Financial summary 2022

IIED’s performance in 2021/22 was satisfactory. While a deficit of GBP£407,000 was made, £202,000 of this was planned investment in establishing a new entity, IIED Europe, and there is a pipeline of projects for 2022/23 that gives reassurance about the short- to medium-term future. 

IIED is funded through income from charitable activities in relation to commissioned research, both practical and academic, and contracted income for 2022/23 is, at the mid-year point, similar to the levels achieved in previous years.

Throughout 2021/22 and into 2022/23, IIED has been closely monitoring the delivery of its projects, including the ability of partners to carry out research. Work continued in a challenging operating environment. And although restrictions on travel and staff absence, predominantly due to COVID-19, alongside short-term recruitment difficulties, did impact the delivery of some projects, these delays have not been significant.

In an increasingly competitive funding environment, the organisation is conscious of the need to be as efficient as possible, and has continued to invest in streamlining internal processes to reduce overheads (and support costs were reduced from £4.6 million in 2020/21 to £3.9 million in 2021/22).

Income was higher than the previous year, £20.6 million against £18.2 million recorded in 2020/21. Payments to collaborating entities increased from £4.6 million in 2020/21 to £6.1 million in 2021/22, showing a large proportion of the increased income was passed on to in-country partners.

IIED has no fundraising activity and is not a grant making organisation; instead it works in collaboration with its partners, resulting in no fundraising activity and grant making disclosures being given.

Reserves policy

IIED’s reserves policy is aligned with its five-year strategy launched in April 2019. To protect the organisation and its charitable programme against the risks of funding loss through income shortfalls and other unexpected financial losses, the policy sets a target for total unrestricted reserves of around three to four months of operating costs and staff salaries, less circa 30% given corrective action would be taken in the event of a going concern issue. 

This is around £2.3 million: trustees have therefore set the target range of free reserves (being total funds less restricted and designated funds) at between £1.9 million and £2.5 million.

The total funds at 31 March 2022 were £2.1 million (2020: £2.5 million). The total free reserves have decreased to £1.85 million (2021: £2.2 million). This falls short of the target range endorsed by the board and IIED’s budget for 2022/23 aims to replenish reserves by £0.25 million to bring the free reserves back above £2 million.

The trustees recognise that, at this mid-point of IIED’s strategy and with the appointment of a new executive director, it is timely for IIED to review its plans for the next couple of years. This review will include a review of the level of reserves that may be needed to achieve any growth plans over the next 2-5 years and further assessment of the financial risks and the full range of mitigation measures.

Investment policy

IIED invested its cash in fixed-term deposits during 2021/22. This policy produces an acceptable rate of return while giving the institute 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 these accounts. The board operates a conflicts of interest policy.