Leonard Cheshire has reported facing “significant” financial issues, with challenges recruiting frontline staff while making redundancies elsewhere.
According to accounts for the year to March 2022, which were filed 59 days late, the disability charity had an income of £158m, compared to £153m the year prior, and recorded its fourth deficit in a row.
The accounts state that scenario planning in the early months of 2021-22 prepared the charity for a significant deficit for the year, but the final £5.5m result is slightly lower than the predicted outcome range of between £7m and £12m.
David Grayson, former chair of the charity, wrote in the accounts that Leonard Cheshire has been “wrestling with some significant financial challenges” meaning “difficult decisions have had to be taken”.
Grayson said recent years had been hard, given the unprecedented challenges of Covid-19 on frontline care delivery, as well as the impact of lost fundraising opportunities over two years.
In 2021-22 the charity started addressing the financial problems that had deepened, the accounts state.
Ruth Owen, the charity’s chief executive, said it was in the process of implementing a “turnaround plan to significantly strengthen the charity financially, putting in place the foundations for sustainable growth in the future”.
Income ‘down on expectations’
Leonard Cheshire’s income of £158m in 2021-22 includes money from government contracts.
Fundraised and programme-related income was “severely down on expectations” at around £7.6m.
Gifts in wills made up nearly four-fifths of donations. In 2021-22, the charity received over £6.2m from wills, and other donations were around £1.3m.
International programmes show an income of £5.1m compared to £6m in 2020-21, with the reduction in income primarily due to reduced income from the Foreign, Commonwealth and Development Office.
Total expenditure increased from £161.5m to £163.3m in the year, as the cost of delivering social care activities increased from £143m to £148.1m, “which was a result of increased staff costs of £3.1m”.
The accounts also show Leonard Cheshire negotiated an extension to their overdraft facility with Barclays Bank. The new overdraft facility of £10m (previously a £7.5m facility) was agreed from 31 July 2022 until the 31 March 2023, and reduced to £7.5m at 31 March 2023, available until 31 March 2025.
The accounts show two possibilities for their financial situation in the year ahead. The first is that the charity is able to manage inflationary pressure on its costs and save money by cutting costs, but the second is that it exceeds this credit facility this year.
Recruitment and redundancy challenges
Leonard Cheshire employed 3,407 full-time equivalent staff on average, compared to 3,655 the year before.
The charity said recruitment “remained a challenge for some services” and in early 2022, it began a major recruitment drive for frontline staff, using government money.
However, it also began a redundancy process in March 2022 for job roles outside of its frontline care and supported living services. The charity has made 300 redundancies since 1 March 2022.
This process cost the charity £2.9m, with £1.7m spent on redundancies the year before, and it says “96% of the planned staff reductions will have completed by 31 March 2023”.
It said overall increased staff costs of £3.1m was largely due to redundancy and settlement costs, pay inflation and pay increases.
The highest paid member of staff received between £250,000-£260,000.
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