Running the numbers

The Endowment Fund
At the heart of the Crop Trust’s work is its endowment fund. Investment income generated by the fund is used to support genebanks that conserve crop diversity – the biological basis of agriculture. The Crop Trust’s endowment fund target is USD 850 million, which would generate enough income to provide stable, permanent financial support to the world’s most important crop genebanks. In 2018, donors contributed USD 17 million to the fund.

The value of the endowment fund, including the KfW loan proceeds, less amounts to be withdrawn to fund the genebank platform commitment, amounted to USD 273 million as at 31 December 2018 (2017: USD 285 million).

Size of the Endowment
The annual return of the endowment fund in 2018 was -8.2% as a result of poor market performance, specifically in the fourth quarter of the year. Since the beginning of 2019, markets have recovered and the endowment fund returned +8.5% in the period from 1 January to 31 March 2019, taking its value to USD 292 million.

The Crop Trust is fortunate to have strong liquidity and a very long-term perspective. The endowment fund is highly diversified and structured for the long-term so that short-term market dislocations, whether positive or negative, do not trigger structural changes to the asset allocation of the portfolio.

The investment objectives and policies of the Crop Trust permit the annual withdrawal of up to 4% of the endowment fund’s average market value over the previous 12 quarters. In 2018, 2.5% (USD 5 million) was withdrawn, of which 91% was provided in long-term grants to the international genebanks of CGIAR. Combined with bilateral contributions from donors, the total contribution to CGIAR amounted to USD 9 million – up from USD 2.4 million in 2016 and USD 6.75 million in 2017. In 2019, this annual contribution to CGIAR will rise to USD 11.5 million.

The Crop Trust is an official signatory to the United Nations Principles for Responsible Investment (UN PRI), an international framework for incorporating sustainability into investment decision-making. The Crop Trust believes that the application of the UN PRI improves alignment of its investment portfolio with its overall mission and with the broader objectives of society. As part of its commitment, the Crop Trust undertakes annual PRI reporting and achieved an overall “A” rating for its UN PRI 2017/18 assessment.

Program and Operational Expenditure
In addition to building up its endowment fund, the Crop Trust supports the conservation of crop diversity in genebanks with annual funding.

In 2018, the total expenditure of the Crop Trust was USD 36 million, of which USD 34 million related to program activities. The Crop Trust continues to follow a course of cost-effectiveness, which is vital in order to achieve its objectives and maintain the trust of donors and partners. In 2018, the Crop Trust secretariat incurred expenditures for management and general services of USD 1.6 million, or 4.6% of total direct expenditures. Fundraising expenditure amounted to USD 0.42 million or 1.2% of total direct expenditure. Overall operational expenditures accounted for 5.9% of total direct expenditures in 2018, down from 8% in 2015.

Financial Audit
The Financial Statements for the year ending 31st December 2018 were prepared in accordance with International Financial Reporting Standards (IFRS). They were audited by PriceWaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft, which issued an unqualified audit opinion.

We thank all our donors and partners for their continued support, and for understanding the need for, and urgency of, safeguarding crop diversity.

Janet Muir, Director of Finance, Crop Trust

The full Financial Statements and Independent Auditor’s Report can be downloaded here.