Thank you Rick for chiming in on this topic. Its my rookie season, on the A&F committee, and appreciate your insight. Rick's last point is probably the most important point... a study group should take a look at this. My gut tells me we can fold the foundation into the ARRL, but, as Director Carlson reminded me, we can't loose sight of the current mission (scholarships) and we can't do so without evaluating all the risks and rewards. Director Norton has pointed out the original mission of satellite funding is in the rear view mirror and gives merit to we should review how we carry out the 2019 mission. I don't have any kids of my own, so, I rely on the experiences of friends and family, who all too often pay out of state tuition. I'd personally like nudge the amount per individual scholarship up a tad, but, I'll leave that decision up to the scholarship award committee. Good discussion all! 73, Matt Holden KØBBC/VY2 (Your ITU zone 9 multiplier this weekend) On Wed, Jul 10, 2019 at 5:13 PM Niswander, Rick <NISWANDERF@ecu.edu> wrote:
A few points to keep in mind as you think of these issues.
1) If the Foundation is folded into ARRL itself, the obligation to the donors does not cease. We still have $5-$6m that needs to be accounted for and spent in accordance with how it was collected.
2) This means that, with the exception of the audit and 990 tax return costs, all or virtually all of the administrative costs will still remain. They will just be paid by a different entity.
3) Folding into ARRL will save some, but not all, of the audit bill. We need an annual audit of ARRL. If the Foundation is added, it would increase the ARRL audit bill. Granted, the increase would be less than the decrease on the Foundation side. My somewhat educated guess is that we might save 25%-35% of the fee. Nothing to sneeze at, but don’t think that it would all go away.
4) The idea of having a Foundation audit only every two years is reasonable. I don’t know if there is something in a governance document that prohibits that though.
5) An advantage of having the Foundation is that all the scholarship-related money and accounting is segregated in one entity. The accounting process is easier.
6) If the Board is thinking that we should fold in the Foundation, I strongly suggest that we take the time to make sure we are not creating a problem for ourselves. At this point, we don’t know what we don’t know. Formation of a study group seems to be a prudent approach.
Finally, as someone in academia, I do not agree we have a problem with the average amount of our scholarships. First, I know of no student who would reject virtually any amount. Second, some students attend community college for a year or two after high school. Those costs are much less than a 4 year institution. Third, public schools in many (but not all) states are reasonable. In NC (granted, one of the less expensive states), annual (annual, not semester) tuition is $4,250. A $500 scholarship pays more than 10%.
Frederick (Rick) Niswander, Ph.D., CPA, CGMA
Professor of Accounting
Bate 3110
East Carolina University
Greenville, NC 27858
*From:* arrl-odv [mailto:arrl-odv-bounces@reflector.arrl.org] *On Behalf Of *Fred Hopengarten *Sent:* Tuesday, July 9, 2019 10:37 PM *To:* k5ur@aol.com; richardjnorton@gmail.com; arrl-odv@arrl.org; arrlf@arrl.org; af-com@arrl.org *Subject:* [arrl-odv:28317] Re: [arrlf:1860] ARRL Foundation - A&F Committee - Interface Report
We can continue this discussion here, or N6AA can make a motion and then we get the advantage of open debate at the meeting. I like to hear what others have to say.
Personally, I think
a. The amounts given out by the foundation are small, when compared to today’s tuitions.
b. The administration costs, in dollars, are high – as Dick points out.
c. The administration costs, in time, are high, and
d. The Development Department is probably spending time way out of proportion to benefit, time which could otherwise be spent on the principal job of that department.
I think Dick’s examination of these issues is a worthy use of Board time.
-Fred K1VR
*From:* arrl-odv [mailto:arrl-odv-bounces@reflector.arrl.org <arrl-odv-bounces@reflector.arrl.org>] *On Behalf Of *Roderick, Rick, K5UR via arrl-odv *Sent:* Tuesday, July 09, 2019 10:25 PM *To:* richardjnorton@gmail.com; arrl-odv@arrl.org; arrlf@arrl.org; af-com@arrl.org *Subject:* [arrl-odv:28315] Re: [arrlf:1860] ARRL Foundation - A&F Committee - Interface Report
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?
That's an interesting point. I can recall years ago some Directors were not that supportive of the Foundation because they felt it was in "competition" with the League. Granted, that was a good number of years ago. However, I still occasionally hear that point raised.
Maybe it's time we considered this, although I'm certain there are some advantages (legal, tax, and otherwise) to the current framework.
73
Rick - K5UR
-----Original Message----- From: Richard J. Norton <richardjnorton@gmail.com> To: arrl-odv <arrl-odv@arrl.org>; Arrlf <arrlf@arrl.org>; af-com < af-com@arrl.org> Sent: Tue, Jul 9, 2019 5:31 pm Subject: [arrlf:1860] ARRL Foundation - A&F Committee - Interface Report
*Introduction*
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
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