But just to finish my line on this part of discussion. There is
nothing
particularly tricky on making bookkeeping level financial calculations.
Presenting "different pictures" hints towards "Innovative bookkeeping",
and I would not make even hints on that without having some evidence
on that. Second, although not being accountant I am not a complete
amateur
on the subject, and I am expecting that our finance VP etc. are very
much
experts on this. Third, no profit is not layman term. There are
different issues
on this such as "operating profit", "net profit" etc. And no you
cannot leave
investments and assets out of the consideration. This is not how
bookkeeping
or even good corporate practice could operate. Remember also the
investments
are providing income, so no investment income --> more membership fees,
less surplus from conferences. Also many operations may come more
expensive
without capital and assets. As of 160MUSD assets, it does not sound
that exceptional
for me for the "shop" which has ca. 400MUSD revenues/expenses. Even in
the private households there is typically a rule of thumb that you
should have
6 months emergency funds available to sleep well. In fact, I know even
couple
of student unions (at the single university level -- in Europe!) who
have larger net
assets that IEEE.
But as said, I will not continue this discussion.
> Dear Joe and Prof. Mahönen:
>
> Thank you for your comments. First, let me point out that there is a
> question mark at the end of the subject line of this email, and the
> word
> "could" is intended to mean "is it possible that?".
>
> If the banking crisis has taught anything is that accounting reports
> are
> very tricky, and that accountants can present very different pictures
> of a given situation using the same basic numbers, but calling
> things by
> different names. As I said before, the opinion of someone with
> accounting background may clarify certain things here. I did not bring
> up the issue of the IEEE finances into this discussion, but agree with
> the original poster that it provides relevant information to this
> discussion.
>
> Here is direct quote from the IEEE report:
> ============================
> In 2008, IEEE had revenues of US$342.4 million, an increase of US$2.8
> million from 2007 as shown by the Statement of Activities.
> The increase in revenue was primarily due to the following:
> 1. Intellectual property revenue increased US$12.6 million primarily
> due
> to the sale of IEEE's Electronic Library (IEL), which represented
> US$10.8 million of the increase.
> 2. Conference revenue increased US$4.0 million exclusive of
> intellectual
> property revenue from conference proceedings included above.
> 3. Other revenue increased US$2.6 million.
> 4. Net investment revenue decreased US$(16.4) million; total net
> investment revenue was US$0.0 in 2008 versus US$16.4 million in 2007.
> Please note that in 2008 the investment loss of US$70.9 million is
> shown
> as an expense rather than a decrease in revenue.
> The operational surplus in 2008 was US$12.5 million.
> This was offset by net investment losses and other losses of US
> $(101.1)
> million.
> ===============================
>
> So, they have revenue increases in the millions, leading to an
> "operational surplus" of US$12.5 million. As far as I know, the
> operational surplus is what microeconomics books (and regular people)
> call profit (total revenue minus total costs). So it is not 10
> millions
> but 12 and a half millions. Not bad at all.
>
> Now they also report big "investment losses". I think this is the
> tricky
> part. If you own 1000 shares of a company each value at US$200 that
> represents US$200,000 in assets. If tomorrow the shares lose US$30
> each
> in value, that represents a decrease in value of $30,000. Technically
> you can call it a $30,000 "loss", and maybe it is. However, that does
> not mean that your expenses were higher than revenues by $30,000. It
> simply means that due to market fluctuations, the value of your shares
> decreased. (Most universities had monstrous "losses" by this criteria
> due to reduction in the values of their endowments). However, due to
> market fluctuation in the opposite direction, a while later the shares
> may recover the initial value and go on to exceed it by USD20 each.
> All
> of the sudden you are $20,000 "richer" than initially. But in fact,
> you
> have had the same shares in the same company all along. So, to a
> degree,
> these fluctuations don't really affect "true" wealth.
>
> At the end of the day, the IEEE still has "net assets" (reserves) of
> US$158 millions, which seems atypical for a professional society.
>
> Now, I don't know as much about the NSF as others in this list.
> However,
> it is my impression that the NSF mission does not include providing
> "buffer" funds for private corporations (even if they are "non
> profit"),
> so that they are immunised against future uncertainties or market
> fluctuations. I suspect they could not grant funds in that category
> even
> if a formal proposal was submitted by such corporation. The same can
> probably be said about other funding agencies (NSF or equivalent), in
> particular those outside the US. Thus, the direct or indirect use of
> funds originating from such agencies for such purpose would seem in
> principle questionable.
>
> Virgilio
>
> Joe Touch wrote:
>> Hi, Virgilio, et al.,
>>
>> Some points to keep in mind:
>>
>> The NSF is only one organization that supports attendees to IEEE
>> meetings. Others include other US gov't funding (DOE, NIST, DARPA,
>> etc.), non-US gov't, as well as industrial support - either of
>> faculty,
>> or of their own researchers directly. It is not accurate to claim
>> that
>> "much" of IEEE resources are from any single source such as the NSF.
>>
>> The IEEE operates as a US non-profit. As such, surpluses in a given
>> year
>> are eventually used in other ways. In addition, they are already
>> closely
>> monitored by the IRS (US govt tax organization).
>>
>> Claiming that any IEEE is "more expensive than it should be" is a
>> claim
>> that has not yet been validated. I will be sending another post on
>> this
>> topic shortly.
>>
>> As noted, the surplus reported is quite small for a given year (10%
>> of
>> revenue), and there are years that run deficits. This is the result
>> of
>> unpredictable attendance and variations in costs.
>>
>> Finally, the surplus reported is for the IEEE - not the Comsoc. So
>> evaluating Comsoc fees and drawing a conclusion about the IEEE as a
>> whole doesn't follow. The IEEE runs many types of conferences - some
>> primarily for research, others for industry. The IEEE also runs a
>> fairly
>> large and complex standards organization. Some of the "conference"
>> revenues seen at the IEEE level could be the result of standards-
>> focused
>> conferences used to support standards activities.
>>
>> Overall, let's please try not to jump to conclusions. I have been
>> working with the Comsoc to determine where costs are and how to
>> reduce
>> them. This may result in reduced conference services, however - we
>> can't
>> complain about the cost and enjoy a fully-staffed registration desk
>> with
>> multiple queues, receptions with buffet lines that rival banquets,
>> plated banquets for 2-day, 80-person meetings, or loss-based student
>> registration rates.
>>
>> Please try to keep this all in mind as we proceed.
>>
>> Joe
>>
>>
>
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