Trustees report and financial statements 2020

STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS OTHER INFORMATION THE ROYAL SOCIETY TRUSTEES’ REPORT AND FINANCIAL STATEMENTS 40 SCIENCE SHAPING THE WORLD WE LIVE IN 41 Financial review Overview In the year to 31 March 2020, the Society’s income increased by 16%, from £111.7 million to £129.8 million. The majority of the Society’s income came from charitable activities, which increased by 19% during the year to £120.1 million (2019: £100.8 million). Total expenditure increased by 17% on the prior year from £114.7 million to £133.7 million, as the Society has continued to expand its charitable programme. Expenditure on charitable activities increased from £110.5 million to £129.3 million and has risen to around 97% of total expenditure from around 95% in 2019. Income from investments has decreased from the previous year to £6.9 million (2019: £8.1 million). In March 2020, due to the COVID-19 pandemic, the Society closed its buildings to Fellows, staff, conferencing clients and other visitors. Although the buildings closed, the business of the Society continued with staff working remotely, wherever possible. In line with government advice, Chicheley Hall closed on 23 March 2020. The operating result before investment gains/losses was in line with the budget and forecast for the year. Although the financial impact was relatively small, there was a significant reduction in some of the Society’s activities. The areas most affected are those that perform trading or public-facing programmatic activities where meetings and events that had been planned for 2020 were cancelled or postponed. The COVID-19 pandemic caused investment markets to fall, resulting in a net loss in investments and an overall net deficit result for the year. On 20 March 2020, the government announced a further series of measures aimed at protecting employees and businesses during the crisis, in particular the Coronavirus Job Retention Scheme. The Society did not receive any financial benefit as a result of the measures in the year ended 31 March 2020 and considered the impact of these measures in the weeks that followed. 2020 £m 2019 £m Expenditure on raising funds 4.4 4.2 Expenditure on charitable activities 129.3 110.5 Total expenditure 133.7 114.7 Income Income from charitable activities Most of the year-on-year increase in income relates to the increase in grants for charitable activities which rose to £108.5 million (2019: £89.2 million). The Society’s core grant from BEIS remained consistent with the prior year at £47.1 million but there were increases in the Society’s grants from BEIS under the Investment in Research Talent Fund (IRTF) from £21.7 million in 2019 to £31.6 million in 2020 and under the BEIS Global Challenges Research Fund (GCRF) from £6.0 million in 2019 to £15.0 million in 2020. The increase in the IRTF was to expand the number of grants awarded under existing programmes. The GCRF supports the Future Leaders – African Independent Research Fellowships (‘FLAIR’), which launched in May 2018; the year ended 31 March 2020 was the first year of FLAIR Fellows. Trading in furtherance of charitable objectives remained at a similar level to the previous year with a small decrease in income of £0.1 million to £11.5 million (2019: £11.6 million) due to successful trading for the majority of the year for both publishing and conferencing. In March 2020, the Society closed its buildings and paused the conferencing trading activities. The 2020 programme of meetings and events was cancelled or postponed and, while limited impact was reflected in the trading results of the conferencing trading activities for the year ended 31 March 2020, it is expected that results for the year ended 31 March 2021 will be significantly reduced. Income from donations and legacies Income from donations and legacies remained consistent with the prior year at £0.8 million. Expenditure The Society undertakes a broad range of activities that provide public benefit either directly or indirectly, in line with our strategic priorities.  Read more on the Society’s public benefit statement on page 10. Expenditure on charitable activities The majority of the Society’s charitable expenditure relates to grant awards, this year accounting for £102.5 million (2019: £84.7 million). The expansion of the grant programme included an increase in the value of grants awarded under existing schemes, most significantly in the URF programme of £7.4 million to £45.0 million (2019: £37.6 million), the Dorothy Hodgkin Fellowships of £1.5 million to £6.4 million (2019: £4.9 million), Royal Society Research Professorships of £1.5 million to £13.9 million (2019: £12.4 million), Royal Society Challenge Grants of £1.6 million to £2.9 million (2019: £1.3 million) and Wolfson Advanced Fellowships of £1.2 million to £1.4 million (2019: £0.2 million).