Reserves policy of the Biochemical Society

The Biochemical Society is funded from two main sources- profits from publishing (via Portland Press) and the Society's investments (its Reserves).

The Society's reserves have arisen from profits on its publishing activities, which in some years in the past have exceeded expenditure. The Society's Executive Committee has considered it imprudent to use the surpluses for one-off expenditure in the year the surpluses arose. Rather, it has thought it wiser to invest the surpluses in order to enable more lasting benefits to accrue to enable the Society to fulfil more effectively its object of advancing the science of Biochemistry.

However, no additions to investments have been made since 1991, all growth being as a result of increased values of the securities held. Indeed, in 1996 a withdrawal of �500,000 was necessary to ensure that the Society held sufficient cash to meet its obligations. A further withdrawal of �650,000 is planned in 2001.

The investment policy is made more valid bearing in mind the very difficult trading conditions in learned publishing in recent years, together with increased demands on expenditure, and uncertainties such as changes in the scope of VAT, the effect on profits of electronic publishing, the growth of library consortia, and the reduction of charity tax relief on investment income.

In addition, many of the Society's major charitable activities, such as conference organisation, and the awarding of grants, require planning and commitment up to more than five years in advance, such as the Congress which took place in 2000. Such a pattern of activity and consequent commitments in advance can only be made if there are adequate reserves to provide a steady revenue flow. The charitable objectives would be severely damaged by an erratic programme of meetings and irregular availability of grant funds.

Similarly, the Society's contribution to the development of scientific literature and information delivery would not be possible without resources to conduct project work.

The Society's financial aim, in order to ensure adequate funding, is to maintain the real value of its investments over time, by ensuring that any net withdrawals from investments to meet cash needs are balanced by growth in the value- and thus income generating capacity- of its investments. The investment value of �10.2 million, (excluding restricted funds) as at 31st December 2000 is a suitable base which, if maintained, should enable the Society to carry out this policy.

As from 1999, the greater part of the Society's funds has been divided into Designated Funds, relating to the main areas of Society activity. These designated funds represent the value of investments required to provide income to fund the various activities, after allowing for profits expected from Portland Press. The funds are shown in Note 9 to the accounts.