GWAII TRUST ANNUAL REPORT 09/10

GWAII TRUST Box 588 Highway 16 Old Massett, Skidegate, Haida Gwaii V0T 1M0 V0T 1S1 • • 250.626.3654 250.559.8883 1.800.663.2388 1.877.559.8883

Gwaii Trust Society Annual Report - 2009/2010

GWAII TRUST ANNUAL REPORT 2009/20010 Gwaii Trust Society Annual Report - 2009/2010

People are like trees, and groups of people are like the forests. While the forests are composed of many different kinds of trees, these trees intertwine their roots so strongly that it is impossible for the strongest winds which blow on our islands to uproot the forest, for each tree strengthens its neighbour, and their roots are inextricably intertwined.

In the same way the people of our Islands, composed of members of nations and races from all over the world, are beginning to intertwine their roots so strongly that no troubles will affect them.

Just as one tree standing alone would soon be destroyed by the first strong wind which came along, so it is impossible for any person, any family, or any community to stand alone against the troubles of this world.

Chief Skidegate, Lewis Collinson March 1966

Oliver Bell is a member of the team working on the VIllage of Old ’s energy efficient apartment complex at New Town. Gwaii Trust Society Annual Report - 2009/2010

© Gwaii Trust, December 2010 Published by the Gwaii Trust

Gwaii Trust PO Box 588, Massett, Haida Gwaii V0T 1M0 250.626.3654 or 1.800.663.2388

Highway 16, Skidegate, Haida Gwaii V0T 1S0 250.559.8883

GWAII TRUST BOARD 2009 – 2010 Peter Lantin, Chairperson

Kim Mushynsky, Director, North Fran Redick, Alternate

Jim Abbott, Director, Graham Island Central CONTENTS Brock Storry, Alternate With INSIDEour Feet on the Ground 3 Students of the Shelley Sansome, Director, Graham Island South Higher Learning Society outside Introduction 5 – 7 Jaacques Morin, Alternate Kay Llnagaay at Skidegate. Where It All Began The Vision Warren Foster, Director, Area ‘E’ Value and Beliefs Kristi Schmitz, Alternate Principles Board Structure

Roles and Responsibilities of the Board Cynthia Samuels, Director, Council of the Haida Nation Legal Status Trevor Russ, Alternate Projects Funded in 2009/2010 9 Percy Crosby, Director, Council of the Haida Nation Cindy Boyko, Alternate Community Program Budget 2010 – 2011 11 Program Allocation Dates for 2010 – 2011 11 John T. Jones, Director, Council of the Haida Nation Cecil Brown, Alternate Operations Budget for 2010 – 2011 12

James Cowpar, Director, Council of the Haida Nation Financial Statements as at August 31, 2010 13 Willard Wilson, Alternate

Cover - The newly painted longhouses at Swan Bay.

1 Gwaii Trust Society Annual Report - 2009/2010

A MESSAGE FROM THE CHAIR – January 2011

t is that time of year again when the Gwaii Trust takes a brief time out to look back at the year that was and to reflect on our accomplishments Iin 2010. In my first year as Chairperson for the Trust, I must say that I was initially overwhelmed with the amount of complexity that surrounds the management of the Trust’s investments, as well as the allocation of those earnings. Depending on your perspective, what the Trust is doing can be viewed from two very different perspectives. At all times, the Board of Directors need to wear two very important and very different hats, one focuses on the earnings of the Trust’s investments, (financial trustee) and the other focuses on how to allocate the earnings of the Trust’s investments (community trustee). Other trusts usually have separate trustees, or Board members that focus specifically on one or the other of these important roles of earning and spending. However Gwaii Trust is unique in its model; Board members are responsible for both the earnings and spending of the Trust’s investments. This is the main reason why being a Board member for Gwaii Trust can, at times, be so complicated. The Board has had a tremendous year in terms of the financial trustee responsibilities it holds. The Board went through a very comprehensive Peter Lantin, Chair of the year of training in the world of investing as we took tremendous strides Gwaii Trust Society in actively managing the investment portfolio of both Gwaii Trust and the Gwaii Forest Charitable Trust, which are collectively valued at approximately $95 million dollars. The world of investing used to be categorized in simple ways; you were either investing in equities (stocks) or bonds. Since the market collapse of 2008, the world of investing has taken a dramatic turn towards diversification. Diversification can be looked upon as, “not having all of your eggs in one basket.” Our investment portfolio now has new invest- ment instruments such as real estate and high-yield bonds, we have also shifted to a more balanced portfolio of stocks and bonds, with a movement of gradually putting a little more weight into the equity markets. The world of Gwaii Trust revolves around our ability to produce cash, to produce income, in order to allocate these earnings to the communities of Haida Gwaii. The Board of Directors should be commended for their accomplishments this year in this realm. It is something that is never seen, nor acknowledged, because the reality of Gwaii Trust is that most residents feel the impacts of the Gwaii Trust in terms of spending, or what the Trust is spending its earn- ings on. So let’s talk about spending. After the Board of Directors finishes the discussions on earnings, they then have to change hats and focus on the Old Masset’s apartment complex was featured in Better Businesses, Everyday Eco-Heroes, the article describes the choices that were made to reduce energry demands while boosting efficienty. spending. Each year, the Board focuses on the following spending respon- sibilities: portfolio management, administration, and programming. Each of these areas are continually looked at in terms of, “How can we save the

3 Gwaii Trust Society Annual Report - 2009/2010

Trust money,” and “What can we do to maximize the effectiveness of the INTRODUCTION spending in areas that are of top priority to the Islands communities.” To ensure a sustainable “Islands community” we must plan and The greatest change that is coming is a change in programming. The manage our development in ways that reflect our cultural and Board is currently looking at a rep-prioritization of the needs of Haida environmental uniqueness. Gwaii, which is based on their interaction with the communities they The Gwaii Trust offers us an opportunity to pursue fundamental represent. The priorities of Haida Gwaii can be categorized into two main economic and social transition. The lack of some of the most basic areas: economic development and youth. The Board is currently working community infrastructure demands immediate attention. The pursuit on a reconstruction of the existing programs to reflect the new priorities. of a sustainable community requires us to address and implement The Board will be engaging the communities throughout 2011 to receive responsible stewardship. The Gwaii Trust offers us an opportunity not input and feedback as we work towards ensuring the relevancy of our readily available to the rest of the world. As individuals we may choose programs and the effectiveness of how Gwaii Trust allocates its earnings. to act together for the common good of our “Islands community.” The current Board of Gwaii Trust has been together for the duration of Quality of life is an essential issue. As we make the “Islands commu- the 2010 year and so far we are very pleased with the re-appointment nity” a better place to live, we make it a more desirable place to visit and of Board members for additional terms. Continuity is something that is to conduct business. critical to the success and accomplishments of the Trust and we are very pleased that this continuity is in place as we move forward in 2011. WHERE IT ALL BEGAN I would like to take the time to acknowledge and thank Cynthia Samu- In 1985, the political standoff at Lyell Island brought worldwide attention els, who is the outgoing Director for CHN Masset, for her four (4) years to the Gwaii Hanaas issues of the land title dispute, the environment of service on the Gwaii Trust Board. I also would like to give a special and economic matters. In 1987, the Haida Nation designated the area a acknowledgement and thank you to Warren Foster as the outgoing Direc- Haida Heritage Site. In 1988, tor for the community of Sandspit. Warren is one of the founding fathers of Canada designated the area a Gwaii Trust and has been around since the inception of Gwaii Trust, which National Park Reserve.

is now almost 16 years ago. On behalf of the Board of Directors, I would Representatives of the Council of the Graham Island North Old Massett like to thank Warren for his dedication, his knowledge and his persever- Haida Nation (CHN) and the Residents Masset ance. Warren was a great advocate for all of Haida Gwaii and I know that Planning Advisory Committee (RPAC) he will be missed at the Gwaii Trust table. Good luck Warren and Cynthia, established an Accord on a Community we wish you all the best in your future endeavours. Development Fund. In spite of legislative Port Clements Graham Island Central I would also like to recognize Ian Hetman, Ron McKee, David Crosby hostilities and other societal encumbranc- (Stinker) and Rose Russ for their past service to Gwaii Trust. It is only es to cross-cultural understanding, and Tlell by the passion and commitment of these, and the many other Directors after years of difficult work, the results Graham Island South before them, that we are able to make the changes before us today. evolved into the Gwaii Trust Interim Plan- Skidegate ning Society (GTIPS). Queen Charlotte Sandspit The GTIPS was established in ac- cordance with the Society Act of British Area E Columbia in November 1991. Its purpose OUR MISSION was to develop a permanent model for The Gwaii Trust will enhance environmentally a locally controlled, interest-generating sustainable social and economic benefits to fund. The Gwaii Trust Society would be Haida Gwaii/Queen Charlotte Islands founded on principles to achieving a sus- AREA & REPRESENTATION through the use of the Fund. tainable “Islands community”. The Gwaii Council of the Haida Nation Trust Society was formed in September encompasses all of Haida Gwaii. 1994 to operate the perpetual Trust Fund, - CHN Massett and the GTIPS was dissolved as a society. - Old Massett Village Council - CHN Skidegate - Skidegate Band Council 4 5 Gwaii Trust Society Annual Report - 2009/2010

THE VISION • Graham Island South; South of Latitude 53° 30’ – Graham Island The Gwaii Trust will advocate and support an Islands community • Council of the Haida Nation (CHN) 4 members: CHN Old Massett, characterized by respect for cultural diversity, the environment, and a Old Massett Village Council, CHN Skidegate, Skidegate Band Council, and sustainable and increasingly self-sufficient economy. • Area ‘E’ - Sandspit, including South Moresby

VALUES & BELIEFS Roles & Responsibilities of the Board The Gwaii Trust Society values and believes in: The Executive Committee is responsible for media relations. • fairness and equity, • effective communication, All Board members have a duty to be fully aware of Gwaii Trust • willingness to change, Society policies, criteria and implementation procedures. • building and demonstrating trust, • a holistic approach to a healthy Islands community, Every Board member is encouraged to give his or her opinions. • consensus decision-making, • a Trust Fund in perpetuity, Full disclosure of pertinent information is expected in order to make informed decisions. • credibility, and • collaborative problem solving. If conflict occurs between or amongst Board members, the Chair will call a break, and at- tempt using mediation to find middle ground. PRINCIPLES In delivering its business plan, the Gwaii Trust Society will: If mediation does not work within 15 to 20 minutes, the Chair will • follow the constitution and bylaws, reconvene the meeting and move on to the next agenda item. • communicate effectively with Island communities, • provide effective guidance to communities on proposal preparation, All Board members will honor Board decisions. • maintain a strong financial management plan that respects its investment policy and is reviewed on a regular basis, In-camera sessions will be called to deal with issues of personnel, legal and financial mat- • encourage all Islands participation in the Gwaii Trust and its programs, ters, and program allocation decisions. After the Board has taken a decision, the results will • set consistent criteria for each program, be published. • be guided by principles of fairness and equity, • emphasize programs that will lead to the vision of an Islands community, The Chair and Board members will attend meetings punctually or provide 24 hours notice, • follow policies and criteria developed by the Board of Directors, for their alternates to attend. • listen to and consider public input, • not replace or duplicate existing government programs, Board development and training will be scheduled annually. • encourage partnering with existing programs or agencies to maximize benefit to the Islands communities, The Board may at its discretion, schedule separate session(s) prior to Board meetings to • continue to refine its programs and operations, and obtain any needed technical advice. • attempt to maximize the available funding.

LEGAL STATUS BOARD STRUCTURE The Gwaii Trust Society is registered as a non-profit Society to The Gwaii Trust Society has a volunteer eight (8) member Board of Directors maximize tax exemption for the Trust. In addition, the Gwaii Trust that represents all participating communities on Haida Gwaii. Society will research the possibility of becoming designated as a “charitable status” organization. One Board member represents each of the following communities: • Graham Island North; Latitude 53° 50’ north • Graham Island Central; Between Latitude 53° 50’ north and 53° 30’ north

6 7 Gwaii Trust Society Annual Report - 2009/2010

PROJECTS FUNDED IN 2009/2010

Major Contributions Skidegate Band Council Youth Centre 150,000.00 Old Massett Village Council Multi Unity Plex 150,000.00 Island Area Advisory Landfill Landfill Closure 200,000.00 500,000.00 Healthy Humans School District 50 Lunch Project School Food Program 80,000.00 ALM Open Gym-Kids 790 Haida Gwaii Community Peace Food Bank 25,000.00 QC Support Service Society Mental Health 3,462.00 QCI Regional Recreation Alternate Fitness 4,368.00 QCC Seniors Islands Senior Games 2010 900 Haida Heritage & Repatriation OM End of Mourning 10,000.00 OMVC and Haida Child and Family Services OM Childbirth Stories 5,703.00 QCI Soccer Soccer League 5,900.00 Skidegate Band Council Choice Seminar 13,971.00 Skidegate Health Centre Haida Canoe Journey 12,836.00 OMVC and Haida Child and Family Services Outdoor Playground 11,500.00 QCI Regional Alternate Fitness 5,570.00 180,000.00 Haida Parity Skidegate Band Council Haida Heritage Centre 166,667.00 166,667.00 Legacy OMVC Food Project $12,491.00 Skidegate United Church Projector System $1,500.00 NWCC & Skidegate Soc. Dev. ESWK Program $16,500.00 Two pages from Bird Species at Risk on Haida Gwaii by Margo Hearne with illustrations by Dejah-Lee Busch. GMD Carving Class $2,500.00 School District 50 Aboriginal Education $5,000.00 QCC Teen Centre $2,000.00 OMVC Yakoun Hatchery $6,522.00 Port Clements Rod & Gun Club Re-Roof House 4,526.00 ALM Tsunami Preparedness 2,444.00 CHN Paperless Office 2,916.00 SBC Laptop Project 4,995.00 HG Community Society Kitchen Upgrade 1,000.00 VOQC Admin/Training 3,962.00 Village of Masset Moving in Masset 10,010.00 Tlell Fall Fair Committee Tlell Fall Fair 5,000.00

8 9 Gwaii Trust Society Annual Report - 2009/2010

Legacy PROJECTS continued from previouse page Community Program Budget 2010/2011

QC SPCA Spayed/Neuter Assistance 3,100.00 Program Budget IWS Creative Zone 5,000.00 Arts 25,000.00 ISFFS Haida Gwaii Film Festival 4,000.00 Arts Workshop Component 10,000.00 Masset SPCA Spayed/Neuter Assistance 1,000.00 Travel Assistance 150,000.00 ALM Spirit Lake Trail 3,858.00 High School Bursary 40,000.00 Village of Queen Charlotte Public Works Staff Training 3,200.00 Post Secondary School 75,000.00 Cedar view Community Church Re-Roof Parsonage 4,400.00 University Tours 30,000.00 Skidegate Band Council Skidegate Days 2010 at Kaay 6,865.00 Mature Student Bursary 125,000.00 Charlotte Islands Regional Rec Commission QCI Rec. Summer Camps 4,508.00 Special Initiatives in Education 50,000.00 Skidegate Education Department Feasibility/Planning for Band School 8,140.00 Christmas 60,000.00 Haida Language Proposal Old Massett Xaad Kihlgaa Hi Su.u Society 7,500.00 Healthy Humans 235,000.00 132,937.00 Legacy Program 150,000.00 Culture as it Relates to Tourism Haida Parity Program 750,000.00 MIEDS Haida Gwaii Vancouver Venue 25,000.00 Culture as it Relates to Tourism Program 150,000.00 Haida Gwaii Forest District HG Junior Stewardship Ranger 10,000.00 Major Contributions Program 750,000.00 OMVC Jasper Repatriation Project 20,000.00 Multi Year Commitments 2010/2011 612,935.00 Edge of the World Music Festival Music Festival 7,352.00 Total 3,212,935.00 Swan Bay Rediscovery Long House Front Project 12,648.00 Haida Gwaii Museum 40 Years Contemporary Art 2,400.00 Skidegate Band Council Haida Art Project 7,000.00 Program Allocation Dates for 2010/2011 OMVC Van Purchase 20,000.00 HG Higher Education Society Marketing & Communication 20,000.00 Program Submission Date Program Budget 124,400.00 September 24 2010 Arts Program 25,000.00 Special Initiatives in Education Culture as it Relates to Tourism 50,000.00 MIEDS High School Job Readiness 10,000.00 October 29, 2010 Legacy Program 50,000.00 OMVC OMVC Entrepreneurial 10,000.00 Christmas Allocation 60,000.00 HG Higher Education Society Semester/Natural Resources Studies 10,000.00 November 26, 2010 Healthy Humans Program 50,000.00 Skidegate Child Development Centre Early Learning in Technology January 14, 2011 2nd Arts Allocation “For our Leaders of Tomorrow” 8,663.00 January 22 , 2010 Annual General Meeting (AGM) Chief Mathews Grade 3/4 Haida Curriculum 10,000.00 January 28, 2011 Major Contributions Program 750,000.00 Laskeek Bay World Seabird Conference 1,337.00 February 25, 2011 Legacy Program 50,000.00 50,000.00 March 25, 2011 Healthy Humans Program 50,000.00 Arts April 29, 2011 Culture as it Relates to Tourism 50,000.00 Robyn Rorick Arts Mentoring 3,480.00 May 27, 2011 Legacy Program 50,000.00 Dr. Norm Sloan Education 3,100.00 June 24, 2011 Healthy Humans Program 50,000.00 Jack Litrell Film 8,058.00 July 29, 2011 Culture as it Relates to Tourism 50,000.00 14,638.00 August 29, 2011 Post Secondary Grant 75,000.00

Total Funded Projects for 2009/2010 1,168,642.00

10 11 Gwaii Trust Society Annual Report - 2009/2010

Operations Budget for 2010-2011

Advertising and Promotion 15,000.00 Bank Charges and Interest 1,692.43 Equipment Rental 8,022.70 Honoraria 79,332.75 GWAII TRUST SOCIETY Insurance 16,924.32 Meetings 8,000.00 FINANCIAL STATEMENTS Office/Postage/Miscellaneous 25,000.00 Rent & Utilities 2,500.00 AS AT AUGUST 31, 2010 Repairs & Maintenance 2,500.00 Office Supplies 21,155.40 Telecommunications 15,866.55 Training & Development 25,000.00 Travel 31,733.10 Vehicle Expense 5,000.00 Wages and Benefits 225,000.00

Special Projects - Outside Trust Partnerships 5 Year Review

PROFESSIONAL EXPENSES Accounting and Audit 15,866.55 Actuary 38,079.72 Custodian Fees 76,159.44 Investment Administration 370,219.50

KPMG Legal 25,386.48 Consult Fees TOTAL EXPENSES 1,008,438.94

12 13 Gwaii Trust Society Annual Report - 2009/2010 Page 2 GWAII TRUST SOCIETY Statement Of Financial Position As at August 31, 2010

2010 2009

Assets Current assets Cash $ 653,612 $ 2,133,226 Accounts receivable, trade and other 4,231 468 Investment income receivable 168,958 202,000 AUDITORS' REPORT Prepaid expenses 46,275 6,152 Advances to Gwaii Forest Charitable Trust - note 6 230,687 269,730 1,103,763 2,611,576 Property, plant and equipment - note 3 and note 4 305,597 10,419 Long term investments - note 2 and note 5 66,272,624 65,162,317 Loan receivable - note 6 800,000 800,000 To the Members of the Gwaii Trust Society $ 68,481,984 $ 68,584,312 We have audited the statement of financial position of Gwaii Trust Society as at August 31, 2010 and the Liabilities statements of operations, changes in net assets and cash flows for the year then ended. These financial statements are the responsibility of the society's management. Our responsibility is to express an opinion on these financial Current liabilities statements based on our audit. Accounts payable and accrued liabilities $ 87,231 $ 86,853 We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards Program commitments - note 8 3,522,092 4,600,944 require that we plan and perform an audit to obtain reasonable assurance whether the financial statements are free 3,609,323 4,687,797 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and Net assets significant estimates made by management, as well as evaluating the overall financial statement presentation. Net assets invested in property, plant and equipment - note 9 305,597 10,419 In our opinion, these financial statements present fairly, in all material respects, the financial position of the society as at August 31, 2010 and the results of its operations and cash flow for the year then ended in Restricted net assets - note 10 52,817,353 51,934,467 accordance with generally accepted accounting principles. As required by the Society Act of , Unrestricted net assets 11,749,711 11,951,629 we report that, in our opinion, these principles have been applied on a basis consistent with that of the preceding 64,872,661 63,896,515 year. $ 68,481,984 $ 68,584,312

Signed on behalf of the board:

Director

Director

Terrace, B.C. November 2, 2010 CHARTERED ACCOUNTANTS

15 Gwaii Trust Society Annual Report - 2009/2010 Page 3 Page 4 GWAII TRUST SOCIETY GWAII TRUST SOCIETY Statement of Operations Statement of Changes in Net Assets Year ended August 31, 2010 Year ended August 31, 2010 Actual Budget Actual Invested in 2010 2009 2010 2010 2009 property, plant Revenue Net Assets and equipment Restricted Unrestricted Total Total Investment income - note 7 $ 4,010,064 $ $ 2,465,338 Administration fees - note 6 56,379 27,705 Balance - beginning of year $ 10,419 $ 51,934,467 $ 11,951,629 $ 63,896,515 $ 68,008,991 Other income 50 2,721 Net income (loss) for the year (20,974) 114,234 93,260 (4,112,476) 4,066,493 2,495,764 Investment in property, plant and Investment management expenses equipment - note 9 316,152 (316,152) Actuary 66,046 37,260 73,309 Custodian fees 50,334 74,520 59,783 Grant inflation protection 882,886 882,886 Investment administration fees 259,479 362,250 267,007 Balance - end of year $ 305,597 $ 52,817,353 $ 11,749,711 $ 64,872,661 $ 63,896,515 375,859 474,030 400,099 Net investment earnings 3,690,634 2,095,665 Administrative expenses Advertising and promotion 2,850 15,715 14,122 Bank charges and interest 2,496 1,656 1,536 Equipment rental and repairs 16,051 13,025 17,908 Honoraria 57,200 77,625 74,705 Insurance 15,066 16,560 13,558 Meetings and functions 12,044 5,780 15,448 Office, postage and miscellaneous 7,753 43,000 16,639 Professional fees and consultants 67,132 40,365 44,123 Rent and utilities 13,274 16,560 19,602 Supplies 35,060 20,700 32,382 Telecommunications 22,484 15,525 24,052 Training, board development and strategic planning 41,213 25,884 2,383 Travel 62,881 31,050 62,974 Vehicle expense 13,040 15,525 12,408 Wages and employee benefits 292,473 190,000 245,051 Amortization 20,974 3,167 681,991 528,970 600,058 Operational surplus 3,008,643 1,495,607 Grant inflation allocation - note 10 882,886 Surplus available for program commitments 2,125,757 1,495,607 Program commitments - note 11 2,263,726 2,075,000 3,281,768 Operating deficit for the year (137,969) (1,786,161) Unrealized gain (loss) on investments - note 5 231,229 (2,326,315)

Net surplus (deficit) for the year $ 93,260 $ $ (4,112,476)

16 17 Gwaii Trust Society Annual Report - 2009/2010 Page 5 Page 6 GWAII TRUST SOCIETY GWAII TRUST SOCIETY Statement of Cash Flows Notes to Financial Statements Year ended August 31, 2010 Year ended August 31, 2010 2010 2009 1. Purpose of the organization

Operating activities The Gwaii Trust Society was incorporated on September 16, 1994 under the Society Act of British Net deficit for the year $ 93,260 $ (4,112,476) Columbia. The Society was established to advise and assist, economically and socially, the communities Items not involving cash: of Haida Gwaii/Queen Charlotte Islands. The Federal government awarded the Society a grant of $38.2 - grant inflation allocation 882,886 million in 1995 to assist the Society to achieve these objectives. - amortization 20,974 3,167 The Society is a non-profit organization under the Income Tax Act and accordingly is exempt from - unrealized loss (gain) on investments (231,229) 2,326,315 income taxes. 765,891 (1,782,994) Cash provided by changes in non-cash working 2. Change in accounting policies capital items - note 13 28,577 (46,333) Effective September 1, 2007, the Society adopted the new Canadian Institute of Chartered Accountants 794,468 (1,829,327) ("CICA") Handbook Sections 3855 "Financial Instruments - Recognition and Measurement" and 3861 "Financial Instruments - Disclosure and Presentation". Under the new standards, all financial instruments Financing activities are initially recorded on the statement of financial position at fair value. They are subsequently valued at Decrease in net program commitments (1,078,852) (1,139,958) fair value or amortized cost depending on the classification selected for the financial instrument. Financial assets are classified as either "held-for-trading", "held-to-maturity", "available-for-sale" or (1,078,852) (1,139,958) "loans and receivables" and financial liabilities are classified as either "held-for-trading" or "other liabilities". Financial assets and liabilities classified as held-for-trading are measured at fair value with Investing activities the change in fair value recorded in the statement of operations. The fair value of financial instruments is Net change in investments (879,078) 5,469,314 defined as market value. Financial assets classified as held-to-maturity or loans and receivables and Purchase of property, plant and equipment (316,152) (5,668) financial liabilities classified as other liabilities are subsequently measured at amortized cost using the Loan to Gwaii Forest Charitable Trust (490,000) effective interest method. Available-for-sale financial assets that have a quoted price in an active market are measured at fair value with the change in fair value recorded in changes in fund balances. Such gains (1,195,230) 4,973,646 or losses are reclassified to the statement of operations when the related financial asset is disposed of or when the decline in value is considered to be other-than temporary. Increase (decrease) during the year (1,479,614) 2,004,361 The Society has classified its financial instruments as follows: Cash - beginning of year 2,133,226 128,865 - Cash is classified as held-for-trading. - Accounts receivable and accrued interest receivable are classified as loans and receivables. Cash - end of year $ 653,612 $ 2,133,226 - Investments are classified as held for trading. - Accounts payable and accrued liabilities are classified as other liabilities. The change in the accounting policy is treated prospectively as required under the standard. The effect on the opening fund balances as at September 1, 2007 was an increase of $5,150,410.

3. Significant accounting policies (a) Basis of accounting The Gwaii Trust Society follows the deferral method of accounting for contributions. The financial statements have been prepared in accordance with the recommendations for not-for-profit organizations found in Section 4400 of the CICA handbook. (b) Revenue recognition Restricted contributions are recognized as revenue in the year in which the related expenses are incurred. Unrestricted contributions are recognized as revenue when received or receivable if the amount to be received can be reasonably estimated and collection is reasonably assured. Endowment contributions are recognized as direct increases in net assets.

18 19 Gwaii Trust Society Annual Report - 2009/2010 Page 7 Page 8 GWAII TRUST SOCIETY GWAII TRUST SOCIETY Notes to Financial Statements Notes to Financial Statements Year ended August 31, 2010 Year ended August 31, 2010

Restricted investment income is recognized as revenue in the year in which the related expenses are incurred. Unrestricted investment income is recognized as revenue when earned. 6. Gwaii Forest Charitable Trust (c) Investments and financial instruments The Gwaii Forest Charitable Trust (GFCT) was endowed by the Federal and Provincial governments during 2007 for the purpose of increasing the sustainable forest management on Haida Gwaii and to Financial instruments including investments are recorded in compliance with the provision of increase community stability through enhancing the forest related economy of Haida Gwaii. During the section 3855 of the CICA handbook. Investments are recorded at fair value and the remainder of the year the Gwaii Trust Society had the following transactions with the GFCT: Society's financial instruments are classified as follows: - Cash is classified as held-for-trading. i) Operating advances and related party transactions. - Accounts receivable and accrued interest receivable are classified as loans and receivables. - Investments are classified as held for trading. Balance receivable from GFCT at August 31, 2009 $ 269,730 - Accounts payable and accrued liabilities are classified as other liabilities. Expenses paid on behalf of GFCT 129,444 Administration fees charged to GFCT 56,379 (d) Property, plant and equipment Repayments by GFCT (224,866)

Property, plant and equipment items are recorded at cost and amortization is calculated annually, Balance receivable from GFCT at August 31, 2010 $ 230,687 using the following rates and methods: Building improvements 4% declining balance The balance receivable is non-interest bearing and will be collected during the next fiscal year. Computer equipment 30% declining balance Furniture and fixtures 20% declining balance ii) Long term loan receivable Vehicles 20% declining balance The Gwaii Trust agreed to provide the Gwaii Forest Charitable Trust with a loan for operational purposes of $800,000. The loan is non-interest bearing and is to be repaid periodically with 20% of 4. Property, plant and equipment surplus earnings after inflation protection from the Gwaii Forest Charitable Trust's investment Accumulated Net book value portfolio. Cost amortization 2010 2009 7. Investment income Computer equipment $ 11,090 $ 6,576 $ 4,514 $ 3,147 2010 2009 Furniture and fixtures 30,947 16,256 14,691 7,272 Building improvements 281,151 11,246 269,905 Interest received and accrued $ 2,341,989 $ 2,435,989 Vehicles 20,608 4,121 16,487 Dividends received and accrued 419,371 437,598 Gain (loss) on disposal of investments 1,248,704 (408,249) $ 343,796 $ 38,199 $ 305,597 $ 10,419 $ 4,010,064 $ 2,465,338 5. Investments 2010 2009 8. Program commitments Cost Market Cost Market The Gwaii Trust funds projects that are in general agreement with its aims and objectives. The balance outstanding represents projects approved by the Board which were not completed as at the fiscal year Cash $ 18,792 $ 18,792 $ 24,766 $ 24,766 end. Treasury bills 774,145 774,145 1,249,380 1,249,380 2010 2009 Federal and provincial bonds 10,375,103 10,983,295 16,763,467 17,684,562 Corporate bonds 15,519,910 16,253,391 15,481,313 16,072,170 Committed balance - beginning of year $ 4,600,943 $ 5,740,902 Mortgages 3,839,441 3,997,307 3,642,077 3,606,924 Current project allocations - note 11 2,465,327 4,650,390 Equities 17,354,244 19,041,042 8,391,880 9,275,675 International equities - note 5 20,132,763 15,204,652 21,582,438 17,248,840 7,066,270 10,391,292 Less project costs paid during the year (3,342,578) (4,421,727) $ 68,014,398 $ 66,272,624 $ 67,135,321 $ 65,162,317 Current project decommitments and adjustments (201,601) (1,368,622) 20 Committed balance - end of year $ 3,522,091 $ 4,600,943 Gwaii Trust Society Annual Report - 2009/2010 Page 9 Page 10 GWAII TRUST SOCIETY GWAII TRUST SOCIETY Notes to Financial Statements Notes to Financial Statements Year ended August 31, 2010 Year ended August 31, 2010

12. Haida Parity 9. Net assets invested in property, plant and equipment The annually approved Haida Parity amounts are commitments of the Gwaii Trust Society even if not Net assets invested in property, plant and equipment is calculated as fully allocated to approved projects during any given fiscal year. Of the original Parity amount of follows: 2010 2009 $12,300,000, there is a balance remaining of $8,700,639 to be included in the annual budgets of the Gwaii Trust over the next ten years. In addition to this, there are allocated but undisbursed funds of Unamortized balance - beginning of year $ 10,419 $ 7,918 $968,772 outstanding at August 31, 2010 for a total of $9,669,411 in Haida Parity funds remaining to be Property, plant and equipment purchased during year - net 316,152 5,668 to be paid. Amortization expense (20,974) (3,167)

Unamortized balance - end of year $ 305,597 $ 10,419 13. Statement of cash flows. Cash provided (used) by changes in the following: 10. Restricted net assets 2010 2009

The Gwaii Trust Society Investment Fund represents the initial endowment of $38,200,000 received from Accounts receivable $ (3,763) $ 2,077 the Government of Canada. The Fund is adjusted annually by the inflation rate for the year to protect the Advances to Gwaii Forest Charitable Trust 39,043 (122,959) value of the original grant for future generations. The fund has been established as a perpetual Prepaid expenses (40,123) 352 investment fund and, as such, the original endowment with the accumulated inflation adjustments can Accounts and wages payable 378 6,225 never be touched, allocated or expended. Investment income receivable 33,042 67,972 The annual inflation adjustment is based on the Canadian Pricing Index (CPI). The change in the CPI for the current year is 1.7% (2009: -0.08%). $ 28,577 $ (46,333)

11. Program commitments 14. Measurement uncertainty Program commitment allocations for the year were as follows: 2010 These financial statements have been prepared in accordance with accounting practices generally Actual Budget accepted in Canada. In preparing these financial statements management has made estimates and assumptions that affect the amounts reported. Actual results could differ from those estimates. New Legacy $ 132,937 $ 175,000 Major Contributions 500,000 500,000 Healthy Humans 130,941 180,000 15. Comparative figures Culture as it Relates to Tourism 124,400 150,000 Some of the comparative figures have been reclassified to conform to the current year's presentation. Arts Program and Workshops 16,698 35,000 Christmas Allocation 60,000 60,000 Education Programs 364,913 475,000 Haida Parity Allocation 500,000 500,000 Haida Parity carry forward adjustment 635,438

2,465,327 2,075,000 Program de-commitments and adjustments (201,601)

$ 2,263,726 $ 2,075,000

During the year unallocated annual commitments to the Haida Parity program in the amount of $635,438 were included in the project commitment allocations. Gwaii Trust Society Annual Report - 2009/2010

23 GWAII TRUST ANNUAL REPORT 09/10

GWAII TRUST Box 588 Highway 16 Old Massett, Haida Gwaii Skidegate, Haida Gwaii V0T 1M0 V0T 1S1 • • 250.626.3654 250.559.8883 1.800.663.2388 1.877.559.8883