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Chairman's Report 2004
FINANCIAL HIGHLIGHTS
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2003-04 |
2002-03 |
| Revenue from all sources |
$12,800,313 |
$9,072,956 |
| Grant allocations |
$8,305,828 |
$7,815,193 |
| Legal Aid Society |
$2,854,653 |
$1,897,521 |
| Administrative expenses |
$364,179 |
$ 364,928 |
| Net available funds |
$1,274,653 |
$ (1,004,686) |
The majority of the surplus in current revenue was transferred by the Directors
to internally restricted net assets. This reserve has been established in order
to provide funding stability for ongoing programs. The Foundation was fortunate
to be able to fully replenish the reserve in 2003-04.
The Board reviewed 78 applications for funding (89 last year) of which 62
were approved (75 last year).
In accordance with the Insurance Act, the Foundation’s funds are kept
invested in short-term money market instruments and low-risk marketable securities.
Income from investments for 2003-04 was $1,381,700, a decrease of 6.8% from
last year's investment income of $1,482,870. This is explained by the greater
number of investments in the lower short-term interest rate part of the market.
Lawyers' general trust account interest received in 2003-04 totalled $11,418,613,
which is a significant increase from last year's receipts due to the combined
positive influence of a slightly higher average prime rate, significantly higher
deposit balances, and the impact of more favorable interest rate arrangements
with many of the financial institutions. The Foundation expects 2004-05 revenue
to drop considerably given the significant drop in prime rate in the first
few months of 2004.
GENERAL COMMENTS
As noted above, revenue from lawyers' general trust accounts for the fiscal
year ending March 31, 2004 was $11.4 million of which 25% or $2.85 million
is due to the Legal Aid Society of Alberta. Investment income was $1.38 million.
Negotiations with financial institutions requesting improvements in the rates
of return on lawyers' general trust accounts will continue for this fiscal
year and, if successful, the improved rates will serve to stabilize and perhaps
improve the income from this source.
The Directors of the Foundation established financial reserves sufficient
to provide three years of secure funding for core grant recipients thus enabling
them to better plan for the future. During 2004-05, it is expected that core
grants will continue to be held close to their current level and that any project
grant applications will be very closely scrutinized.
Because it is difficult to predict interest rate trends and other economic
factors, the Foundation reviews annually its core funding budget and other
funding initiatives.
The Foundation takes seriously its stewardship role in relation to the total
trust deposits held in general trust accounts at the various financial institutions.
In recent months, the overall balance has been well in excess of $500 million
and the Foundation believes these deposits should receive market based interest
compensation that reflects both the very substantive balances and their overall
stability. Some nominal progress has been achieved with the majority of the
financial institutions. The only institution to steadfastly refuse to pay a
reasonable interest rate continues to be the National Bank of Canada.
The Foundation and its funded community agencies are most appreciative of
the leadership and support of the cooperative financial institutions in this
time of diminished financial resources and lower interest rates.
I would like to express my appreciation to the Foundation's Board of Directors
and to the staff, Diana Porter and David Aucoin for their guidance of the Foundation
over the past year.
- Mona T. Duckett, Q.C.
- Chairman, Alberta Law Foundation
- July 2004
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