DCMS Grant : contingency plans?

[John Philpott]

Alex Holowczak wrote

Is there a reason why the BCF has roughly £200,000 in its accounts and the ECF only has £40,000 or so? Why can't the money be transferred from the BCF to the ECF?

(N.B. My understanding of the role of the BCF in relation to the ECF is limited.)

Alex, my hope is that the report of the Management Board, which will form part of the BCF Council papers, will contain an introductory section reminding (or in some cases informing) everybody of why the BCF still exists and is of its current size relative to the ECF.

[Roger de Coverly]

If so do those who currently serve on the BCF board automatically become in 'charge again'

I believe the BCF board (in so far as it exists) is identical to the ECF board. The BCF Council is not the same as the ECF Council (Congresses and some leagues are excluded). The Trustees of the PIF (who control the invested assets) are not the Board though.

In practice the Trustees of the PIF would be expected to bail out the ECF but it's never been completely clear that they are compelled to. The accounting treatment changed when the ECF took over from the BCF, previously the PIF was consolidated into the BCF accounts, but it never has been for the ECF. I would presume some accounting standard says you don't consolidate if there's doubt about to whom the assets belong.

[Alex Holowczak]

One thing is for certain if the ECF becomes bankrupt (which it won't...), any direct members have to pay £1.

[John Upham]

any direct members have to pay £1.

What are the consequences of refusal?

[Alex Holowczak]

any direct members have to pay £1.

What are the consequences of refusal?

One for David Anderton I guess. Would the court case be worth the £1?

[andrew martin]

10 nights at the Hotel Alik in Batumi.

[John Upham]

10 nights at the Hotel Alik in Batumi.

Would you prefer a Travelodge?

[John Philpott]

Roger de Coverly wrote

The accounting treatment changed when the ECF took over from the BCF, previously the PIF was consolidated into the BCF accounts, but it never has been for the ECF. I would presume some accounting standard says you don't consolidate if there's doubt about to whom the assets belong.

The accounting treatment did not change - it remains exactly the same and the PIF continues to be consolidated into the BCF accounts because it is the Permanent Invested Fund of the BCF rather than of the ECF, and will remain so until the renewal of the Trust Deed in 2013.

A more interesting question, which is on my long term agenda, is whether there should be consolidated accounts bringing together all parts of the empire (ECF, BCF, Chess Centre Ltd, BCF Youth Chess Trust and John Robinson Youth Chess Trust), not because there is any statutory requirement (which there is not) but because that would be of considerable assistance in understanding the big picture. One practical difficulty is that the John Robinson Youth Chess Trust has a different year end (31 August) from the others (30 April).

[Roger de Coverly]

The accounting treatment did not change - it remains exactly the same and the PIF continues to be consolidated into the BCF accounts because it is the Permanent Invested Fund of the BCF rather than of the ECF, and will remain so until the renewal of the Trust Deed in 2013.

The spin said that the ECF had replaced the BCF and that "all your bases (BCF) are ours (ECF)". Whilst a debate on accounting standards is almost as tedious as those on 10.2, it does however remain a fact that the assets of the BCF's PIF have for most practical reporting purposes disappeared from scrutiny.

[John Philpott]

Roger de Coverly wrote

it does however remain a fact that the assets of the BCF's PIF have for most practical reporting purposes disappeared from scrutiny.

But they are reported in the BCF accounts. The 2008/9 and 2009/10 BCF accounts will be available for download shortly from the ECF website. The fact that the 2008/9 BCF accounts are a full year late is, of course, totally unsatisfctory. If the proposal on the BCF Council agenda to make the Chairman of the ECF Governance Committee a member of the BCF Council is accepted, I may be in a stronger position to bring influence to bear on the running of the BCF.

[Christopher Kreuzer]

Roger de Coverly wrote

it does however remain a fact that the assets of the BCF's PIF have for most practical reporting purposes disappeared from scrutiny.

But they are reported in the BCF accounts. The 2008/9 and 2009/10 BCF accounts will be available for download shortly from the ECF website. The fact that the 2008/9 BCF accounts are a full year late is, of course, totally unsatisfctory. If the proposal on the BCF Council agenda to make the Chairman of the ECF Governance Committee a member of the BCF Council is accepted, I may be in a stronger position to bring influence to bear on the running of the BCF.

I wonder how many people know the BCF still exists? I had been labouring under the misapprehension that the ECF had replaced the BCF. But this is probably more due to not reading carefully enough the announcements at the time the changes took place.

[Christopher Kreuzer]

Given the scale of the shortfall - it is obvious that existing cost cutting will not do the job.

The only short term way, I can see in covering the funding gap is:

1. Merge the PIF with the JRT.
2. Appoint 3 directors of the ECF as JRT Trustees.
3 Move the entire junior budget into the JRT.
4 Cross charge the admin cost of running the junior budget.

That will solve the immediate problem, though those who control JRT might not like it.

Sorry to hear about the news regarding the government funding.

A brief plea for those posting here to try and explain the initialisms they are using. I knew that DCMS = Department for Culture Media and Sport (or something along those lines) and that JRT = John Robinson Fund, but PIF had me stumped for a long time (though John Philpott explained it later in the thread). I discarded Pacific Investment Fund, but it turned out that was close. PIF = Permanent Invested Fund.

While searching on these forums for more background to this, I came across an earlier post by Martin Regan which was very helpful in detailing the background here as regards the financial structure. I'm not whether it is now outdated or not, but the earlier post (from April 2007) is here (the whole thread is worth reading as well):

http://www.ecforum.org.uk/viewtopic.php ... 2348#p2348

Is it possible to have an update to that April 2007 summary, as it applies for October 2010? e.g. What are the current figures and are the various trustees of those four main elements (Permanent Invested Fund, Chess Centre Ltd, ECF/BCF Youth Trust, John Robinson Trust) still the same?

[Matthew Turner]

I have scanned through Andrew Farthing's Paper on the Office Review and there are some interesting points and I am very grateful for the hard work that he has obviously put in. The document itself seems to be more about ECF funding than the Office per se (how we consolidate the current mix of funding streams). It also seems to be a paper for further discussion

"It is appreciated that this is a difficult and complicated issue and an immediate, final decision is not sought at October Council. However, it would be helpful to know which options are clearly unacceptable to Council to aid preparation for a final decision in April 2011. It is proposed to ask Council to vote on each option to say whether it would be unacceptable. If a majority votes that an option is unacceptable, it will not be worked on further. Only the remaining options will be developed into detailed proposals and presented to Council in April."

What would happen if none of the options is acceptable, or worse they are all acceptable now, meaning more work, but are rejected in April?
It seems to me that Andrew's Paper should really be called Solutions for the Long-term funding of the ECF, but I'm not sure that in the short term it is sufficient to address the financial headwinds facing the ECF.

[Andrew Farthing]

The timing of the DCMS news meant that the paper on the office review had been seen and approved by the Board before we knew the latest probable situation re the grant. I could have rewritten the paper and sought further Board approval, but this would have taken time and it seemed more important to get the papers available for Council in time rather than hold things up. As I've commented before, the effect of a withdrawal of the DCMS grant in March 2011 creates a problem of timing rather than being a fundamental change to what I assumed at the time would be the ECF's situation in the medium term.

It should be stressed that the cost savings identified in Phase 1 of the office review, along with other steps taken by the Board, mean that the "hole" created by the loss of the DCMS grant is much smaller than it would have been. I agree that there is an immediate need to act to avoid a deficit next year, but, all other things being equal, the actions required are less drastic than if this had happened 12 months ago.

As the postscript to the paper makes clear, also stated in the comments about the DCMS news on the ECF homepage, the new situation does mean that there is greater urgency than before. Matthew's comments about the dangers of a failure to make a decision at Council are quite right. The DCMS gave us advance warning of the likely withdrawal of the grant precisely so that we had the chance to take it into account at the AGM. Council needs to focus its collective mind on agreeing a way forward, both in general terms in October and in the specific details in April.

It's true that the "office review" looked at funding more generally. I couldn't see how looking at the office in isolation from wider issues would make any sense. Much of what the office does is tied to Game Fee and Membership, so the ECF's choices about how it operates these are fundamental to the office support it needs.

[Matthew Turner]

Andrew,
As I see it there are two possible viable routes that you see for ECF funding
1. Funding solely by (presumably compulsory) membership
2. Funding solely by game fee

At this stage Council is being asked which (if any) of these possibilities they wish to be investigated. To implement either of these changes (in April) would require a 75% majority. I have always been in favour of 1, but would much prefer to be implementing it in circumstances where it was the right thing to do, rather than we had to do it.
Of course there are dangers in both approaches, because you are effectively ending a funding source. I think Council will see it this way (mistakenly in my view) and I'm not sure that you will get the 75% approval. I think in order to get such a significant change then you need the Borad to force it through. In my opinion you need to decide on one of the options as a Board and state that it would be impossible for the Board to continue if they don't have the confidence of the Council to pursue this strategy which is fundamental to the financial wellbeing of the ECF.