ISOC DOcument
Title:      ISOC 2001 Budget
Author(s):  Michael E. Conn, Lynn St Amour
Date:       2000.11.26
Committee:  BoT
Document:   mtg22-04
Revision:	1.0
Supersedes:
Status:     Meeting Paper
Maintainer: Mike Conn
Access:     Unrestricted

ISOC Trustees and Vice Presidents,

Attached is the proposed ISOC budget for 2001 that I plan to present to you at our meeting in San Diego next month. Lynn, Don and our new accountant, Bob Vaughan worked hard to develop this budget. The 2001 ISOC budget is aliened into our new four pillars of operation; Standards, Membership, Education & Training and Public Policy. This budget takes advantage of reduced headcount to improve our cash position while challenging us to continue the financial momentum we have built with our Platinum and Organizational Members.

Realizing this budget would produce a $328K profit for ISOC in 2001. It will likely take us two to four more years to totally recover from the serious loss caused by the 1999 INET conference in San Jose. The 1999 losses placed ISOC into a negative fund balance of $1,086K. This year ISOC has turned INET back into a positive operation and INET 2001 should be the same. With the help of our Platinum Members, ISOC has paid off our backlogged account payables and we expect to be in the "Black" on our 2000 Income Statement. The proposed 2001 budget will build on this momentum and reduce ISOC's negative fund balance to approximately $700K while making valuable investments such as a half a million dollars to the RFC Editor.

One of the keys to making this budget a reality is to continue to recruit new organizational members. With the delay in replacing Don Heath and the reduction in ISOC headcount, I encourage all of us to help find and recruit new organizational members. By continuing to increase our Platinum and Organizational membership revenues, ISOC should have a solid financial year in 2001 while making a positive contribution to the advancement of the Internet.

Also attached is a document that list the ISOC Activity Analysis by Pillar. Below are additional notes on 2001 ISOC budget.

Michael E. Conn
ISOC Treasurer

Additional Information on the proposed 2001 ISOC Budget:

REVENUES:

Organization Revenues: Total 2001 Organizational revenue is planned at $2.0M ($650K in Platinum members and $1.35M in 'traditional' org. member revenues).

1999 Actual:	$ 1.3M
2000 F'cast:	$ 1.8M	= Reg Org $1.540M + Platinum $0.285M
2001 Budget:	$ 2.0M	= Reg Org $1.350M + Platinum $0.650

(Note: The reduction of 'traditional' member revenues is caused by current members upgrading to the Platinum program. Platinum revenues of $0.65M are already promised and expected to come in late in the year.)

REVENUE ALLOCATIONS:

Total Org. revenues incl. Platinum contributions have been allocated amongst the 'Pillars' as follows:

• Standards = 38% of all org. revenues ($550K from Platinum sponsors and 15% of 'traditional' org. revenues.)

• Membership = 34% of all org. revenues (equal to 50% of 'traditional' org. revenues) plus 100% of all individual revenues and a fairly conservative estimate of $35K in contributions.

• Educ. & Training = 13% of all org. revenues (equal to 20% of 'standard' org. revenues). Note: our conference activities for 2000 were self-supporting and they will be again in 2001). Conference and tutorial workshop revenues are also included here and will be discussed in detail later in this memo.

• Public Policy = 15% of all org. revenues - $100K from Platinum sponsors (already committed) and 15% of 'standard' org. revenues.

INDIVIDUAL MEMBER REVENUES:

Individual member revenues have stayed relatively constant at $220M despite approx. an 8% growth in member numbers year on year. This is the result of a higher percentage of our members coming from Developing countries and we believe this is a reasonable budget for 2001 having examined recent trends and evaluated the chapter efforts.

1999 Actual:	$219K
2000 Forecast:	$220K
2001 Budget:	$220K

CONFERENCES:

- INET

the profit for INET 2000 after all fully loaded staff costs are taken into account is expected to be approximately $200K. The net profit from INET 2001 is forecasted to be $190K, again after all fully loaded staff costs are taken into account. ISOC's on a revenue sharing model vs. a profit sharing model and total costs have been reduced considerably through scaling back many of the 'extras' such as the gala and lunches, etc. A local 'organizer' is assuming all financial liability and all costs except for our support staff costs.

A summary of the INET 2001 budget is as follows:

Total sponsorships:	$0.9M	($0.3M committed already best ever for this point in the plan)
Total registrations:	$0.6M	(assumes 1000 attendees)
Total expenses:	$1.0 M
Forecasted profit:	$0.5M

ISOC will receive $240K as our % of revenues plus reimbursement for $50K in expenses to put towards our costs. We expect to net a minimum of $190K after fully loaded staff costs have been paid. This profit could be slightly understated but given recent staff changes we decided to take a conservative approach.

- NDSS made approximately $20K profit in 2000 and is expected to make approximately $30K in 2001.

- Future (INET) Conferences - expect sponsorships of $75K in 2001 for a 2002 conference, this would be used to fund expected costs in 2001 of $65K (max.) to support the development of these conferences.

- Education/workshops - as we're in the process of evolving our activities in this area it may be necessary to fund some of these activities (staff costs) before recouping them fully in sponsorships or registrations. Therefore, we've forecasted only $25K in revenues but $62K in expenses.

2001 ISOC EXPENSES:

Total 2001 expenses are budgeted for $2.6M vs. $3.0M forecasted for 2000, a total reduction of $400K. The major changes are shown below.

Expense Decreases:
	$190K	Staff reductions of 3 people (2001 vs. 2000) on a fully loaded annualized basis.
	$220K	Savings on CEO's salary for partial year
	$275K	Net reduction in conference expenses with much of this coming from the way we're now managing conferences (note: the headcount reduction of one has been accounted for above).
Total Decreased:	$685K
Increases:
	$150K	RFC Editor - increased support from $350K to $500K
	$30K	Increased Standards support costs (IETF staff travel, IAB/IESG mtg. support, etc)
	$20K	Costs associated with managing the platinum program
	$80K	New org. member resource/hire or org. member collections resource
Total Increased:	$280K
Net Reduction in Expenses:	$405K

The budget includes one executive position vs. two in previous years.

The expenses of the Geneva office are now fully integrated by activity (the revenues were integrated in 2000).

G&A:

A significant portion of what were previously categorized as G&A costs have been re-allocated ($400K) as all salary related benefits and corresponding rent and telephone charges are now tied to the individual and these 'fully-loaded' salary costs are assigned to the pillars according to the specific activities of each individual. For example, the salary and overhead cost of ISOC staff person who works strictly on Membership is carried in the "Indiv/Chap admin" expense line rather than the G&A line.

Remaining G&A costs are $520K and the major categories are outlined below:

$142K	Fully loaded salaries for true G&A activities such as financial, system administration, ExComm support, etc. (2000 F/C = $150K)
$80K	Legal, insurance, auditing fees (2000 F/C = $74K)
$85K	BoT support (2000 F/C = $86K)
$50K	Depreciation (2000 F/C = $46K)
$40K	Materials & supplies (2000 F/C = $36K)
$50K	Professional services (2000 F/C = $36K)

Total of detail above: $447K broken out vs. total of $520K.

PROMOTIONS & PUBLICATIONS:

These items are budgeted at this years level ($300K in total) which covers OTI, e-OTI, and the web site and this is really the minimum we need to be effective.

ISOC
ACTIVITY ANALYSIS BY PILLAR