Posted on Tue 09 Feb 2021 at 10:33 by Francesco Masala
We are all aware of the damages the Covid-19 crisis has had on the finances of many organisations, and The SU has not been left unscathed by the various restrictions, lockdowns, and changes to the law. We believe it is important to be frank about the financial challenges we are facing as an organisation, both currently and looking at the future.
The SU is a charity completely independent from the University. We therefore have our own governance structure, overseen by a Board of Trustees composed by independent trustees and elected ones (the SU Officers). Each year, our activities and finances are externally audited and we have to file a report with the Charity Commission.
The SU has three key sources of income that funds our staffing and activities. The main one is a block grant we receive from the University. In this academic year, this amounts to approximately £1.7m. This income is topped up by commercial sales we make through our bar, café and nightclub sales. Other sources of income include stall hires to external businesses, National Express commission, and Totum Card commission. The total turnover of The SU is around £3.5m and this money funds our entire organisation. Large-scale events we all know and love like Freshers’ Week and Summer Ball would entirely be funded through ticket sales.
The block grant is a contentious issue for The SU year-on-year, as there was no guarantee that the amount received in the grant one year would be the same one for the year after. This year, we have made it possible to secure the same amount for our block grant for 2021/22 – this has been a huge achievement and has given us a level of security in terms of SU activities next academic year.
However, the real hit from Covid-19 has been on our commercial income.
The Covid-19 restrictions and lockdowns have resulted in a significant drop in our commercial income - we are down by approximately £1m. Our bar usually turns a profit of around £140k, now we are forecasting a loss of £170k. This has a significant impact on our budgets as we try to absorb these losses. From the outset we have had to take some significant measures, including the furloughing of staff, a freeze of non-essential expenditure across the board, and a recruitment freeze. Budgets across areas were reduced across The SU to weather the financial challenges. Whilst necessary, we are incredibly aware of how this has caused concern and stress among our staff and students. We can only applaud and be incredibly thankful for the resilience shown by our community through this difficult time.
The loss of commercial income has brought the organisation into a deficit now forecast at £213k. Normally, The SU would aim to create a small surplus to build up our financial reserves. This money is then allocated for larger projects: as an example, in the past, reserve money has been given for the refurbishment of the University Radio Bath studio. The reserves are also there to support The SU during unexpected financial challenges, such as the current one. We are therefore using some of our reserves to cover the losses made, and the University has been incredibly supportive of our activities to ensure we would not completely use our reserves and would not have to cut any further activities this year. The University has also supported us this year in the funding of Freshers’ Week and East Village, and we are hugely grateful of the importance the University has placed on the student experience this year.
The roll-out of the vaccination programme in the UK is a cause for celebration and hope for the future, and we are keen to get the show back on the road as soon as it is safe to do so. Whilst we are hopeful that the 2021/22 will be a more prosperous one, we must take stock of the losses we have made over the past months and must re-prioritise our spending over the next academic year. We also must replenish our reserves to ensure our long-term financial sustainability which has been hugely threatened by the crisis.
We will have to be incredibly cautious about our expenditure over the year ahead, with our aim to break even by the end of Financial Year 2021/22. This means we will have to make savings on our spending compared to previous years. Believe me when I say that, whilst essential to the long-term stability of The SU, this is the most disappointing thing I have to say as your SU President. I am fully aware that there are difficult conversations that are going to happen in the coming weeks, with staff members and student leaders alike. We will have to review budgets for all areas with the possibility of cuts – this is a very unfortunate reality, but a necessary one. We will be working with you over the next few weeks to find alternatives, and we are in conversations with the Department of Development and Alumni Relations to scout alternative ways to receive funding, as well as looking for ways to maintain our activities going in a more cost effective way. We will also start looking at how we can diversify our income streams to veer away from relying almost exclusively on our bar sales.