Networking the World TM

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Networking the WorldTM

Introduction

IEEE has three special studies underway:

BrandingBudget

ReorganizationStreamlining

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Networking the WorldTM

Introduction (Continued)

Budget reorganization is being accomplished by the Board of Directors (with the Institute’s Finance Committee on the “point”) via the development of a New Financial Model (NFM).

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Networking the WorldTM

Introduction (Continued)

This presentation will address issues related to budget reorganization and the New Financial Model (NFM).

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Networking the WorldTM

Overview

• Background• The Transition• Goals of New Financial Model• Terminology (“A” Words)• Probable Effects• Possible Effects

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Networking the WorldTM

Background

• Financial Strengths of Institute› Overall Financial Condition Strong› Operating Processes Adequate

• Financial Weaknesses of Institute› Revenue Streams Assigned to Entities› Infrastructure Support Leveraged

Against These Revenue Streams

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Networking the WorldTM

Background (Continued)

• The current financial model› Does not always match revenue and

expense within the Institute.› Does not promote good business

behavior.› Produces a false understanding of

ownership of funds.› Produces a false understanding of

return on investments.

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Networking the WorldTM

Background (Continued)

• The current financial model› Wastes administrative effort.› Does not include all Institute units

(entities, departments, Societies, Regions, Sections, Councils, Chapters, Branches, and Conferences) as presently required by Corporate Auditors.

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Networking the WorldTM

Background (Continued)

•The financial model should› Promote good business behavior.› Provide an accurate indication of the

real financial health of each operating unit and not give the appearance of phantom wealth.

› Fully fund the Institute’s infrastructure approved by the Board of Directors.

› Provide the Institute with adequate processes and funds for investment spending.

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Networking the WorldTM

Background (Continued)

•The financial model should› Not raise member dues or fees

unless absolutely necessary.› Ensure that all Institute units (i.e.

entities, departments, Societies, Regions, Sections, Councils, Chapters, Branches, and Conferences) follow the same, simple, easy-to-understand rules.

› Be simple and easy to implement.

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Networking the WorldTM

The Transition

• 1993 - Attempt to Solve ProblemsInitiated

• 1996 - Volunteer Financial Oversight Structure Changed

• 1998 - Corporate Commitment toRestructure Finances

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Networking the WorldTM

The Transition (Continued)

• 1999 - New Financial Model (NFM) Being Defined

• 2000 - Transition BudgetImplemented; NFM

Finalized

• 2001 - Transition Completed

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Networking the WorldTM

Goals of NFM

• Simplify investment options in order to› Eliminate administrative overhead› Eliminate misconceptions about “investing”

• Charge units direct costs that are clearly identifiable for services provided

• Charge remaining Board-approved costs as an “infrastructure charge”

• Address funding needs of all units (including Regions and Sections) as budget line items

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Networking the WorldTM

Goals of NFM (Continued)

• Eliminate allotments for entities and departments (Bylaw Amendments Required*)

• Address funding needs of all units • Continue to more forward with concentration

banking • Require up-front approval of all expenditures

(budgeted and not-budgeted items) over fixed amount (based upon unit classification)

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Networking the WorldTM

Goals of NFM (Continued)

• Require approval by a “higher authority” for deficit budgets

• Require that all units follow consistent time-table and process for budgeting and reporting year-end status

• Pursue “new opportunities” for covering infrastructure costs

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Networking the WorldTM

Terminology (“A” Words)

• Allotment1 - Bylaw assignment of income

• Allocation2 - Budget assignment of infrastructure charges

• Assessment3 - Member assignment ofspecial charge to fund activities

• Appropriation4 - Annual budgetdesignation of income

1Eliminate 2Revise3Consider Eliminating 4Expand

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Networking the WorldTM

Probable Effects

• Region and Section “rebates” will be budget lines rather than a RAB “pass through”.

• Region and Section budgeting for each year must be accomplished in the previous summer and reported to the Institute for incorporation within Institute’s budget by early fall.

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Networking the WorldTM

Probable Effects (Cont.)

• Region and Section year-end financial reporting must be accomplished in January.

• Region and Section investment returns will be fixed and not optional.

• Regions and Sections will be moved to concentration banking.

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Networking the WorldTM

Possible Effects

• Region and Section funding from the Institute may no longer be based upon the number of members.

• IEEE-USA Region and Section support levels may be significantly reduced.

• RAB may assess Regions and Sections an “infrastructure charge”.

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Networking the WorldTM

Possible Effects (Cont.)

• SoutheastCon and Southcon may be assessed a “franchise fee” (in the form of a per attendee charge) for the use of IEEE’s name and logo as conference sponsor.