,; ·, The Institute of Economic Affairs (A Charitable Company Limited by Guarantee) TRUSTEES' REPORT AND FINANCIAL STATEMENTS L 31 December 2013 l CHAR\TY COMMISSION F\RST CONTACT 13 JUN2014 RECORDED RECEIVED Company Registration No. 755502 Registered Charity 23535 I Nt- J l The Instituteof 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 Bruno Prior (appointed 12thNovember 2013) Neil Record Professor Martin Ricketts Linda Whetstone Chainnan Treasurer 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 MK9 IBP BANKERS Barclays Bank pie Pall Mall Corporate Banking Centre Pall Corporate Group PO Box 15163 London SWIA IQD INVESTMENT MANAGERS CCLA Investment Management Limited BNY Mellon Fund Managers Limited M & G Securities Limited Henderson Global Investors Pagel The Instituteof Economic Affairs TRUSTEES' REPORT The Trustees present their report together with the financial statements of the Institute of Economic Affairs for the financial year 2013. 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 General 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: • • • • 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 60% higher than in 2012, up from £831,000 to £1,330,000. We continue to seek flexibility in responding to potential changes, both in income and in programme opportunities. Over the year, visits to the website (www.iea.org.uk) were up by nearly 60% to 1,323,000. Over 50 IEA publications were each downloaded more than 1,000 times. Page2 ,- The Instituteof Economic Affairs TRUSTEES' REPORT Over the past year, our student outreach has continued to thrive. As part of the new sixth fonn conference programme we have partnered with more than 20 schools to host regional economics conferences for Alevel and 1B students. These have proved incredibly popular and have allowed us to reach more than 3,000 students. We have already organised another 25 conferences for the forthcoming year at schools all over the UK. In February, the IEA State of the Economy Conference was attended by 50 A-level students and teachers, financed by bursary donations from IEA supporters. We also organised two one-day seminars for A-level and lB economics teachers. Our outreach to university students continues to grow and our weekend Freedom Forum conference was attended by more than 200 students. The conference offered students a diverse range of talks, debates and training workshops around the general theme of free market economics and classical liberal ideas. Once again, our Freedom Week seminar in Cambridge proved to be very popular, with nearly 10 applicants for every place on the week long course. Both Freedom Week and the Freedom Forum received very good feedback from attendees and we look forward to the 2014 edition of these events. Over the past year the IEA has strengthened its international outreach and external activity, leveraging the UK programme to allow other free market organisations to take advantage of it. IEA staff have participated in nearly a dozen international events, conferences and forums; our books have reached economists, policy-makers and students from West Virginia to China, from Austria to Ethiopia, and from Hungary to Iran. Furthennore, we are finnly in the initial stages of creating a pan-European network of like-minded think tanks to share our work, help in the development of liberal ideas in other European countries, and strengthen our impact on decision-makers in Brussels. Additionally, over the past year more than 40 IEA publications have been translated into, and reprinted in nine different languages. The IEA published or co-published six titles in print in 2013, together with three editions of our journal, Economic Affairs, which is now published in association with the University of Buckingham in order to allow the IEA to focus more in its new EA magazine. 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 l 00 authors across our monographs, web papers and journal and our triennial student/teacher supplement reached 2,000 individuals or educational establishments across the UK. In addition we co-published five books with trade publishers. Our acclaimed new magazine, EA, has proved an immediate hit with students and teachers throughout the UK. Each edition features some of the best writers in the world on economic freedom. It is sent to every school in the UK teaching A level or 1B Economics or Business Studies - and articles have already been used as teaching modules in schools and universities. The IEA organised about 85 events in 2013, 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 Grover Norquist, President of Americans for Tax Refonn, in July 2013 and attracted an audience ofover 300. In late 2013 the IEA launched IEA TV, an online platfonn for all aspects of the free market. The new service features many new videos and hundreds of archive clips. It has been warmly welcomed, and in the months immediately following launch, viewing of videos on our website was running at an annualised increase of 600%, with viewers in over 130 countries. The IEA also continued to expand its media coverage, with senior IEA staff and fellows making around 2,400 media appearances across print, radio and television - up 70 per cent on the previous year. In addition, more than 4,500 people now follow the IEA on Facebook and 4,700 follow us on Twitter. Page3 The Instituteof Economic Affairs TRUSTEES'REPORT 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 most grateful. There is a formal meeting of academic advisers once a year, under the chairmanship of Professor Martin Ricketts, one of our Trustees. Continuing themes are over-regulation, much of it stemming from the European Union; systemic problems in the welfare state, including social security, education and health services; corruption, both intellectual and financial, in public life; and other pervasive aspects of government interference. In early 2014, 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, not merely to restrict its rate of growth, remains limited. Hence the IEA 's role in spreading public understanding is as important as ever. FINANClAL REVIEW Total incoming resources during the year were £1,527,000 and total resources expended were £1,566,000 leaving net resources expended of £39,000. Restricted income was £420,000 compared with resources expended on restricted projects of £467,000. The net increase in funds was £258,000, after allowing for realised and unrealised gains and losses on investments. Investment income on the Ralph Harris Fund during the year amounted to £63,000. The financial statements, together with the notes thereto, expand on these outline details. 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 modern UK scene that all too many so-called "charities" do receive much - in many cases most- of their funds from government. The Finance and General Purposes Committee, and the full Board of Trustees, regularly review the amount and pattern of donations. 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 lnstitute'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 lnstitute's programmes in accordance with donors' intent. The free reserves of the charity as at 31 December 2013, defined as being unrestricted, undesignated funds not represented by tangible fixed assets, amounted to £274,000 (2012: £166,000). Page4 The Instituteof Economic Affairs TRUSTEES' REPORT 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 employees' 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. FUTURE PLANS The Institute intends to enhance its activities still further in 2014 and beyond, continuing our longestablished 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 2013 and up to the date of signing this report, unless otherwise stated. Professor DR Myddelton Chairman Kevin Bell Treasurer Robert Boyd Michael Fisher Michael Hintze Professor Patrick Minford Professor Mark Pennington Bruno Prior (appointed ]2th November 2013) Neil Record Professor Martin Ricketts Linda Whetstone 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, Page5 The Instituteof Economic Affairs TRUSTEES'REPORT 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 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), and in acco~dance with the provisions applicable to· companies entitled to the small companies exemption. By order of the board Profe~ Chai~~A,J£ ~, 1 \}'wt, 2014 Page6 The Instituteof Economic Affairs TRUSTEES' REPORT 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; • make judgements and estimates that are reasonable and prudent; and • 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. By~ Professor DR Myddelton c~~ 2014 Page? The Institute of Economic Affairs INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF THE INSTITUTE OF ECONOMIC AFFAIRS For the year ended 31 December 2013 We have audited the financial statements of the Institute of Economic Affairs for the year ended 31 December 2013 on pages 9 to 20. The financial reporting framework that has been applied in their preparation is applicable law 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 permitted 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 formed. Respective responsibilities of trustees and auditor As explained more fully in the Statement of Trustees' Responsibilities set out on page 7, the trustees (who are also directors for the purposes of company law) 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 ofan audit of financial statements is provided on the Financial Reporting Council's website at http://www.frc.orn:.uk/Our-Work/Codes-Standards/ Audit-and-assurance/Standards-andguidance/Standards-and-guidance- for-auditors/Scope-of-aud it/U K-Private-Sector-Entity-(i ssued-1- December2010).aspx. 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 2013 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; and have been prepared in accordance with the Companies Act 2006. Opinion on other requirement of the Companies Act 2006 In our opinion the information 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 information and explanations we require for our audit; or the Trustees were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies exemption from the requirement to prepare a strategic report or in preparing the Trustees' Report. ~~~~s~~E~~:.!;-1-f For and on behalf of BAKER TILLY UK AUDIT LLP, Statutory Auditor Chartered Accountants The Pinnacle, 170 Midsummer Boulevard Bucks MK9 1BP Milton ~es, \2 ----' v.ne 2o )k. C ~s The Instituteof Economic Affairs STATEMENT OF FINANCIAL ACTIVITIES (INCLUDING AN INCOME AND EXPENDITURE ACCOUNT) For the year ended 31 December 2013 Notes INCOMING RESOURCES Incoming resources from generated funds Voluntary income Activities for generating funds Investm.ent income Dividends receivable Interest receivable Incoming resources from charitable activities: Academic programme: Publications and subscriptions Events Unrestricted funds Restricted funds Endowment fund £000 £000 £000 922 408 16 2 1 34 69 Total incoming resources -- Total 2013 £000 2012 £000 1,330 831 16 18 52 26 52 35 34 69 33 90 1,527 1,059 1,044 420 157 57 214 183 259 77 32 42 624 285 236 185 22 481 166 213 130 21 1,566 1,194 RESOURCES EXPENDED Charitable activities: Fundraising and subscriber Support Academic programme: Publications Student/Teacher outreach Events Communications Governance 3 365 208 204 143 22 Total resources expended 2 1,099 NET INCOMlNG RESOURCES/(RESOURCES EXPENDED) Other recognised gains and losses: Unrealised gains on investments Realised gains/(losses) on disposal of investments 41 22 9 3 Total -- 467 63 -- -- 4 (55) 8 5 (47) 63 (39) (135) 54 215 269 218 15 8 28 (29) -- NET MOVEMENT lN FUNDS (50) 22 286 133 (133) 258 54 Transfers between funds TOTAL FUNDS BROUGHT FORWARD 11,12, 13,14 1,098 629 2,442 4,169 4,115 TOTAL FUNDS CARRIED FORWARD l l,12, 13,14 1,048 784 2,595 4,427 4,169 All of the above results are derived from continuing activities. The Statement of Financial Activities includes all gains and losses in the year. Page9 The Instituteof Economic Affairs BALANCE SHEET As at 31 December 2013 Company Registration No. 755502 Registered Charity No. 235351 Notes 2013 2012 £000 £000 689 3,251 693 3,392 3,940 4,085 180 419 211 8 599 219 (112) (135) 487 84 4,427 4,169 11 2,595 2,442 Restricted funds 12,14 784 629 Unrestricted funds Designated funds General funds 13,14 13 774 274 932 166 14 4,427 4,169 FIXED ASSETS Tangible assets Investments 7 8 CURRENT ASSETS Debtors Cash at bank and in hand 9 CREDITORS: Amounts falling due within one year 10 NET CURRENT ASSETS TOTAL ASSETS LESS CURRENT LIABILITIES FUNDS Endowment funds TOTAL FUNDS The financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime. The financial statements on pages 9 to 20 were approved by the Trustees and authorised for issue on 3 3'li\t..)t 2014 and are signed on their behalf by: P~lton Trustee ~~2014 Page 10 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. TANG IBLE FIXED ASSETS Fixed assets are stated at historical cost, less depreciation. 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. STOCKS AND WORK IN PROGRESS No value for accounts purposes is attributed to stocks of unsold publications. PENSION CONTRIBUTIONS The Institute operates a defined contribution scheme. Contributions are ~harged to the Statement of Financial Activities on an accruals basis. 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. Governance 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. 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 time spent on each activity. Page 11 The Instituteof 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. RESEARCH EXPENDITURE Research expenditure is written off in the financial statements as it is incurred. 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. RESTRICTED FUNDS Restricted funds are those donated to the Institute for one or more specific purposes. ENDOWMENT FUND 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. Leasehold 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. CASH FLOW STATEMENT The company has taken advantage of the small company exemption from preparing a cash flow statement under the terms of FRS 1. Pagel2 The Instituteof Economic Affairs NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 2013 £000 2012 £000 408 922 237 594 1,330 831 DONATIONS (VOLUNTARY INCOME) Foundations, corporate and individuals Restricted Unrestricted 2 ALLOCATION OF COSTS 2013 Fundraising and subscriber support Publications Student/Teacher Outreach Events Communications Governance Direct Costs £000 Support costs £000 2013 Total £000 16 267 90 73 30 14 198 357 195 163 155 8 214 624 285 236 185 22 490 1,076 1,566 ALLOCATION OF SUPPORT COSTS 2013 Personnel costs Office costs Property costs Travel costs 820 158 79 19 1,076 ,., 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% 10% 0% 20% 35% 16% 12% 16% 1% Page 13 The Instituteof Economic Affairs NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 2 ALLOCATION OF COSTS 2012 Fundraising and subscriber support Publications Studentffeacher Outreach Events Communications Governance Direct costs £000 Support costs £000 2012 Total £000 30 210 73 86 27 15 153 271 93 127 103 6 183 481 166 213 130 21 441 753 1,194 ALLOCATION OF SUPPORT COSTS 2012 Personnel costs Office costs Property costs Travel costs 675 90 (22) JO 753 Support costs have been allocated as follows: Fundraising and subscriber support Publications Studentffeacher Outreach Events Communications Governance 3 GOVERNANCE Salaries and staff costs Audit Legal and professional Support costs Personnel costs 14% 28% 24% 24% 10% 0% 21% 37% 11% 16% 14% 1% 2013 £000 2012 £000 8 II 3 6 10 22 21 5 Pagel4 The Instituteof Economic Affairs NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 4 NET INCOMING RESOURCES/(RESOURCES EXPENDED) Net incoming resources/(resources expended) for the year are stated after charging: Depreciation - charge for year Depreciation - credit in respect of prior years Auditor's remuneration Operating lease rentals - plant and machinery 2013 £000 2012 £000 19 (75) 10 2 26 11 2 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 prior year relates to depreciation charged on land from 1996 to 2011, to correct the historic position. 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 The average monthly number of persons employed by the Institute during the year was: Office and management 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 £ 100,00 l - £110,000 2013 No. 2012 No. 13 10 2013 £000 2012 £000 593 66 38 443 50 20 697 513 2013 No. 2012 No. The employees earning over £60,000 participate in the company defined contribution pension scheme. Contributions paid in the year in respect of these employees amounted to £18,909 (2012: £8,362). No Trustees, or persons related or connected to them, received reimbursement of expenses from the Institute during the year. any remuneration or Page 15 The Instituteof Economic Affairs NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 7 TANG IBLE FIXED ASSETS Office equipment £000 Freehold property £000 8 Total £000 Cost 1 January 2013 Additions 965 73 22 1,038 22 31 December 2013 965 95 1,060 Depreciation 1 January 2013 Charged for year 274 18 71 8 345 26 31 December 2013 292 79 371 Net book value 31 December 2013 673 16 31 December 2012 691 2 693 Property £000 Total £000 689 FIXED ASSET INVESTMENTS Market value at 1 January 2013 Additions Disposals Unrealised gains Open-end funds £000 Cash held on deposit £000 2,982 310 255 (162) 100 3,392 255 (665) 269 (503) 269 Market value at 31 December 2013 2,748 403 100 3,251 Historical cost at 31 December 2013 2,123 332 71 2,526 Historical cost at 31 December 2012 2,617 268 71 2,956 Property represents an equity share in leasehold property, and is included in the accounts at the Trustees' assessment of market value. Page 16 The Instituteof Economic Affairs NOTES TO THE FINANCIAL ST ATEMENTS For the year ended 31 December 2013 9 DEBTORS 2013 £000 Trade debtors Taxation recoverable Prepayments and accrued income 10 CREDITORS: Amounts falling due within one year 69 8 103 140 3 68 180 211 2013 £000 Trade creditors Taxation and social security Other creditors Accruals and deferred income Bank overdraft 2012 £000 2012 £000 39 20 14 39 43 16 3 21 52 112 135 --- Deferred income has arisen as a result of 2 year subscriptions paid in advance. Amounts are released to the Statement of Financial Activities within the year to which the subscription relates. 2013 £000 Deferred income at I January 2013 Released to Statement of Financial Activities in year Deferred in year Deferred income at 31 December 2013 11 2012 £000 3 2 (3) 3 (2) 3 3 3 EXPENDABLE ENDOWMENT FUND Ralph Harris Fund At I January 2013 £000 Investment Income £000 Transfers between funds £000 Investment Gains £000 At 31 December 2013 £000 2,442 63 (133) 223 2,595 == The Ralph Harris Fund has been established as an expendable endowment fund to endow the position of Director General of the IEA as "Director General and Ralph Harris Fellow." Page 17 The Instituteof Economic Affairs NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 12 RESTRICTED FUNDS NFS publication State of the Economy conference Research Intern Freedom Forum Earhart grant for Benedikt Koehler Earhart grant for Kristian Niemietz Trade Policy Research Centre Conference Brexit Essay Competition Sock Puppets European Network Lifestyle Unit Transport Unit Age Endeavour Ralph Harris Fund (note 11) M Fund At 1 January 2013 £000 9 2 6 Income Expenditure £000 £000 (9) 5 l 9 (7) (l) (9) 6 (6) 6 (6) 71 7 (77) (7) (10) 168 Investment Gains £000 Transfers £000 158 15 45 15 45 50 25 (31) (50) (25) 20 561 12 (153) (76) 629 420 (467) 31 At 31 December 2013 £000 133 566 69 --69 133 784 Network for a Free Society funded for a monograph on the foundations ofliberty by Dr Eamonn Butler. State of the Economy conference donations cover the cost of bursary places for students. A UK University donated funds to support a research intern in the year. A donation was received towards the cost of the Freedom Forum, which is a long weekend residential education and information event for between 250 to 300 participants. The Earhart Foundation has funded a research fellowship for Kristian Niemietz and made a grant to Benedikt Koehler, to support his research and the production of a book on early Islam. 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. An all-day conference (entitled The Causes of the Great Recession: a Monetary Interpretation); followed by a post-conference dinner (for overseas speakers and VIPs) was funded by specific donations. Significant donations were collected in 2013 to fund the Brexit Prize competition which will be concluded and awarded in 2014. A donation has been received to develop further in 2014 the ideas within the Sock Puppets web papers already published in 2013. A donation was received for the next instalment of Sock Puppets, which was published in February 2014. Page 18 The Instituteof Economic Affairs NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 Donations were received to establish a European Network of Free Market Think Tanks. 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 1 January 2013 £000 Designated Funds Fixed Asset Fund Dorian Fund Warren Fund Designated unrestricted funds Unrestricted general funds Income £000 Expenditure £000 Investment Gains £000 Transfers £000 At31 December 2013 £000 691 209 32 2 5 (18) (147) 673 69 32 932 2 5 (165) 774 165 274 166 1,098 1,042 (1,099) 1,044 {1,099) --- =::...--=. 5 ==:::. =:....:..= 1,048 =-:-~-·..!,: 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. 14 ANALYSIS OF NET ASSETS BETWEEN FUNDS Designated Funds £000 Fund balances at 3 1 December 2013 are represented by: Tangible fixed assets Investments Current assets Current liabilities 673 Total net assets 774 101 General Funds £000 Restricted funds £000 Endowment Total fund funds £000 £000 16 139 231 (112) 457 327 2,554 41 689 3,251 599 (I 12) 274 784 2,595 4,427 Page 19 The Instituteof Economic Affairs NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2013 15 PENSION SCHEMES The Institute operates a defined contribution scheme and contributions to the scheme are made to an independent insurance company. The pension costs of the Institute's scheme amounted to £37,590 (2012: £19,815). There were £14,169 contributions outstanding at the end of the year (2012: £3,263). 16 STATUS The Institute is a company limited by guarantee and has no share capital. The Institute had 11 (2012: 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. 17 RELATED PARTY TRANSACTIONS There were no related party transactions in the year (2012: nil). 18 COMMITMENT UNDER OPERA TING LEASES 2013 £000 2012 £000 At 31 December 2013, the Institute had annual commitments under noncancellable operating leases as follows: Plant and machinery: Expiring between 2 and 5 years 2 2 Page 20