APPROVED
NHS Grampian (NHSG)
Minute of Endowment Committee Meeting
Monday 14 December, 0930-1200
CHP Meeting Room, Summerfield House
Present
Mr Raymond Bisset (Chair), Non-Executive Board Member
Mr Ewan Robertson, Director of Performance Improvement/Board Secretary
Cllr Lee Bell, Non-Executive Board Member
Mr Mike Scott, Non-Executive Board Member
Mr Gordon Stephen, Employee Director
In Attendance
Mr Barry Jenkins, Assistant Director of Finance
Mr Derek Angus, Treasury Accountant
Ms Carol Clark/Mr Mike Connor, Newton Investment Management Ltd - Items7.2/7.3
Dr Donnie Ross/Ms Anne Moore - Item 11
Miss Anne-Marie Meconi, Minuting Secretary
Item / Subject / Action1. / Apologies and Welcome to New Committee Member
Apologies were received from:
Mr Alan Gall, Finance Director
Dr Roelf Dijkhuizen, Medical Director
Prof Neva Haites, Non-Executive Board Member
2. / Minute of Meeting held on 5 October 09
The Minutes of the above meeting were approved.
3. / Matters Arising
3.1 / Review of action sheet
Three items to come back to the next meeting were:
1. 23.6.08 - Item 4 - Evaluation and workshop including workplan and constitution.
2. 15.12.08 - Item 12 - Position of Board Members as Endowment Trustees.
3. 5.10.09 - Item 10.2 - Expenditure request by Dr I Brown.
4. / Update on Future of 403 King Street, Aberdeen
The paper gave an update to the Committee on progress in relation to achieving best value from the sale of the above premises.
A tender had been issued for the appointment of a property adviser/professional valuer/marketing agent and four bids had been received and J&E Shepherd had been successful and they would advise on how best to market the property. Options would come back to the Committee for consideration and once agreed it would go up for sale as soon as possible.
Kitchen equipment and two snooker tables were still within the property and in good condition. Ramsay Milne was looking into donating these to a charitable organisation along with some consumables as the Club officials were not removing them,
Mr Stephen asked how the money received on this sale would be dealt with and would it be reinvested for staff benefit. Mr Angus said it was left for the Health Board generally and not specifically for staff.
The Committee noted the report.
This item to come back to the next Committee meeting. / ER
5. / GAPF Endowment Funding
Mr Bisset went over the paper.
Mr Stephen said that in future it would be groups that would benefit from this funding rather than individuals as had been granted in the past.
The Committee noted the report.
6. / Donations
Mr Bisset said that the report stated that nearly £1.2m ofdonations had been received in the three months to 30 November 2009.
Cllr Bell said that the kindness and generosity of the people surprised him all the time and suggested that it would be beneficial to generally thank people who had donated.
Mr Jenkins and Mr Angus agreed to speak to Mrs Laura Gray, Director Corporate Comms, about getting a thank you in the papersto donors. / BJ/DA
7. / Investments
7.1 / Review of Investment Portfolio at 30 November 2009
Mr Bisset reviewed the portfolio valuation.
Mr Jenkins said that Newtons would give a further update but that we were in a much better position now than we had been earlier in the year. An important point to note was that the market value was now above the book value but not sufficiently to lift the restriction on fund holders spend.
The Committee agreed to continue the ruling where fund holders can only spend 80% of their fund but that they would keep this under review.
7.2/7.3 / Investment Portfolio at 30 November 2009 - Newtons
Carol Clark and Mike Connor join the meeting
Ms Clark went over Newtons presentation. It included an up-to-date valuation as of 11 December 2009. Markets had made a recovery andmarket values werenow above the book value.
Returns on cash remained low due to the low interest rate. Shares were at attractive levels and bonds were doing well.
Mr Connor explained the portfolio position and the rationale and thinking on the portfolio. The financial sector was still weak due to concerns that the bank debt issues had not been addressed in an appropriate way. Newtons favoured telecoms and health care companies and will continue to focus on emerging and developing economies.
Mr Bisset asked if there were any areas that we may need to sell at a loss. Newtons said that Government bonds were not in a positive position and we might need to take some losses on gilts.
Mr Connor said that the portfolio position was cautious and no dramatic changes in the structure of the fund were required.
Carol Clark and Mike Connor left the meeting.
8. / Overview of Current Financial Position
8.1 / NHSG Endowment Fund at 31 October 2009
Mr Bisset went over the figures.
Mr Angus said that money held in the bank had reduced since 31 October as additional monies provided to Newtons had been used for further investments. This also provided a better return than interest received from money in the bank.
Mr Angus said that Appendix 1 showed that £5m of the fund was committed expenditure. Specific fund expenditure can be approved for 2-3 years so total commitment hadbeen accounted for within this figure.
The Committee agreed the report.
8.2 / Endowment Committee Fund at 31 October 2009
Mr Angus said that £83kwas the present surplus on the fund but with the estimated profit on the sale of investments being break even, the year end balance was expected to be £45k.
The Committee agreed the report.
8.3 / General Endowments at 31 October 2009
Mr Bisset went over the report. The Committee was asked to consider the proposal on the treatment of the investment advisers fees and to note the spend year to date against the approved budget and the indicated variances. Mr Bisset said that the adviser’s fees should be spread over all the funds and the Committee agreed to this action.
Mr Scott indicated that research expenditure seemed slow. MrAngus said that that was due to the process involved with R&D applications and that there was usually a delay before any charges were processed but possible slippage was minimalbut any would be carried forward to next year.
The Committee agreed the report.
8.4 / Rolling cash-flow forecast
Mr Robertson asked what the payments to AberdeenUniversity were for. Mr Angus said that it was mostly research related expenditure.
The Committee noted the report.
8.5 / Review of expenditure on General Endowments
Mr Angus said that the estimated capital balance at 31 March 2010 would be £3.5m but in April 2006 it had been £5.5m. The balance had therefore decreased significantly.
Mr Scott said that a realistic view of the situation was to reduce expenditure now and it could always be revisited at a later date.
Mr Angus suggested that the capital sum should not go below £3m as continued income from this sum was required to meet expenditure demands.
The Committee had been asked to reconsider whether any Endowment contribution could be made to the Staff Physio Service after a review of the general endowment expenditure for 2010/11. A paper had been received from the Physiotherapists that had been provided to the Exchequer Budget Steering Group with proposals (see options 1-4 below) for consideration. The paper sets out four options but there would be a trade off between the cost of each option and the level of service provided.
Option 1 - £98K - Advisory and clinical services
Option 2 - £77K - Advisory and limited clinical services
Option 3 - £42K (full-time) or £21K (part-time) - Advisory service only
Option 4 - stop the service as of 31 March 2010
The Committee discussed the options and agreed that if this Service was stopped it could impact on staff off sick.
Proposals to reduce the amount of general endowment expenditure were as follows:
Long service awards - £35K
Investment management fee - £80K
ARI general endowment contribution - £41,850
Research - £20K
Grants - £25K
This would release £201,850 to either fund the Staff Physio Service and/or reduce the budget deficit of the Headquarters fund.
A further option would be to assess whether income received from dividends and bank interest could be “top sliced” for the headquarters fund prior to apportionment over all funds. This was on the basis that the headquarters fund met the loss on the sale of investments last year.
The Committee agreed that:
- Fund Option 2 for the Staff Physio Service on a one year basis and be reviewed at end of year.
- More information was needed on future level of staff that would qualify for long service awards and to determine the level of award for long service due to financial constraints.
- Investment management fee to be redistributed over all funds.
- ARI general fund to provide funding towards the Staff Physio service - 31% to come out of the fund.
- Research –reduce the research budget to £10K.
- GrampianHospital Arts Trust - £50K for one year only and then they have to support themselves through fundraising.
Mr Jenkins and Mr Angus to bring to the next meeting aproposal which provides clarity on the redistribution of interest/dividends. / DA
DA
DA
DA
DA
DA
BJ/DA
9 / Funding Requests
9.1 / Expenditure requests approved from 1 September-
30 November 2009
Mr Angus said that the expenditure was greater than the income.
The Committee noted the report.
9.2 / Continued funding of paediatric oncology research nurse
Mr Bisset said that for governance purposes this request for £90K should have come with information explaining how this money would be used and an update on its progress. Mr Angus said that the request had gone to Professor Alison MacLeod for her approval and this was still awaited.
Subject to Prof Macleod's approval, the Committee would formally sign off the request once Mr Angus had received more information on how this money had been used and feedback on what had been achieved so far. MrAngus to email the Committee with the information. / DA
9.3 / Medical equipment for Royal Cornhill Hospital from Charlton Trust
Mr Angus said that a breakdown had been received from MrWMitchell, Service Manager, RCH, on the items of medical equipment and costs that had been submitted to the Joint Medical Equipment Committee (JMEC) for their approval which was awaited.
The Committee approved the request subject to JMEC approval.
10 / Draft General Endowment Budget 2010/11
Mr Bisset went over the paper and figures.
Following the discussion at Item 8.5 the draft endowment budget should be amended with the agreed adjustments and considered at the next meeting. / DA
11 / Grampian Hospitals Art Trust (GHAT)
Dr Donnie Ross and Ms Anne Moore joined the meeting.
Mr Bisset asked Dr Ross and Ms Moore how the money they received from the Committee was spent.
Dr Ross requested that the Committee support them until they were in a position to start their own fundraisingby starting up a fundraising committee and the appointment of a Fundraising Managerat a cost of £25-30K. Ideally they would like the Committee to give them £100K to keep the service at the present level. GHAT had to raise £250K for a new gallery.
Ms Moore went over the current projects and the costs incurred.Mr Scott asked if they sold any pictures. Ms Moore said that they had sold £14K of commissioned art but that they were now losing the present gallery though a new site had been identified and this may affect future amounts received.
Mr Bisset explained to them that there was a financial deficit accruing that Endowments had not experienced before. The Committee would not be able to give them a decision today.
Dr Donnie Ross and Ms Anne Moore left the meeting.
Mr Robertson suggested allocating one more year of funding to enable their fundraising to start. An alternative view expressed was that GHAT needed to use the resource that they have in place to get their fundraising started given that they had already been given a year's notice and they had not yet started any fundraising schemes.
Cllr Bell said that GHAT needed an early indication on the Committee's decision.
Mr Jenkinsand Mr Angus to draft a letter for the Chairman to sign to inform GHAT that they would get £50K and only for one more year due to the financial climate. / BJ/DA
12 / Annual Update on Use of Monies Provided to UCAN
Mr Bisset said that this was a very comprehensive report and very impressive.
Mr Bisset expressed an interest in visiting UCAN.
The Committee noted the report. / RB
13 / Guidance for NHS Boards on Accepting Charitable Donations
Mr Bisset spoke on a circular (CEL 40 (2009)) that had been received from the Scottish Government on"Guidance for NHS Boards on accepting charitable donations". Mr Bisset asked if there was anything we needed to change to comply with the guidance. Mr Angus said that we were complyingwith the circular and thatthe trustees should specifically note paras 6 (Management of Charitable Donations) and 12 (General Duties of Trustees).
The Committee noted the circular.
14 / NHSG Medical Equipment Report - for noting
Mr Jenkins said that this was brought to the Committee for noting and that nothing specifically related to Endowments. When equipment was being bought through Endowments it went to Medical Physics for approval and an asset register was maintained.
The Committee noted the report.
15 / Review of Risk Control Plan
Mr Bisset went through the report and then Mr Jenkins said that there were no new risks.
Cllr Bell brought the Committee's attention to number 12(adverse publicity for the Endowment Fund) of the report and asked could there be an adverse responsefrom GHAT due to the reduction in their funding. MrJenkins said he thought that there would be a reply from GHAT to the Committee's letter but that they could apply for money from the Exchequer.
Mr Jenkins and Mr Angus to draft a letter for the Chairman to sign. The draft to be circulated to Committee members for approval before despatch.
The Committee to inform Corp Comms of the letter due to the implications on staffing in GHAT.
Board Members to be informed of the reasoning behind the Committee's decision to reduce GHAT's funding.
The Committee noted the report. / BJ/DA
BJ
RB
16 / AOCB
Report to Board
Items to be brought to the Board’s attention:
- Staff Physiotherapy Service
- Grampian Hospitals Art Trust / RB
17 / Date of Next Meeting
5 March 2010, 1000-1300, Conference Room, Summerfield House
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