Our finances

Financial statements

The Association’s financial statements have been prepared in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102), and the Statement of Recommended Practice, Accounting and Reporting by Charities, applicable to charities preparing their accounts in accordance with FRS 102 (known as the Charities SORP (FRS 102)) and the Charities Act 2011.

Consolidation

These accounts consolidate the results of The Scout Association and its five wholly owned trading subsidiaries:

• Scout Shops Limited (trading as Scout Store)
• Scout Insurance Services Limited (trading as Unity)
• Scout Services Limited
• Scout Products Limited
• World Scout Shop Limited

The subsidiary trading companies covenant their annual taxable profits to The Scout Association.

We’ve included more information on these companies in note 12 to the financial statements.

2022/23 financial overview

Our balance sheet remains strong, with overall funds slightly down compared to last year at £87 million. Our liquid assets (fixed asset investments and cash and cash equivalents) also remain high at £65.9 million, although this includes about £6.5 million received in advance payments for the World Scout Jamboree in Korea. Excluding the Jamboree funds, liquid assets have declined by £10.5 million since last year. This is because we’ve continued to invest particularly in tangible and intangible fixed assets to support further growth, and improving the funding position of our defined benefit pension scheme as described below. We’ve also significantly increased the stocks held by Scout Store in view of growing demand and lengthening of supply chains.

Continued growth in both membership subscriptions and commercial operations was broadly as budgeted, but recruitment was slower than expected. The cost of claims was significantly lower than previous years, partly due to a lagging effect as normal Scouts activity resumed. As a consequence, the overall deficit before investment losses was less than we’d budgeted for. Looking forward, we’d expect both expenditure items to increase, and the emphasis remains on securing further growth in membership numbers to provide a sustainable operating model. In that respect, youth membership increased by about 5.6% over the course of 2022/23, which, coupled with the increase in the core membership fee of £1, has resulted in membership income for 2023/24 of £14.3 million up from £13.2 million in 2022/23.

In regard to future growth, we’re continuing to spend a further part of the reserves from the sale of Baden Powell House on improving the volunteer experience and we’ll also be investing in targeted growth in underrepresented communities. The latter will be greatly assisted by over £6 million from the Uniformed Youth Fund, successfully secured towards the end of the year and which we’ll largely receive and deploy over the next two years.

Financial results

The results for the year are shown in the Consolidated Statement of Financial Activities (SOFA) on page 44.

There was an operating deficit, before investment and pension valuation changes, of £0.7 million for the year, compared with the previous year’s deficit of £0.3 million. This was virtually all attributable to unrestricted funds, with restricted fund income being almost equal to expenditure. We discuss this further under income and expenditure below.

Listed investment values fell, giving an investment loss of £1.3 million, compared with last year’s loss of £0.1 million.

On an accounting basis, the actuarial surplus on the defined benefit pension fund this year was negligible compared to £3.2 million in the previous year. The actuarial loss on assets (£8.8 million) and an increase in liabilities are due both to experience losses arising as a result of the triennial valuation (£1.4 million) and changes in demographic assumptions (£0.5 million). This was compensated by the reduction in liabilities due to changes in financial assumptions, particularly increasing interest rates (£10.8 million).

Taking into account the revaluation surplus on heritage assets of about £0.4 million, the overall reduction in funds as shown in the SOFA was £1.7 million, compared to an increase of £2.8 million in 2022.

Income

Total income for the year was £36.2 million, compared with £30.0 million in 2022.

Subscriptions are the major source funding the support provided to members and increased to £13.2 million (2021/22: £11.2 million). The fee is paid by youth members only; adult and Network members aren’t required to pay a National Fee.

We didn’t increase the core membership fee for 2022/23, acknowledging the fact that we’d increased the membership fee by £7.50 in the previous year (of which £1.50 had been earmarked to help units in financial need), as well as realising substantial inflows from the sale of Baden Powell House. However, as subscriptions are assessed based on youth membership recorded in the census returns taken in February of the preceding financial year, this income benefitted from the nearly 17% recovery in membership numbers we saw last year from the low point during the COVID-19 pandemic.

The continued and generous support of our donors is important and greatly appreciated by Scouts. In difficult and uncertain economic conditions, legacies and donations overall decreased by £0.8 million to £2.3 million, mainly due to a reduction in restricted legacies (£0.7 million), which are largely directed to the benefit of specific groups or districts. Other donations overall were broadly stable at £1.6 million, although there was a significant move towards restricted giving of about £0.6 million.

Income from charitable activities is derived from our activity centres and other sales linked to our charitable purposes. These include camping, training, activities, and accommodation charges at Gilwell Park and the other National Scout Adventure Centres. With the easing of the COVID-19 lockdown and increased face-to-face Scouts activity, this income increased significantly to £3.2 million (2021/22: £1 million), but was still much lower than income from the same sources before the COVID-19 pandemic of about £5.8 million.

Our trading income includes the retail sales made by Scout Store and World Scout Shop Limited, commission income generated by Unity and sponsorship and promotional income. Scout Store activity improved considerably, with sales up from £9 million to £10.5 million, which exceeded pre-COVID-19 pandemic levels. In particular, programme badge sales increased by 80% on a like for like basis as groups continued to recover following the COVID-19 pandemic. Unity commission income also increased by over 9% to nearly £2.6 million. We’ve continued our strong links with corporate sponsors and generated nearly £1 million from these beneficial connections, a similar level to last year.

Investment income (including interest) increased by £0.9 million to £1.5 million. This reflects the increase in funds held for investment for the full year following the sale of Baden Powell House in August 2021, as well as the increased interest rate environment.

Expenditure

Total expenditure was £37.0 million, compared with the previous year of £30.2 million, an increase of £6.8 million.

Trading expenditure increased broadly in line with trading income and totalled £9.5 million for the year (2021/22: £8.2m).

Our overall spend on charitable activities was £27.2 million, an increase on 2021/22 of £5.4 million. Of this amount, £23.3 million was unrestricted expenditure (2021/22: £18.7million) and £4 million was restricted expenditure (2021/22: £3.1 million).

The unrestricted expenditure is still significantly lower than 2019/20 (the last pre-pandemic year) excluding the Jamboree expenditure that occurred that year. The primary reason for this is the lower level of claims costs as noted above.

Our expenditure (and income) on charitable activities is allocated to four activities, which help fulfill our four strategic objectives (Growth, Inclusivity, Youth Shaped and Community Impact) as shown in the pie chart. This is followed by a description of what we provide and achieve through these activities. Many of the actions and activities delivering our strategic objectives are led by volunteers, with proportionately less financial expenditure than activities delivered by our salaried staff.

Youth programme and activities

We continue to pride ourselves on the diversity of our youth programme. Each week in Scouts, we provide the opportunity for young people to develop Skills for Life. From money skills to cooking, they can discover more about the world around them.

Over 1,700 activities are now available on our website, making it easier for volunteers to deliver inspiring programmes and help more young people achieve their Top Awards. During the year, we’ve improved the digital programme planning tools, which provide enhanced accessibility, new event calendars, downloadable session plans for offline use, and videos that show how to play various games. We created a range of activities working with partners including Disney, Dungeons and Dragons, Gas Distribution Network, Arup, BBC’s Wild Isles, The Rail Industry, UK Power Networks, Go Outdoors, Rolls-Royce and Nominet. We added over 150 new activities to the activity finder to help volunteers plan programmes. We also created specific programme activity resources to celebrate the life of Her Late Majesty Queen Elizabeth II to explore her legacy.

We also administer a number of grant schemes that aim to help Scouts provide a great experience to young people locally.

Adult support and training

Our adult volunteers have continued to be amazing this year, and we’ve done our best to support them in the way they deserve. To make sure every volunteer’s journey is the best it can be, we’ve been working on the design and delivery of several projects to transform the volunteer experience. This will deliver new guidance and support, changes to our volunteer roles, updated learning, and many improved digital tools for volunteers across the UK. This includes partnership working with Girlguiding, generously funded by Pears Foundation, which is helping us improve the volunteer welcome journey to make it smoother and easier for all.

As well as building for the future, our continuous review process for our current web content and our essential training continues to improve the support we provide right now. This makes sure both are clear and useful for our volunteers, and has enabled us to deliver great new support over the last year, including on Trustee recruitment, thanking volunteers and guidance for having constructive conversations.

We've created an extensive range of online tools and guidance to support volunteers as we continue to grow Squirrels. Our new volunteer learning experience will have inclusion at its heart – both with dedicated inclusion content and making sure it’s woven throughout all of the learning.

A key part of our adult support and training is delivered through our Growth & Communities Team. We:

• provide induction workshops for all new Group Scout Leaders, District Explorer Scout Commissioners and District Commissioners;
• offer one-to-one induction engagements for all new District Commissioners and County Commissioners in England;
• run District Commissioner support days twice a year where participants are briefed on key topics and can build their network of contacts and support; and
• provide a two-day induction and support event at Gilwell Park for all new County Commissioners (England/Northern Ireland), Area Commissioners (Wales) and Scottish Regional Commissioners. At this event, they have their UK HQ induction and are introduced to key staff colleagues.

Our Volunteering Design team staff work with the UK People Team of volunteers to maintain and develop the resources available to support the volunteer experience in Scouts, including methods for recognising volunteer contributions, supporting the delivery of our programme, and leading other volunteers.

Regional Commissioners in England give support and leadership to the 60 English County Commissioners and we provide the opportunity to bring them together for regular meetings. We offer one-to-one management and support, and create networking and shared learning experiences.

We celebrate the astonishing impact of our adult volunteers through certificates that recognise various lengths of service, from five years to 70 years, and recognition of exceptional service to Scouts through an adult award scheme comprising seven levels of service (from the Commissioner’s Commendation to the Silver Wolf).

Development of Scouting

We’ve continued to grow for the second year in a row. We’ve had a 5.6% growth since the previous year in all sections (Squirrels, Beavers, Cubs, Scouts and Explorers). We’ve already created 860 Squirrel sections, and by 2033, we hope to welcome 130,000 4 and 5-year-olds per annum, supported by 40,000 new adult volunteers. This, along with our commitment to improving volunteer experience, means we remain optimistic about our growth goals and the bright future of Scouts.

Our Growth & Communities Team is employed to deliver workshops on recruiting volunteers, young people, and growing Scouts in new communities. In England, our Growth & Communities Team work with local volunteers to open new sections both in existing Scout Groups and in new areas, recruiting volunteers and generating interest from parents and young people to join.

Support and service to members

We continued to provide support and assistance to members across Districts and Counties to help them with the effects of the pandemic and building back membership. Our service centre has been busy providing advice and addressing raised issues. We also provide insurance most noticeably for public liability and trustee liability and deal with any arising claims.

We run five Scout Adventure sites across the UK that provide inspiring outdoor learning through activities, skills and places to camp and enjoy the outdoors.

Investment policy and performance

The targeted Reserves are partly invested in an investment portfolio initially equally allocated between two fund managers, Cazenove and Sarasin. The balance is effectively held in short term cash deposits. The performance targets given to the fund managers are over the medium to long term are:

• to maintain an optimum level of income tempered by the need for capital growth in order to safe-guard future grant-making capacity; and
• on a total return basis to outperform CPI + 4% on a rolling three-year basis

In the light of market conditions, neither fund manager met these targets last year and on a total return basis (combining investment income and valuation changes) the funds combined provided an overall loss of £0.6 million representing about 2.6% of the opening market value. This compares to CPI increases over the same period of about 10%.

The Association’s current asset investments of £10.8 million represent holdings held in Royal London Asset Management Funds, on behalf of the Short Term Investment Service provided to the movement. As of 31 March 2023, total deposits by Scout Groups, Districts, Counties and Regions in the Short Term Investment Service were £11.0 million (2022: £11.3 million) and the balance of these deposits is held in a bank account to meet operational requirements. Following a review, a decision was taken during the year to discontinue providing this service and monies are in the process of being returned.

The Scout Association Defined Benefit Pension Scheme
The most recent full actuarial valuation of The Scout Association Defined Benefit Pension Scheme was carried out as of 31 March 2022. The valuation showed a deficit on a technical provisions basis of £2.5 million and a funding level of 94%, which is an improvement from the 86% funding level at the previous March 2019 full valuation. Based on this valuation, we agreed with the Trustees to inject a further £2.5 million in addition to the amounts due last year under the previous deficit reduction plan, and in total we paid £3.6 million into the Scheme. This resulted in an overall surplus on an accounting basis of £2 million.

The Trustees regularly monitor the Scheme’s funding to make sure general reserves provide adequate cover against any future liability. We’ll also keep the potential for effecting an insurance buy-out of the Scheme under review.

Charity funds

The Scout Association’s consolidated funds remained stable at £86.6 million with the aggregate value of endowment funds (£2.1 million) and restricted funds (£3.9 million), each remaining broadly static and unrestricted funds (£80.6 million) declining by about £1.5 million. Within unrestricted funds, the General Fund declined by £7.6 million, partially offset by increases in the designated funds (£2.1 million), primarily relating to fixed assets, the pension reserve, and trading funds.

The increase in the designated fund for fixed assets of £2.3 million reflects the net additions in intangible and tangible fixed assets of the Association of £1.7 million and £2.3 million respectively less the depreciation charge for the year of £1.9 million, disposals of £0.2m and the revaluation surplus on heritage assets of £0.4 million. The Group’s total investment in intangible assets of £2.0 million represents software to support the commercial operations and development of digital tools and work on a volunteer membership system. The total investment in tangible fixed assets of £2.5 million has helped in attending to urgent building work in our activity centres to refurbish toilet blocks and other buildings.

All funds are described in more detail in note 19 to the financial statements with analysis of the movements in the year.

Reserves policy

The Trustees annually review the reserves policy, and continue to plan to hold reserves to protect the Association and delivery of its charitable programmes by providing time to adjust to changing financial circumstances.

The reserves policy establishes an appropriate target for the level of general ‘free’ reserves as represented by the balance of the General Fund. The target is based on a risk assessment of the probability and likely financial impact on the Association’s activities, which might be caused by a decline in income, an inability to meet its financial obligations, or an inability to reduce expenditure in the short term.

We also hold reserves to support the development of Scouts. The policy seeks to make sure there’s an equitable balance between spending the maximum amount of income raised as soon as reasonably possible after receipt, while maintaining an appropriate level of reserves to make sure the charity can operate uninterrupted. It also provides parameters for future budgeting and strategic plans and contributes towards decision making.

The pandemic highlighted the risks of short term reductions in membership and losing commercial income due to curtailment of face-to face Scouts, while needing to maintain member services. As a consequence, the Trustees determined that the appropriate target for free reserves for The Scout Association itself should be based on one year’s expenditure with an additional element for possible future claims costs reflecting their longer-term nature. At present, this indicates a level of reserves of the order of £29 million.

The general free reserves for The Scout Association as at 31 March are £49.8 million, which is well in excess of this target following the sale of Baden Powell House in August 2021. However, it has reduced significantly from last year, when the free reserves were over £57 million. This has been caused by a number of items in addition to the operating deficit, specifically the injection of funds into the pension scheme of £3.6 million, the excess of capital expenditure over depreciation of £2.7 million, and the declines in the investment values of £1.2 million. In addition, the Trustees recognise there are a number of factors which will further reduce the free reserves over the next two years, in particular:

• Further budgeted losses while membership numbers recover to previous levels.
• Capital investments required particularly in digital capabilities, the commercial operations and Scout Adventures
• The need for funds to deliver our Skills for Life strategy to target membership growth and diversity and inclusion, particularly in communities most affected by the pandemic.
• Potential further contributions to the defined benefit pension scheme, particularly in the context of any potential buy out of the scheme.

At the same time, it’s envisaged that the target level may increase due to inflation and other cost pressures. Therefore, over the next two years, we may drop slightly below our target reserves. If that happens, the intention thereafter would be to build back the free reserves primarily through earnings with depreciation exceeding capital expenditure.

Going concern

The Trustees have considered the financial plans for the budget year of 2023/24 and projections for the following two years, looking at the cash and reserve projections. This covers a period of at least 12 months from the signing of these financial statements.

Current actions and clear plans for the continuing growth of membership, provide a solid foundation for the finances of The Scout Association. The sale of Baden Powell House has also provided resources to maintain a sustainable operating model while that growth occurs, and to invest in growing our services. Our current level of reserves provide a significant level of resilience to possible financial risks that may materialise in the short term.

Taking all of the above into account, the Trustees have a reasonable expectation that the charity has adequate resources to continue operating for the foreseeable future. Accordingly, they believe the going concern basis remains the appropriate approach for preparing the financial statements.

Remuneration policy

The Trustees consider that the Board of Trustees and the Executive Leadership Team (the Chief Executive and the Directors) comprise the key management personnel of the charity.

All Trustees give their time freely, and no Trustee received remuneration in the year. The Chief Executive (who’s also a Trustee and a full member of the Board) is only paid for his executive duties.

Details of Trustees’ expenses and related party transactions are disclosed in note 6c to the financial statements.

The People and Culture Committee (a subcommittee of the Board) annually review the remuneration of the senior staff, considering market conditions, cost of living increases, and the financial position of the organisation. The salaries of the Executive Leadership Team are benchmarked to make sure they’re commensurate with the size of the roles.

The Executive Leadership Team members are entitled to employer pension contributions, and other benefits available to employees generally. In addition, enhanced medical insurance provision is provided.

The Executive Leadership Team sets the salaries for all other employees.

The remuneration benchmark is the mid-point of the range paid for similar roles, although a market rate supplement may also be paid where appropriate.