1. Financial Risk Management with Foreign Institutions From a Central and Departmental View Presented by: Bob Stemple, Associate Director Research Revenue Peggy Bartek, Sr. Grants Administrator MGH Center for Global Health

2. 2 Setting Expectations Specific deliverables Scope Communication Cultural Who? What? Where? When?

3. 3 Assessing Collaborators Financial systems Technical expertise Environmental factors (economic, geographical) Past performance, questionnaires

4. 4 Building an Agreement Clear deliverables Contractual language as protection for all parties Managing risk, never eliminating it Engaging local counsel Third parties – NGOs, hospitals, universities

5. 5 Types of Agreements Fixed price – what happens when currency fluctuates? Milestones – what happens when milestones are not met? Custom agreements

6. 6 Managing Risk - Ongoing Fluctuating exchange rates – who takes the hit? COMMUNICATION! – local and foreign Roles and responsibilities – collaborator and foreign PI Training for local administrators Petty cash at foreign sites

7. 7 Worldwide Research Dealing with Exchange Rates

8. 8 Subcontract from a hospital in Spain Contract states to be invoiced and paid in U.S. Dollars DateAwardedEuroBudgetExpensesPayments 4/12/12$100,000N.A.$100,000 5/14/12$50,000 6/16/12$50,000 7/17/12$50,000

9. 9 Subcontract from a hospital in Spain Contract states Budget in Euros DateAwardedEuroBudgetExpensesEquivalent 4/12/12$100,000.7546€75,460 5/10/12.8547$50,000€42,735 6/16/12.8547$50,000€32,725 Total$100,000€75,460 Should be€42,735 Short($11,712)€10,000

10. 10 Confused? It only gets worse!

11. 11 Subcontract from a hospital in Spain Contract states to be invoiced in Euros DateAwardedEuroExpenseInvoicedPayments 4/12/12$100,000 5/14/12.7546$50,000€37,730 6/16/12.6546$50,000€32,730 7/17/12.8546€37,730.8546€32,730 Totals($17,552)$82,448€70,460

12. 12 Do of any of these pieces make sense?

13. 13 Subcontract from a hospital in Spain Contract states to be invoiced & paid in Euros DateAwardedEuroExpenseInvoicedPayments 4/12/12$100,000 5/14/12.7546$50,000€37,730 6/16/12.6546$50,000€32,730 7/17/12$44,149.8546€37,730 8/19/12$34,286.9546€32,730 Total$78,435($21,565)€70,460

14. 14 Subcontract to a hospital in Japan Contract states to pay in Japanese Yen DateAwardedMarkBudgetInvoicedPayments 4/12/12$100,000 5/14/12$50,000 6/16/121.479¥73,977 Now what?¥23,977

15. 15 The money will fit together with the research, if we work together as a team!

16. 16 You CAN control the research, you CAN’T control the world economy. Be sure to negotiate to get terms in US Dollars