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This article was first published in the February 2016 UK edition of Accounting and Business magazine.

Thalidomide, developed by German pharmaceutical company Grünenthal, was first marketed in 1957 as a sedative and then as an anti-morning sickness medication. Thousands of women worldwide took the drug before its devastating effects became evident. Many babies died in the womb, while others were born with limb defects and damaged eyes, ears and internal organs. 

The Thalidomide Trust, based in St Neots in Cambridgeshire, was set up in 1973 to support those in the UK born with disabilities caused by the drug. The charity does not fundraise but manages £130m of funds provided by Diageo (see ‘Basics’), as detailed in a covenant, until 2037. Thanks largely to the campaigning efforts of beneficiaries (of which there are 467 in total), the trust has also secured 10 years of funding from the UK Department of Health, to the tune of £80m. This funding was initially agreed in 2010 as a three-year pilot, which was then extended.

‘Our trustees monitor how that’s doing, but part of the Diageo covenant sets out how we invest the funds,’ explains Jenny Tunbridge, the trust’s finance director. ‘The trust adopts an “aggressive approach” to try to maximise the return from the investments’.

Tunbridge joined the trust in June 2013, leaving her role as financial accounting manager at the Royal Society of Chemistry (RSC), also a registered charity. Having previously been office-bound for several years, Tunbridge was particularly taken with the idea of being able to work directly with the trust’s beneficiaries. She is now one of a team of 11, most of whom only recently began working for the trust, after the former employees reached retirement age together. Tunbridge is on the management team, with the trust’s director and the director of health and wellbeing. 

On joining the trust, Tunbridge was pleased to discover that her job is even more hands-on than she had expected. Although many of the beneficiaries are ‘very financially able’, a core group needs direct assistance to manage their financial affairs. ‘For some, we assist with budgeting, going out to visit them in their homes. We go all over the UK.’ (Only 36 of the beneficiaries live overseas.) The team also works hard to reach out to beneficiaries not in regular contact with the trust. A significant part of Tunbridge’s work is keeping an eye on the trust’s investments, working with a board of trustees and a finance committee. Schroders actively manages £85m of the funds, which are in equities, while BlackRock passively manages £45m. 

If the investments fail to make expected gains, Diageo can step in to help. ‘We are completely underwritten by Diageo. We have an actuarial review every three years, and every six years enter into negotiations with Diageo to look at our funding and see if we are underfunded.’ If the trust is underfunded by more than 10%, the company will review funding. 

‘Good relationship’

In 2022, the trust will review its investment strategy with the conglomerate. ‘At some point we will start de-risking to make sure the capital is not at risk for beneficiaries,’ says Tunbridge. ‘Diageo is very supportive of us, and we have a good relationship with them.’

There are no concrete plans in place beyond 2037, at which point all of the beneficiaries – born between 1959 and 1962 – will be in their late 70s and early 80s. People with thalidomide-related disabilities were originally predicted to have a significantly reduced life expectancy. Although this is now known not to be the case, many are experiencing serious joint problems as they age, partly because of the way they have adapted their movements. Setting current funding to meet changing physical needs is a challenge, says Tunbridge. 

The trust will be liaising with Diageo to work out what will happen when the covenant expires. ‘That’s where we will also work with the beneficiaries,’ says Tunbridge. ‘A committee of 12 elected beneficiaries are represented at the majority of trustee meetings. They are very involved, very committed and very good at campaigning.’ For example, the committee played a vital role in securing the Department of Health funding, working in a ‘very organised way’ and lobbying MPs. 

Tunbridge sees her main challenge as ‘trying to balance the strategic side of my role with helping the beneficiaries. Being a small finance team gives me the experience of doing everything,’ she says. ‘The challenge is trying to do the accounting side, the regulatory side, making sure that everything operationally is working well, and balancing that with the needs of the beneficiaries,’ she explains. ‘We have to manage the resources that we have got. We are very mindful of that. Any money that we spend is money that isn’t going to the beneficiaries.’

When someone becomes a trust beneficiary, they are benchmarked in line with existing beneficiaries. Each year, the trust sets a distribution rate for funds, currently at £1,100. The most severely disabled beneficiaries will get 75 times £1,100. A health grant is set in a similar way. Any money left after all the beneficiaries have died will be transferred to a disabled children’s charity. ‘Our aim is that we don’t run out of money but equally are not left with a big pot. We need to get our money out to beneficiaries.’

Updating policies

Tunbridge has helped to oversee the trust’s evolution with the new team in place. ‘Although the trust was very well run, it had a slightly old-fashioned feel,’ she laughs. This was exemplified by the heavy, leather-topped management desk, once donated by Diageo, that dominated her office on the day she arrived. Filing cabinets groaned with papers on each beneficiary, listing every detail of their lives, from childhood. 

The team is currently updating policies and making sure they are all clearly recorded. Many of the previous policies were held in the heads of the former team members, says Tunbridge. Her predecessor, John Hurley, had been in the post for 27 years and was particularly supportive. ‘He said to call if there was anything I needed to know. I did,’ she says with a smile. 

Tunbridge is also involved in reviewing the staff pension scheme, which did not meet the requirements of automatic enrolment. Meanwhile, to ensure that the small finance team is not overstretched, she has moved the accounting year-end from April to September; the previous year-end coincided with grant payment. ‘Last year we had an 18-month financial period, which has worked really well to spread the workload,’ she says. 

Tunbridge is now looking at major advance funding, allocated to cover one-off costs of, say, home or car alterations. ‘We give advance funding. However, because essentially we are taking future years’ funding, we have to make absolutely sure that the beneficiaries can afford it. So I spend a lot of time looking at their income and their outgoings to make sure that we are not going to put them in financial difficulty by reducing their future grant.’

The next challenge for the trust will be to adopt the new statement of recommended practice (SORP) for charities, which aims to improve the quality of financial reporting. Fortunately, one of the trustees is on the SORP committee and Tunbridge hopes to pick his brains. She also intends to work with a financial coordinator in her team to ensure that the trust follows the recommendations. ‘We have improved financial reporting both internally and externally. Now we are looking at the annual report, which we want to make more user-friendly,’ she says. 

Increased reporting

The trust is also in dire need of a new database to store finance data for each and every beneficiary, as well as health records. ‘We are looking to move to a system that will enable us to do more reporting – for example, pulling out data on how many beneficiaries have epilepsy,’ she explains. Although some beneficiaries receive grants in a lump sum, the trust looks after the money for others, so the system needs to be custom-made. ‘It’s like having 467 separate bank accounts.’

Tunbridge began her career as a branch manager at Halifax Building Society. When she had her two sons, she moved to a part-time role as mortgage adviser. Although she enjoyed her work, she had always wanted to become an accountant. She bit the bullet and left Halifax to take up a job as finance officer at the Arts Marketing Association, working to obtain an AAT qualification in 2000. 

With a full-time job and her children still at primary school, she recalls long weekends spent with her head in her books. ‘It was quite a tough balancing act,’ she says. In 2005, she joined the RSC as deputy financial accountant. She also studied for her ACCA Qualification, which led to her promotion to financial accountant. Tunbridge’s sons must have been impressed and inspired by her efforts; now aged 24 and 18, one has just obtained an ACCA Qualification, while the other is currently studying for AAT. 

Tunbridge is thankful for her ACCA Qualification. ‘What I like about ACCA is that it’s broad. You get exposure to management accounts, tax and financial reporting. For a job like this, in a small finance team where you have to cover all of the tasks for finance, it gives you confidence; you know what you are doing.’

The financial aspects of Tunbridge’s work may not be as complex as at the RSC but she finds her role deeply satisfying. ‘You are so close to what you are doing. We have only got a small group of people and you get to know them all. I like to see tangible benefits of my work. I really like the fact that we are working with people.’

Emma Davies, journalist