The year was marked by economic slowdown and geopolitical tensions across the globe. With continued uncertainty around Brexit, the UK economy fared badly and economic output continued to decline. However, the kindness of our donors recognising the ongoing humanitarian crises around the world meant that our income exceeded £130m for the first time. Our charitable expenditure did not match this increase in income so the surplus is carried over to be spent on programmes in future years.
INCOME AND FUNDRAISING
In total the charity’s income increased by 2.3 per cent to £131m (2018: £128m). Although income from institutions fell, as did in-kind donations, this was more than compensated for by the surge in voluntary donations driven by a significant increase in funds from Islamic Relief partners to unprecedented levels.
Voluntary donations, which are made up of regular giving, campaigns, appeal income and income from Islamic Relief partners, jumped to £118.1m (2018: £106.7m). The major constituent of voluntary donations is income from Islamic Relief partners which went up 18.8 per cent to £86.1m (2018: £72.5m).
Donations from individuals
Almost every Islamic Relief partner registered an increase in funding.
Donations from individuals in the UK were up by 7.2 per cent to £26.7m (2018: £24.9m). The Disasters
Emergency Committee (DEC)
Emergency Committee (DEC) launched only one campaign in the year, the Cyclone Idai Appeal in March, and funding through the organisation halved to £1.2m (2018: £2.4m). Although income from international fundraising fell back to £4.1m, the figure of £6.9m achieved in 2018 was exceptional and between 2019 figure is decidedly better than the £2.3m received in 2017.
Each of the three constituent parts of institutional income decreased as compared to the previous year. Such income from the Middle East was down to £3.1m (2018: £6.5m), whilst institutional income from the rest of the world fell back to £3.9m (2018: £5.8m). In-kind donations, which had doubled to £5.1m in 2018, returned at £2.1m to levels consistent with those achieved in 2017.
After total resources expended of £128.0m (£128.6m in 2018), reserves stood at:
£23.7m (2018: £22.5m)
£9.4m (2018: £8.0m)
£7.4m (2018: £7.0m)
£40.5m (2018: £37.5m)
Although some of the catastrophes afflicting our world dropped out of the headlines, Islamic Relief Worldwide continued its work bringing humanitarian relief, disaster risk reduction, healthcare, education, water and sanitation and livelihoods to wherever it was needed. The charity championed the rights of those suffering the most, empowering them to speak out and campaigning for positive change.
Total charitable expenditure
Total charitable expenditure dipped slightly in the year to £113.2m, from the record figure of £114.4m achieved in 2018. The marginally lower expenditure, coupled with an increased amount of income, has generated a surplus that has been carried over to be spent on charitable activities in following years.
The greatest proportion of charitable expenditure
The greatest proportion of charitable expenditure continued to be accounted for by our work to reduce the impact of conflicts and natural disasters. The expenditure in this area fell back to £60.3m (2018: £65.5m), but the figure still represented more than half of all charitable spend (2019: 53.2 per cent, 2018: 57.3 per cent).
Expenditure on caring for orphans and vulnerable children
Expenditure on caring for orphans and vulnerable children remained constant at £26.4m (2018: £26.2m) and accounted for approaching a quarter of all programs expenditure. Spending on campaigning for change also held steady, staying at £1.9m. Providing access to healthcare, water and sanitation programmes saw a marginal decrease in funding to £11.7m (2018: £12.1m).
Expenditure on sustainable livelihoods and support for education programs
There were significant increases in expenditure on sustainable livelihoods and support for education programmes, both of which had seen marked decreases in funding in the previous year. Spending on sustainable livelihoods grew by 65.4 per cent to £8.6m (2018: £5.2m) and support for education increased by 23.1 per cent to £4.4m (2018: £3.5m).
Expenditure in The Middle East
The Middle East remained a geographical focus for the charity’s work as the conflicts in Syria and Yemen continued relentlessly and accounted for 38 per cent of charitable expenditure. Although the proportion spent remained relatively constant, the actual amount, at £42.8m, was slightly down on the previous year’s figure.
Expenditure in the Asia region
Expenditure in the Asia region remained steady at £26.8m and accounted for almost a quarter of charitable spend, particularly due to the ongoing humanitarian situation in Myanmar and the knock-on effects in neighbouring Bangladesh.
Expenditure in Africa
There was a slight re-balancing of expenditure in Africa between east and west. In east Africa, spending fell by £1.8m to £18.6m whilst in west Africa, a region sorely neglected by the donor community, expenditure increased by £1.3m to £16m.
Expenditure in Europe
Expenditure in Europe, mainly in the Balkan countries, increased to £9.1m, up £1.4m from the 2018 figure. The funding in the region was largely for livelihood programs. All of the expenditure detailed above has, as always, been in line with donors’ wishes.
TIC INTERNATIONAL LIMITED
INTERNATIONAL WAQF FUND
POST BALANCE SHEET EVENTS
TIC INTERNATIONAL LIMITED
Having returned to profitability in 2018, trading at TIC International Ltd (TIC) – the wholly owned trading subsidiary of Islamic Relief Worldwide – continued to improve in 2019. Although turnover increased by only 1.3 per cent to £3.4m, profits almost doubled to £217,692.
Due to efficiencies achieved in the cost of sales, the gross profit margin improved to 48.3 per cent (2018: 45.4 per cent). With administrative costs remaining static an improved net profit margin of 6.3 per cent was achieved, up from the 2018 figure of 3.3 per cent.
The company has two divisions; a clothes recycling business and a network of charity shops. The turnover from clothes recycling dipped to £1.9m (2018: £2.3m).
A new activity, the sale of cakes, was started in 2019. This new venture, together with income from the shops, contributed £1.5m to turnover.
It is hoped that promotional campaigns in conjunction with the fundraising activities of the charity will improve the quality and quantity of donated goods, which continue to be matters of concern at both the recycling and retail operations.
Plans to increase the efficiency of the recycling business have been put into action. The retail operation is under scrutiny with a view to improving sales through the implementation of a variety of strategies.
In 2019, £144,181 of prior year profits were donated to Islamic Relief Worldwide.
It is due to the kindness of donors, the loyalty of customers and the dedication of staff that the company is back on its feet. The company is thankful to them all.
INTERNATIONAL WAQF FUND
This is a subsidiary of Islamic Relief Worldwide and also a registered charity, which undertakes Waqf (Islamic endowment) activities. The activities of the Waqf department, which previously sat within Islamic Relief Worldwide, have been transferred to this entity. This is the first year of operation of the organization and accordingly the financial results portray the International Waqf Fund in its start-up phase.
Reserves consist of endowments, restricted reserves and general reserves.
Our current endowments are invested in property. Returns are used for humanitarian development projects, or otherwise transferred to unrestricted reserves (see note 24).
Restricted reserves represent donations and grants for specific projects that are unspent at the balance sheet date, and which will be spent on the specified programs in the coming financial years.
General reserves (also known as unrestricted reserves) are not restricted to specific projects but ensure that the delivery of our vital programs is not disrupted by unforeseen circumstances, such as a fall in income or rise in expenditure.
The total group reserves, as at 31 December 2019, increased by 7.9 per cent to stand at £40.5m (2018: £37.5m). Of this, restricted funds account for £23.7m (2018: £22.5m), general funds for £9.4m (2018: £8.0m) and endowment funds for £7.4m (2018: £7.0m). With restricted income surpassing expenditure, restricted reserves increased by £1.2m.
The level of general funds increased by 18 per cent due to a marked reduction in unrestricted expenditure. The increase in endowment funds was represented by the return on investment.
The movement in reserves, compared over the last three years, is summarized below:
31 Dec 2017 : 8,792£
31 Dec 2018: 8,005£
31 Dec 2019: 9,394£
2018/2019 change: 7.4%
31 Dec 2017 : 22,758£
31 Dec 2018: 22,502£
31 Dec 2019: 23,690£
2018/2019 change: 5.3%
31 Dec 2017 : 6,585£
31 Dec 2018: 7,001£
31 Dec 2019: 7,398£
2018/2019 change: 5.7%
31 Dec 2017 : 38,135£
31 Dec 2018: 37,508£
31 Dec 2019: 40,482£
2018/2019 change: 7.9%
Islamic Relief Worldwide has a policy that sets the level of general reserves such that it meets our operating expenses in the event of a sudden drop in income or the incurring of unexpected expenditure. This policy is regularly reviewed, assessing risks and reflecting on changes in factors such as investment, income and also our financial obligations and commitments. Such a review was undertaken in 2019, and the current target level of reserves of five months of the core operational budget was deemed to be sufficient at the time. These funds are to be held in current and medium-term cash forms. At the year end general reserves stood at £9.4m, representing seven months’ operational budget and comfortably above the target level as determined in 2019.
POST BALANCE SHEET EVENTS
The implications and consequences of the current Covid-19 pandemic cannot be easily quantified at this early stage, but could have the potential to be extremely far-reaching both financially and operationally. This is the case even where restrictions are lifted according to the government’s best estimates. It is difficult to accurately predict how Islamic Relief Worldwide income will be affected in 2020, but it is anticipated that the coronavirus pandemic will hamper our ability to fundraise in the usual way. Our general reserves policy was developed to mitigate the impact of such scenarios. Additionally, in order to preserve the reserves, a number of other measures have been put in place, which remain under constant review.
Resources are currently being redirected to alternative methods of fundraising that do not require face-to-face interaction, such as online platforms. Plans are being implemented to reduce costs and to secure financial support offered to charities by the UK government. Islamic Relief is also reviewing its business model with the wider Islamic Relief partners in order to further stabilize its funding and unrestricted income. It is anticipated that these efforts should, at least in part, mitigate the expected drop in income.
In view of the financial performance and the reserves position as at the balance sheet date, the Board of Trustees has a reasonable expectation that Islamic Relief Worldwide will have the resources to continue in operational existence for the foreseeable future.
The Trustees believe there are no material uncertainties that call into doubt our ability to continue as a going concern. The annual financial statements have therefore been prepared on the basis that the charity is a going concern.
This Trustees’ Annual and Strategic Report, prepared under the Charities Act 2011 and the Companies Act 2006, was approved by the Board of Trustees on 27 June 2020, including approving in their capacity as Directors, the Trustees’ Strategic Report and Director’s Report contained therein, and is signed as authorised on its behalf by:
Mrs Lamia El Amri
Chair of Trustees
27 June 202