TRUSTEES' REPORT AND ACCOUNTS 2024 47
Group consolidated reserves (£271.7m)
The RSPCA holds two types of reserve - restricted and unrestricted
- (see Note 17). The group reserves also include restricted and
unrestricted reserves held in the subsidiary companies.
Restricted reserves (£26.7m)
Restricted reserves are the balance on endowment funds and
restricted income funds; these are held pending their application
to the activity specified by the donor.
As at 31 December 2024, the balance of restricted reserves within
the charity was £22.2m (2023: £24.2m), and the balance within the
group was £26.7m (2023: £28.3m).
Unrestricted income funds (£245.0m)
As at 31 December 2024, the group's balance of total unrestricted
income was £245.0m (2023: £250.5m). Reserves are unrestricted
funds that are expendable at the discretion of the trustees in
furtherance of the charity's objects. They are made up of designated
and general funds. These funds can be analysed into designated
funds and free reserves.
a) As at 31 December 2024, the group's balance of designated funds
was £130.9m (2023: £131.2m).
• A permanent designated fund is matched to fixed assets, as
this cannot be quickly utilised to realise cash in the event
that cash is required. The part of the General Fund represented
by fixed assets is therefore excluded from the free reserves
calculation, as generally a charity could not dispose of all
or the majority of these assets and continue its operations
as a going concern.
• Designated funds are also set aside for approved
capital expenditure.
• Designated funds are also allocated to investment in long-term
strategic projects underpinning the long-term sustainability
of the RSPCA (see Note 20 for details).
Designated funds for long-term investments are broken down
into funds to support the organisation's transformation programme
to 2027, the investment in growing our income to 2026 and the
upgrade of our estate of animal centres and hospitals, with
programmes expected to span over the next three to five years.
We have started utilising the £10m fund to support branches through
a match-funded development opportunity in 2024, while our £5m
Perfect Storm fund fulfilled its objective in 2024. This fund was a
rapid response to a combination of external factors - including an
increase in abandonment of animals, shortage of veterinary provision
and cost increases - and internal challenges, which together created
a very real animal welfare crisis. The fund has been applied across a
number of activities, from contributions to pet food bank schemes,
increases in boarding and rehoming capacity across our network of
centres and branches and cross-sector voucher and grant schemes,
to improvement in communications and welfare advice.
We have set aside £15.5m in new designated funds to invest in a
range of activities: supporting our branch network (to continue
supporting the rehoming effort for animals rescued by the
Inspectorate in 2025); campaigning; developing international
partnerships; encouraging prevention through education;
match-funding a donation for an animal welfare evidence centre
(a research initiative designed to understand the relationship
between animal welfare and human activities); and growing our
partnerships and philanthropy strategy.
The group's designated funds breakdown is outlined below.
31 December
2024
£m
31 December
2023
£m
Fixed assets reserve 48.0 48.4
Capital commitments 15.4 5.4
Other designations:
Improvements of our estate of
clinics, hospitals, animal, wildlife
and equine centres
14.9 15.0
Transformation programme 13.8 23.4
Engagement and income generation 12.6 22.7
Branch development fund 9.3 10.0
Other operational programmes (*) 16.9 6.3
Total designated funds 130.9 131.2
(*) Other operational programmes includes new designations for an animal
welfare evidence centre match fund (£5m), a branch care contribution (£3m),
investment in partnerships and philanthropy growth (£3m), campaigning
(£2m), international partnership development (£2m) and prevention through
education (£0.5m). It also includes a residual £0.1m for our 200th anniversary
campaign and advocacy, and £0.6m for our Perfect Storm programme, while
funds to support the transfer of general animal hospital treatment and animal
care for the public to PDSA are now closed.
Other unrestricted funds (£114.1m)
The pension reserve of £15.2m (2023: £18.7m) represents the
pension liability recorded in the consolidated and charity balance
sheet, and is calculated annually for accounting purposes under
FRS 102. This liability does not result in any immediate
requirement to pay this amount to the pension scheme, and
ongoing cash contributions into the scheme are met through
budgeted income, so there is no requirement to ring-fence an
amount equal to the full deficit from other reserves to cover
this liability.
In 2024, following the allocation of new designations, we have
free reserves of £114.1m (2023: £119.4m). Free reserves are
calculated as total funds, less restricted reserves and designated
funds. This calculation also deducts the pension liability.
The Board reviewed the reserves policy during the year. Free
reserves will continue to be held for the following reasons:
• to meet working capital requirements
• to protect the RSPCA against income fluctuations
• to fund strategic initiatives over the three-year planning period
• as an adversity or continuity reserve - to protect the RSPCA's
operations against unplanned adverse events.
Consideration has been given to the level of reserves required
to meet the risk in each of these categories, and the target levels
of free reserves - between £85m and £95m - have been agreed,
based on the following assumptions:
• a working capital reserve of between £10m and £20m
• a reserve to protect against falls in legacy income of £10m
• a continuity reserve of £65m.