Conservation International
Foundation and Affiliates
Consolidated Financial Report
June 30, 2019

Contents
Independent auditor’s report

1-2

Financial statements
Consolidated balance sheets3

Consolidated statements of activities

4

Consolidated statement of functional expenses

5

Consolidated statements of cash flows

6

Notes to consolidated financial statements

7-26

Independent Auditor’s Report

To the Board of Directors
Conservation International Foundation

Report on the Financial Statements
We have audited the accompanying consolidated financial statements of Conservation International
Foundation and Affiliates (CI), which comprise the consolidated balance sheets as of June 30, 2019 and2018, the related consolidated statements of activities and cash flows for the years then ended, therelated consolidated statement of functional expenses for the year ended June 30, 2019, and the related
notes to the consolidated financial statements (collectively, the financial statements).
Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements inaccordance with accounting principles generally accepted in the United States of America; this includes
the design, implementation and maintenance of internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whether due to fraud or
error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these financial statements based on our audits. We
conducted our audits in accordance with auditing standards generally accepted in the United States ofAmerica and the standards applicable to financial audits contained in Government Auditing Standards,
issued by the Comptroller General of the United States. Those standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free frommaterial misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entity’s
preparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness ofthe entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating
the appropriateness of accounting policies used and the reasonableness of significant accounting
estimates made by management, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.

1

Opinion
In our opinion, the financial statements referred to above present fairly, in all material respects, thefinancial position of Conservation International Foundation and Affiliates as of June 30, 2019 and 2018,
and the changes in their net assets and their cash flows for the years then ended in accordance withaccounting principles generally accepted in the United States of America.
Emphasis of Matter
As discussed in Note 2 to the financial statements, CI retrospectively adopted the Financial AccountingStandards Board issued Accounting Standards Update (ASU) No. 2016-14, Not-For-Profit Entities(Topic 958): Presentation of Financial Statements of Not-For-Profit Entities. The adoption of this standard
resulted in additional footnote disclosures for liquidity, changes to the classification of net assets andadditional analysis of expenses by both function and nature. Our opinion is not modified with respect tothis matter.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated January 20,
2020, on our consideration of CI’s internal control over financial reporting and on our tests of its
compliance with certain provisions of laws, regulations, contracts, and grant agreements and othermatters. The purpose of that report is solely to describe the scope of our testing of internal control overfinancial reporting and compliance and the results of that testing, and not to provide an opinion on theeffectiveness of CI’s internal control over financial reporting or on compliance. That report is an integral
part of an audit performed in accordance with Government Auditing Standards in considering CI’s internal
control over financial reporting and compliance.

McLean, Virginia
January 20, 20202

Conservation International Foundation and Affiliates
Consolidated Balance Sheets
June 30, 2019 and 2018
(In Thousands)
2018

2019
AssetsCash and cash equivalents
Investments
Grants and promises to give, net
Grant advances
Project advances to partners
Notes receivable, net
Prepaid expenses and other assets
Property and equipment, net
Total assets$

66,616
264,732
28,710
5,533
5,269
1,100
4,660
6,614

$

69,542
251,147
35,438
3,208
5,329
300
3,644
4,371

$

383,234$

372,979$

8,866
10,453547
2,059
46,04067,965

$

5,496
9,109
766
4,653
35,81955,843Liabilities and Net Assets
Liabilities:
Accounts payable and accrued expenses
Accrued salaries, vacation and employee benefits
Notes payable, net
Grants payable
Deferred revenue
Total liabilities

Commitments and contingencies (Notes 4 and 15)
Net assets:
Without donor restrictions
With donor restrictions
Total net assets

17,351
299,785
317,136

17,724
297,545
315,269

Total liabilities and net assets$

See notes to consolidated financial statements.

3383,234$

372,979

Conservation International Foundation and Affiliates
Consolidated Statements of Activities
Years Ended June 30, 2019 and 2018
(In Thousands)
2019
With
Donor
Restrictions

Without
Donor
Restrictions
Support and revenue:
Contributions:Individuals
Foundations
Corporations
Other
Cancellations and de-obligations
Grants and contracts:
NGO/multilaterals
Foundations
Public funding
Corporations
Other
Licensing agreements, product sales andother income
Investment income, net
Net assets released from donor restrictions
Total support and revenue$

Expenses:
Program services:
Country, regional and ocean
Grantmaking divisions
Moore Center for Science
Policy and Strategy
Communications
Center for Environmental Leadershipin BusinessCenter for Communities and Conservation
Total program services
Supporting services:Management and operations
Fundraising
Total supporting services
Total expenses
Changes in net assets before
other income and losses
Other income and losses:
Loss on translation of affiliate andfield office net assets(Loss) gain on translation of grants
and pledges receivable
Changes in net assets
Net assets:
Beginning
Ending

$

4,789
6,817
1,756
99
-

$

29,85020,857
2,606
58
-

Total

$

Without
Donor
Restrictions

2018
With
Donor
Restrictions$$

34,63927,674
4,362
157
-

4,894
5,682
1,788
3
-

38,044
20,8122,501
227(5,011)

Total$

42,93826,4944,289
230(5,011)

3,156
1,244
527
4,140
-

18,95016,526
15,512
6,545
761

22,106
17,77016,03910,685
761

2,081
605
2,169
3,884
-

15,55021,262
8,477
8,927
336

17,631
21,867
10,646
12,811
336

2,198
736
127,675
153,137

676
13,424(127,675)(1,910)2,874
14,160151,227

2,003
1,548
136,074
160,731307
12,927(136,074)(11,715)

2,310
14,475
149,016

69,791
29,456
8,548
6,185
5,498

-

69,791
29,456
8,548
6,185
5,498

71,15937,907
9,062
3,817
5,501

-

71,15937,907
9,062
3,817
5,501

4,254
3,489
127,221

-

4,254
3,489
127,221

4,529
4,409
136,384

-

4,529
4,409
136,384

11,50914,03425,543-

11,50914,03425,543

10,697
13,147
23,844-

10,697
13,147
23,844

152,764-

152,764

160,228-

160,228373(1,910)(1,537)503(11,715)(11,212)

-

(288)

(288)

-

(861)

(861)

-

(42)

(42)

-

59

59

373

(2,240)(1,867)503(12,517)(12,014)

17,351

299,785

317,136

16,848

312,302329,150

17,724$

297,545

See notes to consolidated financial statements.

4$315,269$

17,351$

299,785$

317,136

Conservation International Foundation and Affiliates
Consolidated Statement of Functional Expenses
Year Ended June 30, 2019 (with Comparative Totals for 2018)(In Thousands)
2019

Moore
Country,

Salaries and benefits

$

2018

Center forCenter forCenterPolicyEnvironmental

Communities

Regional

Grantmaking

for

and

Leadership

and

and

and OceanDivisions

Science

Strategyin Business

Conservation

Operations

35,281

$

7,369

$

5,576

$

3,787

Communications
$

2,867

$

3,191

$

2,351

Management

$

8,294

Fundraising
$

8,810

Total
$

77,526

Total$

74,712External grants

8,825

19,090

500

15

64

15

62

-

-

28,571

39,229Professional services

9,094

1,345

756

1,205

1,816

220

191

1,114

1,983

17,72418,027

Travel, meetings and events

8,622

680

734

720

248

374

549

858

2,133

14,91814,289

Occupancy

3,207

649

539

266

356

293

248

230

652

6,440

6,725

Equipment and furniture

3,123

68

242

56

50

36

21

173

91

3,860

3,759
1,024
2,463

Depreciation andamortization

634

108

118

54

51

56

42

118

89

1,270

Other expenses

1,005

147

83

82

46

69

25

722

276

2,455

$

69,791$

29,456

$

8,548

$

6,185

$

5,498

See notes to consolidated financial statements.

5

$

4,254

$

3,489

$

11,509$14,034$

152,764$

160,228

Conservation International Foundation and Affiliates
Consolidated Statements of Cash Flows
Years Ended June 30, 2019 and 2018
(In Thousands)
2019
Cash flows from operating activities:
Changes in net assets
Adjustments to reconcile changes in net assets to net cash
provided by operating activities:
Depreciation and amortization
Loss on disposal of property and equipment
Net realized and unrealized gain on investments
Net realized and unrealized loss on international retirement savings plan
Net loss (gain) on translation of foreign denominated grants
and promises to give receivable
Decrease in allowance for doubtful grants
and promises to give
Decrease in discount to present value for
grants and promises to giveGain on notes receivable
Cancellations and de-obligations
Changes in assets and liabilities:
Decrease (increase) in:
Grants and promises to give
Project advances to partners
Grant advances
Prepaid expenses and other assets(Decrease) increase in:
Accounts payable and accrued expenses
Accrued salaries, vacation and employee benefits
Grants payable
Deferred revenue
Net cash provided by operating activities$2018(1,867)$(12,014)1,270
490(9,616)
5

1,024
2(11,299)
133

42

(59)

(180)

(145)

(201)
-

(341)
(3)
5,011

7,067
60
(2,325)(1,016)

63,062(5,329)
341
(773)

3,370
1,344
(2,594)
10,221
6,070

147
948
(2,964)(1,664)36,077

Cash flows from investing activities:
Proceeds from sales of investments
Purchases of investments
Purchases of property and equipment
Sale of landCollections on notes receivable
Disbursements on notes receivable
Net cash used in investing activities

79,451(83,425)(5,656)
1,653
120
(920)
(8,777)

71,613(98,676)(731)
11(27,783)

Cash flows from financing activities:
Principal payments on notes payable
Net cash used in financing activities

(219)
(219)

(218)
(218)

(2,926)

8,076

69,542

61,466

Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents:
Beginning
EndingSupplemental disclosure of cash flow information:
Cash paid for interest
See notes to consolidated financial statements.

6$

66,616$69,542

$

12

$

13

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 1.

Nature of Activities

Nature of activities: Conservation International Foundation and Affiliates (CI) is a nonprofit organization
headquartered in Arlington, Virginia, with offices in over 30 countries. The Conservation International
Foundation was established in 1987 under the laws of the State of California and is tax-exempt under
Section 501(c)(3) of the Internal Revenue Code (IRC).
CI works to ensure a healthy and productive planet for us all. People need nature for many things: astable climate, clean air, fresh water, abundant food, cultural resources and much more. Yet unsustainableeconomic and infrastructure development can have negative impacts on nature. CI works at every level –from remote villages to the offices of presidents and prime ministers – to help move society toward asmarter development path.
CI focuses its efforts on four areas:
Combating climate change by protecting forests: CI works to reverse the destruction of tropical forests,
which equates to more than one-third of the global action needed to avoid the worst climate scenarios.
Creating holistic models of sustainability: CI creates self-sustaining, scalable conservation models
within larger geographic landscapes and seascapes, ensuring that humans and nature can thrive together.
Protecting our oceans at scale: CI works to protect the ocean on an unprecedented global scale whilebalancing ocean production. Its goal is to double the area of protected ocean by 2025.
Innovating science and finance to accelerate conservation: CI works to create and apply sciencebased evidence and solutions to conservation policies and works to unlock greater investment in nature.
By promoting healthy, sustainable societies, CI helps improve quality of life for people – especiallyvulnerable populations who are often directly reliant on nature for their survival.
Affiliates: The accompanying consolidated financial statements include the operations of CI-Brazil,
CI-Europe in Belgium, CI-Guyana, Cl-Hong Kong, CI-Japan, CI-Mexico, CI-New Zealand, CI-Philippines,
CI-Singapore, CI-Suriname, CI-UK and Conservation South Africa. All of the aforementioned organizations
are separately incorporated in their respective countries. Due to the significant amount of oversight andsupport (financial and programmatic) provided by CI, their financial activities have been consolidated with
CI’s financial activities.
Additionally, Conservation International Foundation is the sole member of Conservation International
Ventures LLC (CI Ventures). CI Ventures is an investment facility designed to accelerate investment insmall and medium enterprises (SMEs) that have the potential to deliver measurable, scalable
conservation impact alongside financial returns. In partnership with leading investors, project developers
and conservation-oriented entrepreneurs, CI Ventures delivers targeted capacity building, and bridgefinancing and other resources to de-risk and scale-up investible projects in sustainable land andseascapes. The overarching goal of CI Ventures is to increase the pipeline of high quality, bankableprojects that maximize environmental and social outcomes and unlock additional finance for conservation
impact. Accordingly, all financial activities of CI Ventures have been consolidated with CI.
Basis of accounting: The accompanying consolidated financial statements have been prepared on theaccrual basis of accounting in accordance with U.S. generally accepted accounting principles.

7

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 2.

Significant Accounting Policies

Principles of consolidation: All transactions between Conservation International Foundation and its
affiliates have been eliminated in consolidation.
Adopted accounting pronouncement: In August 2016, the Financial Accounting Standards Board(FASB) issued Accounting Standards Update (ASU) No. 2016-14, Not-for-Profit Entities (Topic 958):
Presentation of Financial Statements of Not-for-Profit Entities. The new standard changes presentationand disclosure requirements in order for not-for-profits to provide more relevant information about theirresources to donors, grantors, creditors and other financial statement users regarding liquidity, financial
performance and cash flows. Among other changes, the ASU replaces the three current classes of net assets
with two new classes (net assets with donor restrictions and net assets without donor restrictions), expands
disclosures about the nature and amount of any donor restrictions, and requires inclusion of information
regarding functional expenses. The ASU was retrospectively adopted by CI during the fiscal year ending
June 30, 2019. As permitted by the ASU in the year of adoption, CI has elected to present the analysis ofexpense by function and nature and the liquidity disclosure for just the year ended June 30, 2019.
Basis of presentation: The consolidated financial statements have been prepared in accordance withthe provisions of the FASB Accounting Standards Codification (ASC) 958, Not-for-Profit Entities, which
stipulated that net assets, support and revenue are classified into two categories according to donorimposed restrictions: net assets without donor-imposed restrictions and net assets with donor-imposed
restrictions:
Net assets without donor restrictions: Net assets without donor restrictions consist ofcontributions, contract revenue, investment income, and other inflows of assets whose use is not
subject to donor imposed stipulations. The Board of Directors may designate a portion of these
net assets for a specific purpose; however, these funds are classified as net assets without donor
restrictions. Investment income generated by the endowment fund supports training and general
CI operations, up to the limits set by the endowment spending policy.
Net assets with donor restrictions: Net assets with donor restrictions include contribution, grantand contract revenue, investment income, and other inflows of assets whose use is subject todonor-imposed stipulations that either expire by the passage of time, will be met by actions of CI
pursuant to those stipulations (e.g., usage of specific programs), or requires that the principal
must be maintained permanently by CI. When a stipulated time restriction ends or purpose
restriction is satisfied, net assets with donor restrictions are reclassified to net assets without
donor restrictions and are reported on the consolidated statement of activities as net assets
released from donor restrictions.
Use of estimates: The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the consolidated financial statements. Actual results could
differ from those estimates.
Foreign currency transactions: The consolidated financial statements and transactions of CI’s foreign
operations are generally maintained in the relevant local currency. Monthly expenses that are incurred byfield offices and affiliates in foreign countries are paid at local currency and then translated into U.S.
dollars at the rate of exchange in effect during the month of the transaction.
Foreign currency translation: The functional currency of CI is the U.S. dollar. Gains and losses resulting
from translations of foreign currencies into U.S. dollars are recognized as other income and losses in the
consolidated statements of activities. Where local currencies are used, assets and liabilities are translated
into U.S. dollars at the consolidated balance sheet date at the exchange rate in effect on that date.
8

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 2.

Significant Accounting Policies (Continued)

Allocation of functional expenses: The costs of providing the various programs and other activities
have been summarized on a functional basis in the consolidated statements of activities. Accordingly,
certain costs have been allocated among the programs and supporting services benefited. Due to thebroad responsibilities and cross-functional nature of the executive leadership, their offices are allocatedbased on estimates of time and effort. Certain costs of the Communications department are also
allocated based on estimates of time and effort. Depreciation, information technology, and other office
operating costs are allocated based on the number of employees.
Foreign operations: The accompanying consolidated financial statements include the worldwide
operations of CI (field and branch offices). At June 30, 2019 and 2018, assets held in foreign countries
totaled $19,752,000 and $19,647,000, respectively. The consolidated statements of activities include
support and revenue of $11,715,000 and $13,813,000 from foreign country programs for the years ended
June 30, 2019 and 2018, respectively.
Cash and cash equivalents: Cash and short-term investments with maturities at dates of purchase of
three months or less are classified as cash and cash equivalents, except that any such cash or investmentspurchased with endowment funds or with management-designated investment funds are classified as
investments.
Investments: Investments are carried at estimated fair market value in the consolidated balance sheets.
Fair value of investments are estimated based on quoted market prices where available. Investments
may include some short-term investments, which consist primarily of money market funds and othershort-term investments temporarily held by investment managers.
Investments in investment partnerships are valued at fair value, based on the applicable percentage
ownership of the underlying partnership’s net assets as of the measurement date, as determined by CI. In
determining fair value, CI utilizes valuations provided by the fund manager of the underlying investment
partnerships. The underlying investment partnerships value securities and other financial instruments on
a fair value basis of accounting. The estimated fair values of certain investments of the underlying
investment partnerships, which may include private placements and other securities for which prices are
not readily available, are determined by CI for the respective investment partnerships and may not reflect
amounts that could be realized upon immediate sale, nor amounts that may be ultimately realized.
Accordingly, the estimated fair values may differ significantly from the values that would have been used
had a ready market existed for these investments.
The fair value of CI’s investments in other investment partnerships generally represents the amount CI
would expect to receive if it were to liquidate its investment in the investment partnerships, excluding any
redemption charges that may apply. CI may adjust the respective manager’s valuation whencircumstances support such an adjustment.
Investment income and net appreciation (depreciation) on investments are reported as follows, whenearned:••As increases (decreases) in net assets with donor restrictions, if the terms of the gift or state law
impose restrictions on the current use of the investment income or net appreciation (depreciation).
As increases (decreases) in net assets without donor restrictions in all other cases.

9Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 2.

Significant Accounting Policies (Continued)

Concentrations of credit and market risk: CI’s financial instruments that are exposed to concentrationsof credit risk consist primarily of its cash and cash equivalents, investments and grants and pledges
receivable. CI invests its excess cash and cash equivalents and maintains its investments with high-quality
financial institutions. CI had $16,097,000 and $12,741,000 of cash and cash equivalents on hand and at
financial institutions in foreign countries at June 30, 2019 and 2018, respectively. The majority of thefunds invested in foreign countries are uninsured. At times, CI maintains cash balances at financial
institutions in the United States in excess of Federal Deposit Insurance Corporation (FDIC) limits. CI has
not experienced any losses in such accounts, and management believes the risk in these situations to beminimal. The composition and maturities of investments, as well as investment performance, are regularly
monitored by management.
CI invests in common stocks, mutual funds, money market funds, fixed income securities, exchange
traded funds, partnerships and private equities. These investments are exposed to various risks, such as
interest rate, market and credit. Due to the level of risk associated with such investments, and the level of
uncertainty related to changes in the value of such investments, it is possible that changes in risks in thenear term could materially affect investment balances and amounts reported in the consolidated financial
statements.
Grants, contributions and promises to give: Grants, contributions and promises to give are recognizedas support in the year that they are unconditionally received from the donor. They are reported asincreases in the appropriate category of net assets. Grants, contributions and promises to give that will
not be collected within one year have been discounted at a rate commensurate with the risks involved at
the time the gift was pledged, based upon anticipated payment dates. CI has established an allowance
for uncollectible pledges in the amount of $462,000 and $642,000 at June 30, 2019 and 2018,
respectively. This allowance is mainly based on potential de-obligations of existing restricted pledges.
Historically, de-obligations mainly arose in cases where CI has completed the project at less than the fullamount of the associated grant, and less frequently, when the donor chooses to discontinue funding for
economic or other reasons.
Contributions include in-kind gifts that consisted of donated professional fees, equipment and airfare. The
in-kind contributions are recorded at their fair value as of the date the goods or services are provided. Inkind contributions were $1,153,000 and $796,000 for the years ended June 30, 2019 and 2018, respectively.
Notes receivable: Notes are recorded as receivables at face value when the agreement is signed byboth parties. Related interest income is recognized as it is earned. An allowance for uncollectible notes isbased on an evaluation of the collectability of the principal and interest. There was no allowance foruncollectible notes receivable as of June 30, 2019 or 2018.
Property and equipment: Property and equipment are stated at cost and depreciated on the straight-line
basis over their related estimated useful lives, generally three to five years. Assets with a unit cost of$5,000 or more are capitalized. Expenditures for maintenance and repairs that do not improve or extend
the lives of the respective assets are expensed as incurred. Leasehold improvements are recorded atcost and are amortized over the lesser of the asset’s useful life or the life of the lease. Land and buildings
are stated at cost; buildings are depreciated on the straight-line basis over an estimated useful life of 30
years. When assets are retired or sold, the related cost and accumulated depreciation are removed fromthe accounts and any gain or loss on retirement or disposal of the assets is recorded as revenue or
expense.

10

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 2.

Significant Accounting Policies (Continued)

Impairment of long-lived assets: CI requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset tofuture undiscounted net cash flows expected to be generated by the asset. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by which the carrying amountof the assets exceeds the estimated fair value of the assets. Assets to be disposed of are reported at thelower of the carrying amount or fair value, less costs to sell.
Notes payable: Notes payable are recognized as liabilities in the year funds are received from the lender.
Grants payable: For agreements considered to be contributions, grants are recognized as liabilities in theyear CI makes the unconditional commitment. For agreements considered to be exchange transactions,the payable is recognized as expenses are incurred by grantees over the reporting period.
Deferred revenue: CI records grant payments received in advance of satisfying the donor-imposed
conditions as deferred revenue.
Income taxes: CI is exempt from income taxes under Section 501(c)(3) of the IRC. In addition, CI has
been determined by the Internal Revenue Service (IRS) not to be a private foundation. CI is subject tounrelated business income taxes under Section 512 of the IRC; however, in the opinion of management,
no provision for income taxes is required to be made.
CI follows the accounting standard on accounting for uncertainty in income taxes, which addresses thedetermination of whether tax benefits claimed or expected to be claimed on a tax return should berecorded in the consolidated financial statements. Under this guidance, CI may recognize the tax benefit
from an uncertain tax position only if it is more likely than not that the tax position will be sustained on
examination by taxing authorities, based on the technical merits of the position. The tax benefits
recognized in the consolidated financial statements from such a position are measured based on thelargest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The
guidance on accounting for uncertainty in income taxes also addresses de-recognition, classification,interest and penalties on income taxes, and accounting in interim periods.
Management evaluated CI’s tax positions and concluded that CI had taken no uncertain tax positions that
require adjustment to the consolidated financial statements to comply with the provisions of this guidance.
Generally, CI is no longer subject to income tax examinations by the U.S. federal, state or local tax
authorities for years before 2016.
The aforementioned field offices are organized as tax-exempt entities in their respective countries, withthe exception of CI-Guyana. This field office is organized under the Companies Act of Guyana regulations.
Its by-laws prohibit the accumulation or distribution of profits.
Reclassification: Certain items within the consolidated statement of activities for the year ended June 30,2018 have been reclassified to conform to the financial statement presentation for the year ended June 30,
2019. The reclassifications had no effect on the previously reported change in net assets or net assets.

11

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 2.

Significant Accounting Policies (Continued)

Recent accounting pronouncements: In May 2014, the FASB issued ASU No. 2014-09, Revenue fromContracts with Customers (Topic 606), requiring an entity to recognize the amount of revenue to which it
expects to be entitled for the transfer of promised goods or services to customers. The updated standard
will replace most existing revenue recognition guidance in generally accepted accounting principles in the
United States of America when it becomes effective and permits the use of either a full retrospective or
retrospective with cumulative effect transition method. This ASU will be effective for CI for the fiscal year
ending June 30, 2020. Management is currently evaluating the effect that the standard will have on its
consolidated financial statements.
In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in this ASU
supersedes the leasing guidance in Topic 840, Leases. Under the new guidance, lessees are required torecognize lease assets and lease liabilities on the consolidated balance sheets for all leases with terms
longer than 12 months. Leases will be classified as either finance or operating, with classification affecting
the pattern of expense recognition in the income statement. The new standard will be effective for CI for
the fiscal year ending June 30, 2022. A modified retrospective transition approach is required for lessees
for capital and operating leases existing at, or entered into after, the beginning of the earliest comparative
period presented in the consolidated financial statements, with certain practical expedients available. CI iscurrently evaluating the impact of the pending adoption of the new standard on its consolidated financial
statements.
In June 2018, the FASB issued ASU No. 2018-08, Not-for-Profit Entities (Topic 958): Clarifying the Scopeand the Accounting Guidance for Contributions Received and Contributions Made. The purpose of the
ASU is to clarify and improve the scope and the accounting guidance for contributions received andcontributions made. The amendments in the ASU should assist entities in: 1) evaluating whether
transactions should be accounted for as contributions (nonreciprocal transactions) within the scope of
Topic 958, Not-for-Profit Entities, or as exchange (reciprocal) transactions subject to other guidance and2) determining whether a contribution is conditional. The amendments in the ASU should be applied on amodified prospective basis, although retrospective application is permitted. Where CI is the resource
recipient, the ASU will be effective for the fiscal year ending June 30, 2020. Where CI is a resource provider,
the ASU will be effective for the fiscal year ending June 30, 2021. Early adoption is permitted. CI iscurrently evaluating the impact of the pending adoption of this new standard on its consolidated financial
statements.
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure
Framework — Changes to the Disclosure Requirements for Fair Value Measurement. The ASU results in
the removal, modification and addition of certain disclosure requirements related to transfers between
levels within the fair value hierarchy, valuation processes and unrealized gains/losses presentation forLevel 3 measurements, and liquidation timing for investments held at net asset value. The changes in thisASU should generally be applied on a retrospective basis in the year that the ASU is first applied except forthe changes related to Level 3 measurements, which should be applied prospectively. ASU No. 2018-13
will be effective for CI for the fiscal year ending June 30, 2021. Management is currently evaluating theimpact of this ASU on its consolidated financial statements.
Subsequent events: CI evaluated subsequent events through January 20, 2020, which is the date theconsolidated financial statements were available to be issued.

12

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 3.

Liquidity

CI receives substantial contributions with donor time and purpose restrictions. In addition, CI receives
support without donor restrictions; such support has historically represented approximately 18% of annual
program funding needs, with the remainder funded by investment income without donor restrictions andappropriated earnings from gifts with donor restrictions.
Contributions without donor restrictions, contributions with donor restrictions for use in current activities
and programs, investment income without donor restrictions, and earnings appropriated from endowmentswith donor restrictions and board-designated endowments are considered to be available to meet cashneeds for general expenditures. General expenditures include administrative and general expenses,
fundraising expenses and grant commitments expected to be paid in the subsequent year. Annual
operations are defined as activities occurring during, and included in the budget for, a fiscal year.
CI manages its cash available to meet general expenditures following three guiding principles:•••

Operating within a prudent range of financial soundness and stability,
Maintaining a sufficient level of asset liquidity, andMonitoring and maintaining reserves to provide reasonable assurance that long-term grantcommitments will continue to be met.

CI regularly monitors liquidity required to meet its annual operating needs and other contractual
commitments while also striving to maximize the return on investment of its funds not required for annual
operations. As of June 30, 2019, the following financial assets are available to meet annual operatingneeds for the upcoming fiscal year (in thousands):

Financial assets at year-end:
Cash and cash equivalents
Investments
Grants and promises to give, net
Project advances to partners
Notes receivable, net
Total financial assets available
Less amounts not available to be used within one year:
Investments related to board-designated endowment
Grants and promises to give due after June 30, 2020
Project advances to partners due after June 20, 2020
Notes receivable due after June 30, 2020
Deferred revenue to be recognized after June 30, 2020
Time and purpose restricted net assets released after June 30, 2020
Perpetual restricted net assets
Financial assets available to meet general expenditures within one year$$

66,616
264,732
28,7105,269
1,100
366,427
12,708
6,015
5,269
300
11,451
204,067
13,318253,128
113,299

CI has various sources of liquidity at its disposal, including cash and cash equivalents, amounts due fromdonors within one year, and investments in marketable securities. Additionally, CI has a board-designatedendowment of $12,708,000 as of June 30, 2019. Although there is no intention to spend from its boarddesignated endowment funds other than amounts appropriated each year for general expenditures, theamounts from its board-designated endowment could be made available if necessary. Note that theboard-designated endowment fund, donor-restricted endowments, and several other investments cannot
be redeemed and made available within one year (see Note 4 for disclosures about investments).
13

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 4.

Investments and Fair Value Measurements

Investment income for the years ended June 30, 2019 and 2018, consists of the following (in thousands):

2019
Realized and unrealized gain, net
Interest and dividends
Investment management fees

$

$

9,616
5,434
(890)
14,1602018$$

11,2994,485(1,309)14,475The Fair Value Measurement Topic of the FASB ASC establishes a fair value hierarchy that is based on
the valuation inputs used in the fair value measurement. Fair value is defined as the price that would bereceived to sell an asset or paid to transfer a liability in an orderly transaction between market participantsat the measurement date, and sets out a fair value hierarchy. The fair value hierarchy gives the highest
priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority
to unobservable inputs (Level 3). Inputs are broadly defined as data that market participants would use inpricing an asset or liability. The three levels of the fair value hierarchy are described below:
Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting
entity has the ability to access at the measurement date. The types of investments included in
Level 1 include listed equities such as common stocks, mutual funds, money market funds andexchange traded funds.
Level 2: Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either
directly or indirectly, and fair value is determined through the use of models or other valuation
methodologies. Investments which are generally included in this category include fixed income
securities, less liquid and restricted equity securities and certain over-the-counter derivatives.
Level 3: Inputs are unobservable for the asset or liability and include situations where there is little, ifany, market activity for the asset or liability. The inputs into the determination of fair value arebased upon the best information in the circumstances and may require significant management
judgment or estimation. CI has no investments classified as Level 3 at June 30, 2019 and 2018.
In certain cases, the inputs used to measure fair value may fall into different levels of the fair value
hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest levelof input that is significant to the fair value measurement. CI’s assessment of the significance of aparticular input to the fair value measurement in its entirety requires judgment and considers factors
specific to the investment.

14

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 4.

Investments and Fair Value Measurements (Continued)

The table below presents the balances of assets measured at fair value on a recurring basis by levelwithin the hierarchy as of June 30, 2019 (in thousands):
2019
Description
Cash and cash equivalents:
Money market funds
Investments:
Common stocks:
Consumer goods
Industrial goods
Financial Services
ServicesTechnology
Healthcare
Basic materials
Real estate
Total common stocks
Mutual funds:
Mutli-sector equity funds
Mutli-sector bond funds
Total mutual funds
Fixed income:Corporate bonds
U.S. government bonds
Municipal bonds
Total fixed income
Other assets:
Money market funds
Gold exchange traded fundTotal other assets
Total publicly traded securities
Other investments measured at
net asset value (a)Level 1

Level 3

Level 2

Total

$

9,495

$

-

$

-

$

9,495

$

19,388
6,131
5,990
1,465
891
548
141
55
34,609

$

-

$

-

$

19,388
6,131
5,990
1,465
891
548
141
55
34,609$27,581
81
27,662--

27,581
81
27,662-54,06043,317
13,996111,373-

54,06043,317
13,996111,373

7,872
1,199
9,071
71,342

111,373

-

7,872
1,199
9,071
182,715

71,342$ 111,373

15

$

-

$

82,017
264,732

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 4.

Investments and Fair Value Measurements (Continued)

The table below presents the balances of assets measured at fair value on a recurring basis by levelwithin the hierarchy as of June 30, 2018 (in thousands):

Description
Cash and cash equivalents:
Money market funds
Investments:
Common stocks:
Industrial goods
Financial services
Services
Consumer goods
Healthcare
Technology
Basic materials
Real estate
Total common stocks
Mutual funds:
Mutli-sector equity funds
Mutli-sector bond funds
Total mutual funds
Fixed income:
Certificates of deposit
Municipal bonds
U.S. government bonds
Corporate bonds
Total fixed income
Other assets:
Money market funds
Gold exchange traded fundTotal other assets
Total publicly traded securities
Other investments measured at
net asset value (a)2018Level 2
Level 3

Level 1

Total$

32,209$-$-$ 32,209$

18,938
8,778
6,811
3,012
834
593
344
39,310$-$-$ 18,938
8,778
6,811
3,012
834
593
344
39,310$36,167
61
36,228--36,167
61
36,228-40,24926,802
18,373917
86,341-

40,24926,802
18,373917
86,341

20,856
1,068
21,924
97,462

86,341-

20,856
1,068
21,924
183,803

97,462

86,341-

67,344$ 251,147$$(a) In accordance with ASC Topic 820-10, certain investments that are measured at fair value using the
net asset value per share (or its equivalent) practical expedient have not been classified in the fairvalue hierarchy. The fair value amounts presented in this table are intended to permit reconciliation of
the fair value hierarchy to the amounts presented in the consolidated balance sheets.

16Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 4.

Investments and Fair Value Measurements (Continued)

Alternative investments are less liquid than CI’s other investments. The following tables set forth
additional disclosures of CI’s investments whose fair value is estimated using net asset value per share(or its equivalent) as of June 30, 2019 and 2018.
The following table provides additional information about the investments by strategy (in thousands):
Fair Value at June 30,
2018
2019

Investment Strategy
Equity (a)Fixed income (b)$$78,082
3,935
82,017$$

63,9893,355
67,344

UnfundedCommitments$$

17,596
17,596

Redemption
Frequency

Redemption
Notice Period

Semi-monthly annually
N/A

5-90 days
N/A(a) This category includes investments in equities across all sectors and geographic regions, including
several long and short hedge funds. The investment strategies of these funds focus on an event or acatalyst that will move an equity price, an equity spread, a credit spread or an implied volatility
spread, offering a blend of both growth and value investing styles. Most of the securities underlying
the funds are marketable equities. About 80% of the funds have a redemption frequency between
weekly to quarterly. The remaining funds can be redeemed annually or at the time of their termination.
(b) This category includes a variety of fixed income investments. It includes investment in a multi-sector
fixed-income relative-value fund, as well as investment in secured U.S. middle market secured loans
and private debt. The investments held as of June 30, 2019, cannot be liquidated in advance of theirnatural termination.
Note 5.

Grants and Promises to Give Receivable

CI considers grants and promises to give receivable to be collectible within one year, unless otherwise
stated by the donor. Unconditional grants and promises to give as of June 30 are due as follows (inthousands):
2019
Within one year
Two to five years
Over five years
Gross grants and promises to give
Discount to present value
Allowance for doubtful pledges
Net grants and promises to give receivable$$

23,395
6,015
29,410(238)(462)
28,7102018$$

27,3558,866
298
36,519(439)(642)
35,438At June 30, 2019 and 2018, $54,000 and $616,000, respectively, had been conditionally pledged to CI.
Because of uncertainties with regard to their realization, conditional promises are recognized only if andwhen the specified conditions are met. As such, these amounts are not reported in the accompanying
consolidated balance sheets or consolidated statements of activities.

17

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 5.

Grants and Promises to Give Receivable (Continued)

CI’s grants and promises to give receivable balance include receivables from the federal government,
foreign governments and private donors. CI’s ten largest contributors during the year ended June 30,
2019, comprised approximately 44% or $66,158,000 of total support and revenue. CI’s ten largest
contributors during the year ended June 30, 2018, comprised approximately 48% or $71,505,000 of total
support and revenue. CI’s ten largest grants and promises to give contributor receivable balances, before
net present value and allowance for uncollectible pledges, comprised approximately 81% or $23,685,000
at June 30, 2019, and 74% or $27,034,000 at June 30, 2018.
Note 6.

Project Advances to Partners

As an accredited implementing agency of the Global Environment Fund (the GEF), CI has entered into alimited partnership agreement in an impact investment fund. The investment objectives of the fund are 1)
to generate measurable social and environmental outcomes and provide reasonable financial returns forinvestors by making debt and equity investments in fishing and seafood-related enterprises and 2) todemonstrate the effectiveness of private capital investment as a catalyst to help coastal fisheries toachieve economic, social, and environmental sustainability.
During the year ended June 30, 2018, CI committed and paid $6,000,000 to the fund, of which $671,000
was deployed as a capital contribution and the balance of $5,329,000 remained as a project advance tothe partner. During the year ended June 30, 2019, $60,000 was additionally deployed and the balance of$5,269,000 remained as a project advance to partner.
Note 7.

Notes Receivable

CI made loans to small and medium-sized enterprises, which support conservation and conservationoriented employment in the regions in which CI works. The outstanding notes receivable balance atJune 30, 2019, bears interest at rates ranging from 3% to 9.26% and are due between July 2019 andJune 2024.
At June 30, 2019 and 2018, notes receivable, less allowance for uncollectible notes, totaled $1,100,000
and $300,000, respectively. The allowance for uncollectible notes at June 30, 2019 and 2018 was $0.
The following schedule shows required future minimum repayments (in thousands):

Year ending June 30:
2020
2021
2022
2023
2024

$

$

18

800
300
1,100

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 8.

Property and Equipment

Property and equipment at June 30, 2019 and 2018, consist of the following (in thousands):
2019
Furniture and equipment
Leasehold improvements
Land
Buildings$

Accumulated depreciation and amortization
Net property and equipment

$

6,840
5,463
131
564
12,998(6,384)
6,614

2018
$

$

8,569
3,715
1,784
552
14,620(10,249)
4,371

Depreciation and amortization expense for the years ended June 30, 2019 and 2018, was $1,270,000
and $1,024,000, respectively. As a result of restructuring and consolidation of CI’s office space in
Arlington, VA during the fiscal year ended June 30, 2019, $5,337,000 in fixed assets and $4,855,000 inaccumulated depreciation were written off and disposed of.
Note 9.

Notes Payable

Notes payable at June 30, 2019 and 2018, consist of the following (in thousands):
2019
L’Agence Française de Développement

$

547

2018
$

766

CI entered into note agreements with L’Agence Française de Développement (AFD) to provide loans tosmall and medium-sized enterprises, which support biodiversity conservation and conservation-oriented
employment in the areas where CI works. The remaining loan principal is due between July 2019 andJuly 2021 and bears interest at a 1.12% rate. The loan agreement has several covenants, including ratios
regarding liquidity and debt-to-net assets.
The following schedule shows required future principal payments as of June 30, 2019 (in thousands):

Years ending June 30:
2020
2021
2022

$

$

219
219
109
547

Interest expense for the years ended June 30, 2019 and 2018, was $11,000 and $12,000, respectively.

19

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 10.

Grants Payable

CI enters into grant agreements with various domestic and foreign organizations. For agreements
considered to be contributions, CI expenses the grant obligation and records the corresponding liability
when the grant agreements are signed because the grants are unconditional. For agreements considered
to be exchange transactions, CI recognizes the liability based on expenses incurred by grantees over thereporting period. As of June 30, 2019 and 2018, CI’s total grant payable were $2,059,000 and $4,653,000,
respectively. CI disburses grant funds to grant recipients based upon the recipients’ cash needs and does
not schedule these payments in advance. CI estimates that the majority of this balance will be paid torecipients within the next fiscal year, so no discount on these payments is calculated.
Note 11.

Net Assets

The components of CI’s net assets were as follows as of June 30, 2019 and 2018 (in thousands):

2019
Without donor restrictions:
UndesignatedBoard-designatedTotal net assets without donor restrictions$$

With donor restrictions:Time and purpose restriction
Perpetual in nature
Total net assets with donor restrictions

$
$

2018

5,016
12,70817,724$284,227
13,318297,545$

4,792
12,55917,351$

286,467
13,318299,785$

Net assets with donor restrictions are funds with time or purpose stipulations imposed by the donor.
During the year ended June 30, 2019, there were $125,765,000 in new funds with donor restrictions and$127,675,000 released from restrictions. These funds also incurred a net loss of $330,000 due to foreign
currency translations. These activities resulted in a $297,545,000 net asset with donor restrictionsbalance as of June 30, 2019, consisting of the following amounts by program (in thousands):
Operating
Additions

June 30, 2018
Management and operations * $Grantmaking divisions
Country, regional and ocean
Policy and Strategy
Moore Center for Science
Communications
Center for Environmental
Leadership in BusinessCenter for Communities
and Conservation$

211,040
49,321
28,754
4,396
2,784
2,042

$

5,534
19,81755,91814,41011,297
9,999

OperatingReleases$(9,896)(29,706)(55,446)(6,826)(8,339)(9,636)

Non-Operating
Activity
$

(277)
(43)
(8)
(2)
-

1,126

2,862

(3,035)

-

322

5,928

(4,791)-

299,785$

125,765$(127,675)

$

(330)

* This amount is restricted due to time or is unallocated flexible funding for future years.

20

June 30, 2019$

206,401
39,38929,218
11,980
5,740
2,405
953
1,459

$

297,545

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 11.

Net Assets (Continued)

During the year ended June 30, 2018, there were $124,359,000 in new funds with donor restrictions and$136,074,000 released from restriction. These funds also incurred a net loss of $802,000 due to foreign
currency translations. These activities resulted in a $299,785,000 net asset with donor restrictionsbalance as of June 30, 2018, consisting of the following amounts by program (in thousands):
Operating
Additions

June 30, 2017Management and operations * $Grantmaking divisions
Country, regional and ocean
Policy and Strategy
Moore Center for Science
Communications
Center for Environmental
Leadership in BusinessCenter for Communities
and Conservation
Other programs
Policy$213,453
54,38035,840
2,689
4

$

5,528
35,74949,971
8,085
11,770OperatingReleases$(7,118)(40,844)(57,083)(7,988)(9,732)

Non-Operating
Activity
$

(862)
36
26
(2)
-

Reclassifications June 30, 2018
$

39
4,396
-

$ 211,040
49,321
28,754
4,396
2,784
2,042
1,126

1,511

2,149

(2,534)

-

-

3,149
1,276
312,302

5,076
6,031
124,359(3,790)(6,985)(136,074)

(802)

322
(4,435)
(322)
-

$

$

$

$

322
$ 299,785* This amount is restricted due to time or is unallocated flexible funding for future years.
Note 12.

Endowment Funds

Management has interpreted the Uniform Prudent Management of Institutional Funds Act of 2006 (UPMIFA)
as requiring the preservation of the fair value of original donor-restricted contributions as of the date of thegift, absent explicit donor stipulations to the contrary. As a result of this interpretation, CI classifies as
donor restricted endowments: (a) the original value of permanently restricted cash contributions and (b) the
discounted value of the future perpetually restricted cash contributions. The remaining portion of thedonor-restricted cash contributions are classified as net assets with donor restrictions (time and purpose
restricted) until those amount are appropriated for expenditure in a manner consistent with the standardof prudence prescribed by UPMIFA. In accordance with UPMIFA, CI considers the following factors inmaking a determination to appropriate or accumulate donor-restricted cash contributions:
•
•
•
•
•
•
•

The purpose of CI and donor-restricted endowment fund
The duration and preservation of the fund
General economic conditions
The possible effect of inflation and deflation
The expected total return from income and the appreciation of investments
Other available financial resources
Investment policies

21

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 12.

Endowment Funds (Continued)

CI’s endowment funds consist of the following at June 30, 2019 and 2018 (in thousands):
2019With Donor Restrictions
Time and Purpose
Perpetual In Nature

Without Donor
Restrictions
Donor-restricted endowment funds
Board-designated endowment funds

12,70812,708

$
$

$
$

$

12,55912,559$$$13,31813,318$$

2018
With Donor Restrictions
Time and Purpose
Perpetual In Nature

Without Donor
Restrictions
Donor-restricted endowment funds
Board-designated endowment funds

11,077
11,077

Total

10,818
10,818$$$$24,395
12,70837,103

Total

13,31813,318$$24,136
12,55936,695Endowment fund activity for the years ended June 30, 2019 and 2018, consists of the following (inthousands):
2019With Donor Restrictions
Time and Purpose
Perpetual In Nature

Without Donor
Restrictions
Endowment net assets, beginning of year
Investment return:Interest and dividends
Realized and unrealized
gains on investments, net
Amounts appropriated for expenditure
Endowment net assets, end of year$$

12,559$$$$13,318$36,695

125

240

-

365

617
(593)
12,7081,186(1,167)
11,077

13,318

1,803(1,760)37,103$

11,189$$2018
With Donor Restrictions
Time and Purpose
Perpetual In Nature

Without Donor
Restrictions
Endowment net assets, beginning of year
Investment return:Interest and dividends
Realized and unrealized
gains on investments, net
Amounts appropriated for expenditure
Contributions
Endowment net assets, end of year

10,818

Total

$

9,865

$

13,317

Total$

34,371

98

206

-

304

854
(513)
931
12,5591,782(1,035)
10,8181
13,3182,636(1,548)932
36,695

$

22

$

$

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 12.

Endowment Funds (Continued)

Endowment funds are invested in the following manner as of June 30, 2019 and 2018 (in thousands):
2019
Common stocks
Alternative investments
Fixed income
Mutual funds
Commodities
Money market funds$$

15,00814,386
5,287
1,223
1,199
37,1032018$$

17,197
12,099
3,655
1,767
1,068
909
36,695Investment and spending policies: CI has adopted investment and spending policies for endowment
assets that attempt to provide a predictable stream of funding to programs supported by its endowment,
while seeking to maintain the purchasing power of the endowment assets. CI’s spending and investment
policies work together to achieve this objective through diversification of asset classes. The current longterm return objective is to generate a return that supports a 5% spending rate, while generating sufficient
return to maintain the purchasing power of the corpus of the funds.
To satisfy its long-term rate of return objectives, CI relies on a total return strategy in which investment
returns are achieved through both capital appreciation (realized and unrealized) and current yield (interestand dividends). CI targets a diversified asset allocation that places a greater emphasis on equity-based
investments to achieve its long-term return objectives within prudent risk parameters.
The spending policy calculates the amount of appropriations annually distributed from CI’s various
endowed funds for grant making and administration. The current spending policy is to distribute the lesserof the accumulated earnings or 5% of the total endowment assets’ average balance of the preceding
calendar year. If economic indicators suggest a downturn in investments, CI may choose to reduce thespending percentage to ensure the corpus is preserved.
Annual returns in excess of spending are re-invested in the endowment assets. In the event that anendowment fund experiences investment losses in a particular year, these losses will be attributed to thatfund.
Unspent earnings on the endowment fund, net of expenses incurred, totaled $11,077,000 and$10,818,000 at June 30, 2019 and 2018, respectively, and are included in net assets with donor
restrictions (time and purpose).

23Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 13.

Retirement Plans

Eligible U.S. paid employees participate in a defined contribution retirement plan. CI matches employee
contributions up to 6% of basic salary. Contributions made by CI during the years ended June 30, 2019and 2018, amounted to $1,942,000 and $1,844,000, respectively.
CI has established an International Retirement Savings Plan (IRSP) for in-country staff working in CI’s
field offices. CI adopted the IRSP with an effective participation date of January 1, 2001. In accordancewith the IRSP, CI makes annual contributions of 3% of each eligible staff person’s annual salary.
Contributions for the years ended June 30, 2019 and 2018, were $237,000 and $218,000, respectively.
As of June 30, 2019 and 2018, CI’s accumulated liability was $1,322,000 and $1,219,000, respectively,
which is included in accrued salaries, vacation and employee benefits in the accompanying consolidatedbalance sheets. An independently managed investment fund accumulating vested and non-vested CI
contributions is included within investments in the accompanying consolidated balance sheets.
CI’s Board of Directors has established a Section 457(b) supplemental employee retirement plan (thePlan). Under the terms of the Plan, eligible employees elect to deposit a percentage of their compensation
into the Plan, subject to IRS limits. Employee deposits and accumulations are accounted for as an asset
and offsetting liability on CI’s balance sheets until they are distributed to the participants. The amount ofdeposits and related accumulations were $69,000 and $48,000 at June 30, 2019 and 2018, respectively.
Note 14.

Related Party Transactions

During the year ended June 30, 2011, CI-Brazil, an affiliate of CI, entered into a purchase and salecommitment with a related party to sell Rio Negro Comercio, Servicos e Turismo, a property consisting ofa lodge situated on 7,647 hectares in the state of Mato Grosso do Sul protected area for the amount ofBrazilian Real 7,200,000. The property was appraised by an independent appraiser, and was advertisedfor sale in a prominent Brazilian newspaper. The sale price was consistent with the appraised price andwas the most favorable price offered. Under the terms of the sale, the buyer: (i) may not subdivide theland, (ii) will provide CI-Brazil and other offices of CI the right of first refusal to re-purchase the land in theevent that the buyer decides to sell the land and (iii) requires any third-party purchaser not to subdivide
the land in the event that CI-Brazil decides not to exercise its right of first refusal to re-purchase the land.
Additionally, CI will retain the right to have access to the land for training and research purposes. The
execution of the deed of purchase and sale of the land was subject to several conditions. During fiscal
year ended 2019, the conditions were met, and the sale was recorded. As of June 30, 2019, theremaining balance due by the buyer, monetarily corrected by Brazilian inflation, was estimated to be
Brazilian Real 3,678,000. This final payment was received in November 2019.
During the year ended June 30, 2019, CI continued to support a related party under a services agreement
to provide technical and programmatic services while the related party built its capacity as an independent
organization. This organization’s mission, which CI shares, places a specific focus on ensuring indigenous
peoples have the economic power and cultural independence to steward, support, and protect theirlivelihoods and territories. For the year ended June 30, 2019, CI received $636,000 in contract revenue
for services provided and $109,000 in grant revenue for work with indigenous people. At June 30, 2019,
there is a remaining related party net receivable balance of $66,000.

24

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 15.

Commitments and Contingencies

Leases: CI leases office space in Arlington, Virginia; Seattle, Washington; Honolulu, Hawaii; and foreigncountries. CI is also obligated under several non-cancelable leases for office equipment. In addition, CI
holds land concessions in Guyana.
The lease for CI’s Arlington, Virginia headquarters was signed on March 31, 2006, and began on
December 1, 2006. On December 26, 2017, an amendment to the lease agreement was signed reducing
the rentable square footage occupied by CI and cost per square foot of the lease. Additionally, the term of
the lease was extended an additional 15 years, expiring on November 30, 2036.
CI has entered into several noncancelable lease agreements, and the following is a schedule of future
minimal payments by year (in thousands):
Years ending June 30:
2020
2021
2022
2023
2024
Thereafter

$

$

4,597
4,140
3,002
2,251
2,214
29,44245,646

Total rent expense for the years ended June 30, 2019 and 2018, was $4,461,000 and $4,648,000,
respectively. Rent expense is recorded on a straight-line basis over the entire lease term. Lease
incentives, including rent abatements, are being amortized over the remaining life of the lease. The
unamortized portion of these incentives is included in accounts payable and accrued expenses in theaccompanying consolidated balance sheets.
U.S. federal grants: CI receives grants from various agencies of the U.S. government. Such grants are
subject to audit and periodic reviews by grantor agencies. The ultimate determination of amounts
received under the U.S. government grants is based upon the allowance of costs reported to andaccepted by the U.S. government as a result of the audits. Until such audits have been accepted by the
U.S. government, there exists a potential contingency to refund any amount received in excess ofallowable costs. Management is of the opinion that no material liability will result from such audits.
CI’s undrawn letter of credit with the U.S. government at June 30, 2019 and 2018, was $2,567,000 and$3,427,000, respectively. CI draws funds quarterly, based on the prior quarter’s spending.
Litigation: CI is involved in various claims and legal actions arising in the ordinary course of business. Basedupon information currently available, management believes the ultimate disposition of these matters will nothave a material adverse effect on its consolidated financial position, changes in net assets or cash flows.
Self-insured health plan: CI has a self-insured health insurance plan for its employees and their
qualifying dependents. CI holds stop-loss insurance coverage, which limits CI’s liability to an aggregate
maximum claim liability per policy year of $1,000,000 and $150,000 per individual claim. At June 30, 2019and 2018, CI had medical claims accruals of $281,000 and $296,000, respectively, which are included in
accrued salaries, vacation and employee benefits in the accompanying consolidated balance sheets.

25

Conservation International Foundation and Affiliates
Notes to Consolidated Financial Statements
Note 16.

Analysis of Field Program Expenses

The following is a breakdown by region of country, regional, and ocean program related expenses (inthousands):
2019South and Central America
Asia Pacific
Africa and Madagascar
OceansGreater China

$

$

26

29,616
17,77815,162
5,416
1,819
69,791

2018$$

30,465
18,22914,015
5,494
2,956
71,159