4. Budget (McKim/Gillanders) - Discussion Only

[Michael von Keitz]

Discuss the budget here.

[Michael von Keitz]

I guess you can't have a budget meeting without a budget! :o Please find the proposed budget for 2012-13 attached.

[Christopher Mallon]

A few points, as I read it through.



The Amazon store sales are ... pathetic is the only word that comes to mind. We need to find more and better ways to push this. Also, do we still have the referral code that gets us a tiny % of any sales even off the regular Amazon site for those using it? We need to push THAT too.
CCN advertising prices may be too high... perhaps lowering the rates would create a flood of advertising and increase the income? We're averaging about $30 an issue... Of course, the fact that it is frequently late means it's a bit unreliable for tournament advertising.
Equipment... ouch. All the more reason to redesign how we do this. Although "Cost of Sales" is a bit nebulous without being broken down. How much of the $3500-$5000 in profit is actually eaten up as part of the $46000 we pay to the office contractor in terms of time spent on these orders? Not to mention "Office Expenses" which are also not broken down.
Another equipment note. We are anticipating a greater profit margin than has occurred in the past. What is the evidence that we can possibly expect this to come true?
Executive travel is... what? Our meetings are online now...
We spent $94,197 or 82.5% of our budget last year on administrative items. 92.5% of the remainder went to the magazine.
Those numbers for next year (estimated) are 84.0% and 100% !!!
Why are we spending $1000 on legal fees? And why are we paying $3600 for an audit? That money would be much better spent on actually supporting chess! The lawyers and accountants don't need our money that badly...

[Gordon Ritchie]

Mike & Co.
I am in general agreement with the budget. I do have a couple of minor questions.
Why is interest from the Foundation going down? Under any scenario, interest rates cannot fall and will probably rise.
Why is there no provision for support for the Canadian Open this year, unlike the past two?
Why is there no provision for support for the Canadian Olympiad team? Surely it falls in this fiscal year ending April 1 2013.
Thanks.
Gordon

[Bob Gillanders]

Mike & Co.
I am in general agreement with the budget. I do have a couple of minor questions.
Why is interest from the Foundation going down? Under any scenario, interest rates cannot fall and will probably rise.
Why is there no provision for support for the Canadian Open this year, unlike the past two?
Why is there no provision for support for the Canadian Olympiad team? Surely it falls in this fiscal year ending April 1 2013.
Thanks.
Gordon

We receive a cheque for interest earned in the Foundation once a year each June. So there is no guesswork here, the $8,377 is the amount received. Paul can give a better explanation as to why it is down.

Financial support is unusual for the Canadian Open. Victoria 2012 received no support. Toronto 2010 & 2011 received support at their respective AGM's when they asked for assistance to help defray losses.

The Olympic budget stands at approx. 17k. Current fundraising efforts and the new FIDE travel funds from the FQE agreement are expected to be sufficient.

[Bob Gillanders]

Another equipment note. We are anticipating a greater profit margin than has occurred in the past. What is the evidence that we can possibly expect this to come true?
[/list]

Sales for the 2010 Yearbook were very poor, so we have written off the inventory to zero. This accounts for the low margin in 2012. Margins going forward should be fine, in fact any yearbook sales will go directly to the bottom line.

[Christopher Mallon]

Sales for the 2010 Yearbook were very poor, so we have written off the inventory to zero. This accounts for the low margin in 2012. Margins going forward should be fine, in fact any yearbook sales will go directly to the bottom line.

Fair enough. One out of eight points addressed! :)

[Christopher Mallon]

Financial support is unusual for the Canadian Open. Victoria 2012 received no support. Toronto 2010 & 2011 received support at their respective AGM's when they asked for assistance to help defray losses.


This probably is something that won't happen now that we have online AGMs - which take place before the Canadian Open, and which do not have the organizers there in person to plead with the few Governors who are present. The full Assembly is less likely to approve something like this.

In fact I would think the Canadian Open is the last of our main events that we should be supporting, since a lot of that money doesn't stay in Canada. Better to support the Closed and Junior to try to increase the prestige of those events.

[Bob Gillanders]

Executive travel is... what? Our meetings are online now...


This is mostly mileage for quarterly meetings held between CFC executive (Michael, Hal, Bob) and Outpost (Gerry,Paul). These meetings have been very fruitful in establishing good communications between executive and office.

[Bob Gillanders]

We spent $94,197 or 82.5% of our budget last year on administrative items. 92.5% of the remainder went to the magazine.
Those numbers for next year (estimated) are 84.0% and 100% !!!


I am not following your argument.
How do you define "administrative"?

[Bob Gillanders]

Why are we spending $1000 on legal fees? And why are we paying $3600 for an audit? That money would be much better spent on actually supporting chess! The lawyers and accountants don't need our money that badly...


Legal $1,000 - there are some new regulations regarding structures of not-for-profits that we may need some legal advise. Michael can explain further.

Audit $3,600 - based on an estimate received.

Yes, we all hate to pay the lawyers and accountants. But they are people too, get over it!

[Egidijus Zeromskis]

CCN advertising prices may be too high...... Of course, the fact that it is frequently late means it's a bit unreliable for tournament advertising.


There are chess sets, books, software. Though, it might be more advantage that the CFC would not have no competing shop.

[Fred McKim]

There are chess sets, books, software. Though, it might be more advantage that the CFC would not have no competing shop.

CCN is not allowed to advertize for competing chess retailers.

[Christopher Mallon]

There are chess sets, books, software. Though, it might be more advantage that the CFC would not have no competing shop.

What I meant was that I would never pay current rates to advertise a tournament... nor would I advertise a tournament at all unless I was sure the issue would be received on time.

[Egidijus Zeromskis]

CCN is not allowed to advertize for competing chess retailers.

That is interesting :eek:
Lets say the CFC is only in advertising business (no shop/FEN, no amazon) - could it generate $5000 from advertisements?

[Vladimir Drkulec]

A few points, as I read it through.



Why are we spending $1000 on legal fees? And why are we paying $3600 for an audit? That money would be much better spent on actually supporting chess! The lawyers and accountants don't need our money that badly...


At this point in time and with the situation we are in, the audit shouldn't be a priority. We should strive to break down our expenses so as to maximize transparency. The legal expenses probably have to do with complying with the requirements for the new non-profits act. We definitely need to minimize our spending in these areas but sometimes it is necessary.

[Pierre Dénommée]

We should stay in the sale of equipment. A small percentage of Amazon sales is better then nothing.

I do not believe that an official supplier of the CFC could give us 27 000$ in revenue per year. Such a supplier would offer us the moon in the first years, but after our members have become his clients, he could afford to offer us next to nothing at the time of renewal because, if we walk out of the agreement, we still do not recover our previous clients.

[Vladimir Drkulec]

I am the only one who seems to be bringing up this issue but it appears to me that we are going to have a $4000+ hole in our budget from memberships because the 2012 CYCC organizers declined to collect CFC memberships from people who were willing to pay. I have had several parents tell me the same story so I suspect that it is true for everyone who played. This is very annoying to me because I was planning to run some events where our juniors played rated games against adults but now if I want to do this I will have to be the one collecting memberships.

[Pierre Dénommée]

Complying with the new non-profit Act should be a priority. I do not believe that we need a lawyer to do this because everything is well explained on the Canadian Government web site.


At this point in time and with the situation we are in, the audit shouldn't be a priority. We should strive to break down our expenses so as to maximize transparency. The legal expenses probably have to do with complying with the requirements for the new non-profits act. We definitely need to minimize our spending in these areas but sometimes it is necessary.

[Paul Leblanc]

Gordon, the reason that income from the Foundation went down is that funds under management dropped by over $13k due to the withdrawal of funds to pay for the final two installments on the new CFC website. It's mentioned in my annual report (see the same place where the governors letters are posted on the CFC website). There was also a smaller impact from dropping interest.

[Paul Leblanc]

Gordon, on your second point we stated in our bid for the Canadian Open at last year's AGM that we would not ask for a subsidy from the CFC.

[Michael von Keitz]

It has been a long while since we last had an audit/review, but our current financial circumstances allow us to change that. If this were projected as an annual expense, it might be troublesome, but, with our transition into the new NFP Act on the horizon and a planned RCAAA application to follow, it seems now is as good a time as any to have books we can point to as having been looked over by professionals.

The legal fees are strictly related to the new NFP Act. First of all, the structure of our board will need to be addressed, but, more importantly, I see our impending relationship with the FQE as having potential ramifications in this context. Although it's not impossible to navigate the hurdles ourselves, there's comfort to be had in seeking final confirmation from a lawyer as to our compliance with the Act.

The CYCC issue is not resolved, but we're anticipating minimal, if any, effect on the operating budget when all is said and done. All but 12 participants in this year's CYCC had either already renewed their membership, or were expired members due to renew. The majority of these fees are expected to be recovered and we are in the process of doing so. We'll be in a better position to discuss the entire matter at the October meeting and would ask that you bear with us.