As lockdown starts to be lifted, groups are thinking about whether they will be able to resume rehearsals in the coming months. Each group will be in a different position and must assess the risks and take decisions based on its own situation, location and membership.
Now is the time to research your options, talk to your members, meet as a committee and make a plan for the next three to six months or year ahead.
Planning discussions should not be led by financial concerns of course, but it is vital for the resilience of your group that you understand the financial impact of the options under consideration. Be open to changing the way you have done things in the past, such as how you collect member subscriptions, but if you start thinking about this now, you will have more time to explain, consult and make any adjustments. Adaptability is key; this is not business as usual!
Before discussions take place, establish what you do know: how much money you have in the bank, what income you can count on and what expenditure you cannot avoid.
And be sensitive to the impact of the current situation on the finances of your members; many will be less able or willing to contribute than before but may not want to share this with you. Retaining members, irrespective of ability to pay subscriptions, is most likely going to be your priority.
Options for your group
Three options you may want to consider are outlined in Planning for the Future 3: Options and Planning. None are right or wrong but if you plan to discuss them, be prepared to examine the financial implications of each.
Option 1 – Hibernate
Pausing group activities may be the sensible option for your group but challenge the assumption that this involves simply suspending member subs and saving costs.
Go through your cashbook for the past year to identify costs you will incur whether or not you are rehearsing or performing. These may include the cost of insurance (including trustee indemnity), website and domain hosting, data protection and Companies House fees, Making Music membership, accounts preparation, PRS fees owed before lockdown and any cancellation fees for future events. In addition, you may agree (or have already agreed) retainers for musical directors and accompanists which need to be renegotiated based on affordability (they need you here for the long term too!).
Once you know these costs, you can decide how you will cover them. Using reserves may be an option if you have these to spare (and this is the rainy day they were created for). Otherwise, the most likely source of income will be from members but not necessarily in the way they have contributed in the past.
Put aside your usual subscription model and consider other options:
- continue member subscriptions but at a minimal rate (an advantage of this is to keep members invested in the group)
- consider a threetier model: current rate, reduced rate, 0% rate
- offer a donation or ability to pay model over the period of hibernation
- reconsider the frequency of collection. For example, the option of a monthly subscription of £5 may be more manageable than an annual payment of £60
- reconsider the method of collection. Many members will be anxious about their own financial position. Collecting subscriptions by monthly standing order will allow them to cancel or reduce their payment at any time if their circumstances change
- consider your refund policy. Under what circumstances would you reimburse subscriptions?
Explain to members why they are being asked to contribute. An anonymous survey of members using free tools such as SurveyMonkey, Google forms or similar can be used to assess member preferences, how many are able to contribute and how much this might raise before deciding on the best way forward (don’t forget a method for those who are not able to take part online).
Option 2 – Go virtual until spring
Meeting online will eliminate the cost of hiring rehearsal and performance venues but may involve additional costs of musical direction and arrangements as well as the unavoidable costs of Option 1.
This option requires considerable time and energy to keep up the level of engagement, novelty and digital creative process. Often this falls to one person in the group who may be willing to do this voluntarily in the short term but not over an extended period.
Continuing to offer group activities online makes it easier to request a contribution from members, albeit in a different way to before. A two-tier membership model may be appropriate, with a subscription for those who are able to take part (with concessions) and an exemption or allowance for those who are not able to engage in this way.
Option 3 – Keep your options open
Less certainty means planning for a range of different scenarios, from an extended lockdown to resuming regular meetings and events over shifting timeframes:
- Put your effort into planning for the most likely scenario at the current time but also consider best and worst-case scenarios so you know what these involve
- Understand your current position. Make sure the accounts for your group are up to date and reconcile your cashbook to your bank statements so you know your current cash position in advance of making significant decisions. Revisit this on a regular basis
- Build on the financial implications of Options 1 and 2 and add in the additional income and costs for your plan
- Factor in new costs such as cleaning, sanitising and hiring larger venues where relevant
- Prepare a simple cash flow forecast by tracking the timing of income and costs across each month as they fall due. Make sure your cash balance will be positive at each point in the plan.
This involves quite a lot of work and responsibility, so make sure this doesn’t fall to just one person. Consider appointing a deputy Treasurer and work together on this. Ensure that calculations and the underlying assumptions are understood, tested and owned by the whole committee.
Flexibility is key:
- Accept that estimates may change as events unfold
- Be agile and design an adaptable subscription model
- Explain to members that you may need to change course as circumstances change and new information becomes available
- Identify decision dates for new cost commitments. Do not make commitments unless you are sure you can afford them if last minute cancellation is required
- Ensure you have clear contractual terms which factor in the possibility of future restrictions
- Be familiar with the terms of your insurance policy. Cancellation costs are unlikely to be covered
- Consider reducing risk by sharing costs with similar organisations, for example booking a venue for a joint Christmas concert
- Don’t cut corners or bypass financial controls. Make sure your financial procedures are as strong online as when you meet in person. Be vigilant for fraud and cybercrime.
Remember: the changes you make now need not be permanent. This is all about adapting to the current situation and maintaining the financial viability of your group for the long term.
Look at our Keeping Running resource on contracts, ticket refunds, membership subscriptions, freelance contracts etc. to help you evaluate where you stand as a group and what you may be able to do to contain costs and/or maintain income.
Always bear in mind that your duty as a committee is to the charity and/or the constitution (if you are not a charity). You are there to ensure the survival of the organisation – what actions will support that most strongly?
Some groups have expressed concerns that the hibernation option (see above) will mean they aren’t meeting their charitable proposes. This will be the case, but that is OK. You don’t have to meet your objects all the time. Taking a decision that means you aren’t meeting your objects right now but that enables you to meet them in a sustainable way in the future, is acting the best interests of the charity. The important thing is that you are not spending funds on activities outside the scope of your objects.
Note on reserves
You may have two or three types of reserve, i.e. money set aside which you do not use on a day-to-day basis for your operations:
Restricted funds; given by a funder for a specific project. You are not allowed as a committee to take decisions on these funds that deviate from their original purpose. You need to consult the funder about any changes you wish to make with regard to how you spend that money. E.g. you may have money for a project to be completed by September 2020, but now you won’t be able to complete it until March 2021. Contact the funder and discuss your new plans with them. In general, we have found that funders at the moment are bending over backwards to be really flexible and helpful. But they need to know you have a plan!
Designated funds; funds that the committee has decided to set aside from reserves in order to make a certain project happen e.g. renew the website. You will have taken the decision to designate the funds in the committee, now table a discussion with the committee about whether you need to use these funds for more urgent purposes (e.g. to keep the group alive and afloat until it can resume its usual activity) and then minute the decision.
You will have taken the decision to designate the funds in the committee, now table a discussion with the committee about whether you need to use these funds for more urgent purposes, and then minute the decision.
Unrestricted reserves; this will be money accumulated from surpluses in past years. You may have a policy (as generally recommended) that these should cover 3 or 6 months’ of operations. It is money you have saved up for a rainy day. THE RAINY DAY MAY BE NOW – so if you do need to use part or all of these reserves, to keep your charity going, make sure you have a full discussion in your committee and minute the decision you take. This kind of unforeseeable eventuality is what reserves are for. If you do spend down reserves to survive you need to factor in building them up again when looking at longer-term planning.
- Charity Commission - Financial planning
- OSCR - Coronavirus guidance
- Charity Commission - ticket refunds
- Coronavirus bounce back loan
- Sayer Vincent - How to handle the year end
- Charity Commission - AGMs and other meetings
We hope you find this Making Music resource useful. If you have any comments or suggestions about the guidance please contact us. Whilst every effort is made to ensure that the content of this guidance is accurate and up to date, Making Music do not warrant, nor accept any liability or responsibility for the completeness or accuracy of the content, or for any loss which may arise from reliance on the information contained in it.