Not every board member can be a financial wizard. Every board member, however, needs to be a financial inquisitor.
101 Board Basics: Fiduciary Responsibilities, BoardSource
I ran for LITA Board on a platform of inclusivity, transparency, and financial stewardship. That means I consider it my sacred trust to you, the members, to understand LITA’s financial status and sustainability; to advocate for directions that support its ability to serve you for years to come; and to communicate with you about the decisions I make in representing you.
The fiscal year 2015 budget [PDF] has been presented to the Board and I will not be voting to approve it this weekend. Here’s why.
First, the budget presents too many unanswered questions.
It does not attribute revenues and expenses to program lines, which makes it prohibitively difficult to tell whether our allocations support our strategic vision, and to monitor the status of our programs.
It quotes fiscal year 2013’s actual dues revenue as our expected dues revenue for fiscal year 2015, but this is not supportable in light of our decreasing membership trend; this dues revenue projection is overstated by approximately $20,000.
Its revenue for registration fees (a new line in this year’s budget) appears to be based on our fiscal year 2014 estimated dues revenue for the sum of Forum, web courses, webinars, preconferences, midwinter workshops, and regional institutes. However, we have not run regional institutes since 2007 and have no immediate plans to do so, and budget estimates for online education have consistently exceeded actual revenue by tens of thousands of dollars. This line is given as $234,200, but actual realized revenue for fiscal years 2011 through (projecting from year-to-date) 2014 has been between $180,000 and $190,000. Therefore this line overstates revenue by roughly $50,000.
The expenses are reported in a new format, with categories that cross-cut previous categories; therefore I cannot confidently judge whether they are accurate. (Over the past four years our expense lines have also been overestimates, usually working out to net operating deficits in the $20K range, but with large year-to-year variance.) I also cannot tell how much support we intend to give to our programs, and if that is in line with what we require.
I asked some of these questions about a previous draft of the budget at Midwinter. (And more; my unanswered-questions list is far too long to fit in either a blog post or a Board meeting.) I have not found that either Midwinter, or this new draft, have answered those questions.
The bottom line: this budget overstates our revenue by around $70,000 and makes the accuracy and relevance of our expenses impossible to analyze.
What budgets are for
Second, this budget is not an instrument for communicating or enacting LITA’s strategic goals.
Because it neither disaggregates revenues nor attributes expenses to program lines, we cannot communicate clearly with our committees and interest groups how their work fits into the big picture, what LITA needs of them, and how we will support them.
Because it does not change — it reflects programs we no longer run and revenues we no longer realize, and does not reallocate money or staff time to new programs — we cannot change. We know that — particularly as a technology association — we operate in a competitive landscape that is radically different than it was ten, even five, years ago. We know, from our membership declines (shared by ALA and many associations) and the thoughtful reporting of our Financial Strategies Task Force, that we must do a better job of articulating our vision and providing value.
We have no shortage of vision, but all our strategic planning is meaningless if we cannot operationalize it.
The budget is a prologue to the real story, which is how we serve you. Let’s set the scene correctly.
Where I stand
I am persuaded that, if I were to approve this budget, I would be failing in my duty of care toward the association, and (more importantly) my duty as a representative of the membership: elected by you, holding the trust of three thousand members carefully in my hands.
Duty of care is an obligation I submitted myself to when I accepted the nomination, but your trust? That doesn’t feel like obligation; that feels like reverence.
We can and must do better by you.
I will not be voting to approve this budget. I ask the rest of the Board to join me.
Update, 10 July 2014: how the meeting went.