Financial Review of the Year
| £m | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Incoming Resources | 1995/1996 | 1996/1997 | 1997/1998 | 1998/1999 | 1999/2000 | 2000/2001 | 2001/2002 | 2002/2003 | 2003/2004 | 2004/2005 |
| Legacy fundraising | 20.3 | 20.8 | 22.7 | 26.4 | 31.9 | 31.2 | 35.6 | 38.3 | 41.3 | 39.6 |
| General fundraising | 13.3 | 14.3 | 15.5 | 17.0 | 19.2 | 23.5 | 25.3 | 26.9 | 27.3 | 29.0 |
| Public funding | - | - | - | - | - | - | - | - | 4.1 | 10.2 |
| Chair Endowment Trusts | - | - | - | - | - | - | - | 1.4 | 1.3 | 2.9 |
| Retail Profit | 5.9 | 8.9 | 9.9 | 7.3 | 7.6 | 6.2 | 8.3 | 7.9 | 9.1 | 9.6 |
| Investment Income | 6.4 | 6.5 | 8.0 | 7.4 | 10.3 | 9.2 | 9.0 | 8.9 | 7.4 | 7.7 |
| See chart 1 above | 45.9 | 50.5 | 56.1 | 58.1 | 69.0 | 70.1 | 78.2 | 83.4 | 90.5 | 99.0 |
| Fundraising & Publicity costs | -7.7 | -8.1 | -9.0 | -10.6 | -12.3 | -11.4 | -13.5 | -16.0 | -16.1 | -19.2 |
| Net incoming resources | 38.2 | 42.4 | 47.1 | 48.1 | 56.7 | 58.7 | 64.7 | 67.4 | 74.4 | 79.8 |
Expenditure on Objectives 1996-2005 |
1995/1996 | 1996/1997 | 1997/1998 | 1998/1999 | 1999/2000 | 2000/2001 | 2001/2002 | 2002/2003 | 2003/2004 | 2004/2005 |
| Research | 31.6 | 36.8 | 39.4 | 43.2 | 40.2 | 40.4 | 45.8 | 49.6 | 53.3 | 49.1 |
| CVI - Research | - | - | - | - | 15.0 | 6.4 | 8.1 | 1.7 | 7.3 | 11.1 |
| Eductation and Care | 4.4 | 6.6 | 8.7 | 9.6 | 12.8 | 14.5 | 12.9 | 15.1 | 18.0 | 17.6 |
| Publicly Funded Education and Care | - | - | - | - | - | - | - | - | 4.1 | 10.2 |
| CVI - Education and Care | - | - | - | - | 3.6 | 5.7 | - | - | - | - |
| See chart 2 above | 36.0 | 43.4 | 48.1 | 52.8 | 71.6 | 67.0 | 66.8 | 66.4 | 82.7 | 88.0 |
| Management & Administration | 0.4 | 0.4 | 0.4 | 0.5 | 0.7 | 0.6 | 0.7 | 0.9 | 0.9 | 0.8 |
| Total Charitable Expenditure | 36.4 | 43.8 | 48.5 | 53.3 | 72.3 | 67.6 | 67.5 | 67.3 | 83.6 | 88.8 |
The charts and tables above show that 2004-05 was another year of significant financial progress for the Foundation. Note that for this purpose we treat the profit from the 500 BHF charity shops as our income from that source, whereas in the Accounts which follow, we are required to show the shops' sales as income (and the expenses of the separately-managed operation as costs). In our view, the ‘profit’ approach gives a more realistic assessment of the situation, while the treatment shown in the Accounts exaggerates the income and the costs of the Foundation as a result of the high proportion of shop sales to our other income (compared with other leading charities).
On this basis, our income rose by 9% overall, to just over £99m - almost double the amount raised only eight years ago. Legacy fundraising fell by 4%, but general fundraising reached new highs with 6% growth. Public funding includes a further £6m from the Department of Health to pay for a re-launch of our very successful and high-profile anti smoking advertising campaign, and also over £4m from The Big Lottery Fund (formerly The New Opportunities Fund) supporting three projects, Heart Failure Nurses, Defibrillators in the Community and Cardiac Rehabilitation Programmes. These three projects will continue for the next three or four years with total funding in excess of £20m.
Expenditure on our charitable objectives was 6% higher than the previous year, at a record level of £88m. Within that total, normal spending on our core activity of research has shown a small decrease of 8%, while expenditure on our fast-growing education and care activities rose by 26% to reach 36% of the total spent (other than awards under the Cardiovascular Initiative).
The costs incurred in achieving these results (predominantly on fundraising and publicity) amounted to £20m (compared with £17m in the previous year); this represented 20% of the total income described above. Comparisons of such cost ratios between charities must be treated extremely carefully, owing to the widely varying costs of the many different fundraising activities they undertake. In this year a significant proportion of fundraising and publicity costs represents, as forecast in last year's Financial Review, investment in the development of continuing and future income sources. Our plans for the current year include a continued uplift in this investment as part of a strategy designed to produce an acceleration of the growth in income over a period of years; this is necessary if we are to meet the increasing demand to support high-quality projects in pursuit of our aim.
Ten-year comparison of BHF managed investment portfolio with benchmark
The value of our investments enjoyed a gain of £14m in the year, as they continued to participate in a worldwide stockmarket recovery. This is the second year of growth following three successive financial years of decline. Despite the long-term historical success of our investment strategy, we continue to review our approach every year to ensure that it is appropriate for the changed investing environment.