YMCA ENGLAND & WALES: VALUE FOR MONEY STATEMENT

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1 YMCA ENGLAND & WALES: VALUE FOR MONEY STATEMENT Obtaining Value for Money YMCA England & Wales has limited resources and it is important that we derive the maximum benefit from these. Hence Value for Money ( VfM ) is about getting the most from the resources at our disposal to achieve our desired outcomes. This is more than simply reducing costs; it is also about improving efficiency and effectiveness of the services we deliver. We define these as: Economy (spending less) = reducing the cost of purchasing Efficiency (spending well) = measure of productivity and performance Effectiveness (spending wisely) = maximising the impact that can be achieved We find that VfM is highest when there is an optimum balance between these three components: Low costs; High productivity; and Successful outcomes Through adherence to VfM we can ensure that YMCA England & Wales achieves sustainable financial strength. This is our annual Value for Money statement and provides information on: Our approach to achieving value for money; Where our resources come from, how we spend those resources and how we are performing; and Our value for money successes and plans for the future. This full Value for Money statement is published on our website with a summary included within our audited Financial Statements. Our approach to value for money Value for Money is led by the Board and overseen by our Finance Committee, but each sub-committee is responsible for ensuring that VfM is considered in their area of operations. VfM is embedded in the way we work and in the way we plan and deliver services to local YMCAs. Our mission statement makes it incumbent upon us to ensure that services are designed and delivered in a way that enhances the organisation s financial sustainability.

2 F We see VfM as the key to financial sustainability as we optimise cost relative to outcomes. This in turn ensures the financial viability of YMCA England & Wales for us to continue to achieve our long-term goals. In a climate of reduced funding and potential economic difficulty for many of our member YMCAs, preserving YMCA England & Wales services at current level, let alone improving upon it, is our challenge going forward. VfM is integral to our approach to budgeting and business planning where every penny is made to count. How have we delivered Value for Money? The five key components of our VfM strategy: 1) Governance to develop a Board led VfM culture within YMCA England & Wales with all staff encouraged to accept ownership and accountability for achieving it 2) Customer focus to ensure that the services we provide are shaped around the needs of our members 3) Performance ensure that staff understand their objectives. To ensure that the right things are measured 4) Financial stewardship setting budgets understanding our cost base and sources of income and to report performance against these budgets. To optimise the use of assets 5) Procurement buying goods at the optimum price/quality mix. We have an annual plan for YMCA England & Wales which is derived from the Federation Strategy, informed by an assessment of the operating environment and our priorities. Every year we allocate resources to our activities to enable us to meet these objectives and then monitor our performance against these objectives. This allows us to monitor and evaluate our performance against our goals ensuring that all activities reflect our commitment to achieving economy, efficiency and effectiveness. The Board and its sub-committees, monitor performance via updates at each meeting, review of strategic risks and regular reviews of programmes, projects and policies. The Board is responsible for setting and monitoring the Value for Money strategy, through oversight of the annual plan and receives performance updates at each of their meetings. The Board holds an annual strategy session at their November residential meeting, which informs the development of the plans and budget for the following year.

3 It is through our staff that we put our commitment to achieving VfM into action: 1. We empower our employees to make decisions that help us deliver more; 2. We monitor performance through regular reports on activity; 3. We seek out our employees views and ideas on how we can become more effective and efficient. YMCA England & Wales monitors VfM via a range of reports showing performance during the year and also over longer-term trend analysis, which are summarised in this VfM self-assessment. Having clear strategic objectives... Right activities Doing things economically... Right Delivery Statutory Compliance Regulatory Compliance Financial viability Customer satisfaction Good performance Cost of delivery Maximising Value for Money Improved staff training Reduced staff turnover Reduced staff sickness Increased use of volunteers Surplus as % of turnover Staff costs as % of expenditure Expenditure as % of budgeted costs Increasing amount of bank and cash balances Maximising the return from our staff Maximising the return from our assets

4 When deciding which initiative to prioritise we consider: The short, medium and longer-term benefits, both economic and noneconomic The total financial and non-financial implementation costs The impact on our risk profile Potential enablers and barriers Any other implications Priority is given to those actions demonstrating they can be implemented quickly, with low cost and higher benefits. Potential Impact High VfM priority 2 A quick win Low VfM priority 4 Monitor High cost VfM priority 1 Transformational VfM priority 3 Future Target Low cost Implementation

5 Measures for our housing operations Average re-let time Actual Target Actual Target Actual Target 8 days No target 19 days No target 22 days No target Average void loss 5% 3% 6% 3% 7% 3% Rent arrears: - current tenants - former tenants Management expenditure against budget Maintenance expenditure against budget Service expenditure against budget Average cost per unit Satisfaction with repairs 4% 3% 4% 2% 109% 95-99% 95-84% 95-5,059 No target 4% 2% 4% 2% 116% 95-83% 95-78% 95-5,507 No target 4% 3% 4% 2% 95-84% 95-83% 95-5,157 No target 99% 80% 99% 80% 99% 80% YMCA England & Wales operates its housing schemes via managing agents. The performance of the managing agents are regularly reviewed and reported at each meeting of the Housing Board. Areas for improvement are identified and raised with the particular scheme. YMCA England & Wales commits to publish the Tenant Annual Report covering the seven standards, detailing how we met each standard and what we plan to do in the next year. Updates on actions promised in previous Tenant Annual Reports: We said in we would: Continue to work with Local Housing Partners to address the issues of rent collection from current residents and former residents, including sharing good practice.

6 Continue to work with the National Residents Forum and the policy team of YMCA England to highlight issues of affordability and welfare reform for our residents. What said we would do in : We will work with the policy team of YMCA England & Wales on the review of funding for supported housing and support our LHPs in implementing any changes. We will discuss affordability with the National Residents Forum in Due to the decision by the Board of YMCA England to dispose of all its housing properties, and to eventually de-register as a registered Provider, the provision of a Manchester office, predominantly to accommodate the Housing Department, has been reviewed. The original lease was for a 10 year period, with a break clause at 5 year point (June 2017). Negotiations have been held with the landlord to give notice under the terms of the lease, and to effect a tenancy at will for as long as the office will be required thus saving costs involved in a further 5 year term. As part of the programme of property disposals, a careful analysis is made in respect of investment in properties that are scheduled for disposal, so that overinvestment is avoided, whilst maintaining absolute clarity that whilst we continue in the role of landlord, we continue to ensure that all H&S repairs are completed, and that Decent Homes standards are maintained. This is evidenced by recent tendering of heating plant replacement at our High Wycombe scheme, with projected costs of c 250k. Asset management expenditure is monitored, to ensure that where appropriate tender arrangements are put in place, to ensure best value within procurement, recognising that the cheapest quote does not always represent best value. Because of the trajectory for Housing Department staff to eventually be made redundant, lease arrangements for company cars has been amended for shorter term lease periods, which can be extendable, rather than renew cars on 3 year terms, which could potentially result in surplus cars being in place and chargeable for the organisation. Average cost per housing unit is higher than other providers due to the clientele we work with and the associated additional support required. This is what differentiates the YMCA from general purpose housing providers.

7 Measures for return from our Retail and Fundraising operations RETAIL OPERATIONS Average number of shops Average weekly income Retail Gift Aid Conversion Average number of staff Full time equivalent FUNDRAISING OPERATIONS Gift Aid penetration in fundraising Return on Investment in Fundraising ,501 1,433 1,460 26% 23% 12% % 59% 60% 3.10x 5.01x 2.75x Retail operations: Average shop count numbers have fallen due to closure of poor performing and loss making shops. Lease breaks are being exercised and shops that cannot make a worthwhile financial return after central costs are being closed. In total 23 shops closed during 2016/17. This process has led to an increase in weekly income, which has been assisted by changing some shop formats to discount stores (Wigan has returned a 42% increase in sales for the first eight weeks when compared to the corresponding period last year and Bishop Auckland a 16% return on the same basis). We have also improved the turnaround on electricals and changed our rag merchant to improve income.

8 The strategy to close loss making and underperforming shops will continue. In total 11 shops are budgeted to close during 2017/18. Rents are being negotiated and in some cases an approach is being made to landlords on temporary shops. New sites will come on a slower rate than they did historically as the criteria for acceptance has been tightened around compliance and lease terms. The Gift Aid conversion has been affected by a tightening around compliance. A strategy to roll out a national re-training programme is underway and this will balance the needs for correct Gift Aid compliance and behaviours with a need to grow our Gift Aid income - it is a difficult balancing act but both are equally important. Fundraising: As a proportion our level of income, Gift Aid on donations is relatively stable. We have tried to ensure that we are keeping this level by doing several mop up Gift Aid mailings per year to ascertain tax status of supporters and ensuring we claim where we can. As an overall proportion, we have looked at our penetration rate and 60% is the general benchmarked data on non-membership organisations 1. We will continue to ask supporters to allow us claim Gift Aid where they are eligible and confirm with those have told us they are not eligible in order to ensure we are keeping records up to date and to prompt notifications if circumstances were to change. The return on investment (ROI) for fundraising was higher in 2016 due to an exceptional legacy, however despite investment and higher expenditure in 2017, we are showing a more positive ROI. This is partly due to a high level of vacant posts which led to less expenditure. Although we will continue to keep a close watch on expenditure and returns, due to a period of additional investment in fundraising we do not expect to achieve a higher ROI in Gift Aid Benchmark: What does good look like? nfpsynergy, July 2016.

9 Measures for return from our staff Human capital cost (total staff cost per FTE) Gross Revenue per employee: - Retail - Non-Retail Staff turnover - Retail - Non-Retail Staff retention - Retail - Non-Retail ,400 21,100 21,140 41, ,520 61% 69% 28% 45% 38% 73% 36, ,350 58% 63% 31% 47% 44% 68% 37, ,450 57% 57% 54% 44% 41% 53% Measures for use of assets Surplus as % of turnover (excluding sale of assets) Staff costs as % of total expenditure Expenditure as % of budgeted costs Unrestricted bank and cash balances (7%) 8% (1%) 28% 30% 32% 104% 87% 99% 4.2m 2.7m 1.0m As noted above, the restructure of our retail operations has seen closure of less profitable shops with a corresponding reduction in retail staff numbers, and an increase in retail income per staff member. As these staff are lower paid, the reduction in retail staff numbers has caused the average salary per employee to increase and this is expected to continue. Our retail shops open and close on a regular basis which leads to a high staff turnover rate and this has been emphasised by the restructure during the year.

10 The non-retail income has been distorted by the exceptional legacy of 1.27m received in 2016, which has been reinvested in improving future fundraising. Expenditure increased in 2017 due to over 800k of exceptional items in YMCA Retail, including significant maintenance costs and provision for dilapidations. Cash balances have increased due to sale of housing assets. The revised Federation Plan for the YMCA in England and Wales has led to YMCA England & Wales reviewing its business model to ensure that we are delivering the services required by member YMCAs. This review has been led by the Board and co-ordinated by an external consultant. This review focused on the efficiency of the service provision and has led to several redundancies. During the year YMCA England & Wales moved offices to avoid a significant rent increase and secured offices with a similar rental cost and more appropriate for our current needs, in particular with better meeting facilities avoiding having to rent external rooms. Long term contracts are reviewed on a 5 year basis and during this year the following items were reviewed: Direct Marketing agency Telecommunications Auditors to the pension scheme For the next year we are looking at utility services.

11 No Strategic objectives 1. Driving delivery of the federation strategy - Increasing our impact Achievements gained in 2015/16 Input Output Outcome Future Objectives Use of contacts with government and parliamentary patrons Consulted by government on changes affecting young people Better able to raise the issues affecting young people Continue to ensure that government are made aware of the impact of their proposals on young people - Extending our influence Create significant understanding of the work of the YMCA through increased recognition of our brand. More YMCAs have adopted the messaging and style guides to promote their works. Increasing public awareness of the YMCA National Brand. Roll out the visual identity across the Federation. Even more member YMCAs to adopt the brand and visual identity. - Working together better Development of YMCA signature programmes in co-operation with member YMCAs. More YMCAs getting on board with the programmes Increased range of services offered by member YMCAs Even more member YMCAs to participate with the programmes - Shaping our future Publication of well researched reports on issues affecting young people Increased media profile Better able to raise the issues affecting young people Further research reports to be issued 14

12 No Strategic objectives Input Output Outcome Future Objectives 2. Securing our financial future Restructuring the business and implementing a cost savings plan. Retail review implemented. Closure of underperforming shops and Cheltenham centre with work relocated to London office Review of the YMCA England business model Strengthening our governance Board led review of governance structures within YMCA England to ensure these are still fit for purpose. Compliance with the Code of Governance has been strengthened with greater accountability Implementation of the recommendations 3. Ensuring a fit-forpurpose infrastructure Relocation of London office Moved to smaller office space with reduced rental costs Annual savings of almost 100k pa against planned rent review Increased use by the Federation of meeting space in central London. Investing in new information systems. We have successfully implemented new EPOS and scanners systems in Retail. Delivered substantial improvement in the efficiency of our Retail support services. Review of management reporting and budgeting + forecasting systems 15

13 No Strategic objectives Input Output Outcome Future Objectives Review of all major contracts at least every 5 years Reduced operating costs Greater economy Continue the rolling programme 4. Protecting and enhancing YMCA Expand the use of modern communication to ensure staff are kept informed of developments in YMCA England and enhance their experience of our services. In particular those staff working outside the London office. Act as guardian for the YMCA heritage, ensure that YMCA in England is represented internationally Expand communication via various channels with greater use and benefits of social media. The current YMCA President is from YMCA Derbyshire and England has a representative on the YMCA World Council. Our International Officer is active with other international YMCAs Staff have become more aware of the activities being undertaken. Greater influence for the YMCA Federation internationally Further expansion of the range of communications being issued. Extend the employment benefits via launch of YMCA staff well-being programme. Extend on the work that has been done to date. 16

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