Islamic Relief Worldwide (IRW) is a non-governmental, non-political humanitarian aid organisation with operations in 25 countries. We are dedicated to helping people in need and are accountable to our donors, supporters, beneficiaries, partners and all our stakeholders. Our activities in 2009 consisted of responding to humanitarian emergencies, addressing the long-term requirements of people in need, attempting to address the underlying causes of poverty, and promoting sustainable development.
Environment
We are among the Top 100 charities in the United Kingdom.
IRW does not view itself as having competitors in the corporate sense but rather fellow organisations operating in the same sector, working towards the common goal of providing humanitarian relief and alleviating suffering. This is illustrated, for example, by the joint working partnership of leading charities through the Disasters Emergency Committee (DEC).
We are committed to ensuring that IRW meets all regulations and laws governing charities and has the appropriate technology and systems in place to meet the requirements of the donor, beneficiary and regulatory bodies.
With the downturn in the global economy, we are taking measures to manage our cash-flow carefully, strengthen our reserves and provide a greater service to our individual donors through whom IRW receives the majority of its funding.
Ethos
We combine honesty and transparency with Islamic values. Accountability before the Creator and our stakeholders is at the core of our ethos.
Income and funding
Our voluntary income continues to grow. The five-year trend (see the table below) shows a fluctuation in 2005 and 2006 that was the result of two major disasters and appeals during that time for the 2004 tsunami and the Asian earthquake. The five-year trend shows an increase from £35.4 million in 2005 to £41.2 million in 2009.
We initially aimed for our income to be in line with the previous year’s income at £45 million (excluding income from trading subsidiaries) in light of the prevailing economic downturn experienced in 2009.
2009 was a successful year due to the generosity of our donors, and this saw our income reach £58 million. This enabled Islamic Relief to continue and expand its charitable activities in both disaster-response and sustainable development programmes.
Funding from institutional donors
We continued to work in partnership with numerous humanitarian organisations to facilitate cooperation, coordination and communication in delivering effective programmes. We are committed to the Millennium Development Goals through the Partnership Programme Agreement with the Department for International Development (DFID) in the United Kingdom, and the aims of our strategy reflect our contribution to achieving these essential global targets.
Note 5 to the financial statements lists the names of organisations that have made charitable donations, and further details of donations to individual projects are shown in Notes 35 and 36.
Fundraising by partners
Fundraising partners are an integral part of the Islamic Relief family, listed on pages 38—39. The income received from the partners is shown below; further details are shown in Note 9 between restricted and unrestricted funds. Note 37 explains how the funds received have been applied to Islamic Relief humanitarian programmes.
Islamic Relief partners fund humanitarian programmes in advance of IRW’s commitment to incur the expenditure, thereby reducing the need to use unrestricted funds.
Expenditure
We initially aimed to maintain our expenditure within the projected income level of £43 million. Utilising our growth in income, we increased our charitable expenditure from £33.8 million to £42.5 million during 2009.
Charitable expenditure
An overview of expenditure by category, as per the diagram indicates our commitment to ensuring and delivering long-term sustainable development to beneficiaries, long after the emergency phase is over and the media attention has faded.
Fluctuations as a result of the Tsunami response during 2005
Fundraising
We aimed to increase our marketing and fundraising activity in the United Kingdom; therefore we projected an increase of 15 per cent to £15 million. We exceeded this target by raising £17 million. Please refer to Note 2.
The growth of income in the five-year period shown is an indication of increased donations, as a result of fundraising activities in the United Kingdom, the Middle East, other regions and by our overseas partners, through community-based and other initiatives.
Fundraising expenditure includes amounts related to specific campaigns during 2009 (£2.5 million or 50 per cent of the fundraising expenditure) 2008: (£2.1 million or 46 per cent of the fundraising expenditure). Please refer to Note 17 for further details.
Governance
We are undergoing a major restructuring initiative at an international level. This has included substantial costs in registering the organisation’s intellectual rights internationally, as well as legal fees and management consultancy fees. Governance costs include internal audit and evaluation. Please refer to Note 15 for further details.
Performance of the trading subsidiary
TIC International Limited aimed to reduce costs and increase its clothes collections by installing more textile banks and by increasing its marketing operations. TIC International’s performance in 2009
has exceeded the directors’ estimated profitability. This was achieved by relying heavily on our collections, and expanding the collection areas to cover Wales and northern England.
The first charity shop in Wales was opened in February 2009 by the Lord Mayor of Cardiff. We expected to open at least one shop in London but this did not materialise because of the difficulty of finding suitable premises in the locations we identified.
A two-year programme to improve the look and feel of the charity shops has started and several shops have been refurbished, with more planned in 2010.
TIC International continues to improve its performance year on year. Total turnover amounted to £2.16m in 2009. The operating profits of £68,881 are more than double the previous year’s profits. This represents 3 per cent of our total turnover.
The main success of 2009 was the complete reliance on our own collection. This meant we could cut out rogue suppliers and reduce working hours so that we have sufficient stock for sorting. Our hardworking staff – the backbone of our company – continued to play a considerable role, and they have consistently shown their full loyalty and commitment to the company’s mission.
TIC International Limited donates profits generated to IRW. During 2009, TIC made a gift aid payment of £100,000 (2008: £80,000).
Challenges
We have been working in line with IRW’s formulated strategy for 2007—09, which provides the strategic direction for an ongoing commitment to ensure that our humanitarian operations are contributing to a fairer, kinder world. To view this strategy document, visit the Who We Are section on our website at:
www.islamic-relief.com
The strategy allowed us to improve how we evaluate Islamic Relief’s performance and to measure the impact
of our work. The purpose and rationale behind the strategy is to ensure that IRW is adequately positioned to meet any challenges and ensure that:
the needs of beneficiaries are adequately and effectively met
communication with donors is effective
there is greater awareness of IRW’s humanitarian programmes
continuous improvement is made to the delivery and quality of the service.
To ensure that any challenges are overcome, IRW has:
set out its strategy for 2010–15, and this is reviewed and used to monitor the achievements of deliverables
invested in developing strong teams that ensure effective delivery of humanitarian programmes, fundraising, awareness raising and providing support activities
enhanced performance monitoring through the Audit and Evaluation Unit
ensured that it has trained staff prepared for immediate mobilisation in the event of an emergency.
Islamic Relief faced many challenges in 2009 – the most important being the impact of the economic downturn. The organisation was already undergoing a large-scale change programme to make it more efficient and effective. The nature of change projects is that some employees will find it harder to cope than others. Therefore the trustees ensured extensive communication and transparency of decision making at every stage to minimise employee concerns. The change brought about a new structure and new senior positions. These roles were advertised and, while most were filled during the year, two director posts remain vacant, despite repeated advertisements. These are the positions of Director of Human Resources and Organisational Development, and Director of Communications.
2009 saw us continue our work with several ongoing emergencies such as Gaza, Afghanistan, Iraq and Somalia, as well as the new emergency in northern Yemen. We also continued our operations to rebuild tsunami-affected Aceh and earthquake-devastated Kashmir. Working in the Occupied Palestinian Territories continues to be a struggle and credit must be paid to our staff in the territories, especially in Gaza, for expanding our operations under strict scrutiny and extreme challenges.
The growth of the One-to-One Sponsorship programme for orphans meant that we needed to carry out a comprehensive review to ensure we can maintain and improve the standards of care for these vulnerable children. We have tried to improve the systems we use to manage the programme. This is to ensure that the reporting process is streamlined, that our child welfare employees in the field can care for the children properly, and that they are not overwhelmed by the amount of paperwork required. This is an ongoing project that we will continue to improve in the coming years.
Transparency and accountability are areas where the NGO sector and society as a whole have demanded higher standards. We are proud of our record on transparency and accountability but we recognised that we needed to improve our reporting and our involvement of beneficiaries. To this end, we have agreed targets that will make us all work towards improvements in this area. We started the implementation of a new financial system that will aid reporting, but the full fruits of this system will only be felt when the global rollout is completed in 2011.
The organisation met and exceeded its financial targets in a very difficult year. We remain vigilant in terms of our expenditure plans as we realise that one-year results may not reflect the longer-term impact of the recession. This is highlighted by the difficulty we had in increasing our unrestricted reserves, as hoped, by 10 per cent over the year. We still aim to do so in 2010.
The work to complete the forthcoming strategy is well underway and we expect to have all plans completed by the end of 2010. For this new strategy, we have ensured better involvement of our stakeholders and peers.
Financial risk management
The following statements summarise our policy in managing identified forms of risk.
Price risk
Salary costs are communicated to staff based on the assessment of each individual position by a job evaluation group. Prices of materials and supplies bought are subject to contracts with suppliers based on current market prices and, where applicable, tendering processes.
Credit risk
Credit risk on amounts owed is low as the majority of debtors are institutional donors with whom there are
signed agreements.
Foreign exchange risk
The fluctuations in foreign exchange during the
current economic climate are being carefully managed by ensuring that, where feasible, income and expenditure is in the same currencies.
Liquidity risk
We have an interest-free bank loan that was taken out to buy our premises in London. We have arrangements to ensure that appropriate balances are maintained in line with the loan arrangement.
We have commitments of funding from our partner offices, which have agreed to provide funds for the humanitarian programmes we implement.
To ensure that there are sufficient funds for ongoing humanitarian programmes, we have made arrangements with our partners to ensure that there are specific funding agreements for all programmes. Arrangements have also been made to receive funds from partners before a programme starts; this reduces the impact of unfounded programmes on unrestricted reserves and ensures sufficient funds are available to respond to emergencies.
Interest rate cash-flow risk
We have favourable arrangements with our bankers whereby we neither pay nor receive interest, and the bankers refund all bank charges.
Reputation risk
We ensure that IRW abides by local laws and regulations and undertakes thorough screening processes of any partners it may work with, in accordance with money laundering regulations. Furthermore, we are committed to the People in Aid Code of Good Practice and have formal recognition from People In Aid.
Reserves
Reserves are held by Islamic Relief to ensure that adequate funds are available to meet our ongoing obligations, as well as for possible emergencies. We try to ensure that operations are not affected by an absence of funds. Sufficient protection is built in to ensure there is no disruption of our global operations.
We aim to discharge funds received as donations for our humanitarian programmes as quickly and as practically as possible. The current target range is seven months reserves of the core operational budget plus an appropriate amount for emergencies. These funds are held in current and medium-term cash forms.
The general rule is that the amount of reserves held in current accounts should be 25 per cent of the net reserves or 25 per cent of the operational budget – whichever is greater. Fifty-five per cent of net reserves are to be maintained in medium-term investments, with the possibility of converting such investments into funds within a maximum period of three months. The remaining 20 per cent of net reserves, as well as endowments and other long-term reserve contributions to IRW, can be maintained in fixed investments that would take longer to convert to funds. The table below and charts overleaf illustrate this policy for 2009 and 2008:
Post-balance sheet, the Board of Trustees has reviewed the reserves policy and this incorporates an evaluation of risk. The Board has proposed to amend the reserves policy, setting a limit on the use of unrestricted reserves over and above which approval would be needed. Reserves are monitored and amendments are proposed to both the policy and the level of reserves held.
During 2009, Islamic Relief aimed to increase its unrestricted funds by 10 per cent. Our reserves increased by 31 per cent: these are made up of £19.9 million restricted reserves and £5.1 million
unrestricted reserves. Restricted reserves increased by 42 per cent, reflecting income received during the year primarily for the Occupied Palestinian Territories and Pakistan.
Unrestricted reserves increased by only 7 per cent as we ensured more targeted funding for projects, reducing the need to use unrestricted funds. Most donors giving to Islamic Relief specify how they expect their donation to be used. Some funds are only restricted by country, which enables us to carry out projects required in that specific country. Other restrictions relate to sector of work — for example, water and sanitation or education.