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2009-03-03 issue:

Web exclusive: MCC not immune to global economic downturn

International program spending cut by $2 million US in upcoming fiscal year

by Aaron Epp of the Canadian Mennonite

Print Article

Mennonite Central Committee (MCC) may have been "cash rich" last June, but that statement is no longer true. Amid the global economic crisis, the organization is reducing its budget in the coming year.

The budget for MCC's international program, which carries out relief, development and peacemaking work in more than 50 countries around the world, will be reduced by about $2 million U.S. and administrative expenditures are also being cut, according to the organization.

Overall, the total budget for MCC Binational, the part of the organization that runs international programs, will shrink by 10 percent.

"I think we're all frantically busy trying to rearrange budgets that we thought were in order [at] Christmas, and doing it quickly without as much consultation and discussion as we'd like," Arli Klassen, MCC's binational executive director, said by phone from Bolivia at the end of January. "But I think people are working together as a very strong team and [are] committed to finding ways to move ahead."

MCC U.S. and the regional MCCs in the States are facing a 9 percent reduction. Klassen did not yet know where the cuts would be made.

"All I can say is that we’re cutting $2 million out of international programming," she said, "and that is going to affect our partners and what we are able to do in many parts of the world."

MCC Canada and provincial MCCs are also facing budget cuts. However, because the fiscal year for MCCs in Canada ends Aug. 31, as opposed to March 31 in the U.S., it is not yet clear what the size of the budget cuts in Canada will be.

"We've developed a three-fold approach to this, or if you want, a stool with three legs," Don Peters, MCC Canada's executive director, said by phone at the beginning of February, when asked how MCC Canada expects to weather the economic storm. The first approach is working diligently to invite people to contribute to the work of MCC. The second is reassessing budgets, reducing expenditures and deferring expenses that can be deferred. The third approach, according to Peters, is using reserves when necessary.

"Through a combination of those three [approaches], we think we're sitting on a very stable stool," Peters said.

MCC Canada has committed to sending $12.5 million Cdn to MCC Binational during MCC Canada's current fiscal year, not including the funding it receives from Canadian International Development Agency, a federal government program. It is behind in revenue compared to last year, but it still expects to meet its commitment to MCC Binational by the end of August.

"We've got challenges ahead of us, but we have eight months to address this situation, so I'm cautiously optimistic,” Peters said. (In its last fiscal year, MCC Canada committed to sending just over $11 million Cdn, and ended up sending over $12 million Cdn.)

While more people are giving money to support MCC's work than in previous years, the average contribution decreased in 2008, and the economic turmoil has affected MCC in other ways. In particular, Peters noted, the value of contributions from Canada was reduced because of the recent sharp drop in the value of the Canadian dollar relative to the U.S. dollar. Nearly half of MCC Binational's funding for its international program comes from Canadian contributions made in Canadian dollars, while MCC Binational's budget and spending is in U.S. dollars.

MCC's financial reserves were also reduced by losses in financial markets. MCC's investments have been made in accordance with a policy recommended by the audit and finance committee of the MCC Binational board, which the board approved, Klassen explained.

"On the whole, MCC is known for being more cautious than aggressive in how we use the money that has been given to us," she said, adding that each MCC has its own reserve. MCC Binational started its fiscal year with 3.8 months worth of average spending in its reserves, and hopes to end this March with 2.5 months left.

For the 2007-08 fiscal year, MCC and Ten Thousand Villages took in nearly $105 million US and spent nearly $103 million US. Indonesia was the largest MCC program in the past fiscal year because of tsunami recovery work, with India and Bangladesh the next largest.
However, generally, Bangladesh, India and Bolivia are MCC’s largest spending areas.

Reflecting on MCC's current financial situation, Peters also commented on MCC Binational board member Ryan Showalter's summary of MCC’s financial state at this past June’s board meetings when Showalter said, "We are cash rich, but people poor."

"MCC is now in a situation where we are no longer cash rich, and we hope that we have enough reserves to make it through," Peters said. "And we're counting on the constituency to make sure the work of MCC continues."

In an MCC release, Klassen asked for prayer for the work of the organization, in addition to financial giving. She thanked members of the constituency for their commitment "to walking alongside people who face poverty and conflict, whether we have big resources or smaller resources. ... Our commitment to sharing God’s love does not change."

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