Lifeboats .... Again

[Sybarite]

On the one side you have the French life boat service which is 25% funded by central and local Government (tax payers), the rest made up of private donations and not inconsiderable charges to persons who are rescued.
On the other hand you have the RNLI which is 100% funded by donations and no charge for rescue.
Am sure any organisation can be improved but prefer the RNLI approach.

There is no charge for persons rescued, only towing charges for boats. €345/hr : cheaper than a commercial tow in all probability. The previous president was working to eliminate these charges too.

 

[Sybarite]

Oh damn and blast it! Trying to type a detailed and considered response on the mobile and just lost the lot

Suffice it to say that, at the risk of further accusations of playing the man rather than the ball, realising that the OP has a background in finance tells all as far as I'm concerned

quantity is valued above quality

cash must be spent not saved

costs must be cut and cut and cut again

the balance sheet rules over everything

everything is measurable

if it can't be measured it can't be counted

and ultimately the only thing that matters is the bottom line

It's a valid approach if all you care, or need to care, about is this year's dividends to share holders and bonuses to top management.

It's sounded the death knell of many a previously successful organisation

Now that is not to say that all is perfect in the RNLI, it would be a miracle if there was no room for improvement, but you need to get your nose out of the numbers and balance sheets and look at the bigger picture

Costs are being looked at, reducing the salary bill has been identified as a desirable goal where possible and its been acknowledged that the organisation could do with being a bit leaner and keener

All of that is subjective of course. There's no "costs must be reduced by £x" just a gentle push towards a slightly leaner culture

the very fact that RNLI continues to buck the trend towards a downturn in donation income is, by the way, some justification for the paid, and paid well, fund raising and publicity departments.

the OP claims experience in the charitable sector yet seems oddly reticent in agreeing with the fact that UK charities are subject to close and detailed scrutiny from the Charity Commission and particularly so in the matter of costs and reserves (two areas the Commission has been particularly hard nosed about for a long time now)

anyway, my battery is fading and so is my interest!

Quite a rant and irrelevant to what I wrote. All that banging about it's perhaps appropriate that you work with noise.....

 

[Sybarite]

I find it very difficult to put up with any sort of criticism of the RNLI, implied , veiled, or otherwise. Are they above criticism? Actually yes they are, go to Poole , look at the Memorial. If they want a jet boat they can have one, if they want to paint it pink with rainbow fairies, that's fine too.

Would you agree that every ambulance should be a Rolls Royce and, if not, why not?

And it's ok by you that the pension fund is £279m ( paid to whom ?) administrative salaries are £55m and boat spend £10m?

 

[Bru]

Quite a rant and irrelevant to what I wrote.

not, I venture to suggest, as irrelevant as the fact that I have been known to dabble with sound mixing. which is about as relevant as the fact that it doesn't pay the bills so I've been known to serve teas and coffees and cook panninis and baguettes in a cafe

What is relevant is that I AM a former charity trustee so I do have some knowledge of how charities actually operate in the UK

anyway, this is in danger of getting personal and I don't actually know you and you don't actually know me and neither of us has anything to gain from it other than engaging in an interesting debate so perhaps it's time to call time ... until next time!

 

[dogleg]

If I'm wrong, challenge me with facts. I don't accept I'm wrong just because you say so. I may well be wrong but justify why.

£10m comes from Note 6 to the accounts, second column, page 32/44. Of course I accept that this figure varies from year to year. I would be interested to know how it has evolved over the last 5 to 10 years.

Off-loading balance sheets was the battle cry of every large corporation in order to improve their B/s gearing or leverage so they were in a position to attract outside capital.

Based on the balance sheet they can do it for the next 50 years, except that this figure is growing every year.

£10m comes from Note 6 to the accounts, second column, page 32/44. Of course I accept that this figure varies from year to year. I would be interested to know how it has evolved over the last 5 to 10 years.


Perhaps I can shed some light on this? In 2012 3 new Tamar class lifeboats went on station and the last three of the class went on station this year. The Shannon build programme was delayed for some time as the first prototype did not come up to operational requirements therefore requiring a return to the drawing board.
Had this not happened there would have been more new ALBs. You are forgetting to mention the 8 or so Atlantic 85 ILBs built per year + same number of ILB1's.

The Shannon programme has been delayed by adapting the lessons gained in sea trials of 13-01 into the main build programme which when under way will produce 6 or so Shannons per year + launching carriages.

The oldest RNLI ALB is a Tyne built circa 1985 due to replaced by a Shannon soon as are the remaining Tyne's within the next few years.

The first Severn went on station in 1996 last built in 2004 so they are between 17 and 7 years old.
Trents first built 1991 last 2003 22-10 years old. Trents They will be gradually phase out being replaced some by Shannons and the rest by possibly anew breed of Tamars or whatever as paln is a basis for change.
Merseys first built 1988 last 1994 so 25 -9 years old. These will be replaced by Shannons.

Many ALB's are therefore quite young in age so why build more to replace boats 15 or so years old with plenty of life left in them with planned maintainence and refits? At the moment apparently the plan is to eventually refit the Severns updating their equipment and electronics etc at some time in the future to extend their life span to around 35-40 years.

The Dutch use Hamilton jets in their boats possibly the best available and also have a regular survey and refit programme making sure they have spares from accompany (Hamilton) that has not gone bust.

 

[dogleg]

There is no charge for persons rescued, only towing charges for boats. €345/hr : cheaper than a commercial tow in all probability. The previous president was working to eliminate these charges too.

Towing a yacht in poor weather is usually the best way of saving lives and the boat.

 

[dogleg]

Would you agree that every ambulance should be a Rolls Royce and, if not, why not?

And it's ok by you that the pension fund is £279m ( paid to whom ?) administrative salaries are £55m and boat spend £10m?

Retired full time coxswains mechanics and crew, widows of lifeboatmen lost on service, injuries to crew on service or exercise compensation for lost wages etc

 

[Amulet]

Ranting thread drift - ignore to taste

Entertaining thread - only one assertion where I have expertise - outsourcing in time of hardship - tried that, many times.

I have public sector but not very big budget expertise like the others here (8 figure annual turnover but never 9). Lay off people when times are hard and outsource! The good ones leave you and the poor ones stay. Where do the companies to whom you outsource get their expertise? They hire the people you laid off and charge you silly consultancy fees for their time. Oh, and I have an idea, why don't we streamline the NHS? We could outsource.

I want people who take ownership of important problems and pride in their solution - over decades. I want them to feel special because they solve important problems and looked after by their employer because they are important. People don't work best when they are under threat, they work best when they are proud of what they do - and if they are, you don't even have to pay them silly money.

 

[dom]

I know zip about jet propulsion, but was fascinated by so many informative explanations, so here’s my tuppence worth on finance, where (hopefully) I know something - the RNLI invest quite a bit in hedge funds.

First a quick point on efficiency: most corporate and charity stakeholders agree that an operation’s efficiency is best assessed by carefully measuring the entity’s monetary, material & capital inputs against its outputs, whatever they are. Germany and Japan are the leaders in this field. Corporates make decisions with respect to intangible value every day - a product’s emotional desirability (important to luxury sector), brand value, etc. Governments make similar decisions regarding human life every day - police numbers, speed limits, train signalling systems, air traffic control, etc.

IMO an attempt to measure the RNLI’s efficiency should not automatically be construed as a slight on the brave and selfless men and women who clearly possess the best attributes of humanity. However, a theory, which cannot be falsified by any set of observations, is closer to religion than reality, so it's reasonable to ask questions.

SECOND WITH RESPECT TO RNLI RESERVES - THEY ARE IN NO WAY EXCESSIVE, PERIOD ...and here’s why: total assets (financial reserves + fixed assets, etc) are currently £579m, financial reserves are £251m, total annual cost of lifesaving activities £116m and fundraising activities £33m. If the RNLI wanted to shift to a fully funded endowment position, obviating the need for further donations, it might assume a 7% (and that’s being aggressive!) return on portfolio assets. This would suggest reserves of approx £1.45bn (£116m/.08). RNLI reserves are currently only about 17% of this.

What should donors make of the £251m reserves? The answer is simple and practical: take a look at Harvard University, which has an endowment of approx $35bn. This has enabled Harvard to invest heavily and confidently in areas de facto out of bounds to Cambridge (Europe’s wealthiest university with an endowment of £4.3bn) or Oxford (£3.3bn). Incidentally the Cambridge Endowment produces a yield of only 3% to the University. For the RNLI to fully fund on this more conservative basis would require reserves of £ 3.8bn (currently only 6.5% of this!).

Empirical evidence strongly suggests that well funded organisations can better plan for the future and deliver better services to all of their stakeholders. For instance the RNLI has a big expenditure programme for 2014 including 4-6 Shannon Class boats (2? delivered in 2013), extensive Shannon Class shore-works, 8 new Class B lifeboats and shore-works (zero in 2013), etc. Would this be possible if it was reliant on folk with collection boxes to pay the bills?

Sorry for such a long post!

 

[dogleg]

quite right

 

[dogleg]

I know zip about jet propulsion, but was fascinated by so many informative explanations, so here’s my tuppence worth on finance, where (hopefully) I know something - the RNLI invest quite a bit in hedge funds.

First a quick point on efficiency: most corporate and charity stakeholders agree that an operation’s efficiency is best assessed by carefully measuring the entity’s monetary, material & capital inputs against its outputs, whatever they are. Germany and Japan are the leaders in this field. Corporates make decisions with respect to intangible value every day - a product’s emotional desirability (important to luxury sector), brand value, etc. Governments make similar decisions regarding human life every day - police numbers, speed limits, train signalling systems, air traffic control, etc.

IMO an attempt to measure the RNLI’s efficiency should not automatically be construed as a slight on the brave and selfless men and women who clearly possess the best attributes of humanity. A theory, which cannot be falsified by any set of observations, is closer to religion than reality.

SECOND WITH RESPECT TO RNLI RESERVES - THEY ARE IN NO WAY EXCESSIVE, PERIOD ...and here’s why: total assets (financial reserves + fixed assets, etc) are currently £579m, financial reserves are £251m, total annual cost of lifesaving activities £116m and fundraising activities £33m. If the RNLI wanted to shift to a fully funded endowment position, obviating the need for further donations, it might assume a 7% (and that’s being aggressive!) return on portfolio assets. This would suggest reserves of approx £1.45bn (£116m/.08). RNLI reserves are currently only about 17% of this.

What should donors make of the £251m reserves? The answer is simple and practical: take a look at Harvard University, which has an endowment of approx $35bn. This has enabled Harvard to invest heavily and confidently in areas de facto out of bounds to Cambridge (Europe’s wealthiest university with an endowment of £4.3bn) or Oxford (£3.3bn). Incidentally the Cambridge Endowment produces a yield of only 3% to the University. For the RNLI to fully fund on this more conservative basis would require reserves of £ 3.8bn (currently only 6.5% of this!).

Empirical evidence strongly suggests that well funded organisations can better plan for the future and deliver better services to all of their stakeholders. For instance the RNLI has a big expenditure programme for 2014 including 4-6 Shannon Class boats (2? delivered in 2013), extensive Shannon Class shore-works, 8 new Class B lifeboats and shore-works (zero in 2013), etc. Would this be possible if it was reliant on folk with collection boxes to pay the bills?

Sorry for such a long post!

quite right

 

[Sybarite]

Towing a yacht in poor weather is usually the best way of saving lives and the boat.

Agreed and there would be no charge for this. If the crew have abandonned the boat and the boat is subsequently towed, the charge is applied.

 

[Sybarite]

[/I]

Retired full time coxswains mechanics and crew, widows of lifeboatmen lost on service, injuries to crew on service or exercise compensation for lost wages etc

I've been travelling. I'll reply to this shortly.

 

[Sybarite]

I know zip about jet propulsion, but was fascinated by so many informative explanations, so here’s my tuppence worth on finance, where (hopefully) I know something - the RNLI invest quite a bit in hedge funds.

First a quick point on efficiency: most corporate and charity stakeholders agree that an operation’s efficiency is best assessed by carefully measuring the entity’s monetary, material & capital inputs against its outputs, whatever they are. Germany and Japan are the leaders in this field. Corporates make decisions with respect to intangible value every day - a product’s emotional desirability (important to luxury sector), brand value, etc. Governments make similar decisions regarding human life every day - police numbers, speed limits, train signalling systems, air traffic control, etc.

IMO an attempt to measure the RNLI’s efficiency should not automatically be construed as a slight on the brave and selfless men and women who clearly possess the best attributes of humanity. However, a theory, which cannot be falsified by any set of observations, is closer to religion than reality, so it's reasonable to ask questions.

SECOND WITH RESPECT TO RNLI RESERVES - THEY ARE IN NO WAY EXCESSIVE, PERIOD ...and here’s why: total assets (financial reserves + fixed assets, etc) are currently £579m, financial reserves are £251m, total annual cost of lifesaving activities £116m and fundraising activities £33m. If the RNLI wanted to shift to a fully funded endowment position, obviating the need for further donations, it might assume a 7% (and that’s being aggressive!) return on portfolio assets. This would suggest reserves of approx £1.45bn (£116m/.08). RNLI reserves are currently only about 17% of this.

What should donors make of the £251m reserves? The answer is simple and practical: take a look at Harvard University, which has an endowment of approx $35bn. This has enabled Harvard to invest heavily and confidently in areas de facto out of bounds to Cambridge (Europe’s wealthiest university with an endowment of £4.3bn) or Oxford (£3.3bn). Incidentally the Cambridge Endowment produces a yield of only 3% to the University. For the RNLI to fully fund on this more conservative basis would require reserves of £ 3.8bn (currently only 6.5% of this!).

Empirical evidence strongly suggests that well funded organisations can better plan for the future and deliver better services to all of their stakeholders. For instance the RNLI has a big expenditure programme for 2014 including 4-6 Shannon Class boats (2? delivered in 2013), extensive Shannon Class shore-works, 8 new Class B lifeboats and shore-works (zero in 2013), etc. Would this be possible if it was reliant on folk with collection boxes to pay the bills?

Sorry for such a long post!

I've been travelling. I'll reply to this shortly.

 

[Sybarite]

[/I]

Retired full time coxswains mechanics and crew, widows of lifeboatmen lost on service, injuries to crew on service or exercise compensation for lost wages etc

It's true they are in it for £200k in 2012 and £5.9m for actuarial checked future commitments. Out of potential pension liabilities (off balance sheet) of £279m. And a charge of £7m in the year for employee pensions. See Notes 3, 10 and 15 to the 2012 accounts.

Those (qualifying) who earn more than £60k got an employer contribution of £159k. (Note 3)

 

[Sybarite]

I know zip about jet propulsion, but was fascinated by so many informative explanations, so here’s my tuppence worth on finance, where (hopefully) I know something - the RNLI invest quite a bit in hedge funds.

First a quick point on efficiency: most corporate and charity stakeholders agree that an operation’s efficiency is best assessed by carefully measuring the entity’s monetary, material & capital inputs against its outputs, whatever they are. Germany and Japan are the leaders in this field. Corporates make decisions with respect to intangible value every day - a product’s emotional desirability (important to luxury sector), brand value, etc. Governments make similar decisions regarding human life every day - police numbers, speed limits, train signalling systems, air traffic control, etc.

IMO an attempt to measure the RNLI’s efficiency should not automatically be construed as a slight on the brave and selfless men and women who clearly possess the best attributes of humanity. However, a theory, which cannot be falsified by any set of observations, is closer to religion than reality, so it's reasonable to ask questions.

SECOND WITH RESPECT TO RNLI RESERVES - THEY ARE IN NO WAY EXCESSIVE, PERIOD ...and here’s why: total assets (financial reserves + fixed assets, etc) are currently £579m, financial reserves are £251m, total annual cost of lifesaving activities £116m and fundraising activities £33m. If the RNLI wanted to shift to a fully funded endowment position, obviating the need for further donations, it might assume a 7% (and that’s being aggressive!) return on portfolio assets. This would suggest reserves of approx £1.45bn (£116m/.08). RNLI reserves are currently only about 17% of this.

What should donors make of the £251m reserves? The answer is simple and practical: take a look at Harvard University, which has an endowment of approx $35bn. This has enabled Harvard to invest heavily and confidently in areas de facto out of bounds to Cambridge (Europe’s wealthiest university with an endowment of £4.3bn) or Oxford (£3.3bn). Incidentally the Cambridge Endowment produces a yield of only 3% to the University. For the RNLI to fully fund on this more conservative basis would require reserves of £ 3.8bn (currently only 6.5% of this!).

Empirical evidence strongly suggests that well funded organisations can better plan for the future and deliver better services to all of their stakeholders. For instance the RNLI has a big expenditure programme for 2014 including 4-6 Shannon Class boats (2? delivered in 2013), extensive Shannon Class shore-works, 8 new Class B lifeboats and shore-works (zero in 2013), etc. Would this be possible if it was reliant on folk with collection boxes to pay the bills?

Sorry for such a long post!

Three days average revenue (£480k /day)would pay for a Shannon lifeboat without touching the reserves.


"....total annual cost of lifesaving activities £116m and fundraising activities £33m....

You are forgetting the most important part : you have annual income of £179m to face up to these expense - which led to an overall increase in reserves in the year of £38m…!!

Total reserves are not £579m they are £612.9m. In a certain way I consider that the restricted reserves are massaged insofar as when a donation is designated to acquire an asset, a reserve is created. However when the asset is acquired and the money spent, the reserve is not eliminated even though it has served its purpose

EG Somebody donates £1.5m to fund a Shannon LB.

DR cash with cash received from donor 1.5m
Cr Reserve 1.5m

Or credit income and then set up the reserve by a charge on the results – net impact on current results = zero.

You buy/make the boat

DR Lifeboats with cost of new boat 1.5m
Cr Cash money coming out of your bank 1.5m

However you still have a reserve. Which according to them (notes concerning Restricted Reserves) serves to remind people of the origin of the donation. But what is the financial function now of this reserve? It can only be there as a reserve to buy future boats. If this is not the case it should be added back to results. But that might be embarrassing. Therefore it is only restricted because there is an internal policy to restrict it but it is not imposed by the donor whose wishes have been carried out. Therefore it is a reserve available for future investment.

 

[Sybarite]

not, I venture to suggest, as irrelevant as the fact that I have been known to dabble with sound mixing. which is about as relevant as the fact that it doesn't pay the bills so I've been known to serve teas and coffees and cook panninis and baguettes in a cafe

What is relevant is that I AM a former charity trustee so I do have some knowledge of how charities actually operate in the UK

anyway, this is in danger of getting personal and I don't actually know you and you don't actually know me and neither of us has anything to gain from it other than engaging in an interesting debate so perhaps it's time to call time ... until next time!

Fine...

 

[jordanbasset]

Agreed and there would be no charge for this. If the crew have abandonned the boat and the boat is subsequently towed, the charge is applied.

They did charge here
http://www.ybw.com/forums/showthread.php?41953-French-Lifeboats
Whilst motoring up Seinne towards Honfluer i encountered engine problem ( Later found water separator completely clogged (( New Tank and Pipes - Dirty Fuel )) am investigating dealer - another story )
Anyway as going with strong tide was concerned at turning yacht across current into Honfluer lock, so radioed Honfluer lock for assistance to get into lock.
Response was they sent the Honfluer lifeboat which towed me in at a charge of £275 Euros ( Min hourly charge ) Did not consider it safe to sail into the lock having mored in sideways last year to counter the current. Difficult to anchor without hindering the gas tankers etc that use the narrow channel.
I have yet to contact my insurance but this is about £200 and my excess is £150 so if excess applies is it worth claiming ?'

and here
'I got into trouble off St Vaast last year. I was with relatively inexperienced crew, not the most experienced skipper myself, on a borrowed boat, and they towed me in. I was bloody grateful. I would have paid 3000 euro!! instead it cost 300.
It was WORTH EVERY CENT when judged against the possible alternative of being blown onto the shore.
We in the UK are extremely lucky to have the RNLI, and how they do what they do on charitable income is fantastic. The fact is however we are spoilt rotten and, typically, expect everyone else to follow our lead.
I would like to know how many of you are actually Offshore Members and showing your gratitude for what they do.'


As I said earlier much prefer the RNLI, entirely funded by donors with no tax payers money and no charge for recovery.

 

[dom]

Three days average revenue (£480k /day)would pay for a Shannon lifeboat without touching the reserves.


"....total annual cost of lifesaving activities £116m and fundraising activities £33m....

You are forgetting the most important part : you have annual income of £179m to face up to these expense - which led to an overall increase in reserves in the year of £38m…!!

Total reserves are not £579m they are £612.9m. In a certain way I consider that the restricted reserves are massaged insofar as when a donation is designated to acquire an asset, a reserve is created. However when the asset is acquired and the money spent, the reserve is not eliminated even though it has served its purpose

EG Somebody donates £1.5m to fund a Shannon LB.

DR cash with cash received from donor 1.5m
Cr Reserve 1.5m

Or credit income and then set up the reserve by a charge on the results – net impact on current results = zero.

You buy/make the boat

DR Lifeboats with cost of new boat 1.5m
Cr Cash money coming out of your bank 1.5m

However you still have a reserve. Which according to them (notes concerning Restricted Reserves) serves to remind people of the origin of the donation. But what is the financial function now of this reserve? It can only be there as a reserve to buy future boats. If this is not the case it should be added back to results. But that might be embarrassing. Therefore it is only restricted because there is an internal policy to restrict it but it is not imposed by the donor whose wishes have been carried out. Therefore it is a reserve available for future investment.

Aha I see the problem - in fact perhaps two:

First A Charity's Reserves: The £600m you mention in post #47 is indeed consistent with the £612m stated in the RNLI's stated reserves in its 2012 accounts. But, the "reserves" word is accounting terminology and NOTHING TO DO WITH THE RNLI'S FREE CASH RESERVES, WHICH ARE £251m (note 7 /2012 accounts). £612m is simply the total of the liability side of the B/S which definitionally equals total assets.

Moreover, the accounting entries you state, whilst correct, miss the step whereby fixed assets are depreciated. Were they not, the RNLI would not be correct in stating £612m of total assets and would be in contravention of UK accounting regulations as amended by relevant international treaties.

Secondly, the RNLIs 2012 £175m income is augmented by a paltry £3.8m contribution from investment income; the rest comes from fundraising, legacies, etc.
IT WOULD THEREFORE BE GROSSLY UNFAIR TO SUGGEST THAT THE RNLI IS SOMEHOW GROWING FAT ON THE BACK OF SEMI-COVERT RESERVES. The RNLI is simply attempting to maintain its modest status quo (with respect to investable reserves) in an environment where investment yield is getting tougher to achieve.

Seems a sensible, prudent and commendable approach to me; especially in light of the fact that the RNLI only maintains reserves at the very modest end of the scale (see my previous post). Your point re 1x Shannon = 3 day's box shaking is precisely why the RNLI is correct in attempting to slowly slowly build its reserves.

For further evidence, look at all of the great work the Wellcome Trust is doing; this charity's freedom and political clout is in no small part due to the $25bn it keeps in reserves.

 

[Sybarite]

They did charge here
[

url]http://www.ybw.com/forums/showthread.php?41953-French-Lifeboats[/url]
Whilst motoring up Seinne towards Honfluer i encountered engine problem ( Later found water separator completely clogged (( New Tank and Pipes - Dirty Fuel )) am investigating dealer - another story )
Anyway as going with strong tide was concerned at turning yacht across current into Honfluer lock, so radioed Honfluer lock for assistance to get into lock.
Response was they sent the Honfluer lifeboat which towed me in at a charge of £275 Euros ( Min hourly charge ) Did not consider it safe to sail into the lock having mored in sideways last year to counter the current. Difficult to anchor without hindering the gas tankers etc that use the narrow channel.
I have yet to contact my insurance but this is about £200 and my excess is £150 so if excess applies is it worth claiming ?'

It would not appear that life was at risk here. They performed a tow job and requested payment for it.

and here
'I got into trouble off St Vaast last year. I was with relatively inexperienced crew, not the most experienced skipper myself, on a borrowed boat, and they towed me in. I was bloody grateful. I would have paid 3000 euro!! instead it cost 300.
It was WORTH EVERY CENT when judged against the possible alternative of being blown onto the shore.

We are talking about an incident happening probably more than ten years ago. I'm referring to the policy today.

Incidentally in this 2004 post I already was pointing out the differences between the RNLI and the SNSM finances.

When the discussions were going on about funding the local SNSM stations in Brittany, it appears that there were significant unpaid bills by foreign yachtsmen....