NEWS & UPDATES
28 Jul 2020
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What’s going on with the CP Society’s finances?
The CP Society has assets, and from those assets, we make income. This income funds the work we do at the CP Society, including the operational costs to run the CP Society, as well as paying for member benefits.
We have two main assets: Essential Assets Limited (EAL), and Cerebral Investments Limited (CIL). The CP Society solely owns both companies.
CIL was established in 2015 as a long-term investment strategy. CIL is currently growing a number of small micro-enterprises and investments, to eventually provide a return to the CP Society.
EAL pays the CP Society income each year from its investments. In the past, this income has been as high as $1.1m. Unfortunately, due to COVID 19, recent forecasts suggest that the current financial year’s income from EAL will be significantly less – closer to $800,000.
This presented the Board with a challenge, because the original 2020/2021 budget forecast showed that the CP Society was due to spend in excess of $2.5m next year. This is obviously a lot more than the $800,000 we expect to receive!
So, the Board needed to move towards a more sustainable budget, that didn’t anticipate any fundraising income. We were asked to consider another revised budget, this time around $1.3m, including staffing costs of over $600,000 and a member programme budget of just $270,000. We considered this ratio of staffing costs to programme benefits unsatisfactory.
We still hadn’t reached our goal of reducing costs to below our expected income. To achieve this, the Board either had to ask EAL to sell down some assets (which would reduce future income payments even more) or try to reduce our annual spending to be more in line with the projected income of $800,000.
So is that why the organisational structure changed?
Yes. At the start of 2020, the CP Society’s wages and salaries bill was over $700,000 each year, across 11 staff members. You can see how, with a projected income of $800,000 and salaries of $700,000, there isn’t a lot left for programmes, events, grants, or even office space.
Alongside this, in February, the Board was presented with a financial deficit of over $700,000 for the 2019/2020 financial year, due to fundraising efforts not succeeding as expected. The Board met that shortfall by spending significantly more than it had budgeted for, by drawing on the CP Society’s assets and calling on extra payments from EAL, one of the CP Society’s investment companies.
So, something had to change. In May, the Board made the tough decision to propose a more streamlined organisational structure, and temporarily reduce our programme offering. We know this has been hard on our staff, and our members, and was not a decision we took lightly. However, without making these changes, the CP Society would have to sell our assets, putting the future viability of the CP Society at risk.
As part of the restructure, we invited staff to apply for the available roles. A number of the team chose to do this, and remain employed by the CP Society.
Sadly, we have had to say goodbye to others. Gilli Sinclair, our CEO, has been at the helm of the CP Society since 2015. She has made some terrific contributions to the Society in that time, especially in the areas of families and young people with CP. Thank you, Gilli, for your tireless efforts for the Cerebral Palsy Society. We wish you well in your next endeavour.
We are also farewelling Gemma Overton and Jacqui Parkinson, both of whom have given so much to the CP Society over more recent years. We know that many of you will have shared moments and memories with Gemma and Jacqui, and we want to thank them sincerely for everything they have done for the Cerebral Palsy Society.
What about Steptember? Can’t we fundraise to make up the shortfall?
Unfortunately, Steptember 2019 failed to make any significant return for the CP Society. In fact, it only delivered around $60,000 towards income, $350,000 below expectations. In December 2019, the Board decided, at the CEO’s recommendation, not to continue with Steptember.
Fundraising has proved challenging for the Society and was budgeted to raise $577,000 for the year but delivered only $76,000 (including Steptember proceeds). Our investment portfolio is extensive, and for this reason, it does make fundraising a difficult task.
Why didn’t the Board tell members what was going on?
Our communication hasn’t been as good as we would like it to be, and we apologise for this. However, while we were undertaking the change process, out of respect for our staff, and to ensure we did not breach privacy obligations or confidentiality provisions, we were unable to talk about the restructure publicly.
Alongside this, we have been responding to a range of issues raised by a group of concerned members around the change process. While these concerns were heard and considered, the Board had to do this in ways that met our obligations as an employer and within our responsibilities as a Board through the Society’s Constitution. Now that the change process has been completed, we are able to communicate more openly with our members.
I’m worried about the future of the CP Society. Should I be?
While the last few months have been difficult, we believe the future of the CP Society is bright. The Paediatric Clinical Network, community advocacy, programmes, grants, and family support functions will remain an important part of the work we do.
The Board is committed to finding a terrific General Manager to lead the Society through this exciting phase. If you would like to apply for this role, or know someone who might be interested, please follow this link to the job advertisement on Seek.