The Marine Stewardship Council (MSC) has more than $41.8 million (€38.7 million) in cash reserves sitting in its accounts. Let me repeat that. The nonprofit fisheries certification group has more than $41.8 million in surplus cash stacking up in its coffers.

(Correction: Subsequent to the publishing of this column, the MSC wrote to clarify the group's position on its cash reserves, saying it does not hold $41.8 million in cash reserves. "The figure quoted in your article amounts to the net assets of the MSC Group, not cash held in the bank nor our organizational reserves. To see the MSC's full rebuttal, click here.)

You are probably asking yourself: Isn't that a lot of money for a nonprofit to stash away? Why does the MSC appear to be stockpiling money? Why isn’t it using that cash on sustainable seafood programs?

Those are all great questions. Let me try to answer them.

First, how much do nonprofits typically keep in a rainy-day fund? According to the National Council of Nonprofits (NCN), less than 25 percent of the nonprofits it surveys annually had more than six months of cash in reserve, and the majority reported that they had less than three months of operating reserves on hand.

“Most nonprofits are small, less than a million dollars, and just don’t have the luxury of building up a large reserve fund,” said Rick Cohen, communications officer at NCN.

The MSC, of course, is larger, with an income of roughly $34 million (€31.4 million).

Total expenditures reported in its 2018/2019 annual report were $30.8 million (€28.5 million). If we use the NCN numbers, that would mean the MSC would hold about $15 million (€13.8 million) in reserves if it wanted a six-month backstop, and $23 million (€21.2 million) if it wanted nine months’ worth of reserves, as is the current MSC policy.

However, the MSC is holding between two and three times what the NCN says is typical, and almost $20 million (€18.5 million) more that its own guidelines require.

The Global Aquaculture Alliance (GAA), by comparison, reported roughly $15.8 million (€14.6 million) in income on its 2018 990 tax form. Its expenses exceeded $16.3 million (€15 million). It reported just over $1.17 million (€1 million), or about 7 percent of its annual expenses, in cash reserves.

“There are lots of reasons to build up a reserve fund that go beyond having a rainy-day fund,” said Cohen.

There is a benefit to building up a reserve if you are planning to launch a major initiative or are planning for an upcoming capital expenditure, he added.

Is there a plan for a portion of the MSC war chest, and if so, what is it?

The MSC says in its annual reports that holding reserves helps to protect it from potential fluctuations in income and expenditures, including the loss or withdrawal of certified products from the MSC program.

It is a fair point, because recently some MSC fisheries have been forced to withdraw from the program.

For example, the Northeast Atlantic mackerel fishery certification was suspended in March 2019. And the Atlantic menhaden fishery certification is under scrutiny after US regulators placed a moratorium on the 141,000 metric ton fishery for being out of compliance with management regulations. One can only imagine the financial pain that might be caused if a foundational fishery such as Alaska pollock or Alaska salmon were to pull out of the program.

Losses like these can hurt, but it is important to keep in mind that the MSC also continues to add fisheries on a regular basis.

Consider that in March 2013, the group had 198 fisheries certified. The number of certified fisheries, according to its 2018/2019 report was 361 -- an 82 percent increase.

The uncertainty caused by Brexit might also be a reason for a nonprofit based in the United Kingdom to build its cash reserves.

Perhaps the reserves are being built for an investment: say, a merger or broad partnership with the Aquaculture Stewardship Council (ASC), which might allay one of buyers' and seafood companies' complaints over the reams of paperwork required in certification.

After unveiling a joint standard for seaweed in 2017, the groups said they were considering future collaboration, starting with a joint standard for shellfish.

The MSC has come a long way from its days as a wobbly-legged toddler of an NGO. It is grown and mature now, so it makes sense that it has more money to manage.

These days, nearly 80 percent of its income is from logo licensing fees and only about 15 percent is from foundations and other donors, who, I wonder, might be looking at the cash reserves and asking why they are still cutting checks to the MSC.

There is nothing wrong with having savings; it's the prudent thing to do as an individual and a business entity.

But is the MSC holding too much in reserve? If so, why?

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