Strewth!

I've now got a new branch cheque book, so I can set the ball rolling to open an investment account with a local building society. 

The most straightforward logistics to achieve this seem to be for me to post out the application form to our Rehoming Co-ordinator (so she can fill in her details as Second Applicant).

She then posts the form on to our Branch Secretary.

Meanwhile I write out a cheque for the opening deposit and take it round to the Secretary for her counter-signature. She can also counter-sign the cheque for the deposit with the Co-Operative Bank at the same time.

Once she has the cheque, form and a copy of our Branch Rules, she takes them down to her local branch of the building society together with her ID.

And once that's been done, the Rehoming Co-ordinator can call in at the building society to prove who she is.

Meanwhile we need to take a copy of the signed minutes of this month's committee meeting and send it to the building society to prove we really did decide to open an account.

Cash flow for September

Our income for September was £18,868, and expenditure £15,680, so there was a net surplus of £3,998 for the month. However, this was skewed by receipt of the £9,289 payment for reclaimed input VAT relating to the annual payment to the University Vet School for clinical services during 2007 which we made in April. 

Another poor month for the shops — overall profits are almost halved compared with 2007.

When combined with the figures for the number of animals handled by us in the same month, you'll see how the cash flow figures demonstrate that the amount of money available per animal is quite low. We would have no more than £50 available for each animal even if we had no overheads (shop rents etc.) at all.

A brief explanation of how VAT works in relation to charity activities is probably in order. We have to pay output VAT to the Inland Revenue on services (such as our animal clinic) for which we make a charge and which are not VAT exempt. We can reclaim the VAT which is included in charges we pay to our suppliers (such as the University Vet School) to enable us to provide those services. 

A normal business would charge its customers more than it pays its suppliers (or go bust) so, because VAT is calculated as a percentage of VATable charges, its reclaimed VAT would always be less than the VAT owed (so it would have to make a net payment to Inland Revenue every quarter).

We subsidise our clinic services, so we charge clinic users less than it costs us to run the clinic, and this means that the VAT we owe is less than the VAT which is included in the charge made by our suppliers. This means the Inland Revenue owe us money at the end of a quarter (effectively we have overpaid them) and we get a refund four times a year.

At present this is very welcome.

Back to Square One

Bother! It turns out that I do not possess any identification which NatWest will accept as proof of identity for the purpose of opening an interest-bearing deposit account to run alongside the branch's current account. 

This is not a complete disaster as they are prepared to open an account with three other branch trustees as signatories. I could operate this by filling in the transfer slips and getting the others to sign to authorise them. Fortunately there seems to be no question of withdrawing my ability to sign cheques for payment from the current account — which must be a relief to the 20-odd veterinary practices we deal with. It's aggravating, though, as it means we are back to square one with the multi-page form to open the deposit account. 

The conversation with the NatWest employee was pure farce, as the poor woman grew progressively more desperate with suggestions about possible suitable sources of ID: firearms certificate? Wait fifteen years until I have a pension book? Certificate of naturalisation? Learn to drive (provisional license won't do)?

At least our funds are in a bank that shows no signs of dying on us, although I would be happier if I could speed up the process of splitting them up into £50,000 chunks in separate organisations so that all the money was covered by the savings guarantee.

Working on it

Still trying to open a deposit account. Latest hurdle is that all the people listed as signatories for the current account need to prove who they are again by providing photo-identification and a recent utility bill showing their name and address. This in spite of the fact that the current account's been open since at least the 1950s and all the signatories have been on the account for the past three years.

Also working on the lease of 61 Burleigh street - the shop premises we hope to move into so we can expand our charity shop. Landlord is reluctant to accept that we're willing to pay either a premium or consider a rent rise, but not both (and certainly not in the current economic climate when they should think themselves lucky to have a potential tenant at all).

Reserve funds again

Trepidation about the general state of the economy. I think it's unlikely that there's any risk that the funds in our bank account could be lost however bad things get, but it's not looking good for our charity shop income if customers aren't spending because they're worried about the safety of their jobs. The CEO of the national RSPCA (as opposed to the local branches) must be feeling pretty glum about invested funds as those do go up and down in value along with the Stock Market (and in this case, down). 

We are extremely fortunate to have received legacy income this year and without it things would be looking very bleak indeed.

Things are already looking very serious for the Rabbit Residence Rescue where most of our branch rescue rabbits are fostered. Please consider sponsoring a rescue rabbit, or adopting a pair of rabbits who are suitable for rehoming (not all of the rabbits featured on the web page came to Rabbit Residence from the RSPCA).

No wonder there's a credit crunch

Opening a bank account (to invest the funds we don't need to spend right away) is much more difficult than you might think. Just setting up a second interest-bearing account with the bank we already use for the current account involves two personal visits, a form covering 6 sides of A4 and signatures of two trustees. Creating a completely new deposit account with a bank that doesn't have any track record with us means a 24 page form, providing personal banking details and addresses of three trustees, signatures of three trustees and giving the names of all the other trustees.

I suppose it does make money-laundering more difficult, but I am beginning to feel that a sock under the bed would be less time-consuming. 

Investments

The RSPCA has an ethical investment policy - basically that society funds shouldn't be invested in anything which causes harm to animals (as that would negate the point of having them, anyway). Putting this into practice isn't exactly as straightforward as it might seem, as I've been finding out.

If you have large amounts of money that you can tie up for several years, there's no problem getting a tailor-made investment package where your funds are invested in companies which fit whatever criteria you specify. For smaller amounts (where "small" means less than about £500,000) it's only really feasible to put your money into existing schemes, and in our case it appears that the only really viable choice is between building societies (you know the funds are invested in property) and the Co-operative Bank (they have a pre-existing list of sectors where they won't invest depositors' money). It's looking as though the Co-op is going to be the right "home" for the money we know we won't need to touch for at least a year.

Unfortunately this doen't completely solve our problems as the Co-op doesn't have many branches where our shops and volunteers can bank cash takings, so it wouldn't be practical to transfer our current account there. We probably also need to maintain some cash on short-term deposit at our current bank because we need to be able to transfer money quickly into the current account when necessary.

I sometimes get asked rather aggressively "what companies do you invest your funds in?" - with the implication that we're probably funding smoking beagles and cosmetics testing. It always sounds rather evasive to say "that's not how banking works", but I'm afraid that's the actual truth. We're not big enough or rich enough to be investing in individual share holdings.

61 Burleigh Street

This is the unit we're hoping to lease to set up a new charity shop in Burleigh street. We're in the early stages of negotiation with the landlords, so nothing is definite yet, but it would be very nice if we could be open for the run-up to Christmas.

The rent would be an eye-watering step-up from the old shop at 184 Mill Road, but we would have more than twice the current sales area and be in a location with more people walking by and hopefully making purchases.

Spent an hour yesterday counting passers-by and recorded 486 - or roughly eight per minute. I'll do another count at the weekend to get an idea of the difference between weekdays and Saturdays.

We're not planning to move the bookshop at 188 Mill Road as that is doing well and still increasing sales. 

We need volunteer helpers at all three shops. If you might be interested, please email camshop@rspcabookshop.co.uk (for the two Cambridge shops) or newmarket@rspcabookshop.co.uk (for the shop in Newmarket)

Branch Reserves Policy

Now that we actually have some reserves (the result of a generous legacy, which pulled us back from a very dicey hand-to-mouth situation) we need to have a policy about the way we manage them, and at our committee meeting this week we agreed the formula below.

“Owing to the nature of our activities and supporter base, branch income is composed of a fairly regular component from fundraising activities and clinic fees and an unpredictable legacy component. This means that we receive occasional very large amounts which need to be used gradually to support the regular income rather than being spent during the year in which we receive them. We aim to keep our free reserves between an upper limit set at twice our annual operating costs and a lower limit fixed at the amount which would permit 12 months continued activity at current levels of regular earned income. 

At any point when free reserves dip below this 12 month safety limit we will have to begin cutting back the level of service which we provide.

At current income and expenditure rates the lower reserve limit is £41,000 and the upper limit is £260,000.”

In other words, if our steady income from the shops, clinic fees, collection tins etc. is £3,000 a month short of what we currently spend, we can calculate how long it would take before our saved funds ran dry. If the remaining time drops to 12 months we need to make emergency cuts until spending is in balance with the steady income. 

Our free reserves at the moment (after allowing for outgoings which we know will take place at the year end) amount to £120,000. This would sustain our current expenditure for three years provided our regular income stays at its existing levels. It means our work is reasonably secure, but there isn't much scope for "capital" projects (such as building an extension to our clinic for a "sluice room", which is one of the things we'd like to do).

I do not believe it

We're in the process of making an offer for the lease of a shop in a busier location than our present retro/vintage charity shop. One thing the landlord requires is what's called a "status enquiry" (basically a reference from our bank to confirm that we could pay the first year's rent). We have to fill in a form and pay £8.50 to the bank and they should send the necessary information to the landlord's agent.

First attempt was just over a month ago. Agent asks, "Where is it".  I call in bank. No record of a form. 

Try again last week. Call in today. No record. Ask bank manager how this could have happened. The first go might have been lost in the post, but last week's try was handed in with my own hot little hand. Manager prods about a bit in the innards of their computer system. Looks worried. Finally confesses that our requests had been passed by the branch to their commercial customer centre which then sent them back to the branch for action, and so on in an infinite loop that is impossible to trace because the people who open post and redirect it at either end of the system don't do anything else. 

Have printed off another request form and handed it to the manager with a personal cheque for £8.50 to avoid more delay getting a second signature for a branch cheque. She swears she will personally supervise its progress.