The Institute of Directors plunged to a loss of £4.2 million after one of the worst years in its 116-year history that saw the chair and director general quit after a probe into racism allegations.
The lobby group also saw membership numbers tumble by 8% to 29,612, though it remains the largest business group for individual directors.
Chair Barbara Judge resigned after an inquiry by law firm Hill Dickinson into claims she had bullied staff, sometimes reducing them to tears, and made racist remarks.
She denied the allegations, but was swiftly followed by deputy chair Sir Ken Olisa and non-executive Arnold Wagner.
Director general Stephen Martin, said to have taped Judge saying of one IoD department, “the problem is we have one black and we have one pregnant woman and that is the worst combination we could possibly have”, also left. The accounts show he received a notice payment of £287,682.
New chair Charlotte Valeur, a former banker and corporate governance expert brought in to steady the ship, admitted that 2018 was “challenging” but also “a much needed catalyst for change”.
One observer said Valeur will bring “City ruthlessness” to the IoD. Valeur said: “As a Royal Charter body our underpinning purpose is not profit but our impact. To achieve this, however, we must retain a firm grip on the finances.”
The IoD didn’t reveal the cost of the Judge investigation but noted a “number of one-off costs, including legal fees related to an independent HR investigation”. The 2018 deficit comes on top of a near £1 million loss the year before.
The annual report says the board have “a firm objective” of moving into surplus this year and notes the IoD has £7.4 million in reserves.
It admits membership numbers are “a concern” but says income from hospitality and professional development is growing. The report shows that by ethnic origin, 77% of staff are “white British, white other, or white Irish”.
On Brexit, the IoD was quick last year to call for a transition period, and said it succeeded in pushing through significant change on issues including corporate governance and the Apprenticeship Levy.
Valeur, who was chair of Kennedy Wilson Europe Real Estate where she led an $8 billion merger, was also a non-executive at 3i Infrastructure.
She told members: “The UK’s business leaders are among the most impressive in the world, full of integrity and enterprise – they deserve an institute that reflects that. For over a hundred years, we have supported, developed, and represented our directors. I want to set it on the path for the next hundred years. If we truly embrace change, we can achieve this and breathe new life into the organisation’s founding values.”
The IoD is presently without a permanent director general, being run by two interim DGs, Anna Daroy and Edwin Morgan.
They are not thought to be in the running for the job.