Market downturn continues to spell trouble for Gwaii Forest

  • Sep. 12, 2008 2:00 p.m.

By Heather Ramsay–Gwaii Forest funds may be in jeopardy as the markets continue to fall. The Gwaii Forest Charitable Trust trustees will meet September 15 to discuss the ramifications of the low returns on the investments made with the $25 million fund. The money, which was formerly the South Moresby Forest Replacement Account, was turned over to islanders’ control in the spring of 2007. By July 2008, the fledgling fund had lost approximately $700,000 due to the downturns and the fund is not predicted to recover by the end of the year, says Gwaii Trust administrator Errol Winter. With no buffer built up to weather these market downfalls, the Gwaii Forest Charitable Trust may not be in a position to offer funds to the community in the short term, he says. “We have to decide what to do now,” he said, adding that the trustees will likely call a meeting with community leaders in October. The Gwaii Forest Society (which allocates the money available through the Gwaii Forest Charitable Trust) has already received a loan of $800,000 from the Gwaii Trust to cover grants and administrative commitments until March 2009, but a plan for the next fiscal year is needed. Mr. Winter says that in the last year, the two trusts have collectively depleted $13-million from the buffer that Gwaii Trust’s original $50-million had built up over the course of the last 15 years. This buffer was built with money set aside to cover inflation, as well as returns on investments, (which were in the double digits for 10 years). Dipping so deep into the buffer means that the value of the Gwaii Trust is down to around $70-million when it has been as high as $85-million, he says. This year, the money has been used to cover multi-year infrastructure commitments, as well as yearly grant allocations, administrative costs and investment losses. Because the Gwaii Trust had such a healthy buffer, its ability to offer grants to the community will not be affected. But Gwaii Forest was created two years ago, coinciding with the collapse of the markets and has had no opportunity to build a protective buffer, said Mr. Winter. “The timing was horrible,” he said. But the downturn will not be permanent and, as history has shown, the markets do eventually rise again. The Gwaii Forest Charitable Trust trustees will consult with their professional investment group to try and determine how long the situation will last and present this information to the community leaders. “But that’s all speculative,” Mr Winter said. Although the option exists to hold off on funding Gwaii Forest projects next year, Mr. Winter says there are other alternatives. The Gwaii Forest Society could raise funds through other sources or the Gwaii Trust could lend or give more money to it. Making these decisions is complicated by the governing structure of the Gwaii Forest Charitable Trust and the GFS. The GFCT is made up of three trustees: Gwaii Trust executive members Warren Foster and Rose Russ and the Gwaii Trust board. “The Gwaii Forest has come along the razor’s edge where we have to make those decisions,” Mr. Winter said.

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