At the spring A&F Committee meeting, League management brought up their concern that the ARRL Development Department manager was spending more time on ARRL Foundation affairs than they, the management, were comfortable with. A committee of one was appointed to act as liaison with the Foundation. This is a report on possible ARRL Board and ARRL Foundation Board actions that might result in less complex and costly operation.
This is not a part of the Board reports, but is also sent to the ARRL Board for possible consideration of the actual need for a Foundation, as discussed at the end.
ARRL Foundation, Inc.
The ARRL Foundation is a separate non-profit organization from the closely related ARRL. The foundation was formed in 1973, primarily to raise money for amateur satellite programs. A separate 501 c(3) foundation was created because there was a belief that potential donors might harbor animosity toward the League from incentive licensing and also that the business sense of the then Board might not be trusted.
It awarded approximately 92 scholarships valued at a total of about $110,000 in 2019, and awarded another grant of $1,500.
It manages an endowment of slightly less than $5 Million.
It performed these services at a cost of approximately $29,000, or 26% of the award value.
It bills each individual scholarship 1% of the scholarship amount , even though the maintenance cost of a scholarship is essentially unaffected by its value. It bills the endowment 1% of the endowment value, a substantially higher amount of money, higher than proportional cost of the labor that is involved in upkeep of the endowment.
Foundation for Amateur Radio - A Similar Scholarship Organization
The Foundation for Amateur Radio is an organization, unrelated to the ARRL, that this year awarded 56 scholarships, including 23 from QCWA, valued at approximately $98,000.
It performed this service free of charge to the sponsors and recipients, or at a cost of 0% of the award value. The entire operation is run with unpaid volunteers who do not have any of their expenses reimbursed.
ARRL Foundation - Major Cost Components
The ARRL Foundation pays the ARRL $15,000 per year for administrative services.
The ARRL Foundation pays an accounting firm $10-15,000 per year for a full independent audit.
The ARRL Foundation pays for government tax and financial reports, independent of those for the League.
The ARRL Foundation pays the League Treasurer nothing for management and investment of the endowment.
Cost Reduction Possibilities for Foundation Board Consideration
1) Give scholarship and grant award management to a volunteer, rather than the League's Development Manager. FAR, the comparable organization referenced above is an example of a successful implementation of this possibility. Note that it may be appropriate to reimburse some volunteer expenses, such as travel to Newington, to retrieve records. A suitable candidate has actually been identified.
2) Reduce the frequency of the full audits. They are not required by law. The Foundation financial business is small and straightforward. Focused oversight during in-between audit years by a combination of Foundation Directors and staff management should be more than adequate.
Serious Questions for ARRL Board
1) Is operation of the scholarship program in its present form, with its high overhead costs, in the best interests of the scholarships, donors, or the League itself?
The ARRL Foundation was formed to raise money for Amateur satellite programs. Years went by before the Foundation worked with any scholarships. Today, essentially the entire ARRL Foundation effort is involved with scholarships.
The ARRL, itself, could subsume the scholarship program, and dissolve the ARRL Foundation, reducing the overhead involved.
2) Do we need the ARRL Foundation? Should we fold its activities back into the League itself, and replace the Foundation Board with a Foundation Committee with essentially the same responsibilities?
73,
Dick Norton, N6AA
A&F - ARRL Foundation Interface Subcommittee