Macmillan Cancer Support spent £180.8m on its charitable activities last year, some £14.2m less than in 2018 due to reducing grant commitments.
The charity’s recently filed accounts for the year to 31 December 2019 show a 7% drop in spending on charitable activities, which according to the charity reflects its decision to reduce grant commitments.
Overall income only decreased slightly and the charity registered a £1.5m surplus. In 2018 it reported a £30m net loss.
The accounts also confirm that Macmillan expects a drop in income between 30% and 50% because of coronavirus, and show that the charity decided to liquidate all its long-term investments in May to respond to the pandemic.
On the decision to reduce charitable expenditure, the accounts say it was “primarily due to a strategic refocusing on Macmillan nurses and clinical roles within various programmes, whilst moving away from, and thereby reducing, our grant commitments associated with supporting allied health professional posts, as well as specific treatment and care buildings”.
This relates to 2019, but later on, the accounts also list “pausing or terminating delivery of indirect grants” as one of the cost-saving measures the charity is undertaking to respond to coronavirus.
It says that of the £205.1m committed in grants at the end of 2019, some £19.5m will be returned to the charity in 2020, “due to an anticipated significant reduction in income, and in response to the feedback that some partners were unable to develop services as planned”.
Income from donations and legacies decreased
Total income for 2019 stood at £232.8m – slightly down on the year before, when it was £235.7m. Investment income declined by £1.1m to £3.8m.
Fundraising makes up the vast majority of the charity’s income and declined slightly from £230.8m to £229.0m.
The biggest drops were seen in legacy income, direct marketing and corporate, while income from events, grants and trading grew.
Facebook fundraisers are a growing income stream and raised £2.25m against a target of £1.9m.
Introducing the report, Richard Murley and Lynda Thomas, respectively chairman and CEO of the charity, wrote that while the 2019 fundraising total is lower than the year before, “it is still a fabulous achievement in a very challenging time for the sector where there has been a decrease in trust and number of people giving”.
Legacy income decreased by £2.3m to £77.7m. This was “largely as a result of the Probate Registry undergoing a modernisation programme, which impacted the whole sector”, the accounts say.
Legacies make up more than a third (34%) of the charity’s fundraised income, and the accounts say that last year Macmillan “made a significant effort to increase people’s awareness of legacy giving”.
This included making its free wills service available for the whole year rather that just in January and August, and the launch of a legacy marketing campaign. The charity said it’s too soon to say whether the investment has paid off, but that in 2019 it had 1,000 new pledgers more than the year before.
Macmillan liquidated its long-term portfolio during the pandemic
The accounts say that in May 2020, Macmillan's trustees decided to convert the charity's entire long-term investment portfolio into cash and short-term bonds.
At the end of 2019, the charity held £11.3m in general reserves, up from £9.1m last year but still far from the £30.6m it had in 2017.
Two years ago, Macmillan scrapped its £20m target level for reserves, in favour of aiming to retain at least £100m in investments and cash that can be liquidated at relatively short notice.
According to this target, the charity went into the pandemic in a strong position, holding £179.8m in cash and investments.
This included £133.9m in fixed asset investments. However, long-term funds were later liquidated.
The accounts say: “The coronavirus pandemic has impacted Macmillan’s operations. The value of fixed asset investments was £133.9m at 31 December 2019. From 31 December 2019 to the date of signing these financial statements, there has been significant volatility in the stock markets due to the pandemic.
“In order to reduce exposure to changes in investment prices and improve liquidity, in May 2020 the trustees instructed Sarasin & Partners to liquidate the long-term fund in its entirety, converting it into cash and short-dated, high quality corporate bonds. At the date of signing, £78.3m had been liquidated and invested in the BlackRock Sterling Liquidity fund and transferred to the short-term portfolio.”
£1.6m spent on redundancies
Macmillan spent £1.6m in redundancy costs in 2019, up from £680,000 in 2018. The charity said this was because it had reorganised some of its departments.
Lynda Thomas, chief executive at Macmillan Cancer Support, said: “We want to make sure we’re operating as efficiently and effectively as we can to make our donations go as far as possible. Part of our focus is to ensure our organisation is fit for the long-term future and we have a sustainable operating model that delivers for our charity.
“We are part way through a long-term change programme which will help Macmillan continue to evolve and last year we redesigned a large number of our directorates, which unfortunately resulted in some redundancies. We have been working hard to move towards our new operating model, delivering greater efficiencies and more effective processes to ultimately better support people living with cancer.”
Macmillan is currently consulting on more than 300 redundancies in response to the predicted income fall caused by coronavirus. It employed more than 1,800 people last year.