These financial statements have been prepared under the historical cost convention, as modified by the revaluation of investments to market value and are in accordance with Accounting and Reporting by Charities: Statement of Recommended Practice applicable to charities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and Republic of Ireland (FRS 102) (effective 1 January 2016) (‘the SORP’), the Charities Act 2011 and applicable United Kingdom accounting standards.

Financial review

2018 was another successful year for The Donkey Sanctuary and we ended the period with a record total consolidated income of £42.3m (2017: £37.6m). Total expenditure, including capital, reduced very slightly to £41.8m (2017: £42.0m), a reduction of 0.4%, and we ended the year with general funds of £42.8m (2017: £42.9m).

Income

The Donkey Sanctuary experienced continued success from its income-generating strategies, whether this was from donations and legacies or its other trading activities. Our voluntary income grew by over 13% to £38.2m (2017: £33.8m), reflecting the continued kind generosity of our supporters and success from our fundraising strategies. We appreciate how important it is to not only introduce new supporters to the work of our charity, but also to ensure we actively engage with our existing supporters through fundraising and communication activities that increase awareness of the impact of our work across the world.

During the year, we carried out a comprehensive review of our adoptions scheme, which was the first review for five years and is part of our overall fundraising strategy. We will seek to actively grow all of our income streams and supporter base to enable us to achieve our new five-year strategic plan and transform the welfare of donkeys and mules across the world, and elevate their status. As one of our many digital fundraising strategies we launched our new website during the year, and we have received some very encouraging feedback from supporters. We also experienced growth in Gift Aid income as we actively promoted the benefits of completing Gift Aid declarations by qualifying supporters.

Income generated from legacies remains an important source of income for us and we are extremely grateful to all who have remembered us in their will. In 2018, legacy income grew to £26.6m (2017: £23.3m), an increase of 14%, and reflects how so many of our supporters are proud that they have contributed towards the ongoing commitment to give care and love to thousands of donkeys worldwide.

In terms of other trading activities, 2018 was a year of transition and growth with income increasing to £3.1m (2017: £2.9m), this reflecting the first full year of trading from our new restaurant The Kitchen, together with the opening of our new, larger Gift Shop. The facilities are proving to be a great success, giving us the opportunity to attract new and existing supporters to experience the scale of our activities and demonstrate how their visit will contribute towards our work across the world. All profits from our trading subsidiaries’ activities are donated back to the charity to help transform the lives of donkeys in need.

Expenditure

Total expenditure for the year, including investment in capital projects, fell slightly to £41.8m (2017: £42.0m), this reflecting the exceptional capital investment in our new facilities in Sidmouth during 2017. In 2018, operational expenditure on our charitable activities increased by 7% to £30.8m (2017: £28.8m). The key areas of increased expenditure being across Rescue and Rehoming activity and human-donkey interaction, whilst there was a slight reduction in expenditure across our overseas programmes, such as Donkeys in the Community.

In 2018, we extended the reach of our donkey welfare advisers across the UK in support of growing the number of donkeys we can rehome, which included the ongoing promotion of direct rehoming with Donkey Guardians, who can offer caring homes for two or more of our donkeys. By continuing to invest we have helped to increase the number of donkeys rehomed in private homes, schools and other institutions. This forms a key element of our new five-year strategic plan. We also experienced the impact of higher straw prices across the UK, resulting in a higher than planned level of expenditure for the donkeys in our care across our sanctuaries. Overall our expenditure grew by more than 9% to £22.7m (2017: £20.7m).

During the year, we fine-tuned the charity’s new five-year strategy – this gave us the opportunity to review the successes of our overseas activities from the last five years through Donkeys in the Community, and to give careful thought as to how our new Global Programmes team will lead us to future success in 2019 and beyond. As we made the time to derive our Global Programmes strategy, we continued with our investment in key areas of activity including the development of our Advocacy team and its activities consulting with governments, other non-governmental organisations, and the international media to garner support. We continued to play a pivotal role in addressing the threat to donkey populations due to the unsustainable demand for their skins, with growing levels of activity in Brazil, across Africa and in China. We encountered unavoidable government-imposed restrictions to our activities in Egypt, and re-evaluated some of our other overseas activities to ensure alignment with our new Global Programmes strategy, hence a slight reduction in expenditure for 2018 to £4.1m (2017: £4.3m).

In 2018, expenditure on human-donkey interaction through our programme of donkey facilitated learning grew by 7%, reflecting our new strategy of providing interactions that offer more opportunity to connect on an emotional level. In order to support our expanding operations and continue the success of the charity as we enter our next five-year-strategy, we will continue to invest in fundraising activities. As we absorbed the impact of the new regulations both from the Fundraising Regulator and from the Information Commissioner's Office in respect of GDPR, we also finalised our new fundraising and commercial strategies during 2018.

As we grow our income, whether this is from donations, fundraising events, legacies or trading, we acknowledge that there will be an increase in expenditure to ensure our continued fundraising success, and we therefore increased our fundraising budget (including trading costs but excluding capital) to £9.2m in 2018 (2017: £8.6m). It is worth noting that the proportion of our expenditure attributed to raising donations, legacies and other fundraising income remains low, at 16.8p (2017: 17.6p) for every £1 of total expenditure. The trustees continue to monitor the risks associated with the changing landscape of fundraising and the potential for reduced levels of income in 2019 and beyond. Through our ongoing maintenance of robust financial controls and other internal measures, we are able to closely monitor the charity’s fundraising performance to mitigate this risk and take suitable action as required.

Net assets and funds

The trustees operate a reserves policy to ensure the continued ability of The Donkey Sanctuary to meet its objectives. The trustees are aware of the potential volatility of income levels and the significant proportion of our total income from legacies. The annual update to our reserves policy representing a more agile and forward-thinking model recognises the specific reserves needed to fund our core activities, reflecting the financial risks the charity faces, our ongoing committed expenditure and the composition of readily available funds to meet day-to-day activities.

The policy will allow us to invest in a dynamic programme of strategic growth, driving forward our ambitious initiatives to transform the lives of donkeys at scale. The policy is kept under periodic review and reserves levels are adjusted as perceptions of risk and other factors change.

In terms of our total assets, £33.2m (2017: £32.4m) relates to fixed assets and planned capital projects, most of which is land and buildings to care for donkeys across our sanctuaries. There were no exceptional capital projects during the year, the capital expenditure represented by normal asset replacement cycles and minor property additions.

General funds of £42.8m (2017: £42.9m) comprise:

  • specific reserves of £25.0m to take account of core operating activity, including the many risks and uncertainties that the charity may face, such as potential reduction of future income
  • general reserves of £17.8m representing those funds available to accommodate medium to long term growth in the charity, and for the trustees to apply to specific transformative strategic projects.