

384

794

1178

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£88,000 of payments to the Trade Policy Research Centre have
been reclassified from Student/Teacher Outreach to Publications
to better reflect the nature of these costs, which is consistent with
the classification adopted in the current year.

ALLOCATION OF SUPPORT COSTS 2011
Personnel costs
Office costs
Property costs
Travel costs

614
90
71
19
794

Support costs have been allocated as follows:

Personnel
costs

Fundraising andsubscriber support
Publications
Student/Teacher Outreach

12%
28%
25%

19%
38%
10%

Events
Communications

25%
10%

16%
16%

0%

1%

2012
£000

2011
£000

6
10
5

6
12

21

20

Governance

3

Support
costs

GOVERNANCE
Salaries and staff costs
Audit
Legal and professional

2

Page 13

 The Instituteof Economic Affairs
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2012
4

NET RESOURCES EXPENDED/EXPENDITURE

2012
£000

Net resources expended for the year are stated after charging:
Depreciation - charge for year
Depreciation - credit in respect of prior years
Auditor's remuneration

2011
£000

19
(75)
10

26
10

=
5

TAXATION
The Institute is not liable to corporation tax on its income and gains in the current year to the
extent that they are applied for charitable purposes.

6

EMPLOYEES

2012
No.

2011
No.

10

11

The average monthly number of persons employed by the Institute
during the year was:
Office and management
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Staff costs for above persons:
Wages and salaries, including benefits
Social security costs
Other pension costs

=·

The number of employees whose emoluments as defined for
taxation purposes amounted to over £60,000 in the year was as
follows:
£60,001 - £70,000
£90,000 - £100,000

2012
£000

2011
£000

443
50
20

441
49
20

513

510

..--=

2012
No.

2011
No.

The employees earning over £60,000 participate in the company pension scheme. Contributions
paid in the year in respect of these employees amounted to £8,362 (2011: £5,769).

No Trustees, or persons related or connected to them, received any remuneration or
reimbursement of expenses from the Institute during the year.

Page 14

 The Institute of Economic Affairs
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2012

7

TANGIBLE FIXED ASSETS
Freehold
property
£000

! :

Cost
1 January 2012
Additions

965

3 1 December 2012

Office
equipment
£000

Total
£000

72

1,037

I

I

965

73

1,038

Depreciation
1 January 2012
Credited in respect of prior years
Charged for year

331
(75)
18

70

401
(75)
19

31 December2012

274

71

345

Net book value
31 December 2012

691

2

693

31 December 2011

634

2

636

11.

'i
Prior to I January 2012, depreciation had been charged over 40 years on both land and buildings,
but from that date on buildings only. The credit in the year relates to depreciation charged on land
from 1996 to 2011, to correct the historic position.

Page 15

 The Instituteof Economic Affairs
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2012
FIXEDASSET INVESTMENTS

8

Open-end
funds
£000
Market value at
1 January 2012
Additions
Disposals
Unrealised gains
Cash in transit

Cash held
on deposit
£000

2,600
591
(585)

Property
£000

Total
£000

686
327
(703)

100

3,386

918
(1,288)
218
158

218
158

Market value at 3 1
December 2012

· 2,982

310

100

3,392

Historical cost at 31
December 2012

2,617

268

71

2,956

Historical cost at 31
December 2011

2,644

686

71

3,401

Property represents an equity share in leasehold property, and is included in the accounts at the
Trustees' assessment of market value.

9

DEBTORS.
Due within one year:
Trade debtors
Taxation recoverable
Prepayments and accrued income

10

CREDITORS: Amounts falling due within one year
Trade creditors
Taxation and social security
Other creditors
Accruals and deferred income
Bank overdraft

2012
£000

2011
£000

140
3
68

44
4
13

211

61

2012
£000

2011
£000

43
16
3
21
52

36
32
4
14

135

86

Deferred income has arisen as a result of2 year subscriptions paid in advance. Amounts are released
to the Statement of Financial Activities within the year to which the subscription relates.

Page16

 ,,

The Institute of Economic Affairs
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2012

11

EXPENDABLE ENDOWMENT FUND
At
1 January 2012
£000

Transfer to
restricted
funds
£000

Investment
Gains
£000

At
31 December
2012
£000

2,367

(75)

150

2,442

Ralph Harris Fund

==

==

The Ralph Harris Fund has been established as an expendable endowment fund to endow the position
of _DirectorGeneral of the IEA as "Director General and Ralph Harris Fellow."

12

RESTRICTED FUNDS
At I
January

i

I
I

i,
I

2012
£000
NFS publication
State of the Economy
conference
AFIEA re J~m.esTooley
Earhart grant for Franklin
Cudjoe
Earhart grant for Kristian
Niemeitz
Trade Policy Research
Centre
Supporter Database
Lifestyle Unit
Transport Unit
Age Endeavour
Ralph Harris Fund (note

11)
M Fund

4

.. · Income

£000
9

£000

5
34

(7)
(34)

Investment
Gains

£000

At31
December

2012
£000
9

£000

2

(2)

2
6

Expenditure

Transfers

6

(6)

58

(58)

10

6

(IO)

50
50
25

(19)
(50)
(25)

20
573

70
12

(145)
(50)

615

319

(406)

31

75

20
561

75

629

26

--

26

==

Network for a· Free Society has provided funding for a monograph on the foundations of liberty by Dr
Eamonn Butler
.
. I.
State of the Economy conference donations cover the cost of bursary places for students.
American Friends of the IEA funded research by lEA author Dr James Tooley, Professor of Education
Policy at the E.G.West Centre, Newcastle University, into barriers to education entrepreneurs.
The Earhart Foundation is funding research fellowships for Franklin Cudjoe and Kristian Niemeitz.
The Trade Policy Research Centre carries out research into the UK's trade policy options outside the
Common Commercial Policy/Single Market Framework of the, EU.

Pagel?

 '

The Institute of Economic Affairs
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 3 I December 2012
A donation was received in 2011 towards developments to the supporter database carried out during 2012.
The IEA Lifestyle Economics Unit investigates, researches and promotes public discussion on the
regulation and taxation of controversial lifestyle products in the UK.
The IEA Transport Unit creates papers, monographs and events on the role of markets in the transport
sector.
The Age Endeavour Fellowship supports IEA research into work and the elderly.
The M Fund was set up to promote research into the reduction in the size of the public sector and to
promote an interest in market economy policies on the part of teachers and senior pupils.

13

UNRESTRICTED FUNDS

At I
January
2012
£000

'·
Designated Funds
Fixed Asset Fund
Dorian
Fund
Warren
Fund

Income . Expenditure
£000
£000

634

288

Investment
Gains
£000

Transfers
£000

57,

691
13

8

(100)

209

(50)

32

(150)

932

150

166

82

Designated
unrestricted funds , .
Unrestricted general
funds

,.

At31
December
2012
£000

---1,004,

8

57

129

732

(845)

1,133

740

(788)
==

13

--='.

1,098

13
=-==

The Fixed Asset Fund represents donations made to the Institute currently designated and used by the
Trustees for the purpose of acquiring freehold and investment property. A transfer has been made
between the Fixed Asset Fund and General Fund 'in order to reflect the depreciation of the freehold
property in the year.
The Dorian Fund has been designated by the Trustees to support the costs of an education director.
The Warren Fund is used by the Trustees to provide working capital.

• I

'

PageI8

 -.---~-·---

..J

I

The Institute of Economic Affairs
NOTES TO THE.FINANCIAL STATEMENTS
For the year ended 31 December 2012

14

15

ANALYSIS OF NET ASSETS BETWEEN FUNDS
Designated
Funds

General
Funds

Restricted
funds

Endowment
fund

Total
funds

£000

£000

£000

£000

£000

Fund balances at 31 December
2012 are represented by:
Tangible fixed assets
Investments
Current assets
Current liabilities

691
241

2
134
165· ·
( 135)

575
54

2,442

Total net assets

932

166

629

2,442

693
3,392
219
( 135)
4,169

;

PENSION SCHEMES

-I

The Institute operates a defined contribution scheme and contributions to the scheme are made to an
independent insurance company.
The pension costs of the lnstitute's scheme amounted to £19,815 (2011: £19,703). There were £3,263
contributions outstanding at the end of the year (2011: £3,524).

r

i
I
I

I

;

16

STATUS
The Institute is a company limited by guarantee and has no share capital. The Institute had IO (2011:
I 0) members at the year end.
The Memorandum of Association provides that members are liable to contribute a sum not exceeding
£1 each in the event of the company being wound up while they are members or within one year of
ceasing to be members.

,I

Pagel9