Shetland Charitable Trust has budgeted nearly £50,000 for increased administration costs and £14,400 for public relations despite agreeing cuts of almost £400,000 in what it pays out to organisations and charities.
At a meeting earlier today the trust agreed to make disbursement cuts of £389,502 while hearing from one trustee that it should look at cutting more from what it gives to larger trusts that can make money by charging for their services.
The trust’s budget, approved unanimously, outlined an increase in administration expenditure from £652,000 to £699,000 while setting aside £14,400 for continued PR if a three-month trial of using Platform Shetland is deemed successful.
According to the trust’s financial forecasting model “professional” and legal fees will increase by £20,000 each, while bought in services will increase by £18,000.
The trust’s deficit will rise from £1.674m to £1.691m owing to an expected drop in income from £8.18m to £7.82m and despite the cut in disbursements.
According to the trust’s financial plan, agreed in May, its expenditure will reduce to £8.5m over the four years to 2020 to put it on a sustainable footing.
The £360,000 drop in budgeted income was due to uncertainty regarding the level of future gift aid from Shetland Heat Energy and Power Limited.
Trustee Allison Duncan said that if the trust’s financial position was “so parlous” it should look at making further disbursement cuts “across the board” but specifically aiming at the larger trusts it funds who may have other sources of income.
But any review of grants will not take place until May next year, the meeting heard.
Trustee Keith Massey said that given the state of financial markets, the trust “should do everything possible to drive in efficiencies.”
Following the meeting, a press release from Platform Shetland said that the trust had agreed to reduce spending in 2016-17 by just under £400,000 as it “continues to bring the amount it hands out into line with its income”.
The trust will disburse a total of £8,401,050 and management and administration costs are expected to be just under £700,000.
With income forecast to be £7,821,290, it means the trust will still be spending more than it earns.
Trust chairman Bobby Hunter said: “We are phasing in reductions over five years, spending some of our reserves in the process, to minimise the impact on the bodies we fund.
“We are confident of reaching a position by 2020 where we can support spending from income only and do not have to draw on our reserves continually.
“That will mean future generations of folk in Shetland can benefit from the charitable trust funds in the way current and previous generations have.”
Approval of the detailed disbursements planned by the trust was delayed in light of new information that Mr Hunter wanted to give trustees time to consider.
On the question of engagement of a PR company Mr Hunter, said: “We are trying to better explain what the trust is doing and get the message out … and why we are doing it.”
He added that by using a local firm they were using resources as efficiently as possible. “Trustees are pleased with the results.”
Asked about the cost of administration Mr Hunter said: “The trust is going through a period of reorganisation though to 2017 and that will account for a lot of it.”