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Merging the Institute’s charities

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At the Institute’s 2016 AGM, a motion was put to members, seeking to merge the Institute’s Benevolent, Orphan and Pension charities. The intention was to produce one charitable entity which would be better suited to meet the needs of today’s society and to introduce efficiencies in the administration of the funds.

The outcome of that AGM debate was to amend the motion to ask Council to investigate the proposal.
Since the beginning of the year members have been encouraged to voice their views on the matter; and they have! The proposal has ignited strong passions in a number of members.

Before we consider the arguments that have been proffered for and against the proposal, it may be worth looking at the history of our current funds, which were all set up by members, managed by members, for and on behalf of members and their dependents.

The Orphan Fund is the oldest, having been formed in 1896. The aims of that fund are to support the children of deceased members while they are in statutory education. Of course, statutory education in 1896 was a very different thing to statutory education in 2017. Mortality rates are similarly different.

The fund has been adapted over the years and at some stage the Institute’s rules were changed so that support may be provided to the children of a members who were temporarily incapacitated having lost the earnings of the main bread winner. In addition, trustees may also consider supporting children who wish to go on to further, or higher, education. Currently the fund supports three children.

The Pension Fund is second oldest, having been started in 1926. This fund provides a small monthly pension, a birthday and Christmas gift to members who find themselves in poor and necessitous circumstances. The fund supports 5 pensioners currently, and has capacity for two more.

The Benevolent Fund is the youngest of the funds, having been formed in 1943. The origins of the fund are a little blurred because there once was a Benevolent Pension Fund, but this ceased to exist some years before. The Benevolent Fund as we know it today seemed to spring from the ashes, and exists to provide immediate financial assistance to members in times of difficulty. Much like the Orphan Fund, it has adapted over the years and will now provide, in certain circumstances, a low-cost short-term loan to members.

The collective annual spend of the three charities in 2016 was £56,000, and the combined value is £3,214,095.

Those for the change
Those members who support the motion have pointed to the fact that as a merged entity, the new fund would be able to support a wider range of needs for members in today’s society. The original aims of the current funds will continue to be the main thrust of the new fund’s activity, but support might also be offered in cases that do not entirely fit within the current rules. One example was that currently, there is no support available to members or their families should anyone of them suffer acute illness and became long-term sick.

There is also the claim that the administrative process would be streamlined with one trust deed, one set of rules, one application form, one set of accounts and one committee to oversee all of the above.
Another point that was raised is that, currently, potential applicants are faced with a myriad of forms and fund names if, or when, they seek support. This is not only confusing but may potentially put off applicants.

Those against the change
Members who argue for a status quo situation point out that the amount of work the charities do, clearly demonstrates that they are still relevant. More importantly, however, there is a feeling that the original remit of the charities will be forgotten in a few years, and that more respect should be given to those who worked tirelessly to build up the Orphan Fund to such an extent that it can now do the work it does.

Also, a scheme of arrangement was made some years ago, and agreed by the charity commission, so that the Institute charities may support each other with financial assistance if there is a need. That is to say that if one of the Institute’s charities experienced a situation where they could not meet the needs of those calling for assistance, then the other charities could support that fund. With this arrangement in place, there is no evidence that modernisation is needed.

Legal situation
A number of members have questioned the legality of merging the funds. The Institute’s solicitors have taken a look at the situation and confirmed that a merger would be legally acceptable so long as the new charity made provision for the aims and objectives of the existing funds:

I. Educational support for the children of deceased members;
II. Continuing support for aged members in poor and necessitous circumstances;
III. Immediate financial support for members in poor and necessitous circumstances.

In addition to this, they point out that whatever is decided by members would have to be drawn up in a new trust deed which, in turn, would have to be approved by the Charity Commission.

Conclusion
The Institute has closed and merged a number of charities over the course of its existence. The last example of this was only a few years ago when the Widows Fund was closed and merged with the Benevolent Fund. The move was approved by the Charity Commission. A few decades ago the OakHill Fund was merged with the T P O’Connor Fund to produce the OakHill and T P O’Connor Fund, which is still in existence today. Other funds that have been closed many years ago are the Oliver Maddox Huffer Fund and the Benevolent Pensions Fund.

More, in going over the various charity documents it is clear that in some cases there are inconsistencies between the trust deed and the Institute’s rules. There are also what appear to be instances where our documentation does not align very easily with recent changes to charity law. For instance, the Charity Commission considers anyone who is in a position to deal with the financial dealings of a charity, as a trustee. The documents relating to the Institute’s charities list trustees as being two or three individuals, and the Institute in a corporate capacity, who hold the investment funds of the charities. Although some clarification has been provided by the Charity Commission where this situation exists; they agreed that those named individuals should be considered as senior trustees. In the Institute’s situation, these trustees maintain their position in perpetuity, with the committee being elected every year. It should be said, that this has proved helpful over time, because those individuals can dispense historical information which may help the committee reach a collective decision on a particular application for support.

No matter which way the vote goes at the AGM one thing is abundantly clear, some work will need to be done to modernise the rules and the trust deeds whether that relates to a new fund or the existing ones.

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