Practice Case Examination Backgrounder

The background information relating to the Case Examination (Backgrounder) is provided to candidates in advance of the examination date. The Backgrounder contains information about both the company and the industry involved in the case. Candidates are expected to familiarize themselves with this information in preparation for the analysis that will be required during the Case Examination. Candidates should note that they will not be allowed to bring any written material, including the advance copy of this Backgrounder, into the examination centre. A new copy of this Backgrounder, together with additional information about the company and a supplement of formulae and tables, will be provided at the writing centre for the Case Examination. Only the following models of calculators are authorized for use during the Case Examination: 1. Texas Instruments 2. Hewlett Packard 3. Sharp TI BA II Plus (including the professional model) HP 10bII (or HP 10Bii) EL-738C (or EL-738)

Candidates are reminded that no outside research on the industry related to this case is required. Examination responses will be evaluated on the basis of the industry information provided in the Backgrounder and the question paper (Additional Information).

2014 The Society of Management Accountants of Canada. All rights reserved. / Registered Trade-Marks/Trade-Marks are owned by The Society of Management Accountants of Canada. No part of this document may be reproduced in any form without the permission of the copyright holder.

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Practice Case Examination Backgrounder

Foreign Aid Canada (FAC) Backgrounder

Overview (1990 to 2011)
Foreign Aid Canada (FAC) is a Canadian third-world aid organization that was founded in 1990 by Dr. Barry Green with the help of a few friends and two wealthy benefactors. FAC grew rapidly, obtaining some key CIDA contracts and participating in a number of historic emergency relief projects, including the 2004 tsunami in Asia. Funded by the federal government, corporations, charitable foundations, and individual donors, FAC has a good reputation as an effective provider of emergency relief and development assistance, mainly in Africa and Asia. In areas struck by famine and other disasters, FAC delivers food items, builds modular homes, and provides other types of emergency relief. In developing countries, FAC provides assistance through various development activities, such as drilling wells, improving irrigation systems and helping farmers in various ways. FAC was incorporated as a tax-exempt, not-for-profit organization without share capital under Part II of the Canada Corporations Act and is a registered charitable organization with the Canada Revenue Agency (CRA). This permits FAC to issue tax receipts for donations. Annual charity information returns must be submitted to the CRA. A significant portion of FACs funding is received from the Canadian International Development Agency (CIDA), which is administered by the federal government. Consequently, project costs must be audited by an independent accounting firm and FACs annual financial statements submitted to CIDA.

Human Resources
Dr. Barry Green, a tireless advocate of assistance to the impoverished nations of Africa, has been the executive director of FAC since its inception. By the end of December 2011, the organization had average annual revenues of more than $24 million and a staff of 116. Currently, the management team includes five functional directors who report to Dr. Green (see the organizational chart presented in Appendix 1). With respect to staff recruitment, except for local hiring in Africa and Asia, new positions are first posted internally. If no qualified candidates are available, the positions are publicized through the Internet on two major employment websites. For positions in Africa and Asia, local hires are preferred. This helps make the people part of the process and reduces relocation, travel, and family-related costs. Generally, because there are few good forums for advertising (such as widely used websites), local managers are permitted to use a word-of-mouth search in the hiring process.

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In general, FAC follows Canadian employment standards throughout the organization. For example, if an employee in Africa is to be terminated, FAC pays severance whether or not it is required under local law. Most staff members are very dedicated to the cause. Employee turnover is lower at the head office than in the Canadian not-for-profit sector; however, turnover is high among the field workers, mainly due to travel requirements, family issues, and working conditions. There are dangers associated with providing aid in developing countries. Some workers choose to disregard these dangers whereas others refuse to work in areas that are highly dangerous. No FAC worker has ever died in the field. For Canadian employees, FAC pays market-level salaries. For locally hired employees in Africa and Asia, FAC pays salaries above the local market rates. The organizations mid-range benefit plan offers coverage for accidental death and dismemberment, health and dental needs, life insurance (1.25 times salary) and long-term disability. Total benefits are approximately 17% of base salaries, including employer contributions to the Canada Pension Plan and Employment Insurance.

Revenue Sources
Each year, FAC competes with tens of thousands of worthy organizations religious, medical, educational, humanitarian, relief, and development for donations from corporations, charitable foundations, and the Canadian public. In 2010 and 2011, the poor global market conditions reduced the total amount of donations available. Most FAC donors have a special interest in the various countries in Africa and Asia and are influenced by the organizations involvement in these countries. Historically, crisis relief attracts far more donations than ongoing development activities. For example, in 2002, donations were higher because of a severe famine in Northern Africa, which received heavy media coverage. In early 2005, Canadian donations increased significantly to fund crisis relief in Southeastern Asia as a result of the devastating tsunami of December 2004, but then returned to normal pre-tsunami levels by August 2005. Since its inception, FAC has maintained a mailing list of individuals, charitable foundations, and corporations that have either made a donation or requested organizational information. Each addressee is sent a quarterly newsletter containing information on FACs current activities, together with a donation request. Various media are used to promote FACs cause, such as ads in national newspapers and magazines, information booths at various events, and fundraising dinners. FAC has a toll-free telephone number through which donations can be made via credit card. For those donors who wish to contribute on a regular basis, arrangements can be made for automatic monthly bank account withdrawals or credit card charges. Gifts of stock, life insurance, annuities, and endowments are encouraged.

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Occasionally, FAC receives a bequest, a type of revenue that is difficult to forecast. Some donors neglect to inform the organization that it has been named as a beneficiary in their wills. Also, a bequest is frequently a residual sum, to be determined after payment of fixed amounts to family members or other parties. Some donations are restricted, which means that the funds may be used only in accordance with the wishes of the contributor. Before FAC accepts a restricted donation, its board of directors must approve the contributors stipulations regarding the use of these resources. The donation is then tracked using restricted fund accounting (see Financial Information section). Approximately 20% of donations and bequests received in fiscal 2011 were restricted. Board-approved uses for restricted donations include general emergency relief, general development, specific emergency relief, specific development, and capital investments. An additional source of revenue for FAC is the sale of memberships in the organization. Typically, members are wealthy individuals over the age of 60 who join because of the organizations involvement in Africa and Asia. The cost of an FAC membership is $10,000 plus a commitment to donate at least $1,000 per year. This commitment is not enforceable. However, on average, members have donated $1,250 each per year over the last five years. Members have no voting rights but receive a copy of the annual report in addition to the quarterly newsletter. Historically, under the direction of Dr. Green, FAC has avoided following political agendas, both domestic and foreign, but has actively sought Canadian government funding when it was available to further the organizations objectives. In Canada, government agendas regarding foreign assistance tend to change when a different governing party is elected, or public pressure forces the government to address a specific area of concern. Government agendas in developing countries also tend to change in response to internal and external conditions. All Canadian government funding obtained by FAC is specific to particular projects, mainly development projects. Not all FACs requests for government funding can be fulfilled. In order to compete successfully against numerous other not-for-profit organizations for the available funds, FAC must identify excellent projects that are related to government objectives, economical, and effective in reaching clearly stated goals. The ratio of support services expenses (e.g. administration, fundraising, donor relations) to project activity expenses is an important factor in determining how much funding (if any) the Canadian government and CIDA, as well as other supporters, will provide. Local stakeholders must be brought on side (i.e. local governments, residents, etc.) and persuasive presentations must be made to CIDA, in both written and verbal form. Ultimately, approval depends on other factors as well, including political and public pressures. For example, a significant amount of the available funding usually goes to support projects that address issues that have been made very visible to the public through the spotlight of the media. In the year 2004, a wealthy African-Canadian businessman set up an endowment fund of $4,000,000 to be invested in fixed income securities by FAC. All income generated

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from the fund, in perpetuity, is to be used for the operations of FAC. The monies are held in a special investment account with FACs bank and are invested by a fund manager.

Public Relations
The FAC logo has been used since 1990 and has become very familiar to people who work in the foreign assistance sector. FAC has an attractive, fully bilingual website that tells the story of FAC and provides one dozen continuously updated vignettes on current project activities. According to FACs Internet service provider, website traffic amounts to approximately 8,400 unique visits per month. From time to time, FAC issues press releases concerning its projects. For example, Foreign Aid Canada announces farm irrigation project in Eastern Africa was released on April 22, 2010.

Facilities
FACs head office is located in a large Canadian city and houses all of the Canadianbased staff. The original mortgage on the office building was refinanced in 2004 and has been paid down significantly. The organization has four regional offices in four key African and Asian countries. These regional offices primarily support development activities; consequently, the four office managers report to Peter Lewis (Director, Agriculture and Water Projects). To some extent, the relief activities are also supported by the regional offices. Mobile, local project offices are set up where necessary for both relief and development projects.

Emergency Relief Projects

Most of the time, the emergency relief provided by FAC is in response to famine. In these cases, large quantities of grains and basic foodstuffs are brought into the affected area for distribution in villages and refugee camps. Food is purchased whenever and wherever it is most efficient to do so, but some items are donated by Canadian farm groups. In cases of severe drought, water is shipped in and distributed by FAC. Where disasters have destroyed homes, FAC provides various types of emergency shelter, from tarpaulins to inexpensive, lightweight modular huts made by a Canadian manufacturer. These huts are built in sections and trucked or flown into the affected area. They can be assembled with minimal tools and expertise. The transportation of supplies is usually contracted out, since FAC owns few vehicles and these are used mostly by the regional office managers for local travel. Transportation costs for emergency relief can be very high. This is due to the quantity of goods moved, the remote locations served, and the tight timelines. Sometimes, thirdparty helicopters or aircraft are engaged to rush supplies to affected areas. Trucks and other vehicles are also used.

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Practice Case Examination Backgrounder

Development Projects
Water and Irrigation Projects In order to improve living conditions for the poor in Africa and Asia, reliable sources of clean water are essential. The lack of clean water means death for thousands through disease. Inconsistent rainfall means ineffective farming and irrigation. FACs development projects in this area generally consist of drilling wells and improving irrigation. Agricultural Assistance Agricultural development projects include the provision of seeds, tools, agricultural training (often via picture books for illiterate farmers), and on-site milling. FAC also helps struggling farmers deal with local pests and crop failures, enrich and conserve their soil, increase harvests, and diversify into more profitable crops. For example, agricultural specialists employed by FAC are introducing farmers to new techniques, including terracing and planting moisture-retaining grasses. A Typical Development Project The Runtan irrigation project would be considered typical of FAC development assistance. A traveling field officer in Africa noted that the Runtan area of Africa suffered from reduced agricultural output because it lacked a way to move water from a river to a nearby dry valley. She submitted a summary project proposal to FACs head office in Canada for a fairly simple irrigation system, and the project was approved. Detailed cost estimates and a project plan were then prepared. A call for tenders was issued, bids were received, and a local contractor was engaged. The field officer liaised with the local government and the local residents to get their support. FACs government relations staff secured CIDA funding for most of the project. As part of the arrangement, FAC agreed to maintain the irrigation system for one year before turning that responsibility over to the local government. The balance of the required funding was covered by donations from the general operating fund. FAC personnel and the local contractor carried out the project using a mechanical trench digger. The work was completed on schedule and on budget.

Project Management
All of FACs emergency relief and development activities are organized into projects, chosen in consultation with communities, local governments, and other organizations. In some cases, FAC staff members identify a need and propose a project. In others, they are approached by the local community, the government, or another stakeholder.

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Projects can be as small as a $2,000 handout of grain to a village stricken with a local flood or as large as an agricultural project involving an entire province of a country and costing up to half a million dollars. The duration of most projects is less than one year. Government funding for development projects is requested by submitting a proposal to CIDA. The project must have a development impact and meet other CIDA criteria, including a $5 million ceiling per project. After approval, CIDA and FAC sign a contribution agreement covering all aspects of the project. All costs are subject to CIDA audit. FAC has never had a problem in this area. At FAC, projects costing under $100,000 can be approved by the executive director. Those over $100,000 must be approved by the board of directors. Presentation of such proposals to the board must include the project objectives, an outline of resources needed, and an estimated budget. Each project has a single project manager who reports to the relevant functional director (i.e. Alison Boutang or Peter Lewis). At any point in time, there can be as many as twenty active projects. Some project managers oversee several small projects at the same time. Normally, two bidders are obtained for each activity that must be subcontracted. Usually, selection of the best bid is based on price. Poor, underemployed local workers are hired whenever possible, especially for the work requiring minimal skills. Most technical positions have to be filled from Canada. After salaries, materials, and contractor fees, the majority of the remaining direct project costs are those related to travel. Estimated travel costs are approved by the project manager prior to each trip. Trip expense claims including receipts are sent to head office by courier or submitted upon the travellers return to Canada and paid. Employees who work in remote foreign locations over long periods of time cannot easily submit expense reports with receipts. Usually, for these employees, an advance on the travel expenses is issued, with the approval of a director, and expenses are later claimed against the advance.

Financial Information
Accounting System FAC uses the Fund Fast accounting system specifically designed for use by not -forprofit organizations. The system has been in use for five years, and Linda Roberts (Director, Finance and Technology) is pleased with it. Transactions at remote relief and development sites are relayed to the head office, usually by courier, where they are entered, albeit with a substantial time delay, in the Fund Fast system. The system provides project accounting reports, financial statements, and actual versus budget reports. No general overhead is charged to projects.

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Accounting Policies FAC follows the deferral method of accounting for contributions and uses the restricted fund method of accounting for reporting. Funds are created to correspond to the different kinds of spending restrictions placed by donors on their contributions. All interfund transfers require the approval of the board of directors. For financial reporting purposes, if a specific type of restricted expenditure has not yet been made, the corresponding restricted contributions are recognized in the operating fund using the deferral method, and later recognized as revenue when the expenditure for which the contribution is to be used has occurred. In the statement of operations, restricted contributions and expenditures related to specific relief and development projects are reported in the operating fund. Unrestricted contributions are recognized as revenue when they are received. Funds can be restricted internally by the board of directors. For example, in 2006, the board designated $100,000 as a base financial reserve. Contributions for the purchase of amortizable capital assets are recognized as revenue on the same basis as the amortization expense related to the acquired capital assets. Until then, they are shown as a liability (deferred contributions) on the statement of financial position. Inter-fund transfers are reported as non-operating items in the statement of changes in fund balances. Investment income on the endowment fund is shown as investment income in the operating fund. Donated services are recorded at fair value. Services for which the value is not easily determinable, such as volunteer labour, assistance from employees of foreign governments, and donated media coverage, are not recorded. Accounts receivable represent amounts billed to CIDA under its contribution agreements with FAC. CIDAs policy is to make payments for approved capital asset projects only after the assets have been acquired or built, and after receiving documentation to support the costs of the assets. For project operating expenses, CIDA will make payments to FAC on a quarterly basis. CIDAs accountants must first audit the projects statement of expenses (submitted each quarter) before any payment is made. For projects with durations of three months or less, CIDA will make payments after the project is complete and the expenses are audited. The organization records and reports its activities as follows: Operating fund This fund is used to account for all revenue and expenditures related to general operations. Capital fund This fund reports the assets, liabilities (e.g. mortgage, deferred contributions), revenues, and expenses (e.g. mortgage interest, amortization) related

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to the organizations capital assets. Purchased capital assets are recorded at cost and are amortized over their useful lives. Donated assets are recorded at estimated fair value. Endowment fund This fund is used to account for all contributions that require the original principal to remain intact. Contributions are treated as increases in the funds balance. The funds investments are recorded at cost, which approximates market value. Auditors Upon incorporation, the board of directors decided that an annual audit of the financial statements should be obtained in order to maintain the highest standards of transparency and accountability. Since that time, the boards audit committee has approved Clark & John, a national accounting firm, to conduct the annual audit. Each year, the auditors have provided a clean audit report on FAC financial statements (see Appendix 2 for the 2010 and 2011 financial statements). Planning and Budgeting Each fall, the following years operating budget is prepared by the accounting staff and approved by the board of directors. Budgeting has proved to be a difficult undertaking for FAC. Both the level of individual and corporate donations and the following years emergency relief needs are difficult to forecast. Throughout the year, internal monthly operating reports are prepared, showing the variances between budgeted and actual revenues and expenses. Prior to developing the budget, the board of directors reviews the strategic plan and provides preliminary direction for the accounting staff to use in preparing the budget. In October 2010, the board of directors prepared an environmental scan and reviewed FACs mandate (see Appendix 3). Considering the economic uncertainty, the board predicted that donations would decrease and directed staff to reflect this in the 2011 budget. As a result, FAC was able to avoid incurring a significant deficit. Banking and Cash Management Since incorporation, FAC has been serviced by a large, chartered bank. FAC has both Canadian and U.S. chequing accounts and frequently sends U.S. dollars to Africa and Asia by wire transfer. The bank provides a credit facility with an operating line based on 75% of collectible CIDA receivables. The current interest rate on the operating line is 6%. To manage worldwide operations effectively, FAC uses a fairly complex cash management system. The U.S. dollar is the preferred currency in Asia and Africa; therefore, most foreign costs are paid in U.S. dollars. However, each regional office has a bank account where some of the U.S. funds are converted to the local currency. From time to time, funds in U.S. dollars are wired from Canadian headquarters to the regional offices to replenish the accounts.
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Practice Case Examination Backgrounder

Non-Governmental Organizations (NGOs) in Canada

Although assistance organizations do not view each other as competitors but rather colabourers in a global battle against poverty and other evils, they effectively do compete for fixed government funding and limited individual and corporate donations. In early 2011, approximately 300 Canadian non-governmental organizations (NGOs) were involved in emergency relief and development around the world, including FAC, World Relief, the Salvation Army, Compassion Canada, and others. These organizations vary in size from very small to very large (FAC would be considered a mid-sized organization). Some focus primarily on relief (e.g. World Relief Canada). Others are involved in many types of activities, including development, both in Canada and around the world. Some have a specialized focus (e.g. medical, education, human rights). New organizations enter this sector every year. A typical FAC competitor is Canada Helps Inc. (CHI), whose stated mission is to serve individuals and families in the poorest countries of the world. CHI has annual revenues of approximately $32 million and, in 2010, approximately 60% of its project activities expenditures pertained to 100 relief projects that assisted more than 250,000 individuals, and 40% to 50 development projects that are expected to improve the lives of 35,000 individuals. CHIs administrative costs usually amount to between 1 9% and 21% of total project activity expenses. Another competitor of FAC is Catastrophe Aid Canada Inc. (CACI), a thinly-staffed organization that raises funds through large newspaper advertisements when disasters strike worldwide. The money raised (approximately $20 million annually) is then channelled through other organizations and governments. CACI does not deliver any services itself. Its administration, fundraising and donor relations costs generally amount to 20% of total money raised.

Official Canadian Foreign Aid

In 1968, the Canadian International Development Agency (CIDA) was formed as a federal government agency to oversee Canadas aid efforts with the main objective of promoting the economic development and welfare of developing countries. Today, its mandate is to manage Canadas support and resources effectively and accountably to achieve meaningful, sustainable results and engage in policy development in Canada and internationally, enabling Canadas effort to realize its development objectives.1 Canada provides foreign aid (called official development assistance or ODA) to developing countries in various ways through bilateral projects, multilateral aid, partnerships with NGOs, and special programs. Programs funded by ODA focus on such areas as education, health and nutrition, HIV/AIDS, child protection, gender equality, agricultural and rural development, governance, private sector development, and emergency relief.
1

http://www.acdi-cida.gc.ca/acdi-cida/ACDI-CIDA.nsf/eng/NIC-5493749-HZK (accessed Dec. 17, 2009)

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Canadian non-governmental organizations (NGOs) make up an important group of partners that provide foreign aid. Supporters of NGOs claim that they possess several advantages over official aid channels: speed, flexibility, low cost, innovativeness and, above all, an ability to reach the poorest effectively. Currently, the federal government allocates a substantial sum to more than 200 NGOs in the relief and development sector, including voluntary assistance agencies (such as FAC), colleges and universities, cooperatives, professional associations, churches, unions, businesses, and other private sector organizations. Each year, CIDAs priorities are set after cross-country public consultations that allow the Canadian people to play a key role in the cooperation program. Canada has a reputation as a mid-sized power and as an honest broker, and both the Canadian government and Canadian aid agencies are viewed internationally as generally trustworthy. As such, Canada has been able to play a constructive role in the areas of human rights, governance, and post-conflict relief and reconstruction programs.

African and Asian Settings

Asia encompasses half the worlds population and two-thirds of the worlds poor, and Africa is home to 12% of the worlds population, of which almost half lives on less than one dollar per person per day. Although farming is the most important subsistence activity in many Asian and African countries, large portions of these continents have a chronic problem with food scarcity. There are a variety of reasons for this problem. The most notable are large-scale natural disasters (e.g. 2004 tsunami, 2005 earthquake), a high rate of population growth, the loss of farm labour due to widespread movement of workers from rural areas to urban areas, the economic priority given to the production of export crops, and a general lack of adequate investment in modern agricultural technology. Soil erosion and desertification (the process in which soil dries out until almost no vegetation grows on it) have become major problems affecting agriculture in many areas. When droughts or floods occur, the people often starve or suffer the effects of severe malnutrition. Crop failures cause rising unemployment for agricultural workers while food prices increase. Progress in many Asian and African countries has been hampered by economic problems and political and social instability. Wars, revolutions, terrorism, and ethnic and religious conflicts have been commonplace. For example, civil war in Burundi and Rwanda between the two main ethnic groups, the Tutsi and the Hutu, caused more than a million deaths in the 1990s. As well, the prevalence of HIV and AIDS in Asia and Africa has become a large problem. Africa is home to more than two-thirds of all people in the world who are infected with HIV. In 2008, the disease killed more than 1.4 million Africans, and the number of AIDS orphans in Africa was estimated to be over 14 million.2

http://www.avert.org/subaadults.htm (accessed Dec. 17, 2009)

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Practice Case Examination Backgrounder

Appendix 1 Foreign Aid Canada (FAC) Organizational Chart As at December 31, 2011

Board of Directors

Executive Director Dr. Barry Green

2 Executive Assistants

Director, Emergency Relief Alison Boutang

Director, Agricultural and Water Projects Peter Lewis 4 Regional Office Managers

Director, Government Relations and Fundraising Florence Taylor

27 Emergency Relief Staff

39 Agricultural and Water Staff Director, Human Resources Travel and Facilities Betty McLeod

6 Staff (2 government relations, 2 fundraising, 2 newsletters)

Director, Finance and Technology Linda Roberts

9 Staff (4 human resources staff, 2 travel/relocation staff, 3 head office facility management and cleaning personnel)

Controller Pat Innes

Assistant Director, Technology Keith Dong

9 Accounting and Payroll Staff

12 IT Staff

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Appendix 2 Foreign Aid Canada (FAC) Statement of Financial Position (Audited) As at December 31 (000s)
ASSETS Current assets: Cash Investments Accounts receivable Capital assets (net) Total assets LIABILITIES AND FUND BALANCES Current liabilities: Accounts payable and accrued liabilities Mortgages payable current Mortgages payable long-term Deferred contributions Fund balances: Unrestricted Invested in capital assets Internally restricted Externally restricted Operating Fund $ 241 211 2,789 3,241 $3,241 Endowment Capital Fund Asset Fund $ 4,000 4,000 $4,000 $ 1,239 $1,239 2011 Total $ 241 4,211 2,789 7,241 1,239 $8,480 2010 Total $ 202 4,102 2,601 6,905 1,265 $8,170

$2,043 2,043 440 610 100 48 758

4,000 4,000

27 27 187

$2,043 27 2,070 187 440 610 1,025 100 4,048 5,783 $8,480

$1,871 25 1,896 214 346 548 1,026 100 4,040 5,714 $8,170

1,025 1,025 $1,239

Total liabilities and fund balances

$3,241

$4,000

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Appendix 2 (contd) Foreign Aid Canada (FAC) Statement of Operations and Changes in Fund Balances (Audited) For the Year Ended December 31 (000s)
Operating Endowment Capital Fund Fund Asset Fund Revenues: Unrestricted donations (Note 1) Restricted donations (Note 1) CIDA contributions (restricted) Member contributions Investment income Total revenues Expenses (Note 2): Project activities (Note 3): Salaries Materials and supplies Contractors Travel and other Amortization expense Support services: Administration Fundraising, public and donor relations Total expenses Excess (deficiency) of revenue over expenses Fund balance, beginning of year Excess (deficiency) of revenue over expenses Inter-fund transfers (Note 4) Fund balance, end of year 5,195 10,250 3,123 1,265 19,833 3,455 746 4,201 24,033 $ 158 $ 75 14 14 89 (89) 5,195 10,250 3,123 1,265 19,833 75 3,469 746 4,215 24,122 $ 69 4,915 11,699 3,200 1,648 21,462 68 3,387 765 4,152 25,682 $ 86 $11,200 2,748 9,410 496 337 24,191 $ $ 2011 Total $11,200 2,748 9,410 496 337 24,191 2010 Total $12,331 3,741 8,844 528 324 25,768

$688 158 (88) $758

$4,000 $4,000

$1,026 (89) 88 $1,025

$5,714 69 $5,783

$5,628 86 $5,714

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Note 1: Types of Donations for the Year Ended December 31, 2011 (000s): Unrestricted Relief Donations individuals and foundations Donations corporations Bequests Total donations $ 9,651 1,549 $11,200 $1,465 155 578 $2,198 Restricted Development $ 100 50 400 $550 Total $1,565 205 978 $2,748 $11,216 1,754 978 $13,948 Total

Note 2: Project Expenses for the Year Ended December 31, 2011 (000s): Relief $1,900 4,613 937 633 $8,083 Development $ 3,295 5,637 2,186 632 $11,750 Total $ 5,195 10,250 3,123 1,265 $19,833

Salaries Materials and supplies Contractors Travel and other

Note 3: Summary of Project Activities for the Year Ended December 31, 2011: Relief 79 151,000 Development 58 38,000 Total 137 189,000

Number of projects Number of lives improved

Note 4: Inter-fund Transfers (000s): 2011 $27 14 47 88 (88) $ 0 2010 $13 25 38 (38) $ 0

Mortgage principal payments Mortgage interest payments Purchase of equipment Transferred to capital fund Transferred from operating fund Net

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Appendix 3 Foreign Aid Canada (FAC) Environmental Scan October 2010

Strengths Good reputation as an effective provider of emergency relief and development assistance in Africa and Asia Skilled staff who are dedicated to the cause low head office staff turnover Good HR practices Good support from members solid membership base each member contributes an average of $1,250 per year Strategically located regional field offices Good relationship with CIDA Neutral stance taken political agendas avoided Efficient use of various promotional media

Weaknesses Membership subscriptions are decreasing (few new members; long-term members passing away) Slow communication of transactions and travel expense claims from foreign locations to head office causes delays in preparing quarterly statements of expenses for projects funded by CIDA Slow payments from CIDA High turnover of field workers High cost of transportation

Opportunities Canadian aid agencies are regarded as honest brokers efficient in ensuring delivery of aid to those in need Emergencies caused by natural disasters and global warming have been increasing in all parts of the world AIDS and HIV continue to be a significant problem in Africa and Asia CIDAs budget for Asian and African aid is expected to increase in 2011 focus will be on fighting AIDS, education, and development projects Canadian dollar strengthening increases purchasing power overseas

Threats Tens of thousands of competitors for donations from corporations, charitable foundations, and the Canadian public More than 300 NGOs competing for government funding Global economic recession is increasing the cost of food and decreasing the amount of Canadian public donations Political and social instability and danger in Africa and Asia Changes in political agendas regarding foreign aid resulting from elections in Canada and foreign countries

Foreign Aid Canada Mandate: Foreign Aid Canada provides development assistance, through agricultural, water and irrigation projects, and humanitarian emergency relief to African and Asian countries in need.

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