Finance and Investments
The Endowment Fund continued to grow during the year, with contributions received from the United States Agency for International Development, the Government of Germany, the Government of New Zealand, the Government of India and Groupe Limagrain along with healthy growth in the investments.
The Crop Diversity Endowment Fund is the key financial instrument that underpins the Crop Trust’s mission, providing the financial means for the Crop Trust to create a permanent legacy of support for genebank collections of critical importance to the global food supply. The Endowment Fund had a successful year in 2021, despite the high level of volatility in capital markets. The Endowment Fund currently has a value of USD 339 million as well as a concessional loan of EUR 50 million; the Crop Trust’s aim is to increase the fund to USD 850 million.
Endowment Fund Growth
A total of USD 8.6 million was received in contributions during the year: USD 5.4 million from the United States Agency for International Development; USD 2.1 million from the Government of New Zealand; USD 2.1 million from the Government of Germany; USD 100,000 from the Government of India; and USD 60,000 from Groupe Limagrain.
Thanks to these contributions and an annual net investment return of 11.4%, the value of the Endowment Fund reached USD 339 million by 31 December 2021, up from USD 304 million as at 31 December 2020. Investment income generated by the fund is used to support genebanks and related programs that conserve crop diversity.
The Endowment Fund is highly diversified and structured for the long term so that it can withstand short-term market volatility, whether positive or negative. In part because of this structure, market fluctuations in 2021 did not negatively affect the year’s returns.
Program activities, including the BOLD, Seeds for Resilience and Strategic Development of the Global Crop Diversity Trust projects, the development of crop strategies, the Genebank Platform program and the Crop Trust’s long-term grants for the daily work of crop conservation by key genebanks, together with Crop Trust’s operational activities, accounted for a total expenditure of USD 35.6 million in 2021, of which USD 33.4 million was related to projects. Operational expenditures made up 6% of total direct expenditures.
Withdrawals of USD 8.8 million from the Endowment Fund in 2021 represented 2.9% of assets, in line with the approved spending policy.
To date, over USD 63 million (2020: USD 54.4 million) has been withdrawn from the Endowment Fund to support the core mission of the Crop Trust. USD 8.8 million was withdrawn in 2021 and these funds were used to support the CGIAR genebanks (USD 7.8million), the Svalbard Global Seed Vault (USD 160,000) and to cover a long-term grant to the Pacific Community (USD 61,000) with the balance being used to support the Crop Trust’s operations. The funds withdrawn were supplemented by an additional USD 5.1 million provided for the Genebank Platform by the European Commission and GIZ.
The Crop Trust’s financial statements for 2021 were prepared in accordance with International Financial Reporting Standards. They were audited by PriceWaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft (PwC) with an unqualified audit opinion. PwC has served as the Crop Trust’s external auditor since 2013.
Outsourced Chief Investment Officer Appointed
Following a competitive selection process in 2021, the executive board approved the appointment of Mercer as the new outsourced Chief Investment Officer to the Crop Trust to help it achieve its growth, risk management and sustainable investment ambitions. Since February 2022, Mercer is responsible for managing the Crop Trust’s Endowment Fund on a discretionary basis in line with the Crop Trust’s objectives. In addition, Mercer will also be providing strategic investment advice and ongoing governance support while supporting the design and implementation of a robust sustainable investment policy.
The Crop Trust is actively working on several initiatives to establish partnerships with the private sector, both in terms of potential innovative fundraising mechanisms and combining efforts on advocacy and awareness raising. Complementing this work is the project “Strategic Development of the Global Crop Diversity Trust” launched in 2021. This is a three-year project funded by GIZ/BMZ. The project will support the institutional development and strategic repositioning of the Crop Trust, including refreshing its financing strategy to reach the Endowment Fund’s target of USD 850 million.