1. American Library Association Division Leadership Meeting - ALA Financial Fundamentals and the Role of BARC - James Neal – Treasurer Clara Bohrer – BARC Chair October 20, 2011 Chicago, Illinois 2011 Fall Meeting

2. 2 The Bottom Line The ALA is a complex organization made up of many interrelated units and groups serving the diverse needs and interests of librarianship and library service to the general population. The Divisions play a critical role in the success of the Association’s efforts to fulfill its mission by providing some of the best and most advanced programming, services and advocacy initiatives to libraries, librarians and librarianship.

3. 3 ALA FUND STRUCTURE OPERATING FUNDPLANT FUND GRANTS & AWARDS LONG TERM INVESTMENTS General Fund Divisions Round Tables Headquarters Building Washington & Choice Offices Operating Furniture & Equipment Exchange Trans (NG) Restricted (NG) Unrestricted Temporarily Restricted Permanently Restricted Huron Plaza Property TOTAL ALA Budget Capital Budget Exchange Trans (G) TechnologyFurn/Equip & Building Technology Reserve Fund

4. 4 ALA Decision-Making Process COUNCIL 100 – Councilors at Large 11 - Divisional Councilors 53 - Chapter Councilors 12 - Executive Board Members 18 – Round Table Councilors ENDOWMENT TRUSTEES 3 - Elected by The Executive Board Treasurer –Ex-Officio FINANCE & AUDIT COMMITTEE Treasurer - Chair 3 - Executive Board Members Appointed by the President BARC Chair PLANNING & BUDGET ASSEMBLY 10 - Councilors Elected by Council 5 Chapters; 5 At-Large 13 - Divisional Representatives 37 - Committee Chairs - ALA Committees Chairs Appointed by President 28 - Round table Representatives EXECUTIVE BOARD 4 - Elected by Membership 8 - Elected by Council 1 - Staff - Executive Director DIVISION BOARDS OF DIRECTORS Elected by Division Members BUDGET ANALYSIS & REVIEW COMMITTEE (BARC) 6 - Members At-Large 2 - Executive Board Members* 1 - Treasurer *Appointed by the President EXECUTIVE COMMITTEE President President - Elect Immediate Past President Treasurer Executive Director

5. 5 FY11 Total ALA Revenues* $47,825,045 *Preliminary first close – FY11

6. 6 FY11 General Fund Revenues* $26,010,696 *Preliminary second close – FY11

7. General Fund Revenues (FY2007 – FY2011) 7

8. 8 FY11 Division Revenues* $13,658,726 *Preliminary second close – FY11

9. Divisions Results – Actual vs. Budget - FY11 Revenues 9 ActualBudgetVariance% PLA $1,017,147.18 $ 968,407.00 $ 48,740.185.03% ACRL $4,576,879.34 $4,211,666.00 $ 365,213.348.67% CHOICE $3,047,374.00 $3,192,432.00 ($145,058.00)(4.54%) AASL $ 824,651.03 $1,217,745.00 ($393,093.97)(32.28%) ASCLA $ 75,037.43 $ 90,875.00 ($ 15,837.57)(17.43%) ALCTS $ 683,632.73 $ 513,670.00 $ 169,962.7333.09% LLAMA $ 260,021.72 $ 297,441.00 ($ 37,419.28)(12.58%) RUSA $ 436,481.45 $ 436,370.00 $ 111.450.03% ALTAFF $ 417,644.57 $ 597,755.00 ($ 180,110.43)(30.13%) LITA $ 464,576.98 $ 462,242.00 $ 2,334.980.51% ALSC $ 1,288,728.35 $1,091,235.00 $ 197,493.3518.10% YALSA $ 564,647.15 $ 730,336.00 ($ 165,688.85)(22.69%) TOTAL $ 13,658,727$13,810,174.00($ 151,447)(1.10%)

10. Divisions Results – Actual vs. Budget - FY11 Expenses 10 ActualBudgetVariance% PLA $1,235,924.19 $1,743,630.00 $507,705.8129.12% ACRL $4,059,149.00 $4,287,877.00 $228,7285.33% CHOICE $2,997,176.49 $3,295,525.00 $298,348.519.05% AASL $1,375,114.91 $1,818,922.00 $443,807.0924.40% ASCLA $ 97,689.83 $ 103,895.00 $ 6,205.175.97% ALCTS $ 539,576.92 $ 500,369.00 ($ 39,207.92)(7.84%) LLAMA $ 261,972.38 $ 315,403.00 $ 53,430.6216.94% RUSA $ 410,095.05 $ 470,884.00 $ 60,788.9512.91% ALTAFF $ 477,624.49 $ 517,372.00 $ 39,747.517.68% LITA $ 472,604.09 $ 493,602.00 $ 20,997.914.25% ALSC $ 1,069,766.38 $1,060,247.00 ($ 9,519.38)(0.90%) YALSA $ 657,299.96 $ 746,482.00 $89,182.0411.95% TOTAL $13,676,518$15,354,208.00$1,677,69010.93%

11. Divisions Results – Actual vs. Budget - FY11 Net Revenue 11 ActualBudgetVariance% PLA ($218,777.01)( $ 775,223.00) $ 556,445.9971.78% ACRL $ 517,730.34($ 76,211.00) $ 593,941.34779.34% CHOICE $ 50,197.51 ($ 103,093.00) $ 153,290.51148,69% AASL ($ 550,213.88) ($ 601,177.00) $ 50,963.128.48% ASCLA ($ 22,652.40) ($ 13,020.00) ($ 9,632.40)(54.73%) ALCTS $ 155,586.17 $ 13,301.00 $ 142,285.171,069.73% LLAMA $ 2,897.29 ($ 17,962.00) $ 20,859.29 116.13% RUSA $ 44,464.73 ($ 34,514.00) $ 78,978.73(228.83%) ALTAFF ($ 49,896.20) $ 80,383.00 ($ 130,279.20)(162.07%) LITA ($ 8,027.11) ($ 31,360.00) $ 23,332.89 74.40% ALSC $ 205,097.46 $ 30,988.00 $ 174,109.46561.86% YALSA ($ 89,174.18) ($ 16,146.00) $ 395,971.54(452.30%) Total $ 97,106.30($1,544,034.00)$2,113,140.02106.29%

12. Revenue Comparison (FY2007 – FY2011) 12

13. 13 FY11 Roundtables Revenues* $351,145 *Preliminary second close – FY11

14. 14 Timeline of Budget Process

15. 15 Operating Agreement Highlights Created over a two year period in the late 1980’s. Adopted in 1989 with a five year phase in period. Defines the relationship between divisions and core (administrative) structure of ALA. Defines the financial responsibility between ALA and the Divisions. Reviewed annually at the Division/BARC Leadership meeting. Preamble: Statement of purpose and values outlines the unique structure of ALA i.e. “one association with indivisible assets and a single set of uniform procedures.” Home of 11 Divisions and other units, “The nature of the relationship among the ALA units is a dynamic one, demanding collaboration and a willingness to work together.”

16. 16 Operating Agreement Highlights (con’t) The agreement provides a cooperative framework in which questions of organizational relationship can be addressed and resolved. Guiding Principles Shared values of unity, diversity, authority (delegated to individual Divisions), autonomy and collaboration/cooperation. Divisions assume financial responsibility for staff and programs, including some indirect costs for Division activities and services provided by ALA. ALA will provide general administrative, financial, membership, publishing services to the Divisions.

17. 17 Operating Agreement Determined Overhead Charges Overhead will not be assessed on revenues from: Division Dues Division Donations Interest Income Earned by Divisions ALA Royalties to Divisions Travel Expense Reimbursement from Outside Organizations Separately-Ticketed Events at Conference (Tours and Meal Functions) Advertising in Publications Provided to Division Members as part of Membership

18. 18 Operating Agreement Services Charge At Actual Cost STAFF SUPPORT SERVICES: Specialized Data Processing*, Equipment Maintenance for Equipment Purchased by Divisions over which the Division Exercises Sole Use and Control, Printing and Duplication*, Certain Telephone Services*, Postage for Special Mailings* PUBLISHING: Subscription and Order Billing Services, Central Production Unit Services, Marketing Services *As Defined in the Operational Practices

19. 19 Division Overhead Assessed On Conference Revenue @ 100% of Rate Publishing Revenue @ 50% of Rate Dues Revenue @ 0% of Rate

20. 20 General Fund Investment in the Divisions - 2010

21. 21 Indirect Cost Historical Summary 2005 - 2010 FY10 FY09 FY08 FY07 FY06 FY05 $17,860,000 19,623,000 18,725,000 18,123,000 16,449,000 15,026,000 $5,089,000 5,589,000 5,190,000 5,258,000 4,619,000 4,287,000 28.5% 27.7% 29.0% 28.1% 28.5% $1,946,000 1,436,000 1,777,000 1,220,000 1,676,000 950,000 $83,000 136,000 141,000 133,000 142,000 136,000 $3,226,000 4,288,000 3,554,000 4,170,000 3,086,000 3,473,000 Total Indirect Costs Division Indirect Costs % of Total Total Indirect Costs Paid Small Division Support Net General Fund Support

22. 22 Indirect Cost Rate History StudyRateBudget Year Applied 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 TBD 25.5% 26.1% 24.0% 23.9% 22.6% 21.5% 21.8% 18.8% 20.3% 19.6% 2014 2012 & 13* 2011 2010 2009 2008 2007 2006 2005 2004 2003 *Per Executive Board approval @ 2011 Spring Meeting.

23. Changes Resulting From the FY10 Indirect Cost Study 23 Approved by the Executive Board at the FY11 Spring meeting based on recommendation by staff and Finance & Audit Committee. The 2010 rate (25.5%) will be applied to the FY12 budget The 2010 rate (25.5%) will also be applied to the FY13 budget Beginning with 2011 study, all future rates, will be applied on a lagging three-year basis as follows: the 2011 rate will apply to the FY14 budget the 2012 rate will apply to the FY15 budget the 2013 rate will apply to the FY16 budget

24. Overhead Comparison Overhead Paid 2011*2010**20092008** Publishing$2,825,558$ 3,681,595$ 2,593,944$ 2,736,836 Conferences$2,042,507$ 1,968,195$ 2,011,085$ 1,958,256 Divisions$1,597,365$ 1,945,679$ 1,435,956$ 1,777,287 Round Tables $ 17,632$ 17,665$ 17,988$ 19,052 Grants & Awards $ 492,394$ 860,967$ 1,002,747$ 1,140,488 Total$6,975,456$ 8,474,101$ 7,061,720$ 7,631,919 *2 nd close **Two Division conferences during the year

25. Division Overhead Contributed 1 Division Conference ACRL 2 Division Conferences PLA & AASL 1 Division Conference ACRL 1 Division Conference ACRL 2 Division Conferences PLA & AASL 2 Division Conferences PLA & AASL

26. Long-Term Investment Fund - Building Through Planned Giving & Gifts 26 $31,332,971 @ August 31,2011 - $28.9 million at End of FY10 - - Growth in value through managed investments. - Transfers from fund balances. - New gifts and contributions.

27. Long-Term Investment Fund - Building Through Planned Giving & Gifts (con’t) 27 Planned Giving Campaign Fundraising Advisory Committee Policies and Procedures Giving Instruments - Bequests - Retirement Fund Designations - Life Insurance Designations - Gift Annuities - Charitable Remainder Trusts

28. New Spending/Payout Policy - Endowment Fund - 28 The spending/payout rate will be a range of 3% - 5% of the trailing five-year quarterly rolling average of each funds net asset balance. The initital rate will be 4%. The annual spending/payout rate will be reviewed and recommended by the Endowment Trustees and the Finance & Audit Committee with final approval by the ALA Executive Board.

29. New Business Development Primary Sources of Revenue: - Membership - Conferences - Publishing How to Build New Revenue Streams for ALA: - Current Products to Current Markets - New Products to Current Markets - Current Products to New Markets - New Products to New Markets 29

30. New Business Development (Con’t) Areas of Current Activity and Exploration: - Electronic Publishing - Continuing Education Online - International Community - Public/Library Users - Mergers and Acquisitions 30

31. 31 ALA TREASURER Advocacy Spokesperson Public Relations Financial Planning Conference Activities Appointments Governance Council Executive Board BARC Finance & Audit ALA-APA ALA Membership ALA Executive Director Endowment Trustees

32. What is BARC’s Role in this Process ?

33. 33 Budget Analysis and Review Committee (BARC Charge) The Budget Analysis and Review Committee (BARC) is charged to review the proposed budget, as forwarded by the ALA Executive Board, in the context of the ALA strategic plan, annual priorities and budget assumptions. To review the financial performance of the Association and the budget impact of potential actions of the ALA Council. To make budget recommendations to the ALA Executive Board and to report to Council regarding budget analysis and the process.

34. 34 BARC Role and Responsibility Annual Budgetary/Financial Planning Calendar Review proposed ALA budget Review current financial performance Make and report budget recommendations to Executive Board Review financial impact of referrals from Council Coordinates PBA session with President-Elect Facilitate discussion in role as a liaison Nurture relationships with Finance & Audit, Executive Board, Council and Member Leaders Reports to Executive Board & Council

35. 35 BARC Review Process Review monthly performance results Review referrals from Council with potential financial implications Process BARC action items as they arise

36. Questions and Discussion