A misspending of endowment funds is at the heart of a spate of resignations.
The Royal Institution, one of the UK’s most prestigious scientific organisations, misspent a previously undeclared £1.6 million in endowments to pay for the refurbishment of its building in London’s west end, Research Fortnight has learned.
The science communication charity declared in January 2016 that it was debt free, after a financial crisis arising from a costly refurbishment of its Grade I-listed building at 21 Albemarle Street in Mayfair left it with multi-million-pound debts for eight years.
However, its 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. The practice did not cease until September 2009, and a further £1.6m was spent.
The discovery means that the Royal Institution must now repay £2.88m in total. It has agreed an “updated replenishment programme” to pay this money back by September 2025, according to its financial statements. Minutes of its annual general meeting, held in May 2016, reveal that Sarika Patel, a trustee who chairs the audit committee, described “future challenges relating to the replenishment of misapplied endowments as agreed with the Charity Commission and the necessary rebuilding of reserves.”
Sarah Harper, who was appointed chief executive of the institution in April, quit after just months, it was announced on 5 September. Research Fortnight understands that three more senior managers are leaving. They are: Michelle Barkwith, head of human resources; Haseena Farid, head of development; and Claire Gardner, head of operations. Research Fortnight understands that the four resignations are related to the misspent funds but that no misdemeanour is implied.
Questioned on 5 September, a spokesman for the Royal Institution denied that his organisation was facing financial problems again. He said that the institution was debt free and described its finances as “sound”.
In a statement issued on 13 September, a spokesman said that “the use of endowment funds in this way does not constitute debt; replenishment is planned and has not had any impact on our ability to meet our charitable objectives”. He added that the spate of resignations was unrelated to the Royal Institution’s finances.
Harper, a former BBC reporter and professor of gerontology at the University of Oxford, declined an interview request.
The findings will put more pressure on the board of trustees and its chairman Richard Sykes. In late 2013, Sykes rejected a rescue plan proposed by the Royal Society, which would have involved the Royal Institution being absorbed by the society. Paul Nurse, Royal Society president at the time and now director of the Crick Institute, lamented the resignations.
“I thought Sarah Harper was a great appointment and I’m disappointed to hear that she’s going,” he said in an email. “I personally think the Royal Institution has an important role to play in public science engagement.”
The hole in the Royal Institution’s finances is likely to have a direct impact on its activities, as the institution finalises its next strategy, due to be published at the end of the year.
This article was updated at 7:20am on 14 September to include a response from the Royal Institution.
Comment from Rob Davies of the Royal Institution:
“The article published in Research Fortnight today implies that the Royal Institution is in financial difficulty and that recent resignations are connected. This is not the case. The Ri is in a robust financial state; we are debt free and produced a surplus in the 2015/16 financial year as reported in our audited financial statements.
That Ri endowment funds were used for the refurbishment of the building nearly a decade ago has been well reported. It was declared to the Charity Commission when first discovered in 2009/10 and again earlier this year, as soon as we made a second discovery. We reported this to our Members and publically in our financial statements published in May 2017.
The use of endowment funds in this way does not constitute debt; replenishment is planned and has not had any impact on our ability to meet our charitable objectives. To date we have replenished £854,000 at the same time as growing our activities considerably.
It is not appropriate for us to comment on individual reasons for staff leaving the Ri, except to make clear that none have left because of the historic use of endowment funds.
We have exciting plans for the future and are in a strong position to deliver them. At a time when scientific communication is vital, as Paul Nurse says, the Royal Institution has an important role to play in public science engagement. ”