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Profit and Archaeology
#21
At the end of the day a commecial unit is a company and if it can operate in the market and make a profit then I say good luck to them. A company must make profit to survive. The main issue is that the work can still meet the Brief set out by the planners and its up to them to ensure standards of specific projects are maintained and all objectives forfilled. Cash surprus needs to be built up in order to sustain the company and its employees during quiet times. Also profit is needed to reinvest into the company for staff training and dare i say it better wages. Having said this i think it is un ethical to extract profit from an archaeological company and use the money elsewhere. If there is surplus it should be used for other archaeological related projects such as publicy/archaeological research.
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#22
'If there is surplus it should be used for other archaeological related projects such as publicy/archaeological research.'

Earlier in this thread Redearth asked what happens to profits made by charities. When I worked for an archaeological unit that was also a registered charity, profits were known as 'operational surpluses' and were ploughed back into the unit. The money was used for training and also to support non-chargeable personnel such as outreach officers.

What is different about the units that operate as charities is that there are no directors, shareholders etc to take a cut of profits - all surpluses can be used directly by the organisation or banked to cover potential losses in future years, although the Charities Commission will take a dim view if cash reserves are very high and there is little evidence of activities that give rise to charitable status.


Beamo
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#23
Quote:quote:"It is worth noting that at least one archaology company, LG, is a co-operative."
Of course, a cooperative is still a private-sector company and still tries to make a profit. The difference is only in how the profit is distributed.

Any organisation must obtain at least as much money as it spends. If it wants to expand, to innovate, to improve its service, or to increase pay and conditions for its workers, it must obtain more money than it spends, and in commercial work that additional money is called 'profit'. For non-commercial work, any above-inflation increase in funding could be seen as equivalent to profit.

Therefore, an archaeological unit that fails to make a profit can never improve either the quality of what it does or the pay and conditions of its workers. The more profit it makes, the more potential it has to do both of those things.

On that basis, you could argue that, far from being immoral, it is a moral imperative for an archaeological unit to make a profit. Any potential immorality would not lie in making a profit, but in what you do with it.

If a unit is profitable, but fails to reinvest in the kind of improvements I outlined above (including wages and conditions), that could be seen as immoral.

In relation specifically to 'poverty wages' it is worth noting that, throughout the economy, the most profitable activities are the ones that attract the highest wages. In any profitable business, a proportion of profit normally goes into wage increases. That would suggest that the only way out of poverty wages is to increase profitability, and that part of the reason why archaeological wages are so low is that the organisations have traditionally been either non-profit making or have made very low profits.

How that proportion is distributed amongst different categories of worker is a different question, and there are certainly moral issues there.

1man1desk

to let, fully furnished
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#24
Quote:quote:Originally posted by beamo

'If there is surplus it should be used for other archaeological related projects such as publicy/archaeological research.'

Earlier in this thread Redearth asked what happens to profits made by charities. When I worked for an archaeological unit that was also a registered charity, profits were known as 'operational surpluses' and were ploughed back into the unit. The money was used for training and also to support non-chargeable personnel such as outreach officers.

What is different about the units that operate as charities is that there are no directors, shareholders etc to take a cut of profits - all surpluses can be used directly by the organisation or banked to cover potential losses in future years, although the Charities Commission will take a dim view if cash reserves are very high and there is little evidence of activities that give rise to charitable status.


Beamo

The non-charitable archaeological organisations I have worked with also put much/all of the 'profit' back into the company, dealing with other non-profit making archaeological issues (not least the jobs where the client doesn't pay for months..... if you are still having to pay your staff and overheads it costs money if the cheque is even a day late!). And in the case of many fieldwork organisations, there aren't external shareholders, the archaeologists are the owners/directors/shareholders.

If you set up your own organisation, you have to get the starting capital from somewhere. The organisation I partly owned for a while was mostly set up with our redundancy money. We risked out future financial wellbeing, I don't see why we shouldn't get some return for that!
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#25
Quote:quote:Originally posted by beamo

Earlier in this thread Redearth asked what happens to profits made by charities. When I worked for an archaeological unit that was also a registered charity, profits were known as 'operational surpluses' and were ploughed back into the unit. The money was used for training and also to support non-chargeable personnel such as outreach officers.

What is different about the units that operate as charities is that there are no directors, shareholders etc to take a cut of profits - all surpluses can be used directly by the organisation or banked to cover potential losses in future years, although the Charities Commission will take a dim view if cash reserves are very high and there is little evidence of activities that give rise to charitable status.


Beamo


Assuming that happens across the board that is excellent, and exactly what should happen. Logically, shouldn't it also be the case that charities, which (as already discussed in other threads) potentially have several advantages over their non-charitable competitors, such as discount software and in some cases undoubtedly discounted rent etc, produce the highest 'profits' and therefore pay the highest wages. Does this happen? I'm not sure it does. I do have the slight suspicion that such organisations inevitably have considerably more managers, support staff, and other posts such as outreach, that hoover up the excess, leaving the site staff in the same position they would be anywhere else.

Having no directors doesn't automatically mean that the money isn't going into someone's pocket, and having directors doesn't mean that they are taking more than a fair share and depriving others.

1man1desk's response was absolutely top notch by the way. Totally on the money (no pun intended).
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#26
I agree, 1man1desk's answer is very good!
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#27
'Logically, shouldn't it also be the case that charities, which (as already discussed in other threads) potentially have several advantages over their non-charitable competitors, such as discount software and in some cases undoubtedly discounted rent etc, produce the highest 'profits' and therefore pay the highest wages.'

The charity unit that I worked for certainly didn't have a discounted rent as it was never part of a county council or university - it was always independent. It may have got some discount software but this would have been a tiny fraction of expenditure anyway. As manager there the charitable status was actually a bit of a pain as it meant having to rejig costings re. VAT every time the client was also potentially non-VAT registered. I recall numerous debates at senior management level regarding whther or not it would be much easier simply to lose the charitable status.

'I do have the slight suspicion that such organisations inevitably have considerably more managers, support staff, and other posts such as outreach, that hoover up the excess, leaving the site staff in the same position they would be anywhere else'.
Possibly, but aren't we concerned that outreach takes place, and that we therefore have to generate the money in some way to cover it? Not all clients like to see this expressed explicitly.

'Having no directors doesn't automatically mean that the money isn't going into someone's pocket, and having directors doesn't mean that they are taking more than a fair share and depriving others.'
I fully agree with the second part of this. However the first part is wrong - for the units that are charities the money cannot go into anyone's pocket unless the trustees agree it, and this is more likely to be in the form of a wage increase across the board rather then a bonus to senior staff.


Beamo
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#28
Quote:quote:

The charity unit that I worked for certainly didn't have a discounted rent as it was never part of a county council or university - it was always independent. It may have got some discount software but this would have been a tiny fraction of expenditure anyway. As manager there the charitable status was actually a bit of a pain as it meant having to rejig costings re. VAT every time the client was also potentially non-VAT registered. I recall numerous debates at senior management level regarding whther or not it would be much easier simply to lose the charitable status.

Possibly, but aren't we concerned that outreach takes place, and that we therefore have to generate the money in some way to cover it? Not all clients like to see this expressed explicitly.

I fully agree with the second part of this. However the first part is wrong - for the units that are charities the money cannot go into anyone's pocket unless the trustees agree it, and this is more likely to be in the form of a wage increase across the board rather then a bonus to senior staff.


Beamo


I suspect that several charity (and council) based organisations do get some form of discounted accommodation (I'm pretty certain of in in some cases I'm familiar with), which, when you consider overheads is a fairly large sum. The point is that with whatever advantages, however small, the potential to make more 'profit' is still there and so the possibility to pay more is also present.

Having been involved in a small charity (not an archaeological one) I can understand why you might want to get rid of the charitable status - the paperwork is a real pain. This connects to my last point, which wasn't that someone i.e. a 'director'-like figure pockets the 'profit' but rather that a charity might think 'we've had a good year so we can afford to employ another outreach officer to fulfill the roles of the charity', or 'we need some more admin people to deal with all this blinkin' paperwork', rather than 'lets pay all our loverly diggers some more.! If they do do the latter then good for them, but does it really happen?

In addition, I am of course keen for outreach to take place,but it's difficult for companies that aren't charities (which might have it written into their mems and arts) and to pay for it unless the brief specifies it (which some do, although often quite weakly in my experience and only for big projects). Otherwise the only way a private company can justify it is as advertising, which it probably isn't very effective as as it's not aimed at the target demographic, i.e. developers (God, how corporate, I'll be looking for that Coke promotion next!)

Also, I'm not sure about the VAT registered bit. Are the company arms of charities (archaeological or otherwise) excempt from being VAT registered?
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#29
To try to answer your question

Also, I'm not sure about the VAT registered bit. Are the company arms of charities (archaeological or otherwise) excempt from being VAT registered?

Slightly off-topic but needs to be nipped in the bud.

No, charities are VAT-Registered (unless very small) - the VAT issue refers to the legal position that charities don't need to charge VAT to certain categories of body (other charities, certain designated public entities, but nowhere actually defined as adefinitive list). The problem alluded to is deciding whether they are exempt or not. If you get it wrong and don't charge VAT when you should, HMRC still want their cash, so that concentrates the mind. The other issue is that some of these entities actually [u]do</u> want you to charge them VAT due to certain technical issues of their own regarding VAT offset, and that adds another dimension of complication.

This whole thing is not a benefit to the charity issuing the invoice by the way. In terms of cashflow it is a pain in the backside - the way VAT works is you collect cash in on behalf of the Exchequer, while on VAT on your invoiced sales, you pay cash out. The ideal is balance each quarter, which is when VAT liability is assessed. However if you don't gather the same as you pay out, then you are responsible for the difference. The less VAT you charge, the greater your net outflow to Mr Darling's pockets.

The simple answer is that it is far easier (for simple brains and for accounting purposes) for charities to work for commercial clients rather than public sector!

Clear? I doubt it somehow, but that is how VAT operates.
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#30
Primarily for 1Man1Desk. I'm intrigued by this concept of 'moral imperative' but still feel uneasy. I can see what you mean - not just playing by the rules but also being a good sportsman. You are making a business case for Corporate Social Responsibility. Investing in both people and infrastructure will lead to a better service to our clients. This will increase sales and profit resulting in a greater yield that can then be reinvested in the business.

My problem with the morality/immorality argument is that this masquerades the fundamental reality that business exists to maximise a return on shareholder investment. The imperative is commercial not moral, and this is particularly problematic in archaeology where the market is an artificial creation, with buyers purchasing a service that enables them to discharge a planning condition. It is true to say that any organisation must obtain at least as much as it spends, but lets be honest here. To obtain more in archaeology is most easily achieved by doing less archaeology. And in addition to methodological issues, the resulting product (archive, reports and final publication) is something buyers must share with the State. They do not have exclusive control of this, and there is no market logic to drive the quality of the product. This is the point I'm making about the difference between a wealth generating and a knowledge generating structure.

In answer to drpeterwardle's initial question, it is possible to make a profit in archaeology and not compromise standards, as long as the sector is explicit about it's own shortcomings and takes collective measures to address them. To all the moralists: I'm working in a country where the words 'archaeology' and 'millionaire' can be logically used in the same sentence, and, well, I'd quite like to be one. Does that make me a bad person?
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