Annex
Illustrative comments from ACEVO members
1. The Charity has an annual income of approx
£3 million. Its trading company has an annual turnover of
approximately £220k.
If the two were run together this would save
approximately £5,000 per year, made up of Audit Fees for
the Trading Company, extra accounts staff time for preparing two
ongoing sets of accounts plus additional management time.
With that £5,000 the charity could produce
three more information leaflets for people with epilepsy in minority
languages.
In addition, our Trading Company has £30,000
of retained profits, used to fund working capital. Changing the
need for a separate company would immediately release that money
to spent on charitable activity.
This of course ignores the set up costs for
a new Trading Company, along with the hugely complex rules and
guidance on funding trading companies which cause vast expenditure
and time for Charities trying to set them up today.
2. The CEO of the National Coalmining Musuem
has written to the Committee with detailed evidence and costings.
To make that museum viable, she runs conferences and a shop with
a turnover exceeding £50,000.
Under the current system, she therefore has
to set up a separate trading company to run the shop and the conference
facilities. The staff members are the same but, to keep the subsidiary
at "arm's length" from the charity, staff activities
must be apportioned between the two organisations.
She orders in, on average, 20 loaves of bread
a day, but has to have two separate order books, several invoices:
12 loaves for the conference facility, eight loaves for the café
and A record is kept if there a sandwich is exchanged between
the trading subsidiary and the charity. This costs the charity
about £30,000 in staff time.
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