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ASSOCIATION OF CHARITABLE

FOUNDATIONS

TRUSTEES ANNUAL REPORT AND FINANCIAL STATEMENTS

YEAR ENDED 31 DECEMBER 2016

Charity No. 1105412

Company No. 5190466

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ANNUAL REPORT 2016

SINCE 1989 … ACF has been the membership association for charitable foundations and grant-making trusts in the UK. We bring together the varied resources, skills and experience of our members to help them achieve their objectives as effectively as possible and to represent their interests. We exist to:

Enable trusts and foundations to learn from each other’s experience, to discuss matters of common concern, to confer with funders from other sectors, and to achieve good practice in their work;

Improve the understanding of trusts and foundations among grant-seekers and the general public;

Encourage philanthropy and promote the development of new foundations;

Influence public policy affecting independent foundations and grant-making trusts, and provide relevant information to our membership.

SINCE THE LAST ANNUAL REPORT … ACF has successfully completed the implementation of its strategic objectives for the 2014-16 period. This follows, and was in large part made possible by, fifteen years of leadership under David Emerson CBE. It was during this time that ACF became the stable, well-respected and influential organisation it is today, providing the basis on which to move forward into its next stage of development. ACF has now appointed a new Chief Executive, and has drawn on an extensive, independent stakeholder survey to develop its 2017-2021 strategic plan. Throughout this report ACF will assess its achievements in serving our membership against the following benchmarks:- We aim: (i) To demonstrate and promote foundations’ contribution to society, through

developing a strong evidence base and advocating for an enabling policy environment in which they can thrive.

(ii) To encourage all foundations to develop their capacities and competencies to make

more effective use of all of the resources that they have at their disposal.

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(iii) To provide the high quality support in response to members’ needs that will serve the existing membership overall and that will be attractive to potential members; including by the provision of a valued space for networking, sharing and peer learning.

(iv) To build ACF as a resilient organisation fit for purpose for its aims and objectives, and

in a rapidly changing environment.

THE BIG PICTURE … provides the context in which ACF has served its membership over the past year.

Foundations, like many civic and state institutions, have responded to the political and cultural upheavals of the past twelve months by reflecting on both their individual practice and their wider societal role. And while the nature of this response has varied in both focus and intensity, echoing the diversity of the sector itself, there remains a tangible sense of ‘taking stock’ and a continued desire to balance a responsiveness to the issues of the day with continued delivery of maximum social benefit over the long-term.

Of particular note was the June 2016 referendum on whether to leave the European Union. The exact nature of the UK’s exit is still unclear, however foundations have been understandably keen to reflect on the implications both for their work as funders and as contributors to a wider culture of philanthropy. Foundations have asked what the vote tells them about the issues, communities and initiatives that they support. In light of the societal divisions and instabilities the vote revealed, do processes, governance and decision-making need to be reconsidered? What measures might minimise the effects on vulnerable constituencies, whether of rising intolerance or deleterious economic impact? As investors and influencers, how might foundations position themselves within economic and political uncertainty?

Foundations are also operating at a time when the boundaries between the private, public and third sector are all in flux, being challenged and transformed by political and economic imperatives as well as by broader cultural and technological shifts and their resulting effects on social, national and trans-national identities. While specific foundations will be examining and recalibrating their activities to reflect this changing context, as a sector foundations have continued in their collective aim to make the best use of the full range of their charitable assets, respond creatively to need and maintain their independence as funders, allies and agents in their own right.

In support of this collective endeavour, ACF has strived to promote good practice, provide peer learning and network opportunities, and advocate on behalf of foundations; articulating their distinct, powerful and irreplaceable contribution to civil society.

THE DETAILS … provide insight into the activities undertaken by ACF on behalf of its membership over the past 12 months.

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We have demonstrated and promoted foundations’ contribution to society, through

developing a strong evidence base and advocating for an enabling policy environment in

which they can thrive.

ACF is committed to the ongoing development of an authoritative evidence base about the size, nature, resources, activities and distribution of charitable foundations in the UK. Our aim is to:

Track the patterns of change so that philanthropists, practitioners and policymakers can make better decisions based on an understanding of the factors that drive the sector;

Reach new audiences who may be unfamiliar with the UK foundation landscape;

Outline a realistic political context for assessing the limited feasibility of the role of foundations in public provision; thereby

Establish and maintain ACF as the informed voice for foundations, giving weight and integrity to our interventions.

ACF continued to make significant progress in this area, building on the work that had taken place in the preceding years. In 2016, with support from the Pears Foundation, we worked with Professor Cathy Pharoah, Co-Director of the Centre for Charitable Giving and Philanthropy at Cass Business School, to further develop a programme of research that tracked key indicators of the health of the foundation sector: its giving, its income and the value of its assets. For the first time, ACF produced a single, combined publication Foundation Giving Trends - Top 300 Foundations, which removed the need for a separate Family Foundation Giving Trends report. This year’s report showed that giving had reached £2.7bn. While still falling short of the pre-recession peak of £2.5bn (equivalent to £2.9bn when adjusted for inflation), the findings demonstrated foundations’ ongoing commitment to delivering social good despite fluctuations in voluntary (-19%) and overall (-2%) income levels. The combined report also detailed the specific growth trajectories of family and corporate foundations. It shows family giving growing by around 5% per year and now accounting for almost two thirds of the total grant-making, and corporate giving rising by 41% in real terms over the past five years. In addition, and for the first time, the report also explored where the money was spent, analysing 16,500 grants and detailing which sectors received the most funding, with education topping the pile followed by health and arts/culture. The development of this evidence base underpins our policy work, providing the raw materials with which we can shape our responses on behalf of our membership. It also helps showcase ACF’s commitment to influencing the public narrative about the positive contribution that foundations make to society. Notable successes this year include the referencing of ACF’s evidence base throughout the sector press both within the UK and Europe, and, for the first time, citation in both The Guardian and The Financial Times. From a policy perspective, ACF has this year identified and met an increasing number of challenges, especially those which threatened to impact on foundations’ operating environment.

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In terms of regulation, trustees’ power to make social investments was clarified by a new Act which also gave the Charity Commission for England and Wales new powers to disqualify trustees guilty of particular misdemeanours and also to issue and publish warnings to charity trustees it believed were at risk of breaching their obligations. In an atmosphere where negative press reporting seemed to command the regulator’s attention as much as material breaches of charity law, ACF with other bodies determinedly engaged in the consultation processes around the introduction of the new warning power. We argued that while no charity should escape its obligations under the law, neither should any charity be censured merely for carrying out controversial work. Working closely with NCVO and the Charity Finance Group we successfully influenced the ensuing guidance to ensure that the criteria for issuing warnings were clearly understood, that reasonable notice would be given, that charities would have a right to make representations and that publication would not be automatic. The Common Reporting Standard is an international tax transparency regime agreed at OECD level which affects endowed foundations. The agreements require financial institutions to collect information about certain payees and to share it with other jurisdictions. Although the scheme went live at the beginning of 2016, it was Spring before it was clear that foundations would be included. The rest of the year saw us intensively engaged in conversations with HMRC, with ACF taking a leading role alongside technical experts from the Charity Tax Group, Charity Law Association, as well as other umbrella bodies and networks such as Charity Finance Group, the Association of Charitable Organisations and the Ariadne Network of Funders. We lobbied Cabinet Office and, with the help of Lord Hodgson, were able to raise questions in Parliament with the result that HMRC crafted bespoke guidance for charities that ameliorated, as far as they were able, some of the most burdensome aspects of the regime. Among these successes was our advocacy aimed at highlighting the risks that might arise to individuals and associations arising from the exchange of information itself. We sought legal advice on the implications of the transparency regime for human rights of those concerned and used it to engage HMRC. Thanks to ACF’s intervention HMRC created a clear, accessible and challengeable system for dealing with these sorts of issues. The full HMRC guidance is now published and we have, with some help from CFG, provided materials and information for practitioners via our own website. Amid these processes, the House of Lords set up an ad hoc Select Committee, chaired by Baroness Jill Pitkeathley to respond to the concerns for the sustainability of the Charity Sector. As a sign of ACF’s growing policy presence and credibility we were invited to address the Select Committee and our Head of Policy was questioned by the Committee alongside other policy representatives from NCVO, ACEVO, CFG, and the Small Charities Coalition. We voiced concerns about the pressures on charities and the increased regulatory and media pressure surrounding their activity. 2016 was a year where, globally, many civil society organisations reported a shrinking space for them to make their contribution, especially in terms of ‘voice’ and campaigning. While UK charities enjoy protections that others do not, even here organisations are reportedly self-censoring despite a successful campaign to resist an ‘anti-lobbying clause’ in government funding agreements. At the very least the role of charities is increasingly contested and foundations are not removed from these wider debates. We do not believe

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that in 2017 the debates will diminish and we therefore expect the pressure will increase on foundations to both protect and manoeuvre successfully within civil society. With that in mind, ACF’s board and its policy reference group, chaired by Anthony Tomei, is actively working with the executive and a strengthened policy capacity to ensure that, as the representative body for UK trusts and foundations, we are on the front foot in defending and enhancing their operating environment.

We have encouraged all foundations to develop their capacities and competencies to make

more effective use of all of the resources that they have at their disposal.

ACF has an important role to play in supporting members to develop their capacities and competencies in order to make the most effective use of their resources. Through an extensive programme of events, we offer a range of opportunities for foundation staff and trustees to explore and develop their thinking on a variety of issues. ACF’s conferences provide a particularly focused opportunity for peer-learning and networking, as well as providing ACF with a unique platform to stimulate challenging debate. This year our flagship annual conference focussed on trust – exploring some of the fundamental implications of trust and considering the role trust might play in building meaningful and productive relationships. Once again, this important event was a huge success. Fully booked for the sixth year in succession, it was attended by 367 people from 173 different organisations. 99% of delegates surveyed said that they would recommend the conference to a colleague and 99% thought the conference supported them in their work. There is still room for improvement, as 10% of delegates didn’t find the breakout sessions relevant to their work, but with a resounding 90% finding them either highly relevant or relevant, and 86% finding the methodology of delivery used suitable and engaging, we may not have to re-invent the wheel, but rather do some tweaking of the spokes going forward. As part of its role as a UK-wide body, ACF holds an annual Northern Ireland conference. The event is an opportunity for foundation staff and trustees with an interest in Northern Ireland to engage with other funders, academics, and representatives from the voluntary and community sector and to learn about the current funding, socio-economic, and political environments. This year the theme was ‘Building upon positive experiences’, and the intention was to take stock of positive experiences of funding in Northern Ireland and to consider in particular the funding of people and place. It was highly participative with sharing of practice and exploration of what has worked and why, and the facilitation was designed to draw out learning and to inform the strategy and practice of others. In addition, ACF is working more closely than ever with members in Scotland, engaging with OSCR and the Scottish Grantmakers. Work with the latter has resulted in a group membership agreement designed to ensure even deeper working relationships going forward.

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We have provided high quality support in response to members’ needs, designed to serve

both the existing membership and be attractive to potential members; including through

the provision of a valued space for networking, sharing and peer learning.

Broadly speaking, ACF’s work in this area falls into two categories. The provision of briefings, news, policy updates and answers to specific member queries can be thought of as ACF’s ‘communicative’ support, whilst our Issue Based Networks (IBNs) and special interest groups might usefully be grouped as our ‘facilitative’ support.

Our monthly news bulletin, Funders’ News, was redesigned this year to improve its appearance and usability. Throughout the year it has informed members of issues affecting foundations, as well as updating them on the work and practice of their peers and of ACF. Key issues this year have included the Common Reporting Standard, the House of Lords Select Committee on Charities, and numerous changes to the regulators’ guidance and powers. Trust & Foundation News, published three times a year, provides members with thorough analysis and thought-provoking reflection on the key issues affecting foundations. Of particular note this year was December’s edition in which members from different fields contributed their thoughts on the implications for foundations of the UK’s decision to leave the EU. This formed part of our ongoing work to inform members of how this decision may affect their practice. ACF’s digital engagement has continued to grow at a healthy rate. The electronic version of Funders’ News is consistently opened by over 50% of recipients, which is double the sector average of 25%. Tweeting from @ACFoundations, we share information that is relevant to our members and keep up to date with their activities, while also using the platform to inform a wider audience of the work foundations do. In the last year, our Twitter following has grown by 40% and now stands at 2,017 followers. Our website, which was revamped in 2015, consistently attracts around 10,000 visitors per month, with the length of time spent on the website by each visitor steadily increasing. The website showcases the many ways in which ACF supports its members, and we are planning to provide further support by increasing our output of blogs on issues affecting foundations. An additional online platform through which ACF supports foundations is fundernetwork.org.uk, our knowledge sharing website open to all grant-makers. It provides a valuable opportunity for funders to ask questions and share ideas with their peers with the option to ask a short question or post a longer blog. The website now has 683 users – 80 more than last year – who posted 62 questions and received 211 responses. The platform also gives ACF staff the opportunity to ask questions directly to members whose views and concerns inform our policy work and consultation responses. On a day-to-day basis, queries are also answered by the dedicated staff team who provide tailored guidance and signposting on a range of issues raised by members. In 2016 ACF also published a guide for those interested in the establishment and ongoing effectiveness of corporate foundations. Good Practice Guide for Corporate Foundations, the updated edition of our 2010 publication researched by Fiona Ellis, provides practical

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guidance on governance, staffing and operations, as well as advice and examples from those already active in the sector. ACF’s networks continue to be a significant part of our offer. In 2016, these member-led groups had 32 meetings with a total of 466 participants attending. These networks are varied, coalescing either around a funding theme (e.g. older people), types of foundations (e.g. corporate foundations), staff groups within foundations (e.g. operational support staff), or topics pertinent to a range of foundations (e.g. monitoring and evaluation). . Finance and investment directors of large foundations continued to value ACF’s Finance, Investment and Resources Management (FIRM) network, which provides a space for charitable foundations to share ideas about good practice in an environment conducive to effective learning. There are 23 members of FIRM, 18 who are ACF members and 5 who are not, with three meetings held in 2016, all of which were well attended. In collaboration with CFG we also launched a new Finance in Grant-making network for all finance staff at grant-making organisations of all sizes. Woburn Place Collaborative This collaborative of foundations interested in social justice held three meetings in 2016 exploring key topical issues, with external speakers providing stimulus and discussion points. Topics included climate change; foundation governance and the changing external environment; using the public health agenda to progress social justice; and technological progress in the sector. The meeting is for CEOs and trustees and meetings have been well attended. Other events As part of our work we also bring in speakers who touch upon time sensitive issues, co-produce events where there is an opportunity to provide something of interest to the wider membership and provide opportunities for foundations to meet with policy-makers. In May we ran a well-attended event to celebrate the introduction of a new power for charities to make social investments, with Rob Wilson MP, Minister for Civil Society. This event saw foundations engaging directly with the Minister, sharing experiences and concerns, and debating how the power might be used. In the second half of 2016 we worked with the Joseph Rowntree Foundation around their new strategy on solving poverty in the UK, co-organising a high profile lecture followed by a more intimate workshop on the role that philanthropy might play in the initiative. In September we organised a roundtable discussion featuring Mark Kramer, Senior Fellow, Kennedy School of Government, Harvard University and Managing Director, FSG, together with Julian Corner, Chief Executive, The Lankelly Chase Foundation who shared their current thinking on collective impact and systems change. During the year we co-convened two meetings of the Intelligent Funding Forum with Big Lottery Fund. Topics included open data and transparency.

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Responsive to membership Part of ACF’s role is to be responsive to members and convene meetings and field trips on issues of emerging interest. 2016 included a series of meetings and briefings on the implications for foundations of the UK leaving the EU; a field visit to Calais refugee camp was organised to help members understand the key issues facing refugees in Calais; and we supported senior foundation staff of the criminal justice network to meet with the National Offender Management Service. Professional development programme ACF provides a range of professional development opportunities focussing on foundation practice for both members and non-members, running 21 short seminars and courses that attracted over 248 attendees in 2016 (nearly 50 more than the previous year). Endowment management We supported members to make effective use of their endowments through running our sixth? series of seminars for trustees and foundation staff on effective endowment management. Developed in collaboration with CCLA and open to all foundations, these seminars comprised three full-day sessions with around 27 delegates attending per session. Feedback was excellent with 100% stating they would recommend seminar series to a colleague and 90% awarding the seminar content 5/5. Action learning In 2015 we launched our very first action learning set with senior foundation staff which was a great success. In 2016 we were really pleased that once the programme had ended, five members of the group decided to become self-facilitating and have met throughout 2016, and into 2017. Network Development Manager In 2016, the Asylum, Refugee and Migration (ARM) Network and the Housing & Homelessness (H&H) Network have continued to grow and prosper. During the year, the Network Development Manager (NDM) has worked alongside the Networks’ co-convenors to provide a wide range of opportunities designed to increase grant-making impact in these two areas. As part of this work, a number of well attended funders’ events have been organised to explore current ARM and H&H issues, including: challenges faced by young undocumented people, collaborative approaches to immigration advice provision, lessons from strategic litigation, impact of welfare reforms on homelessness, system change and homelessness. In addition, during the course of the year, ACF has continued to support work around migrant destitution, by facilitating discussions amongst funders and service providers operating in the H&H and ARM sectors about potential strategies that can help tackle this issue. It has also jointly organised with the Environmental Funders Network a timely event to explore the links between climate change and migration, and a field visit to Calais refugee camp in partnership with NGOs working on the ground. This initiative, which followed on from the fruitful work carried out in the previous year in response to the refugee crisis, has resulted in a group of funders co-funding legal work that was crucial in persuading the UK Government to welcome over 750 unaccompanied refugee children to the UK after the camp was dismantled in the autumn.

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Finally, towards the end of the year, ACF and the Ariadne Network jointly held a meeting to update funders on the impact of the refugee crisis across Europe and explore how UK foundations could most effectively respond. The meeting sparked interest amongst foundations in working more closely to better support unaccompanied refugee children. Northern Ireland Development Officer ACF has also continued to work within Northern Ireland as part of its UK-wide remit. With support from the Big Lottery Foundation in 2016, the Northern Ireland Development Officer focused on work with members around the theme of ‘accelerating change’, looking at ways to share learning and ideas between foundations and other relevant stakeholders, and to multiply foundation assets and resources - financial, physical and knowledge-based - that can be deployed to build on innovative ideas and practice. City Philanthropy Following the June 2016 independent review of City Bridge Trust’s strategic funding of its philanthropy projects, including City Philanthropy, a new joint philanthropy strategy for City Bridge Trust (CBT) and the City of London Corporation (CoLC) has been formulated. It sees the City Philanthropy project deeper embedded in the City of London Corporation in a ‘Head of Giving’ role currently being recruited. The Director of City Philanthropy will continue to provide support on a consultancy basis. This will allow the achievements of City Philanthropy, as captured in the strategic review, to be built upon, bringing all the Corporation’s assets to bear, including networks and influence. The strategy will allow all CBT’s and CoLC’s activities around encouraging philanthropy and responsible business to be better co-ordinated with the aim of increasing impact. Therefore ACF’s hosting of City Philanthropy ceased on 31 March 2017..

We have been building ACF as a resilient organisation fit for purpose for its aims and

objectives in a rapidly changing environment.

2016 has been a period of both growth and change for ACF. The appointment of Carol Mack as Chief Executive, following 12 years as Deputy Chief Executive, means the organisation enters its next strategic period with renewed energy, drive and focus, whilst also retaining significant institutional memory and sector expertise. Work has begun on transforming ACF’s relationships with corporate entities, which, it is hoped, will better support our members in their work, as well as providing more coherence and benefit, both intellectual and financial, to the arrangements. Additional staffing support around policy and communications allowed the organisation to capitalise on this area of its development, whilst a new Senior Membership Manager is already taking steps to refine and enhance ACF’s processes and strategies of engagement. ACF’s finance, resource and database capacity has also been reconfigured, adding more coherence and oversight to that part of the business. All of this is set against the backdrop of an independent review of membership, carried out by the Institute of Voluntary Action Research (IVAR) which revealed an overwhelming level

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of satisfaction with ACF’s progress to date as well as an endorsement of future growth areas. Feedback on ACF showed the overwhelming majority of members, 94%, are ‘satisfied’ or ‘very satisfied’ with ACF membership – an increase from 86% in 2012, while 100% would recommend ACF membership to other foundations. In sum, with a strong member endorsement of its work so far, a remit for further development, and exciting strategic plan for the years to come, there is much cause for optimism and a real sense of resilience in the face of emergent challenges.

OVER THE NEXT 12 MONTHS … ACF will approach the inevitable challenges of running a lean and ambitious organisation with increased confidence and a growing reputation for excellence. Some of the ways in which we will consolidate and improve our operations include: Staffing Led by our new Chief Executive, the current staff team blends new skills, perspective and experience with a deep knowledge of our membership and understanding of the issues that they face. We have built an evidence base about the role of foundations and developed the communications and policy contacts and networks to bring this to bear on policy makers and opinion formers. Our events and learning programme has made a step change in its depth and breadth, while our systems and finances are also under careful and skilful stewardship. Strategy, Mission and Vision Over the coming year, ACF will begin the process of delivering its new strategic plan for 2017-21. This follows deep engagement with the membership and wider stakeholders as well as input from both the ACF staff team and the board. Member views on how ACF should develop in future focused on the development of a more challenging and proactive voice, increased presence outside London, additional convening power and a review of the membership offer. In what will be an exciting development of its activity, ACF can therefore begin to develop against the following strategic vision in 2017: ACF wants a world that is supported, sustained and strengthened by the effective use of foundation resources. Our mission is to support foundations to be ambitious and effective in the way that they use their resources. 1) ACF SUPPORTS foundations in achieving their charitable objectives by: • Providing information, advice and training • Gathering, distilling and disseminating learning • Building and developing resources on foundation practice • Signposting sources of specialist expertise

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• Environment-scanning for trends and debates • Informing members of issues affecting their practice 2) ACF ADVOCATES on behalf of foundations for an enabling policy, legislative and

operating environment by: • Developing and enhancing an evidence base • Making the case for philanthropy in civil society • Closing the ‘knowledge-gap’ around foundations • Protecting and advancing foundations’ interests • Building relationships and networks with other policy actors • Intervening strategically 3) ACF CONNECTS foundations to people, organisations, governments and movements

relevant to their work, by: • Convening members and other actors around issues • Brokering relationships relevant to members’ work • Playing a facilitative role in potential collaboration • Providing a protected space for conversation and exchange • Optimising our learning and events programme • Analysing, developing and targeting our member offer 4) ACF INSPIRES foundations to be ambitious and effective in the way that they use

their resources, by: • Developing a set of principles for good foundation practice • Providing access to national and international thought leadership • Reflecting societal challenges and external feedback • Nurturing an environment conducive to self-reflection • Promoting positive case studies from the UK and beyond • Showcasing relevant thinkers, debates and provocations In order to achieve this, we must ensure that … 5) ACF THRIVES and is sustainable, supporting members over the longer term, by

Ensuring we are financially robust

Responding to member need

Valuing our people

Implementing effective systems

Adapting to technological change

Nurturing a values-driven culture and prizing environmental sustainability Remit and collaboration As a UK-wide membership association, working with grant-makers in each of the four jurisdictions, ACF will strive to offer ever-more value to its entire membership, regardless of location. We have a project officer based in Northern Ireland; in Scotland we work closely with Scottish Grantmakers; and in Wales we have strong links with the Wales Funders’ Forum. We will keep these arrangements under review to ensure that they are meeting the needs of our members in each jurisdiction. ACF will consider particularly the role that digital

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technology can play in ensuring we offer maximum value and engagement across our entire membership, regardless of location. Further afield, ACF will continue to be an active member of the European DAFNE network of organisations which, like ACF, support foundations and grant-makers. In conjunction with ongoing interaction with membership organisations across the globe, this ensures that ACF is up to speed with issues at the global institutional level which may affect UK foundations. ACF is also a member of the Worldwide Initiatives for Grant-maker Support, which will continue to keep us in touch with global trends affecting philanthropy, civil society and grant-making.

Our enhanced policy capacity will continue to enable us to develop strong working relationships with other voluntary organisations on issues of common concern, including NCVO, the Charity Tax Group and the Charity Finance Group. With the wider fiscal and spending environment likely to continue to affect foundations, alliance building and coalition working seems likely to be more essential than ever before. Shaping the debate An understanding of the importance of foundations’ contribution to society will continue to drive our engagement with Government and opinion formers, whether we are acting alone, alongside members, or in partnership with other umbrella organisations. Our messaging and focus on this issue remains clear; although foundations’ financial contribution is small compared with that of the public sector, what they offer in the wider funding ecology is incredibly valuable, for example as one of the few remaining providers of grant funding, or as social investors who are able to give priority to social outcomes in ways that other investors may not, often by backing innovative and risky projects. We will also emphasise that foundations provide much more than just money; the ‘toolkit’ encompasses human resource, expertise, local knowledge, convening power and advocacy. Underpinned by a strong and developing evidence base, ACF will continue to tell a compelling story about foundations and deliver ever-more effective interventions on their behalf.

New initiatives A particular focus in the forthcoming year will be the increasing utilisation of online platforms in order to ensure ACF’s external affairs and policy work is communicated and shared quickly, widely and effectively. Social media will play a role, as will blogs and, resource permitting, video and audio recordings. Looking ahead, ACF also hopes to begin to develop a set of aspirational foundation principles; giving a clear message of commitment to continuous learning and improvement and also providing ACF with a framework to create a strategy of learning, as well as data to better understand its membership and develop its policy work. Preparations for the flagship 2017 Annual Conference will begin shortly, with ambitious plans already starting to emerge, while ACF will also be reviewing the governance and delivery of its network provision, aiming to increase consistency and the delivery of member value.

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In addition, the organisation will seek to re-orientate its relationship to corporate entities, away from transactional sponsorship and toward a partnership arrangement, leveraging greater value for both parties in the process. On the international front, the Head of Learning and Events will be leading a workshop at the WINGS Forum in February 2017. The work is part of a framework that aims to establish a common language to describe the work and value of philanthropic infrastructure organisations around the world. A Human Resources review will take place during 2017, as will the completion of a new work plan to underpin the 2017-21 strategic objectives. In addition, with the assistance of the Cranfield Trust, ACF will complete a membership strategy review, to incorporate issues such as fee structure, retention, recruitment and engagement.

THE FUTURE … will see ACF continue to support UK foundations in a variety of creative and impactful ways through the provision of information, advocacy and learning. We will continue to increase our influence through the delivery of first class communications, robust policy interventions and nuanced thought-leadership. We will remain a focused and dynamic organisation and continue to develop, improve, refine and consolidate our activities with the aim of preserving an enabling environment in which the foundation model can flourish.

GOVERNANCE

Role of the Trustee Board

The Board is responsible for the general management and supervision of the work of ACF. It sets ACF’s strategy, delegating operational decisions to the Chief Executive and her staff.

Appointment of Board members

The Board comprises 12 elected members, together with up to five co-optees. All elected trustees must be connected to a member of ACF, for example as a trustee or as a member of staff. Their term of office is three years with re-election for a further term permitted. Potential trustees can be nominated by any full or associate member of ACF and, where there are more nominees than vacancies, an election is conducted by postal ballot.

Induction and training

Prior to attending their first meeting, new Board members are briefed by the Chair and have an initial induction meeting with the Chief Executive, with the opportunity to meet with the staff team. They receive an information pack as part of their induction which includes the relevant guidance for trustees from the Charity Commission, together with papers from recent Board meetings. Trustees individually also attend ACF’s member events and thereby widen their awareness of current issues and concerns amongst ACF’s membership.

ACF’s objects and public benefit

ACF’s objects are to “further the work of charitable grant-making trusts and institutions for the public benefit by:

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advancing the education of the public in such trusts and institutions and carrying out research and publishing the results of such research;

promoting the collective and individual effectiveness of such trusts and institutions and better methods of administration and management of their resources”

As set out above, these objects are delivered through our strategic aims and this report has set out in detail how these aims have been taken forward. Each has been undertaken in support of the needs of the individuals, groups and communities who will benefit as a consequence of improved standards of practice and operation by our member trusts and foundations. The trustees have had regard to the Charity Commission’s guidance on public benefit in considering what work the charity should undertake and in the performance of their duties.

Risk

The Board reviews ACF’s risk register twice per year and ACF’s principal risks are listed below. Trustees monitor these risks carefully and take appropriate steps to mitigate them.

Risk Mitigation

Short-term financial sustainability Trustees are reviewing ACF’s income mix in its entirety and are taking steps to both diversify and increase unrestricted income

Security of long term accommodation Following notification from its landlord ACF is actively searching for alternative premises over the longer term

Managing ACF’s pension liability arising from its membership of the Pensions Trust Growth Plan

Trustees are maintaining active membership of the scheme to avoid triggering a s75 exit debt

Changes to key personnel Trustees obtain professional advice for key appointments and invest in ACF’s HR policies and practices to avoid preventable loss of intelligence when staff leave

The risk arising from Government or regulators proposed changes that adversely affect foundations’ freedom to operate.

ACF maintains an active policy role and a dedicated governance budget to oversee it to help protect Foundations’ operating environment

FINANCIAL REVIEW

Sources of funding

ACF’s principal sources of funding are membership subscriptions, grants and fees for its charitable activities. Members pay an annual subscription on a sliding scale, which is based on their grant expenditure in the previous year. Unrestricted income from member subscriptions, as well as voluntary income from other sources, was used to provide services to members and others in support of our strategic objectives, as set out above. Restricted

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income in the form of project grants was used for specific areas of work described elsewhere in this report. We also receive sponsorship and commercial support for some of our activities.

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Our financial position This year ACF turned an operating deficit of £12k in unrestricted funds increasing to £16k when unrealised gains from the pension scheme are included. This is due to an intentional decision to spend some of ACF’s reserves on a recruitment agency, Saxton Bampfylde, to oversee the recruitment of the new Chief Executive following the departure of David Emerson CBE after 15 years in post. The board is pleased to have announced the appointment of Carol Mack as the new Chief Executive and considers this expense to be a valuable investment in ACF’s future.

This aside, unrestricted income and expenditure balanced for the period and the board is pleased to report that membership income had a modest increase, in part due to an inflationary increase being applied at the start of the year but also due to new members joining ACF. Restricted funds turned a surplus of £39k and this is due to some funds being remitted to ACF in advance of the activity to which they relate. ACF endeavours, where possible, to secure full cost recovery on its project work and over time income balances with expenditure. As reported last year, ACF is carrying a Pensions Trust Growth Plan liability on its balance sheet. This year has seen a modest reduction down to £94k from £97k in 2016. Trustees continue to allocate £10k per year to a designated fund which over time will help offset this liability. Despite macro-economic uncertainty caused by Brexit and other international developments the board is confident that ACF’s financial position remains robust over the short to mid-term. However, the consultation with members, held this year as part of its 5 year strategic review, encourages ACF to increase its support to members and as such the Board is actively considering how best to increase income to meet this demand over the next strategic period. We hope to report in more detail on this next year.

Reserves policy The trustees have considered the unrestricted reserves that ACF requires to sustain its operations. In doing so they have considered Charity Commission guidance on charity reserves as set out in CC19 and concluded that a target general reserve of £417k, equivalent to approximately six months’ unrestricted expenditure should be set. This will provide sufficient funds to underpin the Association’s work and to hold funds kept for unforeseen contingencies, such as an emergency office relocation, the need for temporary replacement staff during sickness, or other expenditure outside the Association’s normal pattern of operating.

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The current level of unrestricted funds after future pension liabilities have been accounted for is £247k and is referred to as ACF’s general fund. The general fund is held in a mix of fixed assets, current assets and liabilities (see note 13b). After fixed assets have been accounted for £211k remains forming ACF’s free reserves. Trustees recognise that this is short of the preferred level and have committed to work towards it.

Remuneration policy

The Trustees consider the Board of Trustees, the Chief Executive and the Heads of Departments as comprising the key management personnel of the charity in charge of directing and controlling the charity and running and operating the charity on a day to day basis. All trustees give of their time freely and no trustee remuneration was paid in the year.

ACF’s provides a competitive employment offer, with salaries pitched around or just above the median for the sector, and which is designed to attract and retain good potential new recruits while ensuring employees stay for the desired length of time. Budgetary constraints, the external environment, what comparators are offering, the values of the organisation and the morale of staff will all be factors in deciding the employment offer, which may include more than just salary. For example it could include learning and development provision, flexible working etc. ACF has a variety of policies and benefits which aim to respond to diverse staff needs but which cumulatively create a rewarding and holistic package. The aim is to be ‘an employer of choice’ for those whom the organisation is seeking to employ.

ACF is a London Living wage employer. The differential between the highest and lowest paid staff member should be no greater than pro rata x6. It is currently lower than x3.5.

LEGAL & ADMINISTRATIVE INFORMATION

Status

ACF is a registered charity, with registration number 1105412, and a company limited by guarantee, incorporated 27 July 2004, and registered in England and Wales (registration number 5190466). Its governing document is a Memorandum and Articles of Association. ACF’s principal and registered office is: Acorn House, 314-320 Gray’s Inn Road, London, WC1X 8DP.

ACF has a wholly owned trading subsidiary, ACF Conferences and Seminars Limited, a company limited by share capital and incorporated on 5 January 2000, registration number 3902450. The surplus achieved by the trading subsidiary in 2016, mainly by way of conference sponsorship was gifted to the Association at the end of the financial year. The trading accounts of the subsidiary have not been consolidated into the main accounts of the Association.

Trustees’ responsibilities

The trustees (who are also directors of the Association of Charitable Foundations 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 trustees to prepare financial statements for each financial year which give a true and fair view of the state of the affairs of the charitable company and of the

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incoming resources and application of resources, including the income and expenditure, of the charitable company for that period. In preparing these 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 charitable 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.

The trustees are responsible for the maintenance and integrity of the corporate and financial information included on the charity’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

TRUSTEES, STAFF AND ADVISERS

Board of Trustees

Chair Amanda Jordan OBE, Trustee, The Baring Foundation Vice Chair Sara Llewellin, Chief Executive, Barrow Cadbury Trust (until 8.11.16) Vice Chair Kenneth Ferguson, Director, Robertson Trust (from 8.11.16) Treasurer Paula Kahn, Governor, Cripplegate Foundation Andrew Barnett; Director, Calouste Gulbenkian Foundation – UK branch (from 8.11.16) Gary Beharrell, Grants Manager, Lloyds Bank Foundation for England & Wales Dr Joanne Knight, Director, Triangle Trust Sara Longmuir; Director of Finance and Investment, Lankelly Chase Foundation (from 8.11.16) Sheila Jane Malley, Trustee, The Co-operative Community Investment Foundation James Money-Kyrle, Director of Finance and Support Services, St John’s Hospital (until 8.11.16) Lucy Palfreyman, Director of Finance, Paul Hamlyn Foundation (until 8.11.16) Andrew Stafford, Director, The Dulverton Trust Jane Streather, Trustee, The Millfield House Foundation

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Antony Tomei CBE, Trustee, The Bell Foundation Muna Wehbe, Chief Executive, Stars Foundation Tim Wilson, Principal Grants & Social Investment Officer, City Bridge Trust James Wragg, Director of Operations, Esmée Fairbairn Foundation

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Committees and reference groups

Officers Group Amanda Jordan (Chair)

Kenneth Ferguson (Vice Chair)

Paula Kahn (Treasurer)

Nominations & Remunerations Committee James Wragg (Chair)

Gary Beharrell

Andrew Stafford

Jane Streather

Amanda Jordan (ex officio)

Policy Reference Group Anthony Tomei (Chair)

Sheila Jane Malley

Andrew Stafford

Jane Streather

Finance and Risk Committee

Paula Kahn (Chair)

Tim Wilson

Joanne Knight

Sara Longmuir

Senior Management Team

Chief Executive, David Emerson CBE (until 8.12.16) Chief Executive, Carol Mack (from 8.12.16) Deputy Chief Executive, Carol Mack (until 8.12.16) Head of External Affairs, Keiran Goddard Head of Learning & Events, Esther Thompson Head of Policy, Richard Jenkins Head of Resources, Liz Pepler

Advisors and Bankers Bankers Cater Allen Private Bank, CCLA Investment Management Ltd., 9 Nelson Street, COIF Charity Funds, Bradford, BD1 5AN 80 Cheapside, London, WC2V 6DZ Unity Trust Bank, Close Brothers Limited, Nine Brindley Place, 10 Crown Place, Birmingham, B1 2HB London, EC2A 4FT

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Solicitors Farrer & Co, 66 Lincoln's Inn Field London, WC2A 3LH Auditors Saffery Champness LLP Chartered Accountants, 71 Queen Victoria Street London, EC4V 4BE ……………………………… ……..…..…………………….…… Amanda Jordan OBE (Chair) Paula Kahn (Treasurer)

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OUR THANKS

ACF’s work would not be possible without additional support and encouragement from many members and other supporters. We would like to express our particular thanks for these as follows: For financial support of the development of ACF’s policy and communications work:

Barrow Cadbury Trust

Esmée Fairbairn Foundation

Paul Hamlyn Foundation For supporting research by Professor Cathy Pharoah, co-Director of the Centre for Charitable Giving and Philanthropy, at Cass Business School, which resulted in the publication by ACF, of Foundation Giving Trends 2016:

The Pears Foundation For supporting our work in Northern Ireland, including the role of the Northern Ireland Development Officer:

Big Lottery Fund

Department for Social Development, Northern Ireland For funding a project on knowledge sharing and learning for funders impacting on housing and homelessness:

The Oak Foundation For funding ACF to lead Inspiring Impact’s work with funders:

A consortium of funders, administered by New Philanthropy Capital For a grant to encourage philanthropy in the City of London:

The City Bridge Trust For financial support of the following publications:

Discovery Trust for a series of good grant making guides

Zurich Charitable Trust for The Good Practice Guide to Corporate Foundations For supporting a series of seminars on effective endowment management:

CCLA For sponsoring the ACF 2016 conference:

Cazenove Charities

Sarasin & Partners LLP

Farrer & Co For providing pro bono consultancy support to review ACF’s membership strategy:

The Cranfield Trust For support and co-hosting of the Intelligent Funding Forum:

Big Lottery Fund

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For their part in the Northern Ireland steering group:

Joanne McDowell, Big Lottery Fund for Northern Ireland

Paddy Sloan, BBC Children in Need (NI)

Lauri McCusker, Fermanagh Trust

Sandara Kelso-Robb, The Halifax Foundation for Northern Ireland For serving on the FIRM steering group:

Sara Longmuir, Lankelly Chase Foundation (Chair)

Mark O’Kelly, Barrow Cadbury Trust

Hunada Nouss, Children’s Investment Fund Foundation We would also like to thank all those many members who have generously hosted meetings on behalf of ACF or given their time to convene Issue Based Networks or to speak at our events.

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ASSOCIATION OF CHARITABLE FOUNDATIONS

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS

We have audited the financial statements of Association of Charitable Foundations for the year ended 31 December 2016 set out on pages 26 to 41. 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), including Financial Reporting Standard (FRS) 102. This report is made solely to the 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 company’s members those matters we are required to state to them in an auditors’ 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 company and the 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 auditors As explained more fully in the Trustees’ Responsibilities Statement, the trustees (who are also the directors of the company 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 Ethical Standards for Auditors. Scope of the audit of the financial statements An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the charity's circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the trustees; and the overall presentation of the financial statements. In addition, we read all the financial and non-financial information in the Trustees’ Annual Report for 2016 to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Opinion on financial statements In our opinion the financial statements:

give a true and fair view of the charity’s state of affairs as at 31 December 2016 and of its incoming resources and application of resources, including its income and expenditure, for the year then ended;

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have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

have been prepared in accordance with the Companies Act 2006. Other matter prescribed by the Companies Act 2006 In our opinion, based on the work undertaken in the course of the audit:

the information given in the Trustees’ Annual Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

the Trustees’ Annual Report has been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Trustees’ Annual Report. 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:

adequate accounting records have not been kept, 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 and 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.

the trustees were not entitled to take advantage of the small companies exemption in preparing the Trustees’ Annual Report and the Strategic Report.

Cara Turtington Senior Statutory Auditor For and on behalf of Saffery Champness LLP Chartered Accountants Statutory Auditors 71 Queen Victoria Street London, EC4V 4BE