Chair's Report 2009

	2009	2008
Revenue	$27,849,213	$63,239.309
Grant allocations / Adjustments	13,479,918	13,712,594
Legal Aid Alberta	5,918,137	14,857,541
Administration	636,968	532,221
Unrealized gains on investments	(7,095,690)	573,693
Excess (deficiency)	$    718,500	$34,710,646

The Board reviewed 119 applications for funding (113 last year) of which 88 were approved (91 last year).

Income from investments for 2008-09 was $4,131,814, an increase from last year's investment income of $3,716,989.

Lawyers' general trust account interest earned in 2008-09 totalled $23,672,550, which is a very significant decrease from last year's receipts of $59,430,161. The early part of 2008 saw the beginning of a dramatic decline in solicitors' interest revenue. The combination of the reduction in average solicitors' general trust account balances that began in early 2008 as the provincial economy slowed, and the more recent and unprecedented fall in interest rates, took a serious toll on revenues in the 2008-09 fiscal year.

At the present time our forecast for revenue from solicitors' general trust accounts in 2009-10 is about $1.8 million, which would only allow for a contribution to Legal Aid Alberta of $450,000. The Bank of Canada has clearly stated their intent to maintain a low interest rate environment over the coming months. In hindsight, the substantial additions to reserves in the two prior years have been fortuitous, and the recent interest rate and stock market volatility has been ample evidence of the need for caution in managing both our liquidity and the growth expectations among the grantee community in the coming years. It is clear that the majority of grant commitments made in the new fiscal year will rely heavily on the grant stabilization reserves.

Although significant reserves allow the Directors some flexibility in moving forward, they are still finite. In response, the Foundation has already initiated a broad review of the existing core program funding and undertaken initial adjustments in the level of grants awarded. The goal is to ensure that grants continue to clearly meet our objectives and show strong merit and value in addressing priority needs in the community. Project grant applications will continue to be accepted, but will continue to be closely scrutinized.

The intent is to assume a measured and prudent stance, as it is not possible to predict when the economy may rebound or interest rates return to higher levels. Funding priorities are being identified, based on a comprehensive overall review, along with principles to guide any graduated reductions, if found necessary. The province-wide mapping of legal services, now underway in the province with joint funding from the Foundation and Alberta Justice, is expected to assist in articulating needs and priorities and also to identify opportunities for targeted new grant making where warranted.

The Foundation is pleased to be able to state that current liquid assets are available to meet all current obligations, and that the Grant Stabilization Fund will allow maintenance of the current overall level of grants for a period of over two years. While the Foundation was not able to fully top-up the Stabilization Fund to our policy of three years worth of annual core grant commitments, it remains a sizeable cushion until such time as the economy and interest rates improve.

General Comments

As noted above, revenue from lawyers' general trust accounts for the fiscal year ending March 31, 2009 was $23.7 million. Twenty-five percent of this revenue source is due to Legal Aid Alberta. In the latest fiscal year the payment due to Legal Aid amounted to $5.92 million.

The Foundation continues to take seriously its stewardship role in relation to the total trust deposits held in general trust accounts at the various financial institutions. In March 2009, the consolidated average balance in the Province of Alberta was over $1.0 billion. Accordingly, notwithstanding the unprecedented low rates of interest, the Foundation will continue to pursue new deposit interest arrangements that represent a fair rate of compensation on the still very substantial consolidated deposit balance in the province.

We would like to specifically note our appreciation to HSBC, TD Canada Trust and the Credit Unions in Alberta for their efforts at sustaining interest levels in a very challenging environment.

I would like to express my appreciation to the Foundation's Board of Directors and to the staff, David Aucoin, Diana Porter and Deborah Duncan, the Foundation's new Program Director, for their guidance of the Foundation over the past year.

All of which is respectfully submitted.

Steve Raby, Q.C.
Chair, Alberta Law Foundation


July 2009

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