1. Strategic Financial Plan June 5, 2010 1

2. 2 Educate Board members on SWE Finances Text Define how to get there Discuss what could change Sync with Strategic Planning Validate and change process SWE - STRATEGIC FINANCIAL PLANNING * * *

3. The Strategic Financial Planning process was initiated by following these steps 1. Educate SWE Board members on the Finances 2. Identify and understand the current Programs and Services including their income and expenses 3. Reviewed risks and identified what could change 4. Identify what the plan looks like and how we take the next steps Input was provided by John Dee, Betty Shanahan and many BOD members. Also, with research there are some steps that need to be done on an ongoing basis and these are included in the plans. One thing to remember is that this will be a PLAN and will need to have steps to monitor, track and review on an ongoing basis. The next steps provided will include adding these capabilities into SWE’s everyday processes. 3

4. Strategic Financial Plan Sections Strategic Financial Alignment to Strategy/ Goals/Objectives Assumptions and Drivers for Potential New Resource Sources Income Source Evaluation and Change Plan Total Fund Management and Usage Summary 4

5. Strategic Financial Plan Sections Strategic Financial Alignment to Strategy/Goals/Objectives Annually SWE focuses on various goals/objectives from the Strategic Plan. Program and Service Reviews are held annually to identify any Program/Service that is no longer benefiting the society’s strategy, goals or objectives. Also, financial tracking occurs to understand the budget spend towards these goals. 5

6. Strategic Financial Plan Sections – Strategic Financial Alignment to Strategy/Goals/Objectives Results – Only about 10.8% of total dollars spent on average on Goals/Objectives FY08 – FY10 This is based on ‘pure’ expenses for the following strategic goals - Outreach programs Scholarship Professional Development Awards Diversity and Inclusion Public Policy 6 Outreach

7. Strategic Financial Plan Sections 7 Strategic Financial Alignment to Strategy/Goals/Objectives

8. Strategic Financial Plan Sections 8 Strategic Financial Alignment to Strategy/Goals/Objectives (expenses by year – FY10 – budget only)

9. Strategic Financial Plan Sections Strategic Financial Alignment to Strategy/Goals/Objectives Next Steps – Need to define appropriate capacity and infrastructure to meet stakeholder needs to Strategy/Goals/Objectives Continued capability to track expenses to the Strategy/Goals/Objectives 9

10. Strategic Financial Plan Sections Assumptions and Drivers for Potential New Resource Sources The Strategic Plan has well identified assumptions and drivers that should be used to identify any new sources of income, new membership sources and any changes in the core needs of our members. 10

11. Strategic Financial Plan Sections Assumptions and Drivers for Potential New Resource Sources Results Strategic Plan was updated for FY10. The updates provided areas that can be opportunities for HQ/BOD to consider for various resource growth. These areas include the following Identify corporations focused on green designs Since time demands, technology and globalization allow us to be 24x7 identify volunteer activities/capabilities to incorporate this identify education capabilities to fit new demands Globalization also allows for International growth via corporations or volunteers Environmental concerns will allow more opportunities with legislators and regulatory bodies for engineers More engineering careers will require education or certification Note – the economic situation of FY09 and FY10 also identified the shrinking of some sources and how dependencies can affect total funding 11

12. Strategic Financial Plan Sections Assumptions and Drivers for Potential New Resource Sources Next Steps HQ/BOD use the assumption/drivers for decision making Define ‘events’ that will occur using this new information from the Strategy Identify new Assumptions and Drivers on an annual basis with Program and Services review 12

13. Strategic Financial Plan Sections Income Source Evaluation and Change Plan As we have reviewed our various programs and services, Income sources for each type of expense are understood. As changes occur in the economy or other changes occur in the world, SWE needs to be able to adapt the plans. With a better understanding of the income/expenses – modifications can occur. 13

14. Strategic Financial Plan Sections Income Source Evaluation and Change Plan Results – Income Increase Contributions and Grants Fund portions of HQ staff (such as Outreach staff) thru Grants Identify Educational Program fees Sell Intellectual property – programs, documents, etc Certification fees Increase Conference registrations fees Add website advertising Increase periodical subscription fees where possible Expense Consider cost reductions on scholarship – identify lower cost model for support Identify HQ Staff areas that can be covered by grants such as Outreach staff 14

15. Strategic Financial Plan Sections – Income Source Evaluation and Change Plan AAES AveAAES MedFY03FY08FY09FY10FY11 Exhibit Booth 6.20%2.20%22.10%19.40%24.40%22.40%21.90% Contributions/Grants 3.60%1.40%14.70%19.00%14.50%18.00% Periodical - Advertising 7.00%4.10%26.80%18.10%18.30%13.70%14.00% Dues 37.20%34.40%10.80%11.70%12.50%13.70%13.10% Meeting Sponsorship 3.70%1.10%10.00%10.10%11.10%11.30%10.80% Convention Registration Fees 15.30%11.40%8.80%8.00%9.10%8.30%9.20% Royalties from non-publications 1.60%0.10%1.00%7.80%4.60%5.40%5.50% Dividends and Interest 2.60%2.30%1.00%2.90%2.30%3.00%2.30% Meeting Revenue - Other 1.00%0.00%2.30%2.70%2.90%3.40%2.40% Net sale of inventory 1.80%0.00%0.10%0.30%0.20%0.30%0.20% Educational Program Fees 6.50%2.60%0.00%0.10%0.00%0.40%0.00% Periodical - Subscription 4.50%0.90%0.10%0.00% Non-periodical publication 1.90%0.10%0.00% Other revenue 1.30%0.30%0.70%0.00% 2.30% Certification 1.20%0.00% Net sale of assets 1.10%0.10%0.00% Periodical - Other 1.00%0.00% Other things we don't do 1.80%0.00% Web Site Advertising 0.80%0.00% 0.20% 15 Identified as Sources to grow

16. Strategic Financial Plan Sections – Income Source Evaluation and Change Plan Next Steps Continue Program/Services evaluations annually and include the Income Source evaluation reviews. Identify annual change plans for Income Sources – develop format/methodology Track income sources annually to understand changes, similar to slide 12 (FY11 to be added also) Define target ranges of Income Distribution and how to migrate to it 16

17. Strategic Financial Plan Sections Total Fund Management and Usage Various financial resources exist to be used by the society. Each of them has their own scope of usage. Headquarters (HQ) Fund – managed by BOT Contingency Reserve Fund – managed by BOT with fund document and resource access managed by the Senate. General Operating Reserve – managed by the Board of Directors 17

18. Strategic Financial Plan Sections – Total Fund Management and Usage Results The Senate CRF team has reviewed the CRF document and identified that there is a need for a holistic approach in the use of the 3 financial resources that are already tracked. Each of these are typically looked at separately and it was felt these should be looked at together with a joint team. Next Steps Senate CRF review document references initiating a joint team to evaluate the 3 financial resources with the various stakeholders – HQ fund, CRF and GOR. Joint team would be with BOT, BOD representation and Senate representation minimally. Objective of this would be to ensure holistic approach to financial management of the 3 financial resources. 18

19. Ongoing Roadmap Make financial planning a routine part of business Keep Financial information at forefront of all decision-making to ensure focused on plans Develop a roadmap of all the changes, actions and track on an annual basis for longer term items Follow up on actions/changes on a regular basis for short term items Continue education sessions for BOD, Senate, etc. Encourage creativity for funding sources Identify SWE desired %’s for Income items not just increase/decrease Develop financial planning savvy in the BOD/HQ and other leaders Continue education sessions for BOD, Senate, etc Identify any resource gaps Have board and staff attend any available training Analyze financial performance – such as the Program/services review to include the annual overall financial information 19

20. Ongoing Roadmap Appreciate the importance of balancing financial need and sources Complete 3 financial resource reviews Continue to understand/educate on restricted vs unrestricted Have business continuity plan kept current Have a contingency plan Identify monitoring mechanism to ensure actions/improvements are visible (similar to scorecard or action lists) Include the reporting already used to show dependencies on corporations Identify ‘new’ reporting capabilities to track actions, new items etc so SWE has a continuous, repeatable reporting capability Timeline – During FY11 the roadmap can be defined and monitoring mechanisms put into place. Then needs to be ongoing basis by making routine.