Financial summary 2016

IIED has grown in recent years. While income has remained relatively static over the past five years, the average number of employees has increased by some 28% during that period (from 93 employees in 2011/12 to 119 in 2015/16).

Measured through the average number of employees, growth steadied in 2015/16 (from 117 employees to 119 employees). This trend is reflected in the attributed income reducing slightly from £18 million in 2014/15 to £17.9 million in 2015/16.

Support costs increased year on year from £3 million in 2014/15 to £3.4 million in 2015/16. This increase has been attributed to the strengthening of the directorate to manage a growing organisation (£198,000), an increase in rent (£117,000) and a five-year maintenance programme on our Gray’s Inn Road property (£98,000).

Reserves policy

As set out in Note 8 of the accounts, our unrestricted reserves closed the year at £2.36 million, an increase of £108,000 over last year (£2.25 million).

This increase follows a £172,000 reduction in the building and capital fund designated reserve, which tracks the value of leasehold improvements over the remaining lease period on the Gray's Inn Road site.

After removing the impact of designated funds, free reserves increased by £280,000 (from £1.29 million to £1.57 million in the year) which is above the £250,000 target set for the year under our policy as detailed below.

The reserves policy requires an annual review to reassess the risks and any changes in llED's income, financial obligations and expenditure. We reviewed the policy during the year and our impact assessment of possible adverse financial events reaffirmed the agreed reserves policy established in 2012.

This concluded that, to protect the organisation and its charitable programme against the risks of funding loss through income shortfalls and other unexpected financial losses, the appropriate target for free reserves should represent approximately four months of operating costs and staff salaries less liabilities from employee benefits (around £2.2 million). We have therefore set the target range of free reserves at between £1.9 million and £2.5 million.

The current free reserves of £1 .57 million therefore falls beneath the lower end of this target range, and the board has endorsed the target growth of free reserves by £250,000 in both 2016/17 and 2017/18.

The latest trustees report contains detailed financial information, including a breakdown of all income received by IIED above £10,000.

In accordance with the requirements of FRS 102 – the financial reporting standard applicable in the UK and Republic of Ireland – we recognise liabilities resulting from employee benefits, which restated the opening unrestricted reserves by £0.31 million (from £2.56 million to £2.25 million).

Investment policy

We invested our reserves in a combination of high-interest cash deposits and fixed-term treasury deposits during 2015/16. This policy produces an acceptable rate of return while giving us flexibility to access funds.

Related parties

Some IIED trustees are also trustees of other charities, or directors or senior officers in other organisations IIED works with as a normal part of its research activities. Where such work involves payment, they enter into arm's length contracts and any payments related to these contracts are detailed in the notes to the accounts. The board operates a conflicts of interest policy.

Plans for future periods

llED's strategy for 2014-19, 'Engaging for change', is ambitious, anticipating continued growth in our four principal research groups and other areas. To support this, we have improved our business planning process, resulting in a comprehensive new business plan for the next financial year.

We continue to strengthen our operations by improving cost recovery, organisational development and fundraising with the 'How Programme' and better integrated cross-institutional systems with the Systems Integration Programme. Our cost recovery model requires IIED to continue its steady growth over the next few years by increasing the number of fee-earning staff while holding our core costs steady.

• Read the trustees' report for the year ending 31 March, 2016

Previous reports

See the financial summaries from previous years: 2015; 2014; 2013