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

Sun Jun 1 11:36:57 EST 2014

Just one small note of warning: more administrative overhead on the
teams that organise LCA is not going to make it a more financially
successful conference but instead will put off more people from
offering a bid.
Make sure that whatever financial oversight you put in place are done
by people outside the core team.

TBH: I am not overly worried about an LCA having made a loss. It does
seems a bit strange that this conference was organised by a
professional events manager and yet the council wasn't made aware of
any financial issues until late. I assume you've done your assessments
of whether the events manager involvement was useful and actually
helped make the conference a success.

Cheers,
Silvia.

On Sun, Jun 1, 2014 at 12:05 AM, Joshua Hesketh <josh at nitrotech.org> wrote:
> 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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