An update on the Royal Institution’s financial situation and future plans.
In 1799, 58 gentlemen including Sir Joseph Banks, Count Rumford and Henry Cavendish invested 50 guineas each (a very substantial sum) to establish an institution with the aim of introducing new technologies, diffusing knowledge and the application of science to the ‘common purposes of life'. It was an enlightened initiative that focussed on providing access to scientific and technical knowledge to the general public, something it has excelled at for over 200 years and continues to do to this day.
Over the years the Royal Institution (Ri) has had a bumpy ride often courting controversy, regularly facing financial difficulties and needing to innovate and adapt to survive. Indeed only 4 years after its foundation, the Royal Institution found itself in financial difficulties. Sir John Hippisley sometime Ri treasurer, wrote to the Earl of Hardwicke: "I recollect with pain that when I was on the Committee of Managers in the year 1803... our capital was exhausted and the corporation was £3,000 in debt, insomuch that a proposal was then made at the board to shut up the house of the Institution and to bring all the effects to a sale for a discharge of its debts. Fortunately a better determination prevailed. A liberal subscription among the members immediately took place. The debt was paid off and near £3,000 was invested for a time in the public funds."
How often does history repeat itself? Fast forward two centuries to 2008, when the Ri headquarters on Albemarle Street, accurately and affectionately known as the ‘home of science' was extensively refurbished to the tune of some £22million. This ambitious project did not attract sufficient funds and resulted in the disposal of income generating property assets and a severely depleted endowment. Once again the Ri found itself with a large debt, a reduced income stream and higher operating costs.
The new Board of Trustees was elected in 2010. It was clear from the outset that a wholesale overhaul of the Institution's governance structure was necessary to bring it in line with best charity practice. The annual operating loss peaked at £2.6million in 2010 but by 2012 this has been reduced to £600k.
At the same time, we refocused our activities on science education and communication. Audience numbers have increased dramatically for our extensive public programme of lectures and events, the Christmas Lectures are hitting viewing figures of over four million in the UK alone and are seen by millions more around the world, and the new and innovative Ri Channel website, which launched at the end of 2011, is nearing 1 million video views. Our Maths Masterclasses take place in 140 locations around the UK and membership is at an all-time high. This success led us to pursue many fundraising avenues but, while I am pleased to say that we have a number of loyal supporters who responded generously, many did not translate interest into action.
We maximise income from the building; every square inch that is not needed for our core purposes is rented out on a commercial basis. Whilst the Ri houses one of the most important scientific collections and archives in the world and maintains the free Faraday Museum we receive little regular funding.
Today, our financial situation is this: we are £5 million in debt, we have an overdraft facility of £2 million, we are operating with an annual deficit of around £600k and we need to replenish the original endowment by about £7.5 million.
This severe cash flow challenge and inability to service the level of debt means that we have a short time-frame in which to act. As Trustees of the charity, we are well aware of our duty to safeguard its financial health and to ensure the delivery of the objects in our Royal Charter. Therefore, at the end of 2012, the Trustees decided to explore options including a substantial partnership, sub-letting or disposing of all or some of its Albemarle Street property in order to put the Ri back on a sound financial footing. Not just for the next few years but for generations to come.
Since the story made headlines a few weeks ago, the level of public support has been overwhelming and inspiring. The Trustees and I are tremendously grateful for all the support and offers of help, but what we need to do is convert those into action and, frankly, income.
A week ago, we met some key supporters of the RI - including Brian Cox, Mark Miodownik and Jim Al Khalili - to discuss a new vision for the Ri that encompasses our wonderful heritage, defines our future purpose and galvanises support.