INTERNET SOCIETY BOARD OF TRUSTEES PRESIDENT’S REPORT November 8- 9, 2003 Minneapolis, MN.

INTERNET SOCIETY BOARD OF TRUSTEES

PRESIDENT’S REPORT

November 8- 9, 2003

Minneapolis, MN

8-9 Nov 2003 BoT Pres. Rpt Nov03.ppt 2

Agenda

• 2003 Review – 2001- 2003 Board Direction

– 2003 Major Initiatives

– Planning Process & Program Review

– 2003 Budget and End of Year Review

– 2003 Key Operating Goals Review

– INET’04 Review

• 2004 Financial Preview


Board Direction - 2001 - 2003 On Plan

Plans focused on driving progress in 4 key areas:1. Financials - - Good, steady progress & expected to continue

• Stabilize short-term• Strengthen long-term

2. Strengthen ISOC governance model - Progressing well, now in 3rd and final stage.

3. Significantly increase activities in: Standards, Public Policy, Education & Publications - 1st phase well underway, and long-term program plans being developed

4. Clarify & strengthen value proposition for ISOC, for Organization Members, IM’s and Chapters - Significant advances in IM and Chapters, (IM) Member Proposal developed and will significantly strengthen Value Proposition for all members


2003 ReviewMajor Initiatives - I

Q1 & Q2 2003:– Launched PIR, significant support during start-up– Completed negotiations -Verisign $5M Endowment– Operating processes agreed - ISOC & PIR– .org Program funds begin flowing - $300K in April– European Chapter Coordination Council MOU– INET’04 successfully negotiated– AfNoG workshop held

• Resources: ISOC FTE’s = 6.5, plus 5 volunteer VP’s !!

Red = not foreseen in 2003 budget and/or staff activities


2003 ReviewMajor Initiatives - II

Q3 & Q4 2003:– New Platinum members - Sida (Educ), Afilias (Pub Pol)– More .org Program Funds - $800K in August– WALC (Latin American NTW)– SeINIT - EU Security Initiative– Workshop Portal– WSIS Support (significantly increased support)– PIR Board elections– (IM) Membership Proposal– IETF ADVCOMM

• Note: ISOC FTE’s = 8.5, plus 5 volunteer VP’s (today = 2)

Red= not foreseen in 2003 budget and/or staff activities

2003 ReviewPlanning Process & Program Review


2003 Program Planning ProcessPhased Approach

• May - July: 1st phase ISOC’s Planning Process– Phase I: Q3/Q4 ‘03 - Programs =Bid-defined and infrastructure

building (largely based on existing plans)• Directional statements prepared by ExComm, ISOC staff,

VP’s, etc.• Input and reviews with PIR Chair, PIR President and PIR

Board to enable both orgs. to begin funding programs.• ISOC BoT Review - July 2003

– Phase II: 2004 & beyond = strategic planning process began June, on-going

• Note: Funding expected from multiple sources: .org, existing Platinums and new Platinums: Sida, Afilias, etc.


2003 Program Funding: A Recap

• ISOC’s 2003 budget (dev’d prior to start of PIR operations) expected total available for programs of $422K. Net cont’n. from PIR (after dir. exp.) of $170K.

• In April, PIR donated $200K to ISOC for Open (RFC) Standards activities and $100K for Education Program Dev’t. – Educ. Grant enabled ISOC to hire 2 prog. Mgrs (per budget)

• In July PIR resolved to contribute an add’l. $800K to ISOC for program development, bringing total to $1.1M!

• New Platinum members also aided program efforts: Sida, Afilias


Program Planning Process Key Programs - Q3/Q4’03

EDUCATION PUBLIC POLICY STANDARDS COMM’Y & OUTREACH

NTW’s, Reg’l Workshops, etc.

Internet Policy & Policy Portal

Phase 1 (& 2)

Internet Stds. Advisories

Buildup Chapter I/Struct/systems - Comm’y. Bldg.

Upgrade NTW Matls.- IPv6, IPSec

Seminars: VoIP * Seminars: IDN, Security *

Polls & Polling system

Workshops Toolkit & Portal

Bulletins/White Papers

RFC Ed. Support Annual Report

ISOC/ACM Rpt.??

TBR: IEEE coop’n?

Hall of Fame

* Planned for Tunis but cancelled

Italics = Phase II


Annualized Forecast - Sept. 032003 Program Fund Disposition - K$

EducationPub Pol & Comm'yOpen Standards

.ORG & All ‘Program’ Funding - $1.7M

$200K

$420K

$503K

.ORG Funds $1.1M

Education

Pub Pol &Comm'yStandards

$513K $620K

$603K


Recap: .ORG Division of Responsibilities

• PIR: – manage registry, set registry policy, develop new products & services,

registrar relations, marketing, communications, Advisory Council, etc.

• ISOC: – program dev’t. & marketing outreach building on ISOC’s established

knowledge, credibility and channels

• Afilias: – back-end service provider

Source: ISOC President’s Report: ISOC - PIR Joint Board meeting November 2002


2003 Key changes: Program Funding vs. Budget

• In October PIR President and Chair indicated they expect an add’l $700K to be available in December ‘03

• Assuming PIR Board approval, ISOC will recognize this additional revenue in 2003 as a donation (due to now common understanding on roles).

• Projected Program Funding in 2003:– Platinums: $ 0.5M

– .org : $ 1.8M (from $422k in budget)

• Note: 2003 = start-up year for PIR and additional .org funding VERY welcome but has made planning and operating to original budget more difficult


2003 Key Changes Operating Model

• With increased funding, comes increased deliverables and increased expectations.

• With significant injection of funds, (many) programs and new resources (internal & external), all ISOC processes and systems under pressure to evolve (while delivering).

• Volunteer model is, not at all unexpectedly, under some pressure - mainly affecting VP structure.

• ISOC must move to a more business-like structure. Altogether transition is working well, but not w/o some start-up problems.

• 2004 Budget = critical review of infra-structure reqmt’s.

Internet Society Board of Trustees

2003Financial Review

8 November 2003

BoT Meeting/ Minneapolis, MN


2003 Year End Forecastfrom July ‘03 BoT

• Revenues – Organizations: challenging target, today’s running rate = $0.8M

vs.budget of $1.3M. Reminder - at a P&L level this means we need to bring in approx. $1.5M in new org. member revenues before year end, unless Platinum

– Platinum revenue: expect to meet or exceed budget

– Program revenues expected to offset any organizational member shortfall and will have significant added benefit of increasing ISOC’s visibility, thereby aiding future org. member recruitment efforts

• Nov. ‘03 Update = Commentary above still valid today, and .org revenues continue to increase significantly


2003 Year End Forecast (cont’d)

from July ‘03 BoT

• Expenses– Non .org Expenses are on track (in fact are under budget), but .org

expenses will be higher given higher level of surplus avail. for programs - however they will also be net positive

– Revenue recognition tied to expenses– ISOC’s PIR governance - related expenses to be recouped

• Cost savings budget of $126K on track (and better than original target of $100K)

• Nov. ‘03 Update:PIR’s contributions to be donations and recognized immediately given (now) common understanding of model. All else consistent w/ above.


2003 Year End Forecast (cont’d)

from July ‘03 BoT

• Summary– Org. Revenues continues to be very aggressive given economic

and world conditions, therefore actively positioning .org surplus/programs to better and more broadly position ISOC & PIR for the future.

– Fully expect to meet budgeted surplus.

– Working to further diversify our revenue stream: Seinit (thanks to Latif Ladid ), US Cybersecurity & EU security efforts, etc.

• Nov ‘03 Update: Commentary above still valid today.


Going forwardfrom July ‘03 BoT

• Board support/commitment– Suggest I contact each board member individually to see how they

can support fundraising, how staff can help, etc.– Goal is additional $50K min. per Trustee. Success here would

mean another $750,000 and would make an ENORMOUS difference in operations.

• Continue relentless focus on Costs and Revenues

• Identify and pursue new creative revenue streams and roles for ISOC consistent with our values & purposes

• Success of .org initiative shows potential for such opportunities

• Nov ‘03 Update: Fundraising efforts in Point 1 above seriously behind. All others still valid today.


2003 Budget vs. Forecast

K$ YTD YTD YTD EOY EOY EOY Budget Actuals Variance Bud F/C Variance

REVENUES Plat Rev - 185 +185 250 635 +385

Org Rev 975 462 (513) 1,300 725 (575) PIR Prog/Gov/Grant 386 600 +214 422 1,400** +978 IM & Misc Rev 95 211 +116 100 215 +115 Total Rev 1,456 1,458 + 2 2,072 2,975 +903

EXPENSESDir.exps.- Standards 657 618 +39 870 850 +20

Dir.exps.-E & T 143 332 (189) 164 456 (292) Dir.exps.- Pub Pol 124 148 (24) 165 326 (161) Dir.exps.- PIR 208 77 131 208 76 +132 G&A/Gov 368 373 ( 5) 467 497 (30) Total Exp 1,500 1,548 (48) 1,874 2,205 (331) Net Surplus(loss) (44) ( 90) (46) 198 770 572

* Strong likelihood this will increase to $1.8 bringing surplus to approx. $1.1M.


ISOC Total Revenues, Expenses and Net Asset Trends - Good Progress

-2000000

-1000000

0

1000000

2000000

3000000

4000000

5000000

1995 1997 1999 2001 2003Bud

RevenuesExpensesNet Assets

Source: Mike Conn’s Treasurer Report

2003 F/C


2003 Budget by Pillar

Org.rev 1,190 165 195 - 1,550 Total Revs 1,290 255 247 280 2,072

Expenses-Dir 870 164 164 209 1,407Expenses-G&A 288 54 56 69 467 Total Expenses 1,158 218 220 278 1,874

Budgeted Surplus 132 37 27 2 198

EOY F/C Surplus 281 286 201 2 770**

STDS EDUC PUBLICPOLICY

TOTALPIR

** could be as high as $1.1M depending upon .org surplus and programs


2003 YTD Budget vs. Sept. Actual - Revenue

REVENUES:

• ORG. Revenues = ($513K) • Platinum Rev. = +$185K * • PIR Prog/Gov/Grant = +$214K• NDSS’03 = +$36K• IM & Misc. rev. = +$80K• Total revenue impact = +$2K

* Afilias upgraded to Platinum - Public Policy Sida became a Platinum Education member


2003 YTD Budget vs. Sept. Actual - Expense

• Direct EXPENSES = ($43K) :

– E & T• Educ & Trng. programs, etc. =($170K)

– Public Policy• IM/Chapter support = ($15K) • Publications = ($10K) increased effort to improve visibility.• Re-classification of salaries into projects = +133K

• G&A = ($5K)– Legal=($15K) sublease documentation & CEO contract– BoT teleconferences=($10K)– Deprec.=+$20K inventory revealed obsolete asset

Total Expense Impact = ($48K)


2003 YTD Actuals By Pillar

PUBLIC

POLICYTOTAL

EDUCSTDS

Org. Revenues

Total Revenues

Expenses-Direct

Expenses-G&A

Total Expenses

Actual Surplus(loss)

YTD Variance

370 108 169 647

685 396 277 100 1,458

618 332 148 77 1,175

232 67 51 23 373

850 399 199 100 1,548

(166) (2) 78 - (90)

(136) 45 47 (2) (46)

PIR


Cash Flow- Sept ‘03 - Feb ‘04

Sept Oct Nov Dec Jan Feb

Beginning Cash $647,853 518,636 362,493 266,693 437,300 $311,892

Receipts: Dues 65,000 61,250 86,000 122,500 150,000 30,000 65,000 61,250 86,000 122,500 150,000 30,000 Platinum Rev 50,000 400,000 .org Revenue 300,000 PIR Rent & Maint 7,450 7,450 7,450 7,450 7,535 7,5357,450 7,450 7,450 7,450 7,535 7,535 Sublease Rent 2,657 2,657 2,657 2,657 2,657 2,6572,657 2,657 2,657 2,657 2,657 2,657 Misc 634 1,000 1,000 1,000 1,000 1,500 634 1,000 1,000 1,000 1,000 1,500Total Cash 723,594 590,993 509,600 1,100,300 598,492 353,584

Payments: Rent, Payroll, Pension 103,185 110,500 82,000 118,000 92,400 92,400 RFC Editor 130,907 132,000 Operating & Misc. 15,478 35,000 30,000 40,000 40,000 25,000 Workshops/Portal 85,000 83,000 35,000 Comm'y Bldg. (Ext) 80,000 Internet Policy Portal (Ext) 1,295 20,000 20,000 Silk Nog (External) 100,000 22,200 75,000 Total Payments 204,958 228,500 242,907 313,000 386,600 192,400

Ending Cash $518,636 362,493 266,693 787,300 211,892 161,184

Note: Assumes $300K from PIR in December 2003 not $700K.


Barcelona INET/IGC’04 Update

• April’03 ExComm expressed concern re; progress of INET’04 Board committee. CEO tasked to prepare proposal.

• LOI successfully concluded with IGC in July 2003

• BoT Approved 7/03 - met all BoT conditions, incl. Financials

• After slow start and w/ significant effort by ISOC staff, two Board members and VP Public Policy, INET/IGC’04 now back on track– Call for Papers to be issued week 2 Nov’03, automated web-based process

– Relationship solid between IGC and ISOC

• Program Committee Chair and Organizing Committee Chair appointed.– PC Chair: Artur Serra (key individual behind ISOC/IGC collaboration)

– OC Chair: Rosa Delgado

• More in tomorrow’s session


Key Operating Goals 2003 President’s Operational Goals

1. Cash reserves >= 2 mos. Op. Expenses - on track

2. Revenues and Surplus >= Budget - challenge in Org. revs. but overall surplus will be met

3. With VP’s, build effective Pub Pol Init. - on track

4. CEO executes effective review for PIR - on track

5. Effectively involve Trustees in fund-raising - needs more involvement/depends on all of us

6. Plan/decision for INET 2004 by Sept. ‘03 - done & back on track

7. With VP’s, ISOC participation in min. of 2 regional conferences -WALC, AfNog, (almost Tunis)

8. Individual Members and Chapters - on track

Internet Society Board of Trustees

2004Financial PREview

8 November 2003

BoT Meeting/ Minneapolis, MN


2004 FINANCIAL PREVIEW

• Still too many unknowns to create budget:

– .ORG Contributions could be $1.4M - $1.9M but won’t be confirmed by new PIR BoT until mid-December at the earliest

– Individual Member Assumptions not yet built in

– New opportunities to work with IETF on Publications and/or Knowledge extraction but model not yet known

– Need to complete infrastructure and resource evaluations


2004 Budget PREVIEW

Revenue: Standards Education Public TotalPolicy

Platinum 250,000$ 142,000$ 100,000$ 492,000$ Organization Member 800,000 50,000 150,000 1,000,000 NDSS 2004 115,000 115,000 .org Program Revenue 450,000 500,000 550,000 1,500,000 Contributions & Miscellaneous 5,000 15,000 20,000

Total Revenue 1,505,000$ 807,000$ 815,000$ 3,127,000$

Expenses:ISOC Salaries & related costs 428,115 242,204 411,650 1,081,969 RFC Editor-ISOC Funded 550,000 550,000 IETF, IAB, D&O Support 98,000 98,000 NDSS 2004 (excluding salaries) 80,000 80,000 Miscellaneous Direct Expenses 12,500 23,000 - 35,500 External Costs-PIR Programs 158,000 204,125 100,000 462,125 External Costs-Sida Programs - External Costs-Security Initiative 80,000 80,000

Total Direct Expenses 1,246,615 549,329 591,650 2,387,594 G&A/Governance 198,203 112,132 190,580 500,916

Total Expenses 1,444,818 661,461 782,230 2,888,510

Surplus (Loss) 60,182$ 145,539$ 32,770$ 238,490$

INTERNET SOCIETY BOARD OF TRUSTEES PRESIDENT’S REPORT November 8- 9, 2003 Minneapolis, MN.

Documents

Transcript of INTERNET SOCIETY BOARD OF TRUSTEES PRESIDENT’S REPORT November 8- 9, 2003 Minneapolis, MN.