Fwd: 2009 Current Year Budget

Woops, didn't hit reply to all!!!

---------- Forwarded message ----------
From: john palmieri <john j5 palmieri gmail com>
Date: Mon, May 4, 2009 at 3:08 PM
Subject: Re: 2009 Current Year Budget
To: Dave Neary <dneary gnome org>

Hi Dave,

Thanks for starting this discussion, it is very important and you bring up good points.  Let me try to give you some answers immediately and see if we can't come up with more in depth solutions for breaking down the budget in a way that is a bit more clear as we continue to refine it.

On Mon, May 4, 2009 at 5:58 AM, Dave Neary <dneary gnome org> wrote:

Hi John,

Thanks for publishing the budget. It's a very useful document to have.

I have a few observations and questions (mostly the same ones I asked of
the board before - but this is an opportunity for a more public discussion).

john palmieri wrote:
> Attached is the 2009 budget put together by Stormy.  Due to the economy
> our budget shows us eating into the surplus quite a bit.  While we will
> remain solvent for 2009, it is a burn rate we will not be able to
> sustain in 2010 barring changes in funding level and/or reduction of
> ongoing expenditures.  Those decisions will be made as the year
> progresses and we have a more complete picture of where we will be come
> December.  As I have said we are in good shape for this year but we need
> to look to the future in order to find ways to best serve our members.

One line I'm missing from the budget is "Balance forward". You mention
we're eating into our surplus, but you don't mention how much we have in
the bank at the beginning of the year.

The first page of the budget states that we started with $130,000 in the bank for and are expecting around an -$83,000 deficit which means we plan to end the year at $47,000 in the bank.  Part of this is due to getting advice from our accountant that we had too much money in the bank. We have since also gotten advice to have at least 6 months of operation expenses  in surplus from other non-profits.  You also correctly note bellow that much of the planned expenses won't happen unless funding comes in from them.  The original budget assumed that companies wanted to pay us in a lump sum during their budgeting cycle instead of the "when events come up" method we had been using in the past.  The economy tanked and it went back to having to ask per event.  We perhaps should change the budget to better reflect that.

Running a budget deficit of $83,000 seems a bit mad given the way things
are going right now - shouldn't we be tightening our belts anywhere we can?

Yes and no.  The year is young so things might actually turn around and the way things look, we can continue flat for the next few year even if things don't change baring a total collapse of our funding (and taking into account losing Stormy as per my other e-mail).  Tying events to extra funding is a good way to keep the cushion without scaling back prematurely.  Remember GNOME 3.0 is in active development so now more than ever we need to keep important activities around that moving ahead.  That being said, if there are any events that aren't really all that important in the grand scheme of things we should absolutely cut them or at least move them down in priority.

I have some ideas how to get closer to a balanced budget. They mean
tightening the belt this year, for the long-term health of the
foundation, but I think that's worth doing.

As I see it, our minimum expenditure during the year is:

Stormy:    $96,000
Zana:      $27,500
Paychex:    $2,400
Taxes:      $6,043

Insurance:  $2,200
Accountant: $3,500
Office:       $592
Bank fees:  $3,000   (is there a way to bring these down?)

Total:  $141,235

And undirected income (that is, income not specifically destined for

Advisory board fees: $110,000
Friends of GNOME:     $20,000 (budgeted)
Google SoC:           $15,000
GUADEC 08:            $20,000 (provisional)

Total:  $165,000

That gives us about $24K to play with, *if* we raise $20,000 from
Friends of GNOME, everyone pays advisory board fees, and we do pretty
well from GUADEC 08.

Looks like this is possible judging by the last updates and if we can keep momentum - http://blogs.gnome.org/foundation/2009/05/04/friends-of-gnome-update/ .

What's unclear from the presentation of the budget is which activities
are coming from the foundation surplus, and which will be run only if
they're self-funding.

We will have to work on this as I don't have absolute numbers.  There is work ongoing that we should unveil soon which will break out exactly where donations go and how much we need to raise for each agenda on the foundations plate (such as hackfests and sysadmin, etc.)

As I understand it, hackfests are all conditional on sponsorship and/or
financial participation of participants.

I assume the same is true of the sysadmin? Given that we have $20,000
raised towards the sysadmin position already, and another $10,000
budgeted from the foundation, how much money do you feel the foundation
will need to raise to make this hire? Is 6 months funds enough, or will
you try to raise a year's worth before asking someone to commit to
sysadminning? Is it to be a contract, or a permanent hire?
Finding the right sysadmin is really the bar here.  We are talking part time contract and there is a question on year to year funding as some of the funds are contingent on specific work being done.  Once that work is done does funding dry up? (this is one of the many reasons we need to keep a full time ED so the situation can be closely monitored)

Is this also the case for re-running the accessibility program? There is
a line that $30,000 is money raised last year and unspent on the
accessibility program - could that be removed from this year's budget as
a budgetted expense, to allow things to be a little clearer on this
year's income/expenditure?

We have a lot of funds ties to specific programs.  The a11y funds will not be dropped into a general pool.  Any suggestions on how to break this out in the budget?  We could end up with hundreds of totals making the budget more confusing if we are not careful.  Perhaps a document showing what has been allocated and what is in our general funds? I should also note while I like the ability to specify where funds are to be spent, it can be abused to the point where we have no general funds and are over funded in areas which aren't stratigically important to long term growth (e.g. we starve the trunk to feed the leaves).
Other planned expenditures, which don't appear to have fundraising
directly associated with them, are:

* European & US event box: $2,500

If the event box is doing good we could not have upgrades this year but we still have to account for shipping. 
* Latin American Tour: $6,000
* Local group budget: $9,371
* Travel budget: $10,000

We will have to look into these but I don't want to cut back on things that pay off dividends in terms of GNOME awareness and development.  In the grand scheme of things activities are the core of what we do and there are bigger, even if more unpleasant ways of making sure we are viable.  One thing to put into perspective is we are making more money this year just not enough to cover the growth plans we had stepped into during better days so barring total meltdown of the economy we could go back to generating a surplus and growing more conservatively (though I think that just means stagnation until the next tech boom)

Could we cut down this budget this year, given the financial state of
affairs elsewhere? If we had an overall community budget of, say,
$13,000 I think that'd be great! $28,000 with no income matching up
seems too much.

That is not to say we shouldn't scrutinize the community budget and see places where it hasn't really benifitted in the past and ask people to be really conservative when it comes to choosing who will be requesting money.  I don't want to mecanically cut funding, especially for community.  We will take a look.  We have to go over last years budget and what we actually spent.  If lowering the current budget to last years levels makes sense then that would the first place to look for cuts.  Again, I don't want to prematurely cut things and end up with a much larger net surplus then we were comfortable with.  That just means we may have wasted opportunities out of fear.   

Marketing budget: shouldn't we be cutting the expenditure of printing
annual reports this year? $2,700 seems like a luxury we can't affort.

We should be moving to a more paperless format anyway so I think this may be a good idea though we still need to have some on hand.  Putting them on Lulu (can individuals get our report from Lulu?) would mean people who wanted more of the print version could get it themselves.

One last overall remark: Looking at the cover sheet, we look like we're
bleeding money, but when you look closer, a lot of the budgeted
expenditure is contingent on fundraising. Doesn't it make sense to
reflect this in the cover page? For example, programs shows -$28,000 and
hackfests -$19,000 but they're not going to happen if they're being 100%
funded by the foundation.

Yes.  This was my fault as writing the request for funds was exhausting given the somber tone.  My ability to summarize was restricted by the exhaustion and need to get both documents out ASAP.  I will be more thorough next time.

Once you factor out these, you're back to -$35,000, and if you manage to
trim the marketing budget, community budget and bank fees, we could even
get down closer to -$20,000 for the year. Factor in the Summer of Code
income, and we are close to a break-even budget - especially since I
know that Stormy is being very careful with her travel budget and is
requesting expenses where reasonable, so I am sure she will not spend
all of the $20K travel budget allotted.

Also, there is currently no budget line for GUADEC 2009 - isn't there a
planned surplus from this year's event also to pay for some things like
the Summit and maybe a hackfest?

There is a budget line of $20,000, it is just not clear since it has a note mentioning 2008.  The Summit doesn't cost much and I suspect we will get companies funding events there.  Having the hackfests there is a good way to save some money since there are a lot of hackers couches and people plan to come anyway.  We definitely want to have a few there this year.

Anyway - I hope my comments are helpful, and reinforce the message that
I think the foundation should absolutely try to balance the budget this
year, even if that means spending less on travel than intended.

The foundation should be building & storing cash reserves for a
potentially horrible 2010 if at all possible.

I am hoping you are more active in budget discussions as you have a lot of good suggestions and are able to ask the right questions to get us thinking.  We need more people outside of the board to take interest in the Foundation's activities.  

John (J5) Palmieri

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