The boycott of the Institute for Learning (IfL) by members of the University and College Union (UCU) led to the FE professional body losing almost half of its fee income, forcing it to rely on government cash to avoid a large deficit, figures reveal.
Annual accounts show that the IfL raised just #163;3 million in the year to the end of March 2012, compared with #163;5.4 million the previous year, when membership was compulsory and the fees of FE teachers were paid by the government.
Transitional funding of #163;1.9 million, paid by the Department for Business, Innovation and Skills to support the institute as it becomes self-reliant, allowed it to make a small surplus instead of a deficit of nearly #163;2 million. But the transitional funding will end in April, requiring the IfL to cut costs or increase membership - it lost more than half its members because of the boycott and the government's subsequent decision not to make membership compulsory, with enrolment falling from 181,000 to 87,500.
"The IfL has been operating in a high-risk environment," the directors reported. Written before the Lingfield review concluded that membership should not be compulsory, the report said that the IfL was budgeting for the first six months of 2012-13 and preparing for "associated reductions in expenditure as needed" once the outcome was known.
According to the accounts, 29 per cent of the IfL's expenditure goes on professional development for members, 43 per cent on support and governance, 18 per cent on communications and 10 per cent on registration and the code of practice.
With the IfL's role in maintaining a register and holding disciplinary hearings having come to an end, this may provide the first savings. Earlier in 2012, the IfL also allocated #163;100,000 to a membership growth fund, aimed at rebuilding its membership numbers on a voluntary basis following the boycott.
"The IfL has known for a long time about the need to become self-financing by 2013, and has taken a prudent financial approach to preparing for this," said chief executive Toni Fazaeli. "While the transition from the government paying the majority of membership fees to individuals paying was never going to be easy, we are buoyed by the strength of the membership - currently over 77,000 members - and by the continued commitment of the IfL's staff.
"We have also explored a range of alternative funding sources and business opportunities to complement the IfL's income from membership subscriptions."
While the future is unpredictable, the IfL is "well placed" to be the professional body for tens of thousands of teachers and trainers, Ms Fazaeli added. This will help members to progress in their careers and support students, she said.
At the same time as reducing expenditure, the IfL has had to put increasingly large sums into reserve, adding the equivalent of an extra two months' spending - or nearly #163;1 million - to its general fund by March this year to ensure it can meet statutory obligations if the organisation is wound up.
The dispute over IfL membership began in February 2011, when the institute proposed raising membership fees from #163;30 to #163;68 a year to cover the additional costs of collecting funds from members rather than a government block grant.
The backlash resulted in tens of thousands of members defying a statutory obligation to register with the IfL, a boycott that spread well beyond UCU's 34,000 FE members, despite a series of concessions over the price.
Eventually, a review by Lord Lingfield concluded that "with the benefit of nearly five years of state funding and regulatory backing, the IfL has not won the confidence of those organisations which should be its partners" and recommended that it should become a voluntary body.