CIFOR Finances

One key message …that has been repeated in last 3-4 years CIFOR’s funding model has changed (and now more rapidly since phase 2 CRPs)…

Multiple shades of restriction…

Multiple shades of restriction… 2010: our funding was almost 50% unrestricted. This was used to “co-finance” projects

Multiple shades of restriction… 2011- End of UR; Advent of W1/2 funding;. use of W1/2 as UR to fill gaps; part of funding paid for new structure e.g. CRP MSU +CCT

Multiple shades of restriction… 2014-16; Funding cuts; delinking of W1 and W2; we were exposed by participation in single CRP; average loss of W1/2 per year ≈ USD 7 m

Multiple shades of restriction… "The Center's funding model has changed rapidly in the last three years and has thrown up challenges in operations and financial management. FTA W1/2 allocations to the Center has reduced from USD 13.9m in 2013 to USD 5.4m in 2016 translating into an average annual USD 6.45m reduction in W1/2 funding. Total funding cuts compared to 2014 W1/2 levels in absolute terms, are USD 19.36m”. Jose Campos, 2016 FS 2016: booked deficit of USD 4.8m for 2014-16

Multiple shades of restriction… CRP Phase 2: W1/2 fully restricted; Funding at FP level; FTA FP2 not funded in 2017; Comparatively W1/2 in 2017 is lower than UR funds in 2004; 100% transition to Restricted

So what does this transition mean for CIFOR? Ability to "co-finance” research is severely limited (zero) Inability to replenish reserves New mantra : Continuous bilateral fundraising To stay at current levels (which will not help us) USD 100,000 per day USD700,000 per week USD 3m per month What we need USD 200,000 per day USD 1.3m per week USD 5m per month Over last few years we have put lot of effort (successfully) to move staff time to bilateral We need to spend funds effectively for partnerships and supplies & services NCEs help only worsen the situation

How have OH and RS costs behaved over years? RS+OH are about 31% of CIFOR operations Vary based on total CIFOR costs Not a linear relationship to direct costs Current structure should support Center size of about USD 40m without new investments

Challenges During the UR era, we were recovering less than 50% of OH+RS cost.. Over the last couple of years the gap between actual and recovery has come down to 10% with efforts to recover better, but we may have hit a plateau Some new challenges 2017 onward, due to change in way we can use W1/2 End of DFID KNOWFOR brings new additional challenges in 2018 Non- recovery of CSP – we do not recover full costs and CSP in many cases

How are we addressing the issue? No one single approach works as donor conditionality differes:w Changing the RS cost driver from USD /staff hour to % of total cost Including indirect costs (e.g. staff costs of support functions) as direct This method has yielded about 3-4% additional recovery However, there this has plateaued With new funding opportunities (e.g. GLF) possible to move some support costs to project; Increase event (other) income Improve budgeting– being more realistic in budgeting; partnerships and services cost about 35% of proposals

We have deficits but financially we are ok? How is that? Extract from 2016 FS FY 2016 Undesignated Reserves USD 8.352m There are also some USD 3m for capital replacement and crises in the designated reserves As per day operating cost has reduced, despite the deficit, the “long term stability" days has kept above recommended range, though we have within 15 Centers moved from one of the strongest Centers to being mid pack

We have deficits but financially we are ok? How is that? Extract from CGIAR 2016 Annual Report

We have deficits but financially we are ok? How is that? Extract from CGIAR 2016 Annual Report

We have deficits but financially we are ok? Forward looking If we continue with the deficits into future years we will eat into the reserves and be less stable. So we need to avoid that.

Questions?