Alan Boswell wrote:
We have now reached a point where the technology exists to relatively easily measure and record for posterity the performance of (almost) any boat anywhere, and for perhaps 10% of the JRA's reserves we could make it happen. I think that would be a good use of the Association's money, and a much better use than leaving it in the bank.
Dear Alan
I suggest that your 10% may be a significant understatement.
The figure at the bottom right of the annual financial statement may be approximately £30k.
However, the 2014 financial management paper included the following:
"The use of our funds has been discussed in a number of places above. However, like all businesses or organisations, we do need to have a sufficient Working Capital to deal with the cycles of cash flow. In our case an obvious cycle is that the turn of the calendar year is ‘harvest time’ for subscriptions. And we have three large bills at intervals for the production and distribution of the paper magazine. That working capital is currently hidden within our general reserves. The amount of working capital required is a matter of judgement. However, the Committee believes that ring fencing as working capital an amount equal t o t h e c o m b i n e d t o t a l o f subscriptions and paper magazine bills plus say 50% (say £10k in 2014) should ensure more than sufficient working capital available to cover the cycles of cash flow and all eventualities. (This includes the highly unlikely but theoretically possible eventuality of winding up the Association, as allowed for in our Constitution. If that ever became necessary we would be solvent to the last!)
The remainder of the funds, ie that in excess of the required working capital, is therefore the amount which is theoretically available for use on projects (say £15k in 2014).
Some have argued however that these reserves must be preserved, apparently at all costs, because ‘such capital once lost can never be replaced’.
However, the Committee believes that these reserves are there to be spent. Firstly, if our reserves are not there to be spent on projects, then what are they there to be spent on?! (Given that our intention is that the GPF and the Paper Magazine are to be funded each year by their relevant subscriptions.) Our reserves are not doing anything to increase the sum total of human knowledge about junk rig by sitting in a bank account. Secondly, the generation of junk rig enthusiasts who have raised this capital, by their s u b s c r i p t i o n s a n d g e n e r o u s donations, should be the generation that benefits, not our grandchildren.
This has however been a somewhat academic discussion because, in reality, for the last few years we have had few if any projects put forward to spend our reserves on. But, we are actively encouraging a number of projects and so it may soon become a real issue.
Any such projects might be funded from the reserves in one of two ways:
• A grant, eg to fund an R&D project.
• A transfer from the reserve to establish a Specific Purpose Fund (SPF) eg to prime the pump for the Association’s publication of a book."
So, parts of the above extract may give you some support for your suggestion.
However, your suggested 10% might actually be nearer 20%. (Plus contingencies, plus inflation, plus, etc, etc.)
If you were to include such a 'percentage of (available) reserves' statement in any proposal, then you may wish to check that it is a defensible number. (No doubt the current Treasurer would give more up to date advice than this very ex Chairman.)
Yours aye
Jonathan