TIC International Ltd (TIC) is a wholly owned subsidiary that undertakes the trading activities of clothes recycling and manages a network of charity shops.
TIC’s key role is generating income for Islamic Relief to support our programmes and our journey towards Net-Zero by performing a valuable environmental service in recycling clothing that may otherwise end up in landfills and harming the environment.
Beyond TIC’s business activities, over the past decades it has played a crucial role in the Midlands, UK in employing local communities and support networks across its workforce. This has resulted in the longterm impact of economic progress for its workforce, as their children achieve further education and enhanced employment.
In 2022, 1,931 tonnes of unwanted clothing (2021: 1,518 tonnes) were converted into either income through re-selling quality clothing through Islamic Relief shops or recycling to generate profits to fund Islamic Relief humanitarian projects. This raised £242,000 (2021: £78,000), thanks to TIC’s dedicated staff, who rose to the economic outlook challenges in the UK.
International Waqf Fund
We established the International Waqf Fund (IWF) to support Islamic Relief investments’ long-term financial sustainability in generating social impact returns. This is known as waqf in Islamic terminology. Impact investments such as waqf reduce the dependency on donations and grants by generating an annual yield that is used to fund our programming.
IWF seeks to raise contributions to its waqf fund towards the goal set by the donor, with the donation achieving ongoing impact, year after year, into perpetuity.
The IWF Board of Trustees recognises that with all investments, it is crucial to manage risks and ensure that investment management capability, the purpose of deployment and impact, and effective administration and investment readiness are in place. The IWF endowments fund is at £1.7 million in 2022 (2021: £1.1 million).
Islamic Relief Worldwide continues to hold endowments that are invested in UK property. Returns from these investments are used for our humanitarian and development social impact programmes, as specified by the donors. Due to ongoing waqf donations and investment returns, the endowment fund grew to £8.4 million (2021: £8.3 million).
Financial results and closing reserves
Islamic Relief reported a surplus of £40.9 million in 2022 (2021: £9.4 million). This is made up of unrestricted reserves of £4.9 million (2021: £1.6 million) and restricted funds of £35.9 million (2021: £7 million) with an endowment fund of £0.5 million (2021: £0.7million).
Restricted reserves include funds secured for ongoing programmes into 2023 and beyond, and those secured for the 2023 pipeline of programmes.
Unrestricted funds include income generated from our general income generation activities through general fundraising activities and income earned by our trading subsidiaries. This funds Islamic Relief’s operating and programme support costs.
Islamic Relief’s unrestricted reserves on 31 December 2022 were £19.2 million (2021: £14.4 million). This includes funds designated to fund Islamic Relief’s ongoing programmes. The free reserves are £17 million (2021: £8.7 million), representing eight months of operational budget. Total reserves are £110 million (2021: £69m), representing £82 million in restricted funds – the increase is funding for pipeline projects that will continue in 2023, and funds expensed. Endowment funds of £8.4 million (2021: £8.3 million) are invested in our property portfolio that generates a return.
We hold free reserves to:
provide continuity to the people we help by protecting against unforeseen project expenditure due to the inherent risk of the VUCA (volatile, uncertain, complex and ambiguous) environment in which we operate, to manage economic and foreign exchange volatility as well as income fluctuations.
provide working capital and manage the seasonality of income generation for the effective running of the charity.
enable Islamic Relief to invest in unforeseen funding and growth opportunities for the benefit of our stakeholders and the vulnerable people we serve, subject to the Board of Trustees’ approval.
The Board of Trustees and the Audit and Finance Committee annually review the reserves policy and the target for unrestricted reserves. The Board of Trustees and Audit and Finance Committee reviews the effectiveness of holding these funds by considering liquidity, security and investment risk.
The Board considers the level of free reserves remains an appropriate target considering Islamic Relief’s size, operations and the financial risks to which it is exposed. The Board has reviewed the Reserves Policy post-financial year-end and considered future activities.
The Board of Trustees has assessed Islamic Relief Worldwide’s ability to continue as a going concern. The trustees have considered numerous factors when concluding whether the organisation continues to be a going concern and have also considered the key risks, including the ongoing cost of delivery, rising costs and inflation, and the cost-ofliving crisis that could negatively impact the charity.
The critical risk in our financial model is a fall in income and our ability to deliver charitable activities, leading to the lower recovery of core costs. We are mitigating the risk of lower core costs through a revised business model agreed upon with Islamic Relief family members and are identifying forward-thinking initiatives to mitigate further. The Islamic Relief Family Council has set up a multi-stakeholder Business Model Committee, which oversees the business model.
Our unrestricted core income is funded by fundraising and income-generation activities. Despite the ongoing geo-political and economic impacts, our financial results continue to see signs of generous giving by our donors, who continue to support generously across the UK, North America and Europe. This has led to a further record £234 million raised in total income.
Our pipeline for 2023 projects is already secured. It continues to be very healthy, with an influx of £68 million of cash into our bank accounts in December 2022 for 2023, enabling us to plan for the coming year with more certainty. We have repaid our bank loan, and no bank borrowings are required. Scenario planning has taken place, and worst-case scenarios have been considered, with a headroom reduction of 40 per cent factored in.
We have begun our new 10-year strategy, supported by a financial plan and our work to positively impact climate change and NetZero initiatives.
After considering these factors, the Board of Trustees has concluded that the charity remains a robust going concern and has adequate resources to continue delivering for the foreseeable future. The Board has therefore prepared the financial statements on a going concern basis.
Dr Ihab M. H. Saad
Chair of the Board of Trustees,
Islamic Relief Worldwide