Financial Framework

The value of the Foundation’s investment assets (our endowment) is significant. At present we intend to spend over the period of six years the income and accumulated unspent income generated by these assets.

We will review this spending policy annually. In time we may move to a spending rule based on a percentage of investment assets.

This means that at present we plan to increase our level of spending, after allowing for the cost of generating the income, to an average over the life of the plan of £20m p.a. in real terms, including the cost of grant-making and the grant to the Helen Hamlyn Trust.

This financial framework does not take account of programme related investment (PRI) (e.g. loans, equity purchases, or quasi-equity funded from income or capital with the primary aim of achieving our objectives) as we have no current plans to make any PRIs, although we will explore the opportunities for them during the life of the plan.

The financial framework also does not take account of mission-related investment (MRI) by which we mean the use of positive screening of investments so that they also help us to achieve our aims. Currently our expectation is that any MRI will be limited to slight investment “tilts” (e.g. towards India). We will review this approach periodically.

Over the course of the plan we intend to commit a greater proportion of funds to special initiatives or targeted schemes than we do to open grant-schemes. The proportion may vary across programmes and over time. We will monitor our commitments between these two styles of grant-making.

We will set an annual budget for support costs. Our objective (6.2) is to apply firm control to our support costs. However over the course of the plan, our target is that the support costs (excluding investment management and its support costs) averaged over the life of the plan will be c.10 % of grants. This target would need to be reviewed if during the life of the plan we begin to make programme related investments.

We do not intend that this c.10% target be treated as a maximum in any year, nor do we believe that it is appropriate to cut corners on support costs, since as a predominantly change-making trust we need to spend money on support, e.g. to stimulate exceptional applications or increase evaluation to develop and share knowledge. In particular we plan to increase(and identify the proportion of our spending on “grants plus”, namely the cost of adding value over and above the grants we make in appropriate cases, such as providing additional funding for research, planning, application or project development, training or organizing networking opportunities.

July 2006