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Summary

The International Development Research Centre (the Centre) continues to be in a good financial position: revenues are increasing even though Parliamentary appropriations are forecast to level off in 2009–2010, expenditures are under control, and liquidities are adequate. The Centre’s administrative services costs have declined during the last six years from about 18% to just under 14% of total expenditures.

During 2008–2009, the Centre continued to take a focused approach to mandate delivery: it regularly reviewed priorities and reallocated resources as needed. Following an expenditure reallocation exercise carried out in parallel to Treasury Board’s 2007 strategic review, the Centre deemed it relevant and effective to reduce expenditures in four areas (see page 61). It also decided to increase expenditures in four higher priority, higher performing areas: 1) the activities of IDRC’s Innovation, Policy and Science, and Social and Economic Policy
programs in Latin America and the Caribbean; 2) democratic governance in fragile states, particularly in Haiti and Afghanistan; 3) democracy, openness, and transparency; and 4) private sector development, notably research on regulatory reform and financing.

Outstanding commitments funded by Parliamentary appropriations have remained stable while outstanding commitments funded by donor partnerships have increased significantly during the year. This ensures a steady stream of donor partnership revenues over the next two years.

During 2008–2009, program expenditures funded by Parliamentary appropriations grew over the previous year while new project allocations funded by these appropriations decreased. This is due to the allocation of additional funds that became available at the end of 2005–2006 and 2006–2007 (see Figure 7 on page 70).

The following section discusses the statement of operations, the balance sheet, and other key financial indicators.

Statement of operations

For the purpose of this discussion, Parliamentary appropriations will be included with revenues, although they are not classified as revenue on the statement of operations. The Centre’s funding is derived from five sources: Parliamentary appropriations, donor partnerships, recovery of administrative costs, investment income, and other income.

The Centre receives different types of  Parliamentary appropriations. The Parliamentary appropriation represents the Centre’s share of Canada’s Official Development Assistance (ODA) envelope as well as modest federal government funding from sources other than ODA. This year’s total Parliamentary appropriation was $5.6 million higher than budgeted.

From time to time, the Centre receives additional one-time Parliamentary appropriations for specific projects or programs (see Note 11 of the Notes to the Financial Statements, page 88). These funds are recorded as deferred revenue and recognized when the related expenses are incurred. The revenues recognized in that manner during this year relate to an appropriation for the Institute for Connectivity in the Americas (ICA). The first wave of funding has now been fully used and new funding became available, which resulted in revenues being $2.3 million higher than budgeted. Administrative cost recovery has been included in the revenue related to ICA. The Centre also received a $4.0 million transfer late in the year, which contributed to the higher appropriation income. A portion of the transfer will allow the Centre to conduct research in Africa in the areas of private sector development and health. The other portion of the transfer will be used to create and share knowledge to improve health and build global health research capacity in developing countries and in Canada.

Included in the Parliamentary appropriations are transfers from other federal agencies. These amounts are not part of the long-term recurring funding base. Table 2 shows the gross revenue from Parliamentary appropriations before accounting adjustments are made (see Note 10 of the Notes to the Financial Statements, page 88). The non-recurring transfers are a result of the Program and Partnership Branch’s efforts to establish collaborations with federal agencies. In 2009–2010, Parliamentary appropriations will include transfers from the Canadian Institutes of Health Research ($3.45 million) and from the Canadian International Development Agency (CIDA) ($2.0 million). The Centre will use these appropriations to increase funding of existing programs in the health equity and information and communication technologies areas.

The Centre’s Parliamentary appropriations for fiscal year 2009–2010 is anticipated to be the same as in 2008–2009. While the Canadian government has announced that the International Assistance Envelope (IAE) would increase in 2009–2010, there remains considerable uncertainty as to how the increase will be distributed among the departments, agencies, and Crown corporations that normally share the IAE budget. Decisions on the distribution of any growth within the IAE will not be made until the year is well underway. Most of the IAE funding goes to ODA.

In past years, the Centre’s Parliamentary appropriations have represented approximately 85% of total revenues. The apparent reduction in 2009–2010 (see Figure 1) is due to an anticipated increase in donor revenues rather than a decrease in the Parliamentary appropriation. This does not take into account a possible increase in the appropriation for 2009–2010.

Revenues from donor partnerships (see page 56) relate either to funding targeted to specific research projects within existing development research programs conducted or managed by the Centre on behalf of other organizations, or to contributions applied to entire development research programs. The funds received in advance are deferred and recognized as revenue when the related expenses are incurred. The total revenue for development research programs funded by donor partnerships for the year was $29.7 million, or $1.8 million lower than budgeted. The difference is primarily due to the delayed start-up of the Think Tank Initiative and a large project in Africa, as staffing took longer than initially anticipated because of the specialized expertise required to undertake the work. However, more agreements than expected were signed during the year, which compensates to some extent for the lower-than-budgeted donor revenues.

The sources of donor funding have changed significantly in recent years. In 2003–2004, close to 59.3% of donor funding came from Canadian government organizations: in 2008–2009, this proportion decreased to 24.8% (see Figure 2, page 59). While the relative share of CIDA funding has decreased, the amount of donor partnership funding received from CIDA increased to $7.9 million in 2008–2009 (up from $5.8 million in 2003–2004). Some of the collaboration is broader and the funding mechanisms now include appropriation transfers that were previously little used. In 2008–2009, the Centre received $8.7 million in appropriation transfers from CIDA (see Table 2, page 57), in addition to donor partnership funding.

The 2009–2010 budget shows an anticipated increase of 35.2% in donor partnership funding compared to 2008– 2009 actuals. Over the past years the Centre has entered into large financial agreements with donors to fund entire programs.The implementation of these programs will continue during the 2009–2010 fiscal year and new programs are expected. Of the $40.1 million in donor partnership funding for development research programs in 2009–2010, $37.2 million will be recognized against existing donor agreements (up from $25.6 million in 2008– 2009), and $2.9 million will be recognized against new agreements expected to be signed during the year. The projected increase in revenues comes from the expansion of co–funding with the Bill & Melinda Gates and The William and Flora Hewlett foundations.

Revenue from the recovery of administrative costs represents the amount that the Centre recovers to administer external funds.The costs recovered do not include core operating costs covered by the Parliamentary appropriations but do include all actual costs to administer the projects and to support project staff. The methodology to calculate the rate of cost recovery is based on generally accepted management accounting principles and is reviewed at least annually. The 2008–2009 revenue was slightly under budget ($0.2 million). Since the recovery of administrative costs from donor partnership agreements is proportionate to donor partnership revenues recognized, the total variance in this area is proportional to the variance in the revenues recognized from donor partnerships.The budget for 2009–2010 is proportionately higher because of an expected increase in donor partnership revenues.

As shown in Figure 3, in 2004–2005, the recovery of administrative costs on donor funding contracts averaged around 9.6%. In 2008–2009, the percentage decreased to 10.0% compared to 10.5% in 2007–2008: this is because recovery of administrative costs for a few older agreements was not commensurate to expenses. In 2008–2009, the Centre subjected its cost recovery calculation to an external audit (essentially completed at 31 March 2009). As a result of the calculations, the target for the standard administrative cost recovery rate was set at 12%. This rate applies to all partnerships except those with CIDA, with which the Centre has a long-standing relationship: the administrative cost recovery for agreements with CIDA is set at 10%. The Centre has budgeted an average cost recovery rate of 10.5% for 2009–2010 to account for some older ongoing agreements with lower cost recovery rates, the rate set for CIDA agreements, and some of the newer agreements where costs are actually less than 12%.

The Centre invests its available cash in high-quality money market instruments. In 2008–2009, the investment income amounted to $1.1 million. The yield on investments is lower than in recent years, but the Centre continues to outperform its benchmark of Treasury Bill yields by a small margin (actual return on investment was 2.95% compared to an average Treasury Bill yield of 2.19%). Next year’s budget shows a decrease in investment income, mainly because of lower market yields, but also because of a decrease in the foreseen average value of the investment portfolio.

Other income includes revenues associated with conference and catering facilities and other miscellaneous items such as the sale of publications and office space sub-leasing. Income from these sources amounted to $1.2million. The 2009–2010 other income revenues may decrease as a result of fewer catering services being provided to external clients because of the current economic situation and the uncertainty of receiving a municipal property tax refund ($0.5million).

The Centre’s expenses are tracked based on a three-tier cost structure. This structure distinguishes between development research programs, development research support, and administrative services costs.

The development research program (see Table 3, page 61) expenses reflect the direct costs (mainly in the form of grants) of scientific and technical research projects administered by the Centre as part of its ongoing programs. In 2008–2009, the share of research program expenses funded by Parliamentary appropriations was $109.4million. This amount is 9.2%higher than the previous year. The $2.3 million variance (2.2%) between actual and budgeted expenses funded by Parliamentary appropriations is partly due to the additional funding for the Institute for Connectivity in the Americas (see the Revenues discussion for more information), which resulted in expenditures of $1.1million more than budgeted. The remainder of the variance (an overrun of $1.2 million) is the result of slight changes in project spending patterns and to changes in the composition of the project portfolio. The proportion of project budgets administered by the Centre increased to 20% in 2008–2009 from 19% in 2007–2008.More short-term research support projects are also being approved, increasing the disbursement ratio in the first year of the projects’ life. Finally, as the size and number of co-funded projects increase, delays in these projects will increasingly affect total program expenditures (both funding lines) as well as donor funding recoveries. Overall, the $2.3 million variance (2.2%) in 2008–2009 is only slightly higher than the 2% variance last year (the 2007–2008 variance was due to underspending, however).

Fiscal year 2008–2009 was the first full year that the findings of Treasury Board’s strategic review of Parliament-funded expenditures were applied. This review coincided with the Centre’s regular review of priorities and reallocation of resources. It targeted at least $6.872 million in recurring expenditures.

In its review, the Centre determined it would wind up activities related to communications for development, as well as activities related to outreach and evaluation strategies. The Centre also determined it would forego geographic expansion of health and innovation programming in the Middle East, and Central and North Africa, as well as postpone expansion of training grants and fellowships to mid-career professionals and scholars in developing countries. Expenditures on development research programs and related development research support and administrative services were targeted in the review.

In the area of communications for development, the Centre followed up on the conclusions of its strategic review by devolving Bellanet, a multi-donor initiative to promote and facilitate effective collaboration within the international development community, to an existing partner research organization. It also moved to include in individual research projects the necessary linkages between modes of communication and development rather than fund a separate research program on those issues.

In its strategic review follow-up, the Centre also entrusted to external evaluation professionals the dissemination of evaluation methodologies such as Outcome Mapping. The Centre cancelled plans for a national advertising campaign to showcase Canada’s role in the developing world through its support for research. Other, more cost-effective means were used to reach out to Canadians, such as public lectures and refinements to the IDRC website. The Centre did not increase the amount of Parliamentary appropriations expended on health and innovation in the Middle East, Central Africa, and North Africa, nor did it expand its training grants and fellowships to non-Canadians.

The strategic review also considered how to reinvest the targeted $6.872 million into four existing areas of programming. Treasury Board decided positively on the strategic reinvestment proposed by the IDRC Board of Governors: the Centre was able to expand activities in four areas identified in the strategic review.

The following projects are examples of several supported in each strategic reinvestment area:

• In Latin America and the Caribbean, a project examining Haiti’s challenges in the area of state-building and democratization supports research institutions in Argentina, Brazil, Chile, and Mexico to study Haiti’s social, economic, and political problems and promote training, collaboration, and debate on state-building in Haiti. Several other projects in Latin America and the
  Caribbean explore issues as diverse as scaling up rural innovations in Peru, increasing capacity in environmental economics, promoting the joint management of transboundary watersheds, and improving the delivery of health care in the region.
  
  
• The Centre is supporting innovative work in the area of democratic governance in fragile states. A project with the Arab Reform Initiative, a network of research centres from the Arab world, Europe, and North America, is mobilizing Arab research capacity to develop a realistic and organic program to provide policy recommendations that will advance reform in the Arab
  world. Other projects are examining, in different regions, the relationship between funding research and improving participatory processes, building new institutions, and strengthening civil society.
  
  
• In the area of democracy, openness, and transparency, one project is examining how the rising phenomenon of Middle Eastern religious broadcast media is related to the rise of religiosity in local and regional public attitudes, and the political, social, and cultural values promoted throughout this process. Other projects are examining democratic processes in the Middle East and where Islamic movements — through their political and social structures — stand on key issues like the rule of law, gender equality, and democratic governance.
  
  
• Activities supporting private sector development include a project to build the capacity of the African private sector development research community to contribute to a business-enabling environment for sustainable enterprise in Africa. It is doing so through competitive grants and training workshops, and by forging partnerships between business schools. Other
  projects are exploring the integration of young African researchers into research and innovation systems, and ways to improve the business environment in West Bank and Gaza.

Development research program expenditures for all Centre development research programs, including the net impact of the strategic reductions and reinvestments, are reflected in Table 4, page 63. Expenditures have increased by $12.8 million over the previous year. Just over 70% of the increase ($9.2 million) pertains to expenditures funded by Parliamentary appropriations.The balance ($3.6 million) relates to donor partnerships expenditures.

As shown in Figure 4, the proportion of the Centre’s development research program expenses used as counterpart (co-funding) to donor partnership funding increased slightly in the past year. While this represented 15.4% in 2007–2008, it stands at 17.0% in 2008–2009. As the level of donor partnership activity increases, the level of development research program expenses related to projects financed solely by the Centre decreased (61.7% in 2008– 2009 compared to 63.9% the year before).

Development research program expenses will increase by $7.9 million in 2009–2010 compared to 2008–2009 actuals. The increase reflects planned expenditures on large donor-funded programs (such as the Think Tank Initiative) that have moved past their start-up phase.

The share of development research program expenses funded by donor partnerships totalled $29.7 million, or $1.8 million lower than budgeted. The Revenues discussion on page 57 provides an explanation for this variance.

It is noteworthy that expenditures for earlier outstanding commitments (i.e., expenditures on “old” projects) funded by Parliamentary appropriations in 2009–2010 will reach an all-time high of about $78 million (see Figure 5). This amount represents nearly 75% of the funding available for development research programs in 2009–2010. The expenditure growth from previous years is still reflected in ongoing projects, but the levelling of the Parliamentary appropriation leaves proportionately fewer resources to fund new projects (i.e., allocations). In more concrete terms, the funding available for new projects will drop from about $35 million in 2008–2009 to just under $26 million in 2009–2010 (see Figure 5). This situation may change if Parliament approves an increase to the Centre’s recurring appropriation for 2009–2010.

Development research support represents the costs of building research capacity in the developing regions of the world. It breaks down into technical support, program complements, and program management. Development research support expenses amounted to $38.1 million in 2008–2009, or 98.6% of budget. Development research support expenses are expected to increase by 11.1% in 2009–2010 over 2008–2009 actuals. The increase is in large part a result of additional staff positions in support of the Think Tank Initiative, as well as other donor-funded
projects: all these positions are needed to achieve the objectives of the donor-funded project. The remainder of the increase includes a modest inflation adjustment for salaries and benefits, and a previously scheduled rent increase. Several types of expenditures, such as travel and professional services, have been frozen at 2008–2009 levels.

Administrative services provide a variety of policy, executive, administrative, and service functions that support the Centre’s overall operations and corporate responsibilities. These expenditures amounted to $28.3 million: the variance of $1.0 million under budget is mainly due to a mid-year reduction of professional services, to the capitalization of salaries of staff involved in information technology projects, and to savings in salaries and benefits attributable to staff vacancies. The budgeted 2009–2010 administrative services expenses are close to the 2008–2009 level.

As shown in Figure 6, administrative costs have grown at a much lower rate than total expenditures since 2004–2005.

In fact, the share of administrative costs relative to total expenditures went fromalmost 18% in 2004–2005 to less than 13% (projected) in 2009–2010. The Centre continues to strive to balance programspending and administrative costs.

Balance sheet discussion

The levels of cash and cash equivalents as well as investments result from the Centre receiving funds in advance of actual spending. These funds are invested in short-term money market instruments. Cash equivalents represent readily convertible investments with a maturity of three months or less from the date of acquisition.

Due to the nature of its activities, the Centre always has a certain level of cash, cash equivalents, and investments (which consist of surplus liquidities invested for more than 90 days — see Note 2d of the Notes to the Financial Statements, page 82). At 31 March 2009, the total cash, cash equivalents, and investments were nearly the same as at a year earlier. However, investments were much lower, reflecting the poor shape of the Treasury investment market. As a result, cash and cash equivalents stood at a higher level than usual.

The cash on hand from donor partnerships is not subject to any particular restriction, other than ultimately being used for the purposes intended. It should be noted that, in practice, much of the cash, cash equivalents, and investments relates to accrued liabilities. Thus, these liquidities are spoken for and cannot be used to enhance programming.

The increase of $3.9million in donor partnership liquidities is attributable to funds being received in advance of disbursements for donor partnership activities.

Accounts receivable and prepaid expenses (see Table 5, page 65) totalled $16.1 million, including $6.5 million in Parliamentary appropriations receivable and $5.8 million in donor partnerships receivable. This year’s total represents an increase of $5.7 million over the 31 March 2008 balance, which is mainly attributable to higher donor partnership receivables at year-end.

Property and equipment (Table 5, page 65) are composed of assets with an initial cost of $5 000 ormore. As at 31 March 2009, they totalled $12.8million, up $0.7million fromlast year. The increase is mainly due to the leasehold improvements of one floor at the Centre’s head office facilities and the replacement of the telephone systemin four regional offices.

Accounts payable and accrued liabilities are part of the Centre’s regular operations and represent such things as payments to suppliers, grants payable to recipients, and salaries and annual leave benefits owed to employees. At the end of March 2009, the accounts payable and accrued liabilities totalled $16.1 million, down $2.1 million from 31 March 2008.?e decrease relates to the value of the project grant payments, which were due but not yet paid.

Deferred revenue includes the unspent portion of funds received or receivable for donor partnership activities ($35.6 million, see Table 6, page 56), the portion of the Parliamentary appropriations used for the purchase of property and equipment, and the unspent portion of the Parliamentary appropriations received for specific projects and programs (see Note 8 of the Notes to the Financial Statements, page 86).

The year-end closing balance was $53.8 million, up $8.9 million from 2007–2008. The increase is attributable to the receipt of funds following the signature of large donor partnership agreements with the Canadian International Development Agency and with the Bill & Melinda Gates Foundation.

Employee future benefits include a provision for employee severance (see Note 2f of the Notes to the Financial Statements, page 83). At $6.0 million (which represents the long-term portion, see Note 9c, page 88, in the Notes to the Financial Statements), the employee future benefits remain close to the 2007–2008 level.

The Centre’s equity is segregated between unrestricted, restricted and reserved retained earnings, and accumulated other comprehensive income.

The retained earnings (see Table 8, page 68) at year-end were $4.4 million higher than budgeted. As previously mentioned, the Centre received an additional appropriation of $4.0 million from Parliament. Ths appropriation was approved and received in the last quarter of the fiscal year, which left insufficient time for the funds to be used responsibly within the fiscal year.

The unrestricted retained earnings represent the balance not set aside to cover either the financial planning reserve or the restricted retained earnings.

This year, Centre management restricted a portion of the retained earnings ($0.7 million) for the replacement of its Web content management system (see Table 9, page 68).

The Centre has established a financial planning reserve in the amount of $6.8million (4%of its Parliamentary appropriation) to protect its financial position. Having a reserve is important for a number of reasons: the funding modality and contractual arrangements with project recipients are evolving; the timing of program spending is not entirely controlled by the Centre as it depends to a large extent on the performance of recipients; small variances in project expenditure patterns have a significant impact on total expenditures. The Board of Governors has approved a policy requiring a financial planning reserve ranging from 4% to 7% of the appropriation at the beginning of the fiscal year.

Further to a choice made pursuant to Canadian accounting standards (see Note 2d of the Notes to the Financial Statements, page 82), the financial instruments classified as available for sale are measured at fair value with unrealized gains and losses recognized in accumulated other comprehensive income. This year’s comprehensive income is $0.1 million. (Refer to the Notes to the Financial Statements for more details.)

Other key financial indicators

As at 31 March 2009, the Centre is committed to making payments of up to $212.9 million on research projects and activities over the next five years. This commitment is subject first to funds being provided by Parliament ($159.6 million) and by donor partners ($53.3 million) and, second, with few exceptions, to recipients’ compliance with the terms and conditions of their grant agreements. The 2008–2009 increase in program allocations resulted in increased outstanding commitments of $20.1 million over 2007–2008’s $192.8 million. The shifting patterns of
funding as well as of project expenditures have resulted in outstanding commitments funded by Parliamentary appropriations decreasing (-1.8%) in 2008–2009 compared to 2007–2008, while outstanding commitments funded by donor partnerships have increased significantly (76.8%). Management predicts that the proportion of outstanding commitments that will be paid during 2009–2010 will increase, leaving less funding for new project expenditures considering the conservative revenue forecast (see Fiscal Year 2009–2010 on page 61 and Figure 5, page 54). Any
change in these projects’ expenditure pattern will have a significant impact on the level of program expenses. Management will closely monitor development research program expenses and take action should any significant trend materialize.

Of the total $159.6 million in outstanding commitments funded by Parliamentary appropriations, $18.2 million is linked to projects co-financed by donor partnership agreements.

Program allocations represent the funds approved for new research projects that will last up to five years. Disbursement is progressive over project duration. The program allocations funded by Parliamentary appropriations reached $129.9million in 2008–2009 ($126.1million + $3.8 million), of which $27.9 million is linked to projects and programs co-financed with donors (see Table 11, page 69).

The level of program allocations funded by donor partnerships reached $60.6million, $20.5million higher than anticipated. The higher allocations are mainly explained by two large projects that were fully allocated up front rather than over their lifespan as originally envisaged. Most (75%) of the $190.5million program allocations made in 2008–2009 were committed during the 2008–2009 fiscal year. Expenses started for those committed projects in 2008–2009 and will continue over their individual lifespan. Taking into account the uncertainty in the Centre’s Parliamentary appropriation, management has determined that the 2009– 2010 program allocations funded by Parliamentary appropriation will be $93.0 million ($90.0million + $3.0million). This amount is about 28% lower than in 2008–2009 (see Figure 7). When co-funding pledges to projects are considered, the amount of remaining funds for programming stands at $64.5million or 42% of total program allocations of $153.1million (see Figure 8).

The allocation peak evident in Figure 7 is due to a significant change in expenditure patterns in 2005–2006 and 2006–2007. This change, discussed in the 2007–2008 annual report, related to an increase in project duration, gains in the purchasing power of the Canadian dollar, growth in the number of new projects, and other factors that contributed to decreasing the annual expenditure ratio on older projects, thus leaving more funding available for new projects. In periods of allocation contraction, expenditure ratios on older projects typically increase, starting the year after the contraction. Centre management is aware of these patterns and remains vigilant and prudent in committing funds.

Outlook for the future

Future accounting changes

In February 2008, the Canadian Accounting Standards Board (AcSB) confirmed that the changeover from Canadian Generally Accepted Accounting Principles (GAAP) to International Financial Reporting Standards (IFRS) will be required for publicly accountable enterprises, effective for fiscal years beginning on or after 1 January 2011.  Although IFRS are principles-based and use a conceptual framework similar to Canadian GAAP, they have significant differences and choices in accounting policies, and increased disclosure requirements. The Centre has chosen to approach the conversion in five phases: diagnostic assessment; design and planning; solutions development; implementation; and post-implementation review. The diagnostic assessment phase was completed during 2008–2009.

The IFRS transition plan is being finalized, including a timetable for assessing the impact on systems, internal controls over financial reporting, and business activities. A formal project governance structure has been established to provide advice and oversight during the various phases of the project.

The Centre continues to monitor standards development as issued by the International Accounting Standards Board and the AcSB, as well as regulatory developments as issued by the Canadian Securities Administrators. Such developments could affect the timing, nature, and disclosure of the adoption of the IFRS. The table above outlines the elements of the Centre’s IFRS transition plan, along with an assessment of progress toward achieving these objectives.

Fiscal Year 2009–2010

The statement of operations discussion contains detailed explanations of significant variances between the 2009–2010 budget and 2008–2009 actuals. The Board of Governors approved the 2009–2010 Program of Work and Budget (PWB) in March 2009. The paragraphs below summarize the key variances in revenues and expenses and outline the projected 2009–2010 closing equity.

The 2009–2010 PWB was prepared based on information known as of 31 March 2009. The Centre’s budget is revised periodically throughout the fiscal year as new information becomes available. In the first quarter of the fiscal year, the development research programs budget is revised to reflect the actual project portfolio opening balances. At the end of the second quarter, the development research support and administration services budgets are revised in order to reallocate unused funds to priority areas. Finally, as the fiscal year-end approaches, the entire budget is again revised in light of trends in spending patterns.

The Centre’s budget for fiscal year 2009–2010 features a 3.5% increase in revenues and a 5.8% increase in total expenses compared to 2008–2009 actuals. The Centre’s recurring Parliamentary appropriation for 2009–2010 is currently forecast to be at the same level as in 2008–2009 (refer to the Revenues discussion on page 57 for an explanation). This revenue increase mainly results fromdonor partnerships, more precisely from existing donor agreements.

In the Canadian federal budget of February 2008, the government announced the creation of a Development Innovation Fund (DIF). The Centre will likely be involved in the DIF. However, because it is not known how the implementation of the DIF will affect Centre operations, revenues and expenditures related to the DIF are not included in the 2009–2010 budget.

The 2009–2010 development research programs expenditures are budgeted at $146.9 million, an increase of $7.9 million over 2008–2009 actuals. The increase reflects planned expenditures on existing large donor-funded programs.

The 2009–2010 expenditures for development research support and administrative services are budgeted at $70.4 million, $4 million more than 2008–2009 actuals. The key factors contributing to the increase include modest inflation adjustments for salaries and benefits, rent increases based on signed lease agreements, and additional term positions being approved for 2009–2010. These positions will allow the Centre to meet the objectives of large donor-funded programs. Several types of expenditures are frozen at 2008–2009 levels, including travel. Professional services for development research support and administrative services are not only frozen but are budgeted at a lower level than in 2008–2009.

The PWB approved by the Board of Governors foresees a closing equity of $6.7million. This represents the financial planning reserve that allows the Centre to protect its financial position. As the Centre reviews its 2009–2010 budget, it may decide to restrict a portion of its equity to finance upcoming capital projects or to increase its financial planning reserve to provide against future uncertainties.

Development research program allocations funded by Parliamentary appropriations have been established at $93.0 million, of which about $28.5 million is linked to donor partnerships funding (see Figure 8, page 60). The level of program allocations funded by donor partnership agreements is expected to reach $60.1 million. The program allocation level will be revised periodically as a result of management’s analysis of projected expenditure patterns within the project portfolio’s outstanding commitments. Revisions will also be made if the Centre’s Parliamentary appropriations increase (see Table 2 on page 57).

Fiscal Year 2010–2011

The Centre will be an active participant in whatever process is in place to determine stakeholder shares of the International Assistance Envelope. As such, the Centre hopes to secure a share of any increases in this envelope in order to enable it to do its part in achieving Canada’s international development objectives. As well, the Centre will continue to explore new partnership possibilities. The additional funding generated from these two sources would allow the Centre to allocate more resources to its development research programs.

If the Development Innovation Fund is to be housed at the Centre starting in 2009–2010, year 2010–2011 would represent the fund’s first complete year of operation.

With outstanding commitments having peaked in 2009–2010, management expects expenditures on old projects to be lower in 2010–2011, which should leave room for increased expenditures
on new projects, resulting in higher program allocations. This is contingent on total available funding.

Development research support and administrative expenses will be adjusted for inflation and other factors deemed necessary for Centre operations. In determining the resources allocated to administrative costs, the Centre will ensure that a proper balance is achieved between program spending and administrative costs.

Five year historical review

Document(s) 4 of 5