Subject: RE: Issue: #748: Section 5.4 - Quarterly deposits inappropriate

From: "Wijnen, Bert (Bert)" <[email-masked]>
Date: Tue, 21 Dec 2004 23:13:57 +0100

> 
> > So... why is it an issue when I suggest it?
> 
> nothing special for you Bert :-)
> 
Thanks... I did not think so either, but it looked like it.

> > But does your text not boil down to the same process?
> 
> it might or it might mean that a big pool of money is maintained
> whatever - the bottom line is that the IASA needes to be able to
> count on money being available - why not just say that?
> 

Mmm... I guess we disagree here.

May be I need to explain my (personal) thinking.

In my view, just as an example, if we have this budget:

Revenues:                            expenses  $5M
- meeting fees           $ 2M
- earmarked donations:   $ 2M
- ISOC budget            $ 1M

and at the end of the year it turnes out that we adhered to th $5M spending
and that the meeting fees and earmarked donations are say $ 5M, then I
would hope we can set aside $1 M for reserve funds for possible future
shortfalls and/or disasters. 
I'd hope that ISOC would still be willing to allocate $ 1M for IETF
(at least untill we have our defined reserve fund established).

In fact I would rather see a budget:

revenues:                             expenses
- meeting fees           $ 2M         allocate to reserve fund $.5M
- earmarked donations:   $ 2M         normal expenses $4.5M
- ISOC budget            $ 1M

And then if meeting fees turn out to generate an extra 1M without extra
cost, then put the extra 1M in the reserve fund so we get to our defined
"reserve" faster.

Makes sense? Or am I too prudent a European (or maybe worse: Dutchman)?

Bert
> Scott

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---

From: Margaret Wasserman <[email-masked]>
Date: Wed, 22 Dec 2004 08:51:38 -0500

Hi Bert,

>May be I need to explain my (personal) thinking.

This is good, because your personal thinking does not match my 
personal thinking and perhaps that is why we have been having trouble 
coming to wording that seems right to both of us.

>(at least untill we have our defined reserve fund established).

With the same budget numbers, I would, personally, think about it like this:

ISOC has agreed to cover a $5M budget.  The IASA is only anticipating 
$2M in meeting revenue.  This means that ISOC needs to raise funds 
(in one form or another) to cover $3M worth of expenses.

If meeting fees and/or designated donations do cover the full $5M, 
the budget is covered.  If these revenue sources do not cover the 
full $5M, ISOC will need to cover the remaining expenses from 
non-IASA-specific funds.

I think that you are making a mistake when you consider the 
"earmarked donations" and the "ISOC budget" to be two separate 
revenue streams.  ISOC will have fund raising programs, and _all_ of 
the donations that ISOC collects from those programs are ISOC 
revenue.  Some of that revenue may be earmarked to specific projects 
(IASA is only one of many projects that people may choose to fund) 
and/or collected via project-specific fund raising efforts, but all 
of this revenue and all related expenses are included in the ISOC 
budget.

I don't know whether or not IETF meeting fees will be included in the 
ISOC budget.  That will depend on whether we view meeting fees and 
expenses as IASA budget items, or whether the meetings are run in 
such a way that only the surplus from the meetings shows up on the 
ISOC/IASA books.

>cost, then put the extra 1M in the reserve fund so we get to our defined

You still seem to be thinking that there is a goal to create a 
separate IASA reserve fund.  I don't think that makes sense.  The 
overall ISOC organization will be more flexible, and more resilient 
with a single, larger reserve that can cover the full operation 
(including IASA) than it will be if we hold separate "ISOC" and 
"IASA" reserves.

If the meeting fees and designated donations exceed the IASA budget 
on an ongoing basis, we will build-up some IASA-specific funds that 
could be used as a first line reserve, but I don't think that should 
be our goal, so I don't understand why we would want a budget that 
tried to achieve that.

Margaret

---

From: "Joel M. Halpern" <[email-masked]>
Date: Wed, 22 Dec 2004 09:32:27 -0500

I think that there is a different side of this.

Suppose that a budget was worked out (as below), with a plan for a certain 
expected coverage from ISOC general funds, meeting fees, and directed 
donations.
Lets presume the budget includes the plan for building the reserves.
If meeting fees run high, presumably the IAOC and ISOC will negotiate about 
how much of that goes into extra IETF reserves, how much goes for 
previously unbudgeted but desired IETF activities, and how much goes to 
reduce ISOC general fund contribution.

What I wonder about is the case where earmarked donations run higher than 
budgeted.  If ISOC is allowed to reduce its support from general funds for 
the IETF based on that increased earmarked donation, then it tends to 
undermine the value of the earmarked donation.

It seems to me that two conclusions follow from this:
1) The budget ought to be built around some assumption (based on 
experience) of earmarked donation.
2) But extra earmarked donation should go to either IETF reserves or other 
IETF specific activities that were not in the budget.

Yours,
Joel

At 08:51 AM 12/22/2004, Margaret Wasserman wrote:

>This is good, because your personal thinking does not match my personal 
>thinking and perhaps that is why we have been having trouble coming to 
>wording that seems right to both of us.
>
>ISOC has agreed to cover a $5M budget.  The IASA is only anticipating $2M 
>in meeting revenue.  This means that ISOC needs to raise funds (in one 
>form or another) to cover $3M worth of expenses.
>
>If meeting fees and/or designated donations do cover the full $5M, the 
>budget is covered.  If these revenue sources do not cover the full $5M, 
>ISOC will need to cover the remaining expenses from non-IASA-specific funds.
>
>I think that you are making a mistake when you consider the "earmarked 
>donations" and the "ISOC budget" to be two separate revenue streams.  ISOC 
>will have fund raising programs, and _all_ of the donations that ISOC 
>collects from those programs are ISOC revenue.  Some of that revenue may 
>be earmarked to specific projects (IASA is only one of many projects that 
>people may choose to fund) and/or collected via project-specific fund 
>raising efforts, but all of this revenue and all related expenses are 
>included in the ISOC budget.
>
>I don't know whether or not IETF meeting fees will be included in the ISOC 
>budget.  That will depend on whether we view meeting fees and expenses as 
>IASA budget items, or whether the meetings are run in such a way that only 
>the surplus from the meetings shows up on the ISOC/IASA books.
>
>You still seem to be thinking that there is a goal to create a separate 
>IASA reserve fund.  I don't think that makes sense.  The overall ISOC 
>organization will be more flexible, and more resilient with a single, 
>larger reserve that can cover the full operation (including IASA) than it 
>will be if we hold separate "ISOC" and "IASA" reserves.
>
>If the meeting fees and designated donations exceed the IASA budget on an 
>ongoing basis, we will build-up some IASA-specific funds that could be 
>used as a first line reserve, but I don't think that should be our goal, 
>so I don't understand why we would want a budget that tried to achieve that.
>
>Margaret
>
>

---

From: Brian E Carpenter <[email-masked]>
Date: Wed, 22 Dec 2004 16:25:43 +0100

Joel,

Joel M. Halpern wrote:
> Suppose that a budget was worked out (as below), with a plan for a 
> certain expected coverage from ISOC general funds, meeting fees, and 
> directed donations.
> If meeting fees run high, presumably the IAOC and ISOC will negotiate 
> about how much of that goes into extra IETF reserves, how much goes for 
> What I wonder about is the case where earmarked donations run higher 
> than budgeted.  If ISOC is allowed to reduce its support from general 
> funds for the IETF based on that increased earmarked donation, then it 
> tends to undermine the value of the earmarked donation.
> 
> 2) But extra earmarked donation should go to either IETF reserves or 
> other IETF specific activities that were not in the budget.

I'm not clear that anything in the -02 text with the minor proposed
changes to get rid of "quarterly" is incompatible with this.

    Brian

>> $2M in meeting revenue.  This means that ISOC needs to raise funds (in 
>> one form or another) to cover $3M worth of expenses.
>>
>> budget is covered.  If these revenue sources do not cover the full 
>> $5M, ISOC will need to cover the remaining expenses from 
>> non-IASA-specific funds.
>>
>> donations" and the "ISOC budget" to be two separate revenue streams.  
>> ISOC will have fund raising programs, and _all_ of the donations that 
>> ISOC collects from those programs are ISOC revenue.  Some of that 
>> revenue may be earmarked to specific projects (IASA is only one of 
>> many projects that people may choose to fund) and/or collected via 
>> project-specific fund raising efforts, but all of this revenue and all 
>> related expenses are included in the ISOC budget.
>>
>> expenses as IASA budget items, or whether the meetings are run in such 
>> a way that only the surplus from the meetings shows up on the 
>> ISOC/IASA books.
>>
>> (including IASA) than it will be if we hold separate "ISOC" and "IASA" 
>> reserves.
>>
>> If the meeting fees and designated donations exceed the IASA budget on 
>> an ongoing basis, we will build-up some IASA-specific funds that could 
>> be used as a first line reserve, but I don't think that should be our 
>> goal, so I don't understand why we would want a budget that tried to 
>> achieve that.
>>
>> Margaret
>>
>>

---

From: "Joel M. Halpern" <[email-masked]>
Date: Wed, 22 Dec 2004 10:30:24 -0500

The concern (and I think it is minor but not insignificant) is not with 
incompatibility.
It is that as currently written, in the case of more IETF earmarked 
donation than expected, it is equally consistent with the text that either
1) ISOC maintains their level of general contribution to IETF activities
or
2) ISOC reduces their level of general contribution to IETF activities, 
because the money is coming from elsewhere.

We clearly want 1.
Governments lover to do 2.  That is the game they play with "lottery money 
is only usable for schools" and similar nonsense.

Yours,
Joel

At 10:25 AM 12/22/2004, Brian E Carpenter wrote:
>>budgeted.  If ISOC is allowed to reduce its support from general funds 
>>for the IETF based on that increased earmarked donation, then it tends to 
>>>revenue may be earmarked to specific projects (IASA is only one of many 
>>>projects that people may choose to fund) and/or collected via 
>>>expenses as IASA budget items, or whether the meetings are run in such a 
>>>way that only the surplus from the meetings shows up on the ISOC/IASA books.
>>>
>>>larger reserve that can cover the full operation (including IASA) than 
>>>it will be if we hold separate "ISOC" and "IASA" reserves.
>>>

---

From: Brian E Carpenter <[email-masked]>
Date: Thu, 23 Dec 2004 10:37:18 +0100

Joel,

Money has this tricky property of being fungible, which is what allows
governments, funding agencies, and even corporate finance people,
to play such games. But on the other hand, what do you expect ISOC to
do in a year when, for whatever reason, its general income is significantly
down and designated donations for the IETF are significantly up? Given that
we are entering a relationship of trust, I think there has to be flexbility
to deal with unforeseeable circumstances such as those.

    Brian

Joel M. Halpern wrote:
> Governments lover to do 2.  That is the game they play with "lottery 
> money is only usable for schools" and similar nonsense.
> 
> Yours,
> Joel
> 
>>> about how much of that goes into extra IETF reserves, how much goes 
>>> for previously unbudgeted but desired IETF activities, and how much 
>>> goes to reduce ISOC general fund contribution.
>>> funds for the IETF based on that increased earmarked donation, then 
>>> it tends to undermine the value of the earmarked donation.
>>>> personal thinking and perhaps that is why we have been having 
>>>> trouble coming to wording that seems right to both of us.
>>>>
>>>> ISOC has agreed to cover a $5M budget.  The IASA is only 
>>>> anticipating $2M in meeting revenue.  This means that ISOC needs to 
>>>> raise funds (in one form or another) to cover $3M worth of expenses.
>>>>
>>>> revenue streams.
>>>> ISOC will have fund raising programs, and _all_ of the donations 
>>>> that ISOC collects from those programs are ISOC revenue.  Some of 
>>>> that revenue may be earmarked to specific projects (IASA is only one 
>>>> of many projects that people may choose to fund) and/or collected 
>>>> via project-specific fund raising efforts, but all of this revenue 
>>>> and all related expenses are included in the ISOC budget.
>>>>
>>>> I don't know whether or not IETF meeting fees will be included in 
>>>> the ISOC budget.  That will depend on whether we view meeting fees 
>>>> and expenses as IASA budget items, or whether the meetings are run 
>>>> in such a way that only the surplus from the meetings shows up on 
>>>> the ISOC/IASA books.
>>>>