The Financial Future of the ECF

The previous post was a moment’s self-indulgence.  It’s time to get down to business.

My paper, The Funding of the English Chess Federation, can be found on the ECF Council page at http://www.englishchess.org.uk/?page_id=897.  It sets out two options for funding the ECF following the ending of the Government grant from the Department for Culture, Media and Sport (DCMS).  The two options are: a simplified version of the existing combination of Direct Membership and Game Fee, and a universal Membership scheme.  These were the choices which the ECF Council asked me to prepare at the AGM in October.   In addition to the description of the two options themselves,  the paper includes background information which I hoped would help Council to reach an informed decision.

Why is all this necessary?

Simply put, compared to a year ago, the ECF is facing the prospect of continuing business as usual with £60,000 less income.  In fact. it’s worse than that, because the £60,000 Government grant was VAT-free income, whereas any sources used to replace it would be liable for VAT (at the new 20% rate) and would therefore need to be greater than the amount they were replacing.  On top of this, inflation continues to put pressure on costs.

The actions of the Board in finding cost-cutting measures have gone a long way towards plugging this gap, but we haven’t been able to close it in full.  As a result, there is a shortfall of income compared with expenditure of nearly £17,000.  Currently, the sources available to cover this amount are players’ contributions in the form of Game Fee, Membership subscriptions or both.  This means that the amount needed from players is higher.  This is true of both of the options set out in the paper.

Reactions

The responses to the paper thus far make it all too clear that the increases involved – whichever option is chosen – are profoundly unwelcome in the eyes of many.  These are tough economic times, and the last thing any of us needs is another increase in the cost of playing chess.  I also understand completely the fears expressed by some that such price increases could drive people away from the game or, at best, away from the graded form of it. 

I hope it goes without saying that this is not the Board’s intention.  Speaking personally, I certainly don’t want my one contribution to English chess to be to send us down a road which leads to an accelerated decline in the game in this country.   My goal in offering to serve on the Board was to try to help English chess, not wreck it.

The choice facing Council

Numbers can be cruel.  The starting-point for the paper is the fact that, as things stand and taking into account all of the cost-savings identified by the Board, the ECF’s current activities cost £160,000, whereas the amount raised from members,  Game Fee and other minor sources of income is about £17,000 less than this.  There are only two possible solutions:

  1. Increase income; or
  2. Reduce spending.

More bluntly, the choice is:

  1. Chess players pay more to fund the ECF; or
  2. The ECF stops doing some of what it does now.

The Funding of the English Chess Federation offers two proposed solutions based on the first of these paths.  They need to be considered very seriously, because the risks are both real and substantial.  For example, the Membership Scheme option is calculated on the basis that at least 85% of graded players will pay to be ECF members at a cost of £18.  If this is felt to be an impossibly high target, this should be a key factor in Council’s decision.  This is only part of the choice, however.

Even before this, the first decision required is between doing the same (and therefore having to pay more for it) and doing less (and keeping what we pay the same, or increasing it by less).  If it’s the latter, Council needs to decide what it wants the Board to stop doing.

If Council opts to fund the ECF’s activities in full, then the question is “How?”  The funding paper describes two options (with some sub-variations).  It is deliberately vague on some of the details of implementation, to allow room for different approaches.  Council could choose to select an option only on condition that a certain approach to, say, collecting membership subscriptions was adopted.  Alternatively, it could leave the Board a free hand to explore options and come up with the best system it can.

The budget for the coming year has been prepared on the basis that the new funding arrangements will not start until 2012/13.  This buys us a year’s grace to do this right.  Nevertheless, the decision cannot be postponed.  Coming away from the Council meeting with the issue still in limbo would in some ways be the worst of all possible outcomes.

What is the Board’s view?

I did not see it as part of my brief in the funding paper to express a preference, and the Board has discussed the options and has so far chosen not to try to sway the debate one way or the other by offering a recommendation.  This is so fundamental to the future evolution of the ECF and, by extension, English chess, that I believe it’s only right to give Council the room to make its own considered choice.  There are no right and wrong answers here, only reasoned decisions based on what we as chess-players believe we should be paying for and how the burden of that payment should be distributed.

Council has a difficult choice before it.  Everyone with a stake in English chess needs to play their part in thinking about the issues here and passing their views to their Council representatives.

This is a turning-point.  For years, the existence of the Government grant has allowed us the luxury of relying on someone else to help fund the national federation.  Those days are gone.  What we decide now will have an impact for years to come.

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