[Linux-aus] linux.conf.au 2014 Financials

Sun Jun 1 00:05:41 EST 2014

Hello community,

This email is to inform you of the current financial position of LCA2014 and
the Council's plans for the longevity and continuation of the conference.

What has happened?
==================

linux.conf.au 2014 books are nearly wrapped up after an excellent event in
Perth. The conference is looking to have a final loss of approximately $40k.

Why has this happened?
======================

There are are a number of contributing factors.

When selecting a host city for linux.conf.au 2014, we were aware of the higher
cost of running the conference in Perth, largely due to geographic location and
cost of services. We also knew the team was expecting to hire an events manager
for help which would increase costs. Nevertheless the conference team did not
want to lose the format or community feel, in neither the bid nor the event,
that is so integral to linux.conf.au.

The Council accepted the Perth bid with the preliminary budgets at the time
showing a positive return.

The change in the state of the conference budget occurred slowly over the year
leading up to the conference. It is difficult for a conference team to estimate
how many attendees to expect. Constraints were encountered with availability of
the key venue, leading to a less than desirable date for the conference, and
sales figures were lower than previous years.

Unfortunately due to poor tracking of the forecast financial state it was not
discovered that the conference was heading towards a loss until it was too
late. Commitments had been made with suppliers/vendors and non-refundable items
purchased. However the Council stands by the fact that it is better to run a
linux.conf.au at a loss than not to have a conference.

This has clearly highlighted some areas in which Linux Australia needs to
address. While we have the cash reserves for exactly this scenario it is
clearly unsustainable and measures need to be taken to mitigate the risk of it
happening multiple years in a row.

What immediate actions are being taken to address the situation?
================================================================

A lot can be learned from this experience and the Council is taking action to
secure the finances for the organisation into the future.

We have followed up on the last outstanding debtors and creditors to confirm
the situation.

The Council has reviewed the Linux Australia operating budget for the current
financial year (running from 1st of Oct 2013 through to 30th of Sept 2014) and
has made amendments to reduce expenditure. These amendments will be published
in the next few weeks for transparency.

The Council has also prepared a draft scenario budget for the following
financial year which shows a healthy growth back to a similar level of equity.

What actions are being taken to prevent something similar from happening in the
future?
===============================================================================

The primary action already in motion by the Council and respected ghosts of
past conferences (not limited to LCA) is to rework the subcommittee structure.
This has been described in a previous email[0] and can be found here[1].

These unfortunate circumstances highlighted the need for better oversight, risk
management and budgetary tracking that is being addressed by the new
subcommittee policy in the following ways:

 1. Past organisers and community members outside of the conference will be
    better embedded in the executive leadership of the conference. They are to
    ensure logistical and budget items are not overlooked.
 2. process for proposing and approving budget.
 3. Formal documentation requirements on significant items contributing to the
    budget (such as venue contracts etc).
 4. This results in a more informed Council and better alignment between
    projected and actual expenditure.
 5. Requiring subcommittees (including non LCA conferences) to return a profit.

The Council is also implementing a formal Risk Register, with a risk breakdown
structure that covers all of our core activities, such as linux.conf.au and
financials. The Risk Register will be reviewed regularly and mitigation actions
undertaken to address risks proactively where justified.

We are also working with linux.conf.au teams to restructure the budget so that
conference activities are funded in a sustainable manner. We are improving the
processes and materials available to better assist Subcommittees in managing
finances, enabling better decision making and financial modelling.

What does this mean for linux.conf.au and other conferences?
============================================================

As an attendee? Nothing.

linux.conf.au will not change its format, nor will prices increase
significantly[2]. We do not expect the feel, structure or atmosphere of the
events to be affected.

None of Linux Australia?s conferences are expecting to change due to these
circumstances. At this point we are purely adding additional risk mitigation
procedures.

What does this mean for Linux Australia's activities?
=====================================================

Linux Australia has yearly operating expenses in the range of $50-60k each
year, incorporating activities such as grants, face to face meetings of
Council, reviewing future bids for future linux.conf.au events, seeding other
events and administrative costs such as formal auditing and bank fees. Linux
Australia relies predominantly on the profit from linux.conf.au to cover its
operating costs, and to a much lesser extent on earnings from interest bearing
accounts.

This means that in all likelihood we will need to curtail some activities in
2014, such as the amount and quantity of grants that are awarded. There are
some costs which cannot be easily reduced, such as the costs for auditing the
organisation in line with NSW law.

Although a loss is forecast, we still have significant equity as an
organisation (> $300k), and our future is not in jeopardy. We simply need to
'tighten the belt' for a year.

Even with a smaller budget for grants and activities the Council does not
expect to be any less approachable than in past years and wishes to continue
encouraging the community to be active.

What does this mean for Linux Australia's future?
=================================================

To be clear, our future is not under any threat. This scenario is one that has
been predicted and planned for by previous Councils, and is one of the reasons
a large cash reserve has been held by Linux Australia. We are working hard to
ensure a similar financial loss does not occur again.

Our long term goal is to ensure Linux Australia has the cash to fund an
linux.conf.au if for some reason in the future it is necessary. This means
returning our financial reserves to a level that could absorb running a
linux.conf.au.

What does this mean for Linux Australia members or me?
======================================================

Nothing is changing. However, I would like to continue encouraging our
community to keep up the awesome work we are doing. Please keep volunteering
and looking for more ways you can contribute. It is our awesome members that
make this organisation what it is.

As always your comments and feedback are warmly welcomed.

Kind Regards,
Joshua Hesketh
 - President, Linux Australia

[0] http://lists.linux.org.au/pipermail/announce/2014-May/000180.html
[1] https://github.com/linuxaustralia/constitution_and_policies/blob/master/new_subcommittee_policy.md
[2] Our Hobbyist and Professional prices have never risen above inflation
https://docs.google.com/spreadsheet/ccc?key=0AjWLKrdgysx1dHFFWU80ZVJReWEzRUIxbmNsLVlWVHc&usp=drive_web#gid=9

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