Marie Stopes International has seen its liquid reserves drop to £15.2m as it continues to face a funding shortfall after the US President reintroduced a ban on funding for organisations which carry out abortions from receiving USAID.
The charity has previously warned that it faced a significant funding gap after President Donald Trump’s reintroduction of the Mexico City Policy banning funding to organisations which offer abortions.
In its accounts for the year to March 2017 Marie Stopes reported that its liquid free reserves stand at £15.2m, down from £18.9m last year.
The reserves policy says that the charity’s monthly operating costs are around £25m which is why it has a target range of between £30m and £35m.
“MSI will continue to build up the sustainability reserve fund until the free reserves target of £30-35m is met. The decrease in the year is partly due to the use of reserves to bridge the loss of USAID funds but also to more challenging payment terms with some major donors,” the accounts said.
Marie Stopes International has a total of £63.7m in unrestricted reserves, but the bulk of this is illiquid assets such as buildings and global working capital.
Secured short-term replacement funding
Marie Stopes International said that USAID funding had accounted for 12.7 per cent of its total grant funding in 2017, which it now expects to lose.
It said it had secured short-term replacement funding in most cases but that it still faces a £20m annual shortfall.
The accounts said: “During 2017, the group managed to secure replacement funding to keep most services running in the short term, although Madagascar, Uganda and Zimbabwe were particularly affected. However, the loss of USAID grants means that there is still a significant funding gap of approximately £20m annually that needs to be closed for the partnership to deliver against global family planning commitments.”
Set-up US fundraising team
In the introduction to the accounts, Simon Cooke, chief executive of the charity said the change in US policy has had a “chilling effect on the whole sector”.
“The road ahead remains challenging. However, we have taken steps to ensure that MSI continues to thrive, and have built strong processes to ensure financial resilience and sustainability,” he added.
Cooke said that the charity has restructured and created a US fundraising team to adapt.
“During the year, we restructured to anticipate changes in donor funding behaviour, with a US fundraising unit established to generate new revenue sources, in part to offset US government losses, but also to allow us to further innovate and to bridge gaps in service provision left when donor contracts end. We expect to see significant results from this team in 2018 and beyond.”
Increase in services income
Despite the challenges surrounding the changes to the USAID, Marie Stopes International has reported a record income of £296m in 2018 with an increase in service income offsetting a decline in grant income.
Its grant income fell by £4.3m to £170m, while services income increased by £8.2m to £93.9m. Consultancy income was stable at £22.9m and income from donations was £3.7m.
Its total expenditure for the year was just over £300m, most of which has been designated as charitable activities.
The average headcount was 11,512 and the charity spent a total of £320,000 on redundancy and termination costs, £82,000 less than the previous year.
Its highest paid employee earned a base salary of £173,067 and a performance-based bonus of £127,485.
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