The following letter was sent to IntraFish by the Marine Stewardship Council in response to Executive Editor John Fiorillo's recent column, Why is the Marine Stewardship Council hoarding its cash?
The Marine Stewardship Council (MSC) does nothold $41.8 million in cash reserves. The figure quoted in your article amounts to the net assetsof the MSC Group, not cash held in the bank nor our organizational reserves. MSC’s unrestricted reserves as of March 2019, were $33.2 million – 35 percent lower than the $41.8 million cash figure cited in your commentary.
Our reserves of $33.2 million are equivalent to 10 months of what we budgeted to spend in 2020/2021. This is in line with our Board of Trustees’ policy on reserves, which stipulates that these should be between 9 to 12 months of planned expenditure for the following financial year, as well as UK government guidelines for not-for-profits.
We do not consider these reserves to be excessive, but prudent management of our organization, to enable us to continue to deliver our mission of encouraging the adoption of sustainable fishing practices. The level of reserves is kept under active review by our board, as part of its strategic overview of where we spend and invest in our program.
You’ve included some comments from the US-based National Council of Non-profits. As a UK-headquartered not-for-profit, UK charity law allows NGOs to set a reserve level appropriate to its needs. Its guidelines specifically state “there is no single level or even range of reserves that is right for all charities."
You’ve also queried the rationale for having these reserves, and correctly identified some of the reasons why our board of trustees set our reserves policy at 9-12 months.
- uncertainty around the amount of income MSC receives from royalties and donors
- short-term working capital/cash flow needs
- risk of losses if required to liquidate fund investments included in our unrestricted reserves
- exchange rates risks implicit in our income/expenditure patterns
- investment in capital projects, such as our digital projects and/or in the Ocean Stewardship Fund, aimed at furthering further the MSC’s mission and vision.
“MSC does not have “surplus cash stacking up” in our coffers," said MSC’s Director of Finance, Jeremy Anglin. "Our financial reserves ensure we have the funds to continue to achieve our mission and to weather any short-term uncertainties and risks. These reserves are equivalent to 10 months of budgeted spend – in line with the policy set out by our board of tgrustees. This amount is also in line with the guidelines for UK-based charities. This prudent management enables us to continue our valuable work of enabling the uptake of sustainable fishery practices, securing seafood supplies for future generations.”