IISD’s Reporting Services is in the midst of a financial “perfect storm,” with several independent factors combining to create a serious situation that threatens the future of our flagship product, the Earth Negotiations Bulletin.
2009 has become a challenge for us as governments have scheduled additional weeks of negotiations in preparation for the huge UN Climate Conference in Copenhagen this December during a period of economic crisis where funding for non-profit organizations is increasingly difficult to source. Like mariners at sea looking at the weather patterns, we have known that the elements were bearing down on us well in advance and, unable to outrun the inevitable, we sent out our SOS messages.
At the end of 2008, when we launched our 2009 fundraising campaign, I wrote to our donors:
Our anticipated costs in 2009 are approximately US$400,000 more than in 2008 and we are asking each of our donors to increase their level of support so that we can meet the growing demand for our services and the costs to provide those services.
Our costs for covering meetings has increased 23% from 2008, due in large part to the increased number and level of coverage of climate change meetings. We are anticipating an additional eight weeks of climate negotiations in 2009.
Early in 2009, during the deepest nadir in the current economic crisis, the Program Directors at IISD were asked by IISD President and CEO, David Runnalls, to assess our funding situation and prospects for the coming year. As an organization dependent on grants for most of our revenue, we needed to take a sober look at where our finances might be headed so that we could prepare for a range of possible scenarios.
My assessment of the situation for our part of IISD, Reporting Services, was:
While the general assumption is that 2009 would be a difficult year for raising funds, the experience of Reporting Services has actually been to the contrary. However, this may be due to one or more factors:
- PIPELINE: The funds that government departments have to use this year are based on allotments made before the onset of the financial crisis during 2008 or before and scheduled for disbursement in 2009. So, we may see the opposite of the “pig in the python” factor, as reduced allocations result in lower funding for 2010 and 2011 but during this year governments do what they always do: attempt to spend all the money they have so that they are not cut back in subsequent years;
- ISSUE SPECIFIC MONEY: We are finding that money is available for climate change, where it might not be available for plant genetic resources or other issues. So, as long as we are working in hot topics like sustainable and renewable energy, climate change, biofuels, MDGs and governance, funds will be available;
- YOU HAVE TO ASK FOR IT: Lowering expectations can be a self-defeating cycle. You will not get any more funding than what you ask for. We have asked for additional funding, despite the gloomy prognostication for 2009, and in almost every case, at this point, we have gotten it. And, for some donors we have received the same amount as last year, but only because we asked for more and they protected our contribution level.
- GREAT FINANCIAL REPORTING AND GOOD EXTERNAL RELATIONS PAYS OFF: When the going gets tough, donors like low risk destinations for their money. IISD’s reputation for thorough reporting and financial accountability helps enormously when going to donors. In addition, by maintaining good relationships with individuals in donor organizations, we have found that they will go the extra distance in protecting grant levels.
Now, several months later and looking back on this assessment, these four factors have certainly started to play out in our current crisis and my original optimism has been replaced by the grim reality of our situation. Nine months after my message to our donors, we are faced with a deficit of approximately US$380K.
We have started to see that the availability of funds from government sources that might have been more plentiful in early 2009 are now becoming restricted, particularly as government departments see the prospects for renewing their discretionary funds in 2010 and 2011 lowered. This trend is sure to continue next year and we anticipate that our funding levels will be down even though the financial crisis will be coming to an end. It may not be until 2011 that government ministries have the same budgets to work with that they did in early 2009.
ASKING FOR IT
: In response to our requests, in some cases governments have responded (early in the year) with larger contributions. The UK, the European Commission, Australia, Sweden and most recently Germany have increased their grants to us. However, while these additional funds have ameliorated some of shortfalls due to added expenses, they have also been offset by cuts in funding by some of our trusted donors, leaving us with some serious cash flow projections.
But perhaps most telling is that as expectations for a successful conclusion to the UNFCCC Post-2012 agreement are lowered, so are the availability of funds for the climate negotiations. While governments still speak optimistically about a successful outcome in Copenhagen, their actual financial commitment to activities in support of the process belies their real diminished outlook for a conclusion to the process in December 2009. So, what we are finding is that “issue specific money” for climate change is not available in the amounts necessary to offset the costs of additional weeks of climate change meetings that we have been asked to cover. When some European countries do not have additional funding for the Earth Negotiations Bulletin
to cover the climate negotiations, it speaks volumes about their commitment to transparency and the success of the process.
REPORTING AND RELATIONS:
Without a doubt, we would be in a lot worse shape if we did not have such great relationships with our donors, who in most instances have gone out of their way to protect funding. We have been very appreciative to some of our donors who have not been able to increase their assistance in 2009 but, on the other hand, have not cut our funding at all. In a year like this, just holding at 2008 levels is a success. And, as always, our excellent financial accounting and reporting back to donors has made it easier for donors to make their cases to their own financial departments for ENB funding.
With seven months remaining in the fiscal year, we are taking a dual strategy in dealing with our situation. As IISD Reporting Services cannot spend more than we take in through fundraising, so we have to cut back on expenditures and find other sources of funding.
Over the last seventeen years running this program, I’ve always tried to avoid the “soufflé effect.” This is where you expand too rapidly and then everything collapses when funds run short. In this case, we have expanded our coverage into a level of “open-ended working groups” and subsidiary bodies to several multilateral agreements and we are going to have to cut back on these. We have begun contacting the Secretariats for the processes we cover, informing them that we will either have to cut back on meetings’ coverage or eliminate it altogether without additional specific funding.
For those meetings where we have had to cut back, we will be asking the Secretariats for assistance in finding specific funding. For many years we have raised millions of dollars that have supported their meetings and we hope that they will reciprocate either with direct assistance or help in sourcing funding for the meetings that we have had to mark as “pending” on our schedule.
The increased demands for our services, due to the extra climate change meetings, combined with the financial crisis continue to be a challenge for us. However, we have created this organization with built-in flexibility and nimbleness through our “scale-up and scale-down” philosophy. By keeping the number of full and part-time staff to a minimum, relying on short-term consultants and running a virtual office without high costs for infrastructure, we are better prepared to weather this “perfect storm” than many other non-profit organizations. As easily as we scale-up for busy times, we can scale-down in order to survive a lean season without collapsing under the weight of our structure, hopefully avoiding the total collapse of the soufflé.