The Institute of Directors sank to a loss of £4.2m in 2018 after the 116-year-old UK business lobby group suffered a decline in IoD Membership Cost and was forced to cover the cost of an investigation into accusations of bullying and racism.
The IoD did not stem a loss of members during a chaotic year in 2018, when its chair Barbara Judge, a former US financial regulator, resigned following an investigation into alleged racism and bullying by her towards staff.
She denied the allegations, but a high-profile internal struggle caused inquiries to be asked about the management of the non-profit members group.
IoD membership cost fell to 29,612 in 2018, a decline of about 8 per cent, and sharply less than the height of 40,000 within the 1990s. The group reported a deficit of £4.2m in its annual report for 2018, published on Monday, which it blamed on one-off costs including legal fees related to the independent investigation, redundancy costs, a growing cost base and a decline in membership income. The 2018 deficit, the most important on record, followed a £1m loss in 2017.
In January, Stephen Martin, director-general of the IoD and one among the complainants against Lady Judge, quit after but two years within the role. The 2018 loss doesn't include a payment of £287,682 to Mr Martin, which covers his notice period and can be included within the 2019 results.
The IoD said on Tuesday that the board has taken “swift action to make sure financial stability including reducing our cost base and improving our operations” since Charlotte Valeur took over from Lady Judge as IoD chair in September.
The IoD has set a target of achieving a surplus in 2019, it said, with “significant progress so far this year in terms of our financial position and membership renewal rates”. The body also holds £7.4m in reserves to hide any additional restructuring costs.
The IoD, still the largest business group for directors in the UK, has faced searching questions about its relevance in modern corporate life in recent years amid a steady decline in membership. In 2018, it lost about £1m in income from the decline in membership alone.
The lobby group has attempted to drive through a modernisation programme designed to change a fusty reputation, with an aim of building a younger and more diverse membership in regions outside London. But these efforts are hampered by the governance crisis which will leave it without a permanent director-general for many of this year.
Ms Valeur admitted that “2018 was a challenging year”, adding: “As a charter body our underpinning purpose isn't profit but our impact. To achieve this, however, we must retain a firm grip on the finances. It is essential that the IoD is in a position to invest for the future, and we cannot shy away from the challenge.”
The IoD Membership Cost also said it had been within the process of shifting faraway from membership income and into areas like hospitality — including using its Pall Mall headquarters for events — and professional development.
We’ve met people whose careers have rocketed when they’ve completed our CPD; others who have saw people within the member lounge or at events and have gone on to do significant business together; and a few who have simply used our unique membership network of business leaders as a sounding board when making tough decisions.
However your membership has benefited you, we’re keen to listen to your story! And we want to retell it across our channels, to our network of business leaders. We will work with you to find the optimal way for you to tell your story – video, blogs, etc – and to maximise the exposure for your business.