Go back

Financial turmoil rocks Royal Institution again

Struggle to balance science and profit as more debt is revealed

The discovery of more misspent endowment funds and a spate of resignations at the Royal Institution have left many wondering whether the organisation will be able to restore its credibility.

The Royal Institution misspent a previously undeclared £1.6 million in endowments to pay for the costly refurbishment of its Grade I-listed building in London, Research Fortnight revealed on 13 September.

The practice of spending endowment funds on refurbishments had continued for a year longer than previously realised, according to a financial statement filed with the Charity Commission in July. It did not cease until September 2009, by which time a further £1.6m had been spent.

The discovery of the misspent funds increases the institution’s original £2.1m debt to the endowment fund to £3.7m. The institution has already managed to pay back £1.1m—meaning that it now has £2.6m left to repay by a deadline that has yet to be agreed by the Charity Commission.

Sarah Harper, a prominent gerontologist at the University of Oxford who was appointed chief executive of the institution in April, quit soon after, it was announced on 5 September. Three more senior managers are leaving: Michelle Barkwith, head of human resources; Haseena Farid, head of development; and Claire Gardner, head of operations.

A Royal Institution spokesman said that the organisation was committed to replenishing the endowment fund, and that the debt has not had any impact on the organisation’s ability to meet its charitable objectives.

Although the institution did not disclose details of the repayment programme, Research Fortnight understands that the resignations are related to tensions between having to balance its scientific programme with making a profit.

Researchers—who had welcomed the appointment of an academic to lead the Royal Institution after eight years of business manager Chris Rofe at the helm—said they were sad to hear about the misspending of funds.

“The scientific community’s confidence in the Royal Institution coming back has been dealt a blow,” said Fiona Fox, director of the Science Media Centre. “I don’t believe the Royal Institution will find its rightful place back in the heart of the science community if it is having to think about profit all the time.”

Colin Blakemore, a neuroscientist at the School of Advanced Study, University of London, and a former member of the Royal Institution’s future direction committee—established in 2013 to devise a long-term financial plan for the institution—agreed. Scientific programmes are likely to suffer if the repayment rate is based on revenues higher than the institution is reporting at the moment, he said. “With the obligation to repay this money, it is hard to see that it won’t be thinking of a programme aimed more at making money than just the purity of scientific engagement.”

In 2013, the Royal Society’s then president Paul Nurse proposed a rescue plan that would have involved the Royal Institution being absorbed by the society. This was rejected by the institution’s board of trustees and its chairman Richard Sykes. Venki Ramakrishnan, the current president of the Royal Society, declined to comment on the possibility of a second bid.

The obligation to repay the endowment fund could discourage the Royal Society’s fellowship from supporting another merger bid, said Blakemore. “With hindsight and this new discovery of more funds to be repaid, maybe it wasn’t a good decision to reject the Royal Society offer. But it is difficult to rewrite history,” he said.

According to Daniel Glaser, director of the Science Gallery at King’s College London, it is too early to say whether it was a mistake to reject Nurse’s rescue plan. Glaser proposed that the institution engage with hedge funds and venture capitalists and develop a clear ethics and transparency policy to make the institution accountable. The institution could also rethink its long-standing opposition to accepting government funding, Fox said.

This article also appeared in Research Fortnight