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

Sun Jun 1 11:49:05 EST 2014

Hi Silvia,

Thanks for your feedback.

On 01/06/14 11:36, Silvia Pfeiffer wrote:
> 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.

The structure of the new subcommittee policy is to have community
members (usually ghosts, council or trusted members) embedded in the
organising so that they can assist with this kind of oversight. So yes,
the burden placed on those organising the logistics is minimal.

> 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.

The professional events manager handled logistics and was not involved
in the financial side of the event management. Without the events
manager it is unlikely there would have been an LCA2014. This was an
added expense (and a fixed one) but not an unexpected one. The council
knew at the time of the bid that this likely meant for a lower return on
the conference but was happy to take that risk on the basis that running
an LCA that makes less money is better than not running an LCA.

While an event manager is an added risk that the council will always be
cautious of (and weigh up on a per-bid basis), the loss came about due
to much lower revenue than expected. In fact, the overall expenses for
the event were on par with most other years.

As such LCA and the council are hoping to track incoming revenue much
closer moving into the future. Specifically to adjust expenses
accordingly where revenue may be at a shortfall.

Cheers,
Josh

> 
> 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
>>
>>
>>
>> _______________________________________________
>> linux-aus mailing list
>> linux-aus at lists.linux.org.au
>> http://lists.linux.org.au/listinfo/linux-aus
>>

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