Part 1: Creative Folkestone Company Accounts 2019–2024: A Shepway Vox Investigation

The Shepway Vox Team is launching a three-part investigation into the money behind Folkestone’s cultural renaissance. In Parts 1 and 2 we will examine the finances of Creative Folkestone in both of its guises – as a company registered at Companies House and as a registered charity – before turning, in Part 3, to the accounts of the Roger De Haan Charitable Trust, the principal benefactor behind the whole enterprise. Across all three instalments we will draw on the latest available filings, covering the financial years 2019/20 to 2023/24, to test how robust, how transparent and how accountable this web of organisations really is.

This first article looks only at Creative Folkestone the company – the entity registered at Companies House. It also happens to be a registered charity, but the focus here is on the accounts filed as a company: the income statement, balance sheet and accompanying narrative. The separate charity perspective will follow in Part 2. For now, this is about the trading and operating vehicle that runs the Creative Quarter, the Quarterhouse, the Triennial, the Book Festival and much else besides.

A Company Built On Art – And Property

Creative Folkestone styles itself as an arts charity dedicated to transforming Folkestone and the surrounding area through culture. Legally, though, it is also a company limited by guarantee with no share capital. Its objects include advancing the arts, relieving poverty by helping artists become self-supporting, providing facilities for the community and promoting regeneration in deprived areas.

The means by which it pursues those aims are highly unusual. Rather than simply staging events in borrowed spaces, Creative Folkestone has, with the backing of the Roger De Haan Charitable Trust, taken control of a large chunk of Folkestone’s old town. Over two decades the trust has bought around ninety run-down buildings, refurbished them and granted Creative Folkestone long leases at peppercorn rents. The company then lets those properties at subsidised rents to artists, small creative businesses, education providers and others deemed compatible with its mission.

By March 2024 the company’s balance sheet showed long-leasehold property assets valued at more than £15 million. These are not buildings it has purchased on the open market with borrowed money; they are, in accounting terms, largely donated assets, handed over by the De Haan trust. But they are central to understanding the finances that follow, because the rents they generate now underpin much of the organisation’s day-to-day income.

Five Years Of Turmoil: What The Numbers Show

Between 2019/20 and 2023/24, Creative Folkestone’s company accounts show a pattern of income and expenditure that broadly track one another, with only modest surpluses or deficits in “normal” years and large headline surpluses in years when major property gifts or advance project funding flow through the books.

In 2019/20, before the pandemic truly hit, income and expenditure were almost identical, with a small deficit at the year end. Trustees explained that delays in completing two new rental properties and the loss of a major tenant at Glassworks meant expected rental income did not materialise on time. What could have been a comfortable break-even year turned into a marginal loss, not because costs were wildly out of control, but because key income lines slipped.

The following year, 2020/21, was dominated by Covid-19. The Quarterhouse closed to audiences for long stretches, major events were postponed and tenants across the Creative Quarter suffered the same uncertainty as businesses everywhere. On the face of it, one would expect a heavy operating loss. Instead, the company reported a surplus of well over a million pounds.

The explanation lies in the way donated assets are treated. During that year the Roger De Haan Charitable Trust transferred further refurbished properties into Creative Folkestone’s hands. Those long-leasehold interests have to be recognised as incoming resources at their valuation. They therefore appear as a large slug of “income” even though they have nothing to do with ticket sales or rent receipts and bring in no cash on the day they are booked. Once that one-off property gift is stripped out, the underlying picture looks much more like a crisis year: event income shrank, some anticipated rents never arrived and the organisation relied on a mix of government Covid support, tight cost control and existing reserves to get through.

The pattern repeated in 2021/22. Activity bounced back strongly: the postponed Folkestone Triennial finally took place, Quarterhouse hosted a full programme, and the Learning and Engagement team delivered hundreds of sessions. Both income and expenditure rose sharply. Again, the company booked a substantial surplus, and again the headline figure was driven mainly by another major transfer of property from the De Haan trust. Once more, if one looks just at unrestricted funds and cash, the story is of an organisation willing to dip into reserves to deliver an ambitious artistic and regeneration programme after two hard years – a conscious decision to spend some of the buffer to revive momentum.

From 2022/23 onwards, the numbers tell a different story. There were no further large property gifts. Donations and legacies fell back sharply. At exactly the same time, inflation surged and energy prices rocketed, with Quarterhouse’s monthly utility bills reportedly reaching eye-watering levels. Yet the company managed to post a modest surplus. That was only achieved by combing through costs, rebalancing the performance programme toward events that draw larger, paying audiences, and undertaking the first systematic rent review in parts of the Creative Quarter for many years. The trustees are explicit about the pressures of inflation and the trade-offs involved in tweaking rents while trying to preserve affordability.

By 2023/24 the bottom line looked stronger again, with a surplus running well into six figures. This time, however, the driver was not donated bricks and mortar but early funding for the next Folkestone Triennial, now due in 2025. Grants and donations secured in advance of the exhibition flowed into the 2023/24 income line, but were allocated as restricted funds to be spent on the Triennial when the time comes. The result is a healthier set of numbers on paper, but much of that “surplus” is already spoken for. Beneath the project funding, the underlying operations again look more like a tight but viable break-even business: property income, bar and ticket income and modest grants just about covering the cost of staff, maintenance, programming and overheads.

Reserves: Learning The Hard Way

One of the most striking shifts across these five years is the organisation’s attitude to reserves. In its early life Creative Folkestone tended to reinvest everything it could into the town, holding only minimal cash. The shocks of the last decade – first the financial crisis, then Covid, now the cost-of-living crisis – have changed that mindset.

Since around 2016 the trustees have set a formal reserves policy. They aim to hold a defined level of free, unrestricted reserves – cash that is not tied up in buildings or earmarked for specific projects – sufficient to cover several months of core expenditure. As economic uncertainty deepened, they temporarily raised the upper end of that target, concluding that a larger buffer was justified.

The accounts show that they have gradually built that buffer. Free reserves measured in the low hundreds of thousands of pounds in 2020 have been lifted to around £600,000 by March 2023, roughly in line with the enhanced target. That may sound like a large sum, but set against millions of pounds of annual expenditure it represents only a few months’ breathing space if significant income lines falter. Nonetheless, in charitable terms it is an important safeguard and it goes some way to explaining how the organisation managed to ride out successive waves of crisis.

By 2023/24, with a cushion in place and Triennial money in the bank temporarily, the company even felt able to invest some surplus cash in a short-term government gilt to earn interest, rather than leaving everything on deposit. That may be a small technical detail, but it reflects a more mature approach to balance sheet management than in the past.

Risks Written Into The Model

Creative Folkestone’s own reports set out the principal risks it faces. Read alongside the numbers, they paint a picture of a business model that is both imaginative and inherently exposed.

Economic conditions form the first and largest risk. A downturn that squeezes household budgets and business confidence threatens ticket sales, bar income and Creative Quarter rents all at once. Inflation eats away at grant funding and forces up the costs of utilities, repairs, insurance and wages. Recent experience has shown this is not a theoretical concern.

The second risk is dependence on particular people and institutions. Sir Roger De Haan and his charitable trust are foundational to the whole enterprise. The buildings that generate the company’s rental income exist in their current form because the trust bought, refurbished and then handed them over on generous leases. The public art collection that gives Folkestone much of its cultural cachet likewise owes a great deal to RDCHT philanthropy. The same applies, in a different way, to Arts Council England and other public funders whose ongoing support for Creative Folkestone’s programmes cannot be taken for granted.

A third risk lies in the property estate itself. Historic buildings require ongoing investment. The trustees have already had to set aside extra funds at times to tackle maintenance backlogs. As environmental standards tighten and energy costs remain volatile, further capital spending will be needed if the Quarter is to remain attractive and efficient. Yet the accounts make clear that most of the property value is locked up in long-leasehold interests received as restricted donations. They cannot simply be sold off or mortgaged as a rainy-day fund without unpicking the whole regeneration bargain.

The organisation’s mitigation strategies – reserve-building, cost control, diversifying income sources, careful property management – are sensible, but they do not remove the underlying structural risks. This is not, and will never be, a conventional commercial landlord. It is a mission-driven body trying to do things in Folkestone that the market would not deliver unaided.

Dependency And Accountability

The dependence on the De Haan trust merits particular scrutiny. Without that trust, there would be no Creative Quarter on anything like its present scale. Without the peppercorn leases, Creative Folkestone would face mortgage or commercial rent obligations that would dwarf its current costs. Without past property gifts, its balance sheet would look threadbare.

That philanthropic support can be seen as enlightened self-interest in the town’s future, but it also concentrates a great deal of influence in the hands of a small group of private individuals. The governance structures of Creative Folkestone – trustees, subcommittees, management – are designed to provide checks and balances, yet the long shadow of the founding benefactor is never far away.

Public funders and the wider community are entitled to ask whether the flows of money and value between the trust, the company and any related charities are transparent and fair, and whether the benefits of this model are widely shared. The company accounts go some way towards answering those questions, but they cannot do it alone. That is why Parts 2 and 3 of this series, looking at the charity arm and then at the Roger De Haan Charitable Trust itself, are so important.

More Than Numbers

It would be easy to read the company’s balance sheet, see tens of millions of pounds in property and a string of surpluses, and conclude that Creative Folkestone is comfortably off. That would be a mistake. The reality that emerges from five years of accounts is more nuanced.

The financial structure is asset-rich but liquid-poor. The organisation walks a narrow path between keeping rents low enough to attract and retain creatives, maintaining buildings to a decent standard, and finding the money for ambitious artistic programmes that rarely pay for themselves. At critical moments it has relied on extraordinary generosity from the Roger De Haan Charitable Trust and others to plug gaps or make the next leap possible.

At the same time, few would deny that the regeneration impact has been profound. The once-neglected streets of the old town are now busy with studios, cafes, galleries and small businesses. Folkestone regularly appears in newspaper lists of desirable places to live and visit, often citing the Creative Quarter and the Triennial as reasons. The question is whether the financial architecture that underpins that success is as resilient and accountable as it needs to be.

This first look at Creative Folkestone’s company accounts suggests a delicate balance: an organisation that has learned from past shocks, shored up its reserves and adapted its programming and rent policy, yet remains structurally dependent on philanthropy and public money. In Part 2 we will turn to the charity arm of Creative Folkestone to see how its income, expenditure and reserves compare, and whether the overall picture becomes more reassuring or more troubling when the two are considered together. In Part 3 we will examine the accounts of the Roger De Haan Charitable Trust itself, to follow the philanthropic money back to its source and assess how far this experiment in culture-led regeneration rests on the shoulders of one Charity and its money.

If you have a story you think we should investigate, please do contact us at: TheShepwayVoxTeam@proton.me

The Shepway Vox Team

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