1. Finance 101 Training for Senators July 20, 2011

2. 2 Finance 101 for Senators Agenda SWE Financial Responsibilities Budgets – Operating, Conference Funds – Restricted, Unrestricted CRF – Purpose, History Reserve Task Force

3. 3 SWE Financial Responsibilities SWE has multiple positions related to financial oversight... HQ, Treasurer, BOD, BOT, Finance Committee, Audit Committee, Independent Auditors...With a broad range of responsibilities which vary by position Provide input on and approve BOD expenses Overall management of operations and conference budgets Approve and manage Conference and Operations Budgets Review detailed statements, approve committee expenses Provide input on draft budgets Advise on proposed budgets and ongoing financial status Manage investments Issue opinions on SWE’s conformance with accounting principles

4. 4 SWE Financial Responsibilities HQ/Treasurer Responsibilities: Monthly statements sent to Treasurer, BOD and Finance Committee Detailed statements sent to each committee Provide input on BOD motions Overall management of operations and conference budgets BOD Member Responsibilities : Approve and manage Conference and Operations Budgets Review detailed statements, understand what charges are occurring Approval of committee expenses Engage Treasurer in BOD motions for budget analysis Finance Committee Member Responsibilities : Review and understand financial statements Provide input on draft budgets Advise BOD on proposed budgets and ongoing financial status Maintain Finance Manual and other documentation Senate Responsibilities : Understand the basics of the budget process Authorize withdrawals from CRF

5. 5 SWE Budgets Two budgets are managed by HQ & BOD Operating Budget – This budget is defined to cover HQ, programs, services and membership benefits. Conference Budget – This separate budget is defined to manage the annual national conference.

6. 6 SWE Budgets - Operating Income Dues (25-30%)* Professional, Collegiate, Corporate Programs and Services (20-30%) Wow! and other outreach, Grants, Awards, Career Service Center, Professional Development, Collegiate Leadership Forum Publications (25-45%) Magazine Other (10-15%) Contributions, Royalties, Interest, Conference Overage, CPC unrestricted donations *Shows typical range of contribution for each segment to overall income in FY04-FY11 time frame.

7. 7 SWE Budgets - Operating Expenses (General Operating Expense) Management (5-10%)* Committees, BOD, Officers, Senate, Executive Staff Administrative (35-45%) IT, HR, Accounting, HQ Staff, overhead costs Programs (15-20%) Outreach, Grants, Awards, Career Service Center, Professional Development, Archives, Web Site Membership (5-10%) Sections / Regions Services, Collegiate, Professional, CPC Publications (15-25%) Magazine Relations (5-10%) Public Policy and Public Relations *Shows typical range of contribution for each segment to overall expense in FY04-FY11 time frame.

8. 8 SWE Budgets - Conference Income Registration, Sponsorship, Events, Exhibits Expenses Speakers, Conference Facilities and Fees, Conference Management, Events, Publications Conference Overage is split -- 95% of FYXX overage currently goes to Operating Budget for FYXX+1, 5% goes to CRF. This split has changed over the years. From FY06 to FY08, 75% went to the Operating Budget and 25% went to CRF. Prior to FY06 it was split 50/50.

9. 9 Operating Budget Historical Info ($K)

10. 10 SWE Restricted, Unrestricted Funds Income may be designated as ‘restricted’ or ‘unrestricted’. Restricted – Donor has imposed stipulations (temporary or permanent) surrounding what the funds can be used for, SWE is not allowed to use those funds for any other purpose. Examples – ExxonMobil and Ford Grants, Hoffman Bequest, IBM Partnership, AWE Program Fund. For some grants, a handling fee is allowed as a percentage of the funded amount. Other grants do not fund handling fees; these are covered as part of HQ expense. Unrestricted – Funds that are donated without specific stipulations, can be used as needed. Example – Board of Directors Challenge. Sponsorship funding is not “restricted”; however funding is provided in exchange for an opportunity. Some programs, such as specific outreach activities, would not continue in the absence funding. “Board restricted funds” such as CRF are not technically restricted.

11. 11 SWE Funds SWE Endowment Fund Inc. (SWE-EFI - Managed by BOT): Headquarters Fund – Permanent endowment providing income to SWE-HQ, funded through life membership payments, some donations and bequests. Awards Fund - Formed by merging several single awards funds. Provides an annual subsidy to be used for awards. Scholarship Fund - Permanent endowment providing income for scholarships. Contingency Reserve Fund (CRF - Managed by BOT): Withdrawals are authorized by the Senate. Currently funded by 5% of conference overage. Reserve Task Force reviewing structure, levels. General Operating Reserve (GOR - Managed by HQ): Retained earnings, capped at 30% of General Operating Expense ($1.2M for FY11), with any excess transferred to CRF. Not a “reserve”, represents “Unrestricted Net Assets”. Change in terminology being recommended by Reserve Task Force.

12. 12 Net Asset Categories All Permanently and some Temporarily Restricted Assets are part of SWE-EFI. Unrestricted Assets also include CRF balance, approximately $3,150,000 as of 3/31/11. Net Assets6/30/096/30/10 Unrestricted$6,126,934$6,067,273 Temporarily Restricted2,922,3213,736,572 Permanently Restricted1,981,7642,119,450 Total Net Assets$11,031,019$11,923,295 Per SWE’s Consolidated Financial Statement & Independent Auditor’s Report for the year ended 6/30/10.

13. 13 Purpose: Currently designated “to provide for emergencies or contingencies that would otherwise threaten the existence of the Society”. Previously, funds could be requested for special projects or one-time expenses. Income/transfers consist of: 5% of conference overage Income earned on assets of the Fund Individual unrestricted donations of $25,000 or more Donations specifically designated for the Fund Base Level: Currently at 110% of the audited General Operating Expense Fund is administered by BOT. Contingency Reserve Fund (CRF)

14. 14 CRF Historical Information ($K) NOTE: FY99 receipts include an unrestricted bequest of $53,593. Other receipts are from conference overages. Withdrawals include $205K in FY02 to move HQ from New York to Chicago, $64K in FY03 for ED search, $10K in FY04 for Student Transition Team.

15. 15 CRF History Early Senate History: A withdrawal was authorized by the Senate in July 2009: “Up to a maximum of $625,000... to be used to cover general operating expenses based on anticipated decrease in unrestricted income, in order to support the current level of programs and services, to be repaid by end of FY15.” Discussion at that time centered around the definition of “emergency”. In January 2010 the Senate voted to add a condition for motions requiring withdrawals from funds controlled by the Senate to be sent to the Finance Committee to review and provide analysis. Senate CRF Task Force chartered in 2009: “To educate members of the Senate on the purpose of the CRF and their role with respect to decisions about the CRF.” Recommendations included annual Senator training, communicating relevant financial information, and formation of a joint Task Force to determine appropriate reserve balances

16. 16 Reserve Task Force Reserve Task Force chartered in 2010: “To provide the Senate and BOD with results of a review of all SWE monetary reserves, any gaps in how they support our mission, and a recommended level of reserves for the Society.” Consists of 11 members including 3 past National Presidents, long-time BOT member, several past and current Finance Committee and Strategic Planning Committee members, Treasurer, Senate Speaker & several Senators. Conducted in-depth review including purpose for reserves in non-profit organizations, SWE assets and relatively conservative position, other financial considerations. Preparing detailed background document to capture assumptions, considerations and concerns, as well as proposed revision to Reserve Fund Document. Anticipate Senate telecon in late August to discuss recommendations, draft motion in early September for voting at Senate meeting in October.

17. 17 Summary Fiduciary Responsibility of Senators: Understand the basics of the budget process and the general intent of CRF. Seek knowledgeable input from BOD, BOT and Finance Committee. As with all who hold SWE positions with financial oversight, balance the interests of the society, the regions and the sections to ensure the ‘greater good’ of the society.

18. 18 Stacey DelVecchio Treasurer Treasurer@swe.org Penny Wirsing Finance Committee Chair penny.wirsing@swe.org LeeAnn Bush Finance Committee Chair-Elect leeann.bush@swe.org Questions For resources go to the SWE Money Community.