New Economic Model Review Group
Minutes: Jan. 25, 2004 (combined from 2 conference calls)
Attendees: Janet Hasz, Deborah Jones, Lynel Jones, Francie Lyle, Joel Mandel, Roger Neece, Denny Robertson, Susan Ryan, Ellen Schweri, Arbie Thalacker, Holger Thams, Mary Vonfintel, Christine Wetzl, Connie Brock
Submitted input via email: Bob Hastey, Christopher St. John
Since several people just joined the group, Connie summarized what happened at the December kick-off meetings.
- Discussed Working group/Review group purpose - to develop 2 recommendations:
- A funding model for the Central Office
- A financial management system for planning, reporting and controlling across the mandala.
- Reviewed current financial situation for Central Office.
- Discussed and revised “13 Points”, a set of principles for developing a new economic model that was developed at the Congress.
(References: Shambhala News Service December 2003, “Summary of Current Financial Situation”, “A New Economic Model – 13 Points”, Review Group Minutes Dec. 14 and Dec. 21)
Connie reported that 17 people responded to the invitation to be added to the Review Group, bringing the total to 53. Each were sent documents distributed to date.
Connie noted there were 3 emails sent since the December meeting:
- Meeting minutes and revised “13 points” document.
- Agenda and homework for today’s meeting.
- An updated Review Group participants list.
The remainder of the meeting was spent discussing options for funding the Central Office. Below is a recap of the discussion. (See attached “Funding Models” used as the basis for this discussion.)
- Question: What percentage of the CO budget is to be covered by local centers?
- Answer: Since this is a more stable source than individual donations or practice center revenue, ideally it would be the primary source, with other sources available for other purposes. This is likely to take several years, so the percentage might start out small (25% or less) and increase over time as the new model is fully implemented.
- Question: How many members do we currently have?
- Answer: Do not currently have accurate data. Best estimate is approximately 7000.
- Question: How do we proceed when we don’t know what services will be provided and how much they will cost?
- Answer: President Reoch and the Board are working on a plan to address this and other Congress followup issues, such as Membership policy. Most likely the process will be similar to the one used for finances, i.e. a core working group and a review group that will develop a recommendation. This process will probably begin in February. In the meantime, we will include in our model scenarios for funding at different levels. This can then be matched to the recommended funding level.
- Question: What about practice centers and other entities?
- Answer: Because their revenues are so different, they are being handled separately. There is a Working group subcommittee looking at land centers. Other entities will be addressed later.
- Question: What do centers currently send to CO?
- Answer: Nothing. Some centers may make occasional donations, but it is not material.
- Question: Why wait for a new model? Why not invite centers to start making a monthly contribution?
- Answer: Many people thought this was a good idea. Both Arbie and Connie will pass it on to President Reoch.
The following comments were made regarding the options (see below for a description of the options).
- Prefers option 4 - a percentage off the top.
- Prefers option 4, with exclusions for restricted donations, and a reduction for all debt service. For a small center in a high cost, low wage environment, option 4 is preferable to a per member approach.
- If we chose option 1, it may constrict the definition of membership. I think the definition should be loosened. Option 4 can be used by every entity, applies equally, seems more fair.
- Likes option 4, but program revenue creates huge variation in monthly cash flow. Would need to remit monthly, based on actual cash flow.
- Prefers membership based option 1, but also wants to see membership more open (his center has members paying anything from $1 per month to $300 per month).
- Likes option1, but not flexible enough. Doesn’t go up with increased dues. Amount would need to be renegotiated every year. Option 2 would go up with increased dues. Option 3 is not predictable, less stable, but this is why we are here – to offer programs, so it would be a good basis. Option 4 is more complicated. So I prefer a mix of 2 and 3.
- Current range in dues is huge. Members come and go, difficult to say each month what the accurate count would be. Prefers option 4, based on net revenue, with quarterly payments due to swings in revenue.
- Any of the options would work; the question is how much would our center have to pay. We can stretch to do this; we can plan for it in future years.
- For special programs with visiting teachers, unusual expenses and revue sharing, program revenue can be very large, but net profit small or negligible. Would need to somehow account for this.
- Likes the idea of membership being also in Shamhhala International, with some portion of dues going to CO. Another option could be to have guidelines and ask each center to pledge annually based on the guidelines. Then it would be up to the center how they would actually cover their pledge – from dues, program revenue, etc.
- For fairness, measure needs to be as broad as possible, so option 4 seems best. Should not be dictated how centers cover there share, let them decide how it is raised.
- Likes the idea that this is invitational, centers invited to do this based on guidelines. Need to make sure that the funding model supports whatever the organizational model is – not in conflict, entities not in competition with each other.
- Need reliability in the system. Can rely on dues, but not so much program revenue. Already feel a great deal of pressure around program revenue. Dues can be an inspiring thing, and options 1 and 2 would foster more a sense of being part of the whole. If program revenues are used, should only include those that are very profitable. Does not like option 4.
- Option 1 not workable because so many members pay little or no dues. Option 2 – dues and unrestricted donations - would be the most consistent. Likes membership being with international, not just local center. A progressive system would be good, larger centers paying larger percentage.
- Pledge vs actual membership is quite a gap! Some sort of combination of options 2 and 3 might be more fair. Need to make sure this is not viewed as a tax. Option 4 could be pretty complicated, would need lots of exclusions for restricted donations.
- Trust can be an issue – will centers try to manipulate their numbers to minimize their payments?
- Once we have the figures from the centers, it might be clearer which model would be best. If we have the proper view and good services being provided then it will not be an issue to collect these revenues.
- Regarding restricted donations, all agreed that if they were included, it would have to be made very clear and the donor should have the option of saying no to sharing. Some thought including restricted under these circumstances would be OK. Some thought it OK only for donations from members. Some felt very strongly that they should be excluded, especially those for building funds and acharya salaries.
Next steps. Connie will revise the Funding Model document to reflect the discussion (see attached). She will also put together some examples using actual numbers for centers. Next meeting likely to be in 3-4 weeks.
Funding the Shambhala Central Office - version 2
All funds in US dollars except where noted
Considerations for Funding Models
- Fairness/equity: how does the model effect the various centers and groups?
- Unintended consequences: how might the model effect future decision-making?
- Simplicity vs. complexity: simpler is easier to implement and administer, but may not meet the needs for fairness or to minimize unintended consequences.
Funding Levels for Central Office
The following table provides historical data of funding levels for reference purposes:
Central Office Expenses Annual in Canadian $ Annual in US $ monthly US 1999 850,000 535,500 44,625 2000 1,200,000 756,000 63,000 2001 1,300,000 819,000 68,250 2002 1,400,000 882,000 73,500 2003 plan 1,400,000 1,092,000 91,000 current (2004) 469,000 365,820 30,485 Note: US figures based on historical exchange rates. Current Distribution of Central Office Funding By Source
Source Amount in US % of total Recurring donations from individuals 25,675 38% One time donations from individuals 20,540 31% Transfers from practice centers 14,220 21% Transfers from Shambhala Training 5,925 9% Other 790 1% totals 67,150 100% Options and Scenarios
The following shows several options for determine how much a Shambhala Center or Group would transfer to the Central Office. For each option, there is a scenario table showing various combinations. Since individual donations currently total $50,000 per month, the table also shows for comparison purposes how much each combination would be as a percent of $50,000.
Note: The options simply describe how a calculation would be made, e.g. $3 per member per month, with 25 members for a total of $75. It would be up to the Center/Group to determine how to cover their total. This could from dues, from program revenues, from fundraising, etc.
Option 1: $x per member
- Questions:
- 1. How do we count members? For example, anyone who pays at least $60 US per year.
- 2. How often do count members; monthly, quarterly, yearly?
- 3. How often would we remit?
Scenarios for option 1
This table shows how much would be transferred for various combinations of membership and monthly amount per member, and what percentage of current donations to the Central Office the transfer amount would be. Current best estimate of membership is 5000-7000.
Example
If we have 6000 members and transfer is $3, then $18,000 would go to the Central Office, which is 36% of the current individual donations.
# of members monthley transfer & % of $50,000 $2 $3 $4 $5 $7 4,000 $8,000 16% $12,000 24% $16,000 32% $20,000 40% $28,000 56% 5,000 $10,000 20% $15,000 30% $20,000 40% $25,000 50% $35,000 70% 6,000 $12,000 24% $18,000 36% $24,000 48% $30,000 60% $42,000 84% 7,000 $14,000 28% $21,000 42% $28,000 56% $35,000 70% $49,000 98% 9,000 $18,000 36% $27,000 54% $35,000 70% $45,000 90% $63,000 126% Note: current monthly Central Office donations approximately $50,000
Assessment
- Links transfer directly to membership, reinforcing the notion that membership is also in the larger Shambhala world, not just the local center.
- Current range in what members actually pay is huge, but this method treats every member the same.
- Centers with high average monthly dues would pay a relatively lower percentage than those with low average monthly dues (favors those with high monthly dues).
- Centers with higher than average portion of revenue from programs (i.e. more than 30%) would pay relatively lower percentage (favors those with large program revenue, low dues).
- It is often hard to tell who actually is a member at any point in time. Have they quit, are they just behind in their dues?
- This method could encourage centers to take a more restrictive definition of membership in order to reduce their count.
- Requires a standard definition of how to count members for this purpose. Other definitions of membership may be needed for other purposes.
- Amounts to Central Office would rise and fall with membership.
Option 2: x% of center/group dues and donations
Questions
- Do we exclude “restricted donations”, i.e. donations made for a specific purpose (building fund, scholarship fund, etc)?
- How often would we remit?
Scenarios for option 2
This table shows how much would be transferred for various combinations of dues/donations and transfer rates, and what percentage of current donations to the Central Office the transfer amount would be.
Example
If Centers/Groups collect $125,000 per month and the transfer percentage is 10%, then $12,500 would go to the Central Office, which is 25% of the current individual donations
Dues and donations monthly transfer and % of $50,000 5% 10% 15% 20% 100,000 $5,000 10% $10,000 20% $15,000 30% $20,000 40% 125,000 $6,250 13% $12,500 25% $18,750 38% $25,000 50% 150,000 $7,500 15% $15,000 30% $22,500 45% $30,000 60% 175,000 $8,750 18% $17,500 35% $26,250 53% $35,000 70% 200,000 $10,000 20% $20,000 40% $30,000 60% $40,000 80% 250,000 $12,500 25% $25,000 50% $37,500 75% $50,000 100% Note: current monthly Central Office donations approximately $50,000. 2001 unrestricted dues and donations to Centers approximately $100,000 per month.
Assessment
- Links transfer directly to membership, reinforcing the notion that membership is also in the larger Shambhala world, not just the local center.
- Does not require a standard definition of membership.
- Most people feel moderately to strongly that restricted donations should not be included. If they are included, it must be clearly described to donor who should have the option of being excluded. If they are excluded, we need a clear definition of what makes a donation restricted.
- All Centers/Groups would pay the same percentage, regardless of size. Centers with high average monthly dues would pay a much higher amount per member.
- Centers with higher than average portion of revenue from programs (i.e. more than 30%) would pay relatively lower percentage (favors those with large program revenue, low dues/donations).
- Amounts to Central Office would rise and fall with dues and donations.
Option 3: x% of center/group program revenue
Questions
- Gross revenue? Is there any practical way to look at net?
- Which programs are included? Only Shambhala programs (i.e. Shambhala School of Buddhist Studies, Shambhala Art)? All visiting teachers, or only Shambhala teachers (e.g. Pema Chodrun, Khandro Rinpoche)?
- How often would we remit?
Scenarios for option 3
This table shows how much would be transferred for various combinations of program revenue and transfer rates, and what percentage of current donations to the Central Office the transfer amount would be.
Program Revenue monthly transfer and % of $50,000 5% 10% 15% 20% 50,000 $2,500 5% $5,000 10% $7,500 15% $10,000 20% 75,000 $3,750 8% $7,500 15% $11,250 23% $15,000 30% 100,000 $5,000 10% $10,000 20% $15,000 30% $20,000 40% 125,000 $6,250 13% $12,500 25% $18,750 38% $25,000 50% 150,000 $7,500 15% $15,000 30% $22,500 45% $30,000 60% 200,000 $10,000 20% $20,000 40% $30,000 60% $40,000 80% Note: current monthly Central Office donations approximately $50,000. 2001 Centers gross program revenue excluding Shambhala Training approximately $54,000 per month.
Assessment:
- Program revenue is less stable, less predictable than membership.
- This option generated the least interest, so it is being dropped.
Option 4: x% of total center/group revenue
Questions
- Do we exclude “restricted donations”, i.e. donations made for a specific purpose (building fund, scholarship fund, etc)?
- Do we exclude anything else?
- How often would we remit?
Scenarios for option 4
This table shows how much would be transferred for various combinations of revenue and transfer rates, and what percentage of current donations to the Central Office the transfer amount would be.
Example: If the Unrestricted Revenue monthly transfer and % of $50,000 5% 10.0% 15% 20% 20,000 $7,500 15% $15,000 30% $22,500 45% $30,000 60% 175,000 $8,750 18% $17,500 35% $26,250 53% $35,000 70% 200,000 $10,000 20% $20,000 40% $30,000 60% $40,000 80% 225,000 $11,250 23% $22,500 45% $33,750 68% $45,000 90% 250,000 $12,500 25% $25,000 50% $37,500 75% $50,000 100% 300,000 $15,000 30% $30,000 60% $45,000 90% $60,000 120%Assessment:
- Does not link transfer as directly to membership as options 1 and 2.
- Does not favor any particular source of revenue, all are treated equally.
- All Centers/Groups would pay the same percentage, regardless of size. Centers with high average monthly dues and very large program revenues would pay a much higher amount per member (tends to favor smaller Centers/Groups).
- Does not require a standard definition of membership.
- Most people feel moderately to strongly that restricted donations should not be included. If they are included, it must be clearly described to donor who should have the option of being excluded. If they are excluded, we need a clear definition of what makes a donation restricted.
- May need to allow for excluding some program revenue for large/unusual programs. For example if there is revenue sharing with the teacher, then this portion of revenue might be excluded from the total used to calculate the transfer.
- The use of exclusions – either for restricted donations or for certain program revenues – makes this option relatively more complex than either options 1 or 2.
- Amounts to Central Office would rise and fall with total revenue. The better the Centers/Groups do in generating revenue, the more that would be transferred to Central Office (unless percentages are adjusted). This option more tightly links financial health of the Central Office with that of the Centers/Groups.
Option 5: Develop guideline ranges for each option and ask each Center/Group to select their pledge.
Example guidelines
- - $3-4 per member per month
- or
- - 10-15% of total unrestricted dues and donation
- or
- - 5-10% of total unrestricted revenue