ForeignAidCanada Backgrounder CMA

5/28/2018 ForeignAidCanada Backgrounder CMA

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Module 2 Assignment 3

Practice Case Examination

Backgrounder

The background information relating to the Case Examination (Backgrounder) isprovided to candidates in advance of the examination date. The Backgrounder containsinformation about both the company and the industry involved in the case. Candidatesare expected to familiarize themselves with this information in preparation for theanalysis 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. Anew copy of this Backgrounder, together with additional information about thecompany and a supplement of formulae and tables, will be provided at the writingcentre for the Case Examination.Only the following models of calculators areauthorized for use during the Case Examination:

1. Texas Instruments TI BA II Plus (including the professional model)2. Hewlett Packard HP 10bII+ (or HP 10bll)3. Sharp EL-738C (or EL-738)

Candidates are reminded that no outside research on the industry related to this case isrequired. Examination responses will be evaluated on the basis of the industryinformation provided in the Backgrounder and the question paper (AdditionalInformation).


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Backgrounder Practice Case Examination M2A3

Page 2 (19 pages) CMA Canada

Foreign Aid Canada (FAC)Backgrounder

Overview (1991 to 2012)

Foreign Aid Canada (FAC) is a Canadian third-world aid organization that was foundedin 1991 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 ofhistoric emergency relief projects, including the 2004 tsunami in Asia. Funded by thefederal government, corporations, charitable foundations and individual donors, FAChas a good reputation as an effective provider of emergency relief and developmentassistance, mainly in Africa and Asia.

In areas struck by famine and other disasters, FAC delivers food items, builds modularhomes and provides other types of emergency relief. In developing countries, FACprovides 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 capitalunder Part II of the Canada Corporations Act and is a registered charitable organizationwith the Canada Revenue Agency (CRA). This permits FAC to issue tax receipts fordonations. Annual charity information returns must be submitted to the CRA.

A significant portion of FACs funding is received from the Canadian InternationalDevelopment Agency (CIDA), which is administered by the federal government.Consequently, project costs must be audited by an independent accounting firm andFACs 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 December2012, the organization had average annual revenues of more than $24 million and astaff of 116. Currently, the management team includes five functional directors whoreport 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 positionsare 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 peoplepart 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), localmanagers are permitted to use a word-of-mouth search in the hiring process.


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Practice Case Examination M2A3 Backgrounder

CMA Canada Page 3 (19 pages)

In general, FAC follows Canadian employment standards throughout the organization.For example, if an employee in Africa is to be terminated, FAC pays severance whetheror 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 amongthe field workers, mainly due to travel requirements, family issues and workingconditions. There are dangers associated with providing aid in developing countries.Some workers choose to disregard these dangers whereas others refuse to work inareas that are highly dangerous. No FAC worker has ever died in the field.

For Canadian employees, FAC pays market-level salaries. For locally hired employeesin Africa and Asia, FAC pays salaries above the local market rates. The organizationsmid-range benefit plan offers coverage for accidental death and dismemberment, healthand dental needs, life insurance (1.25 times salary) and long-term disability. Totalbenefits are approximately 17% of base salaries, including employer contributions to theCanada Pension Plan and Employment Insurance.

Revenue Sources

Each year, FAC competes with tens of thousands of worthy organizationsreligious,medical, educational, humanitarian, relief and developmentfor donations fromcorporations, charitable foundations and the Canadian public. In 2011 and 2012, therewas intense competition among assistance organizations for the limited amount ofdonations available.

Most FAC donors have a special interest in the various countries in Africa and Asia andare influenced by the organizations involvement in these countries. Historically, crisis

relief attracts far more donations than ongoing development activities. For example, in2002, donations were higher because of a severe famine in Northern Africa, whichreceived heavy media coverage. In early 2005, Canadian donations increasedsignificantly to fund crisis relief in Southeastern Asia as a result of the devastatingtsunami of December 2004, but then returned to normal pre-tsunami levels by August2005.

Since its inception, FAC has maintained a mailing list of individuals, charitablefoundations and corporations that have either made a donation or requestedorganizational information. Each addressee is sent a quarterly newsletter containinginformation on FACs current activities, together with a donation request.

Various media are used to promote FACs cause, such as ads in national newspapersand magazines, information booths at various events and fundraising dinners. FAC hasa toll-free telephone number through which donations can be made via credit card. Forthose donors who wish to contribute on a regular basis, arrangements can be made forautomatic monthly bank account withdrawals or credit card charges. Gifts of stock, lifeinsurance, 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 beneficiaryin their wills. Also, a bequest is frequently a residual sum, to be determined afterpayment of fixed amounts to family members or other parties.

Some donations are restricted, which means that the funds may be used only inaccordance with the wishes of the contributor. Before FAC accepts a restricteddonation, its board of directors must approve the contributors stipulations regarding theuse of these resources. The donation is then tracked using restricted fund accounting(see Financial Information section). Approximately 20% of donations and bequestsreceived in fiscal 2012 were restricted. Board-approved uses for restricted donationsinclude 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 theorganizations 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 notenforceable. However, on average, members have donated $1,250 each per year overthe last five years. Members have no voting rights but receive a copy of the annualreport in addition to the quarterly newsletter.

Historically, under the direction of Dr. Green, FAC has avoided following politicalagendas, both domestic and foreign, but has actively sought Canadian governmentfunding when it was available to further the organizations objectives. In Canada,government agendas regarding foreign assistance tend to change when a differentgoverning party is elected, or public pressure forces the government to address aspecific 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 befulfilled. In order to compete successfully against numerous other not-for-profitorganizations for the available funds, FAC must identify excellent projects that arerelated to government objectives, economical, and effective in reaching clearly statedgoals. The ratio of support services expenses (e.g. administration, fundraising, donorrelations) to project activity expenses is an important factor in determining how muchfunding (if any) the Canadian government and CIDA, as well as other supporters, willprovide. 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 verbalform. Ultimately, approval depends on other factors as well, including political and publicpressures. For example, a significant amount of the available funding usually goes tosupport projects that address issues that have been made very visible to the publicthrough the spotlight of the media.

In the year 2005, a wealthy African-Canadian businessman set up an endowment fundof $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 areheld in a special investment account with FACs bank and are invested by a fundmanager.

Public Relations

The FAC logo has been used since 1991 and has become very familiar to people whowork in the foreign assistance sector. FAC has an attractive, fully bilingual website thattells the story of FAC and provides one dozen continuously updated vignettes oncurrent project activities. According to FACs Internet service provider, website trafficamounts to approximately 8,400 unique visits per month. From time to time, FAC issuespress releases concerning its projects. For example, Foreign Aid Canada announcesfarm irrigation project in Eastern Africa was released on April 22, 2011.

Facilities

FACs head office is located in a large Canadian city and houses all of the Canadian-based staff. The original mortgage on the office building was refinanced in 2005 andhas 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 fouroffice managers report to Peter Lewis (Director, Agriculture and Water Projects). Tosome extent, the relief activities are also supported by the regional offices. Mobile, localproject 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. Inthese cases, large quantities of grains and basic foodstuffs are brought into the affectedarea for distribution in villages and refugee camps. Food is purchased whenever andwherever it is most efficient to do so, but some items are donated by Canadian farmgroups. In cases of severe drought, water is shipped in and distributed by FAC.

Where disasters have destroyed homes, FAC provides various types of emergencyshelter, from tarpaulins to inexpensive, lightweight modular huts made by a Canadianmanufacturer. These huts are built in sections and trucked or flown into the affectedarea. They can be assembled with minimal tools and expertise.

The transportation of supplies is usually contracted out, since FAC owns few vehiclesand 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 ofgoods moved, the remote locations served and the tight timelines. Sometimes, third-party helicopters or aircraft are engaged to rush supplies to affected areas. Trucks andother vehicles are also used.


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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 throughdisease. Inconsistent rainfall means ineffective farming and irrigation. FACsdevelopment projects in this area generally consist of drilling wells and improvingirrigation.

Agricultural Assistance

Agricultural development projects include the provision of seeds, tools, agriculturaltraining (often via picture books for illiterate farmers) and on-site milling. FAC also helpsstruggling farmers deal with local pests and crop failures, enrich and conserve their soil,increase harvests and diversify into more profitable crops. For example, agriculturalspecialists 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 developmentassistance.

A traveling field officer in Africa noted that the Runtan area of Africa suffered fromreduced agricultural output because it lacked a way to move water from a river to anearby dry valley. She submitted a summary project proposal to FACs head office inCanada 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 wasissued, bids were received and a local contractor was engaged. The field officer liaisedwith the local government and the local residents to get their support. FACsgovernment relations staff secured CIDA funding for most of the project. As part of thearrangement, FAC agreed to maintain the irrigation system for one year before turningthat responsibility over to the local government. The balance of the required fundingwas covered by donations from the general operating fund.

FAC personnel and the local contractor carried out the project using a mechanicaltrench 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. Insome cases, FAC staff members identify a need and propose a project. In others, theyare 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 localflood or as large as an agricultural project involving an entire province of a country andcosting 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 acontribution agreement covering all aspects of the project. All costs are subject to CIDAaudit. 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 suchproposals to the board must include the project objectives, an outline of resourcesneeded 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 thesame 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 workrequiring minimal skills. Most technical positions have to be filled from Canada.

After salaries, materials and contractor fees, the majority of the remaining direct projectcosts 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 headoffice by courier or submitted upon the travellers return to Canada and paid. Employeeswho work in remote foreign locations over long periods of time cannot easily submitexpense reports with receipts. Usually, for these employees, an advance on the travelexpenses is issued, with the approval of a director, and expenses are later claimedagainst the advance.

Financial Information

Accounting System

FAC uses the Fund Fast accounting system specifically designed for use by not-for-profit 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 anddevelopment sites are relayed to the head office, usually by courier, where they areentered, albeit with a substantial time delay, in the Fund Fast system. The systemprovides project accounting reports, financial statements and actual versus budgetreports. 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 restrictedfund method of accounting for reporting. Funds are created to correspond to thedifferent kinds of spending restrictions placed by donors on their contributions. All inter-

fund transfers require the approval of the board of directors.For financial reporting purposes, if a specific type of restricted expenditure has not yetbeen made, the corresponding restricted contributions are recognized in the operatingfund using the deferral method, and later recognized as revenue when the expenditurefor which the contribution is to be used has occurred.

In the statement of operations, restricted contributions and expenditures related tospecific relief and development projects are reported in the operating fund. Unrestrictedcontributions are recognized as revenue when they are received.

Funds can be restricted internally by the board of directors. For example, in 2007, the

board designated $100,000 as a base financial reserve.

Contributions for the purchase of amortizable capital assets are recognized as revenueon 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 offinancial position.

Inter-fund transfers are reported as non-operating items in the statement of changes infund balances. Investment income on the endowment fund is shown as investmentincome in the operating fund.

Donated services are recorded at fair value. Services for which the value is not easilydeterminable, such as volunteer labour, assistance from employees of foreigngovernments and donated media coverage, are not recorded.

Accounts receivable represent amounts billed to CIDA under its contributionagreements with FAC. CIDAs policy is to make payments for approved capital assetprojects only after the assets have been acquired or built, and after receivingdocumentation to support the costs of the assets. For project operating expenses, CIDAwill make payments to FAC on a quarterly basis. CIDAs accountants must first audit theprojects 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 theproject 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 expendituresrelated to general operations.


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Capital fund This fund reports the assets, liabilities (e.g. mortgage, deferredcontributions), revenues and expenses (e.g. mortgage interest, amortization) relatedto the organizations capital assets. Purchased capital assets are recorded at costand are amortized over their useful lives. Donated assets are recorded at estimatedfair value.

Endowment fund This fund is used to account for all contributions that require theoriginal principal to remain intact. Contributions are treated as increases in the fundsbalance. The funds investments are recorded at cost, which approximates marketvalue.

Auditors

Upon incorporation, the board of directors decided that an annual audit of the financialstatements should be obtained in order to maintain the highest standards oftransparency and accountability. Since that time, the boards audit committee hasapproved 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 (seeAppendix 2 for the 2011 and 2012 financial statements).

Planning and Budgeting

Each fall, the following years operating budget is prepared by the accounting staff andapproved by the board of directors. Budgeting has proved to be a difficult undertakingfor FAC. Both the level of individual and corporate donations and the following yearsemergency relief needs are difficult to forecast. Throughout the year, internal monthlyoperating reports are prepared, showing the variances between budgeted and actualrevenues and expenses.

Prior to developing the budget, the board of directors reviews the strategic plan andprovides preliminary direction for the accounting staff to use in preparing the budget. InOctober 2011, the board of directors prepared an environmental scan and reviewedFACs mandate (see Appendix 3). Considering the economic uncertainty, the boardpredicted that donations would decrease and directed staff to reflect this in the 2012budget. 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 bothCanadian 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 on75% of collectible CIDA receivables. The current interest rate on the operating line is6%.

To manage worldwide operations effectively, FAC uses a fairly complex cashmanagement 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 hasa bank account where some of the U.S. funds are converted to the local currency. From


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time to time, funds in U.S. dollars are wired from Canadian headquarters to the regionaloffices to replenish the accounts.

Non-Governmental Organizations (NGOs) in Canada

Although assistance organizations do not view each other as competitors but rather co-labourers in a global battle against poverty and other evils, they effectively do competefor fixed government funding and limited individual and corporate donations. In Canada,there are hundreds of Canadian non-governmental organizations (NGOs) that areinvolved in emergency relief and development around the world, including FAC, WorldRelief, the Salvation Army, Compassion Canada and others. Among the hundreds ofCanadian non-governmental aid organizations are some well-established not-for-profitsthat started out as fundraising branches for the Canadian government.1An example ofsuch a not-for-profit is Oxfam Canada, which has since become a government-independent organization.2

These NGOs vary in size from very small to very large (FAC would be considered amid-sized organization). Some focus primarily on relief (e.g. World Relief Canada).Others are involved in many types of activities, including development, both in Canadaand around the world. Some have a specialized focus (e.g. medical, education, humanrights). New organizations enter this sector every year.

A typical FAC competitor is Canada Helps Inc. (CHI), whose stated mission is to serveindividuals and families in the poorest countries of the world. CHI has annual revenuesof approximately $32 million and, in 2011, approximately 60% of its project activitiesexpenditures pertained to 100 relief projects that assisted more than 250,000individuals, and 40%, to 50 development projects that are expected to improve the livesof 35,000 individuals. CHIs administrative costs usually amount to between 19% and

21% of total project activity expenses.

Another competitor of FAC is Catastrophe Aid Canada Inc. (CACI), a thinly-staffedorganization that raises funds through large newspaper advertisements when disastersstrike worldwide. The money raised (approximately $20 million annually) is thenchannelled through other organizations and governments. CACI does not deliver anyservices itself. Its administration, fundraising and donor relations costs generally amountto 20% of total money raised.

1 Cranford Pratt, Canadian International Development Assistance Policies: an Appraisal(Montreal:

McGill Queens University Press, 1994), 88.2 Oxfam Canada, Oxfam Canada gets top marks from partners, accessed October 31, 2012,

http://www.oxfam.ca/who-we-are/oxfam-canada-gets-top-marks-from-partners.


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Official Canadian Foreign Aid

In 1968, the Canadian International Development Agency (CIDA) was formed as afederal government agency to oversee Canadas aid efforts with the main objective ofpromoting the economic development and welfare of developing countries.3Today, its

mandate is to manage Canadas support and resources effectively and accountably toachieve meaningful, sustainable results and engage in policy development in Canadaand internationally, enabling Canadas effort to realize its development objectives.4

CIDA provides a significant amount of funding to various organizations, such asInternational Development NGOs, educational institutions, faith-based organizationsand community groups. According to a 2012 survey conducted by the Canadian Councilfor International Co-operation (CCIC) and the Inter-Council Network ofProvincial/Regional Councils for International Cooperation (ICN):

Almost half (45.6%) of the 158 organizations surveyed received more than 25%of their income from CIDA, with a quarter receiving more than 50%. Among the107 organizations that receive money from CIDA, 72 organizations (67.3%) weremore than 25% dependent on CIDA funding. There are few discernible patternsamong these 72 organizations. Among these organizations, a large proportion(around 54%) were relatively small from an income perspective (less than $1million), but there was less of a correlation with staff size (only 15% have lessthan three staff). A quarter of the organizations that participated in the surveyreceive no CIDA funding.5

Canada provides foreign aid (called official development assistance or ODA) todeveloping countries in various waysthrough 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 andemergency relief.6CCIC estimates that Canadian ODA was $5.5 billion in 2010/11,7andaccording to more recent publications CCIC estimates that ODA will decline to $5.2billion between 2012 and 2014.8Therefore, Canadas aid performance as measured

3 CIDA, Mission and Mandate, accessed October 31, 2012, http://www.acdi-cida.gc.ca/acdi-cida/acdi-cida.nsf/eng/NIC-5493749-HZK#mission.

4 Ibid.

5 Brian Tomlinson and Rose Yewchuk, Putting Partnership back at the Heart of Development: Canadian

Civil Society Experience with CIDAs Call-for-Proposal Mechanism, Partnerships with CanadiansBranch(CCIC, 2012), 4.

6 CIDA, Canadas ODA Policy (May 9, 2012), accessed October 31, 2012, http://www.acdi-cida.gc.ca/acdi-cida/acdi-cida.nsf/eng/STE-42484626-GZ3.

7 CCIC, The Report to Parliament on the ODA (October 2011), accessed October 31, 2012,http://www.ccic.ca/_files/en/what_we_do/2011_CCIC_Briefing_Note_3rd_Report_to_Parl_ODA

_Act.pdf.8 CCIC, Federal Budget 2012: Facts and figures on Canadian Aid Performance past, present and

future (March 29, 2012), accessed October 31, 2012, http://www.makepovertyhistory.ca/story/federal-budget-2012-facts-and-figures-on-canadian-aid-performance-past-present-and-future.


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against Canadas Gross National Income (GNI) will decline from an estimated 0.34% in2010 to 0.29% in 2012, and 0.27% in 2014.9

Canadian non-governmental organizations (NGOs) make up an important group ofpartners 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.

Each year, CIDAs priorities are set after cross-country public consultations that allowthe Canadian people to play a key role in the cooperation program. Canada has areputation as a mid-sized power and as an honest broker, and both the Canadiangovernment and Canadian aid agencies are viewed internationally as generallytrustworthy. As such, Canada has been able to play a constructive role in the areas ofhuman rights, governance and post-conflict relief and reconstruction programs.

African and Asian Settings

In 2011, 60 per cent of the worlds population lived in Asia and 15 per cent, in Africa.Africas population has been growing 2.3 per cent per year, a rate more than double thatof Asias population (1 per cent per year).10

Based on a 2011 report published by the Asian Development Bank, Asia and the Pacificregion remained home to the largest number of the worlds poor. The next largest regionwith the worlds poor is Sub-Saharan Africa.11The report stated that:

Based on broad estimates, 63% of the worlds extreme poor lived in Asia and thePacific region in 2008. This is much larger than Sub-Saharan Africa (33%).Relative to 2005, Asia and the Pacific regions share dropped by a little over 4%,

while Sub-Saharan Africa gained by almost 4%.12

Although farming is the most important subsistence activity in many Asian and Africancountries, large portions of these continents have a chronic problem with food scarcity. 13There are a variety of reasons for this problem. The most notable are large-scalenatural disasters (e.g. 2004 tsunami, 2005 earthquake), a high rate of populationgrowth, the loss of farm labour due to widespread movement of workers from ruralareas to urban areas, the economic priority given to the production of export crops, anda general lack of adequate investment in modern agricultural technology. Soil erosionand desertification (the process in which soil dries out until almost no vegetation growson it) have become major problems affecting agriculture in many areas. When droughts

9 Ibid.10 Barbara Crossette, The State of World Population 2011(UNFPA, 2011), 5.11 Guanghua Wan and Iva Sebastian, Poverty in Asia and the Pacific: An Update(Asian Development

Bank, 2011).12

Ibid., 21.13 Stephanie Dunn, Food Scarcity Trends, Challenges, Solutions(Zurich: Dexia Asset Management,

May 19, 2010).


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or floods occur, the people often starve or suffer the effects of severe malnutrition. Cropfailures cause rising unemployment for agricultural workers while food prices increase.

Progress in many Asian and African countries has been hampered by economicproblems and political and social instability. Wars, revolutions, terrorism and ethnic and

religious conflicts have been commonplace. For example, civil war in Burundi andRwanda between the two main ethnic groups, the Tutsi and the Hutu, caused more thana million deaths in the 1990s.

A recent study of the global AIDS epidemic14reported that 22.5 million people areinfected with HIV in Africa. The majority (60%) of them are women and girls.15The studyalso concluded that, of the 16.6 million children globally who had lost one or bothparents to an AIDS-related illness, 14.9 million of them were in Africa.16

The study also reported that:

The Asia Pacific region has made significant progress in controlling HIVs spread.

The number of people living with HIV has remained stable for the past five yearsand estimated new infections are 20% lower than in 2001.17

Therefore, the UNAIDS study shows that the AIDS epidemic continues to remain aproblem in Africa, but there is progress in Asia and the Pacific region.

14 UNAIDS, AIDS at 30: Nations at the crossroads (June 8, 2011), accessed October 31, 2012,http://www.unaids.org/unaids_resources/aidsat30/aids-at-30.pdf.

15 Ibid.

16 Ibid.17 Ibid., 82.


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Appendix 1Foreign Aid Canada (FAC)

Organizational ChartAs at December 31, 2012

6 Staff(2 government relations,

2 fundraising,2 newsletters)

Director, EmergencyRelief

Alison Boutang

Board of Directors

Executive Director

Dr. Barry Green

2 ExecutiveAssistants

27 EmergencyRelief Staff

Director, Agriculturaland Water Projects

Peter Lewis

39 Agriculturaland Water Staff

Director, GovernmentRelations and Fundraising

Florence Taylor

Director, Human ResourcesTravel and Facilities

Betty McLeod

Director, Financeand Technology

Linda Roberts

9 Staff(4 human resources staff,2 travel/relocation staff,

3 head office facilitymanagement and cleaning

personnel)

4 RegionalOffice Managers

Controller

Pat Innes

9 Accounting and

Payroll Staff 12 IT Staff

Assistant Director,Technology

Keith Dong


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Statement of Financial Position (Audited)As at December 31 (000s)

OperatingFund

EndowmentFund

CapitalAsset Fund

2012Total

2011Total

Assets

Current assets:Cash $ 241 $ $ $ 241 $ 202Investments 211 4,000 4,211 4,102

Accounts receivable 2,789 2,789 2,601

3,241 4,000 7,241 6,905

Capital assets (net) 1,239 1,239 1,265

Total assets $3,241 $4,000 $1,239 $8,480 $8,170

Liabilities and Fund Balances

Current liabilities:Accounts payable and accruedliabilities $2,043 $ $ $2,043 $1,871Mortgages payable current 27 27 25

2,043 27 2,070 1,896

Mortgages payable long-term 187 187 214

Deferred contributions 440 440 346Fund balances:

Unrestricted 610 610 548Invested in capital assets 1,025 1,025 1,026Internally restricted 100 100 100Externally restricted 48 4,000 4,048 4,040

758 4,000 1,025 5,783 5,714

Total liabilities and fund balances $3,241 $4,000 $1,239 $8,480 $8,170


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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)

OperatingFund

EndowmentFund

CapitalAsset Fund

2012Total

2011Total

Revenues:Unrestricted donations (Note 1) $11,200 $ $ $11,200 $12,331Restricted donations (Note 1) 2,748 2,748 3,741CIDA contributions (restricted) 9,410 9,410 8,844Member contributions 496 496 528Investment income 337 337 324

Total revenues 24,191 24,191 25,768Expenses (Note 2):

Project activities (Note 3):Salaries 5,195 5,195 4,915Materials and supplies 10,250 10,250 11,699Contractors 3,123 3,123 3,200Travel and other 1,265 1,265 1,648

19,833 19,833 21,462

Amortization expense 75 75 68Support services:Administration 3,455 14 3,469 3,387Fundraising, publicand donor relations 746 746 765

4,201 14 4,215 4,152Total expenses 24,033 89 24,122 25,682

Excess (deficiency) of revenueover expenses $ 158 $ (89) $ 69 $ 86

Fund balance, beginning of year $688 $4,000 $1,026 $5,714 $5,628Excess (deficiency) of revenueover expenses 158 (89) 69 86Inter-fund transfers (Note 4) (88) 88

Fund balance, end of year $ 758 $4,000 $1,025 $5,783 $5,714


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Note 1: Types of Donations for the Year Ended December 31, 2012 (000s):

Unrestricted Restricted Total

Relief Development Total

Donations

individuals andfoundations $ 9,651 $1,465 $100 $1,565 $11,216Donations corporations 1,549 155 50 205 1,754Bequests 578 400 978 978

Total donations $11,200 $2,198 $550 $2,748 $13,948

Note 2: Project Expenses for the Year Ended December 31, 2012 (000s):

Relief Development TotalSalaries $1,900 $ 3,295 $ 5,195Materials and supplies 4,613 5,637 10,250Contractors 937 2,186 3,123Travel and other 633 632 1,265

$8,083 $11,750 $19,833

Note 3: Summary of Project Activities for the Year Ended December 31, 2012:

Relief Development Total

Number of projects 79 58 137Number of lives improved 151,000 38,000 189,000

Note 4: Inter-fund Transfers (000s):

2012 2011

Mortgage principal payments $27 $13Mortgage interest payments 14 25Purchase of equipment 47

Transferred to capital fund 88 38Transferred from operating fund (88) (38)

Net $ 0 $ 0


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Environmental Scan October 2011

Strengths Weaknesses

1. Good reputation as an effective providerof emergency relief and developmentassistance in Africa and Asia.

2. Skilled staff who are dedicated to thecause low head office staff turnover.

3. Good HR practices.4. Good support from members solid

membership base each membercontributes an average of $1,250 peryear.

5. Strategically located regional field offices.

6. Good relationship with CIDA.7. Neutral stance taken political agendas

avoided.8. Efficient use of various promotional

media.

1. Membership subscriptions are decreasing(few new members; long-term memberspassing away).

2. Slow communication of transactions andtravel expense claims from foreignlocations to head office causes delaysin preparing quarterly statements ofexpenses for projects funded by CIDA.

3. Slow payments from CIDA.4. High turnover of field workers.5. High cost of transportation.

Opportunities Threats

1. Canadian aid agencies are regarded ashonest brokers efficient in ensuringdelivery of aid to those in need.

2. Emergencies caused by natural disasters

and global warming have been increasingin all parts of the world.3. AIDS and HIV continue to be a significant

problem in Africa.4. CIDAs budget for Asian and African aid is

expected to increase in 2012 focus willbe on fighting AIDS, education anddevelopment projects.

1. Tens of thousands of competitors fordonations from corporations, charitablefoundations and the Canadian public.

2. Hundreds of NGOs competing for

government funding.3. The amount of Canadian public donationsis limited; the competition amongassistance organizations is intense.

4. Political and social instability and dangerin Africa and Asia.

5. Changes in political agendas regardingforeign aid resulting from elections inCanada and foreign countries.

6. ODA is expected to decline in 2012 to2014.

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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Bibliography

CCIC. Federal Budget 2012: Facts and figures on Canadian Aid Performance past,present and future. March 29, 2012. http://www.makepovertyhistory.ca/story/federal-budget-2012-facts-and-figures-on-canadian-aid-performance-past-

present-and-future.. The Report to Parliament on the ODA. October 2011. http://www.ccic.ca/_files

/en/what_we_do/2011_CCIC_Briefing_Note_3rd_Report_to_Parl_ODA_Act.pdf.

CIDA. Mission and Mandate. http://www.acdi-cida.gc.ca/acdi-cida/acdi-cida.nsf/eng/NIC-5493749-HZK#mission.

Crossette, Barbara. The State of World Population 2011.UNFPA, 2011.

Dunn, Stephanie. Food Scarcity Trends, Challenges, Solutions.Zurich: Dexia AssetManagement, May 19, 2010.

CIDA. Canadas ODA Policy. May 9, 2012. http://www.acdi-cida.gc.ca/acdi-cida/acdi-cida.nsf/eng/STE-42484626-GZ3.

Oxfam Canada. Oxfam Canada gets top marks from partners. http://www.oxfam.ca/who-we-are/oxfam-canada-gets-top-marks-from-partners.

Pratt, Cranford. Canadian International Development Assistance Policies: an Appraisal.Montreal: McGill Queens University Press, 1994.

Tomlinson, Brian, and Rose Yewchuk. Putting Partnership back at the Heart ofDevelopment: Canadian Civil Society Experience with CIDAs Call-for-ProposalMechanism, Partnerships with Canadians Branch.CCIC, 2012.

UNAIDS. AIDS at 30: Nations at the crossroads. June 8, 2011. http://www.unaids.org/unaids_resources/aidsat30/aids-at-30.pdf.

Wan, Guanghua, and Iva Sebastian. Poverty in Asia and the Pacific: An Update.AsianDevelopment Bank, 2011.

Documents

ForeignAidCanada Backgrounder CMA