October End-of-Month Financial Report Released

annual-reportFrom the LNC List: The October End-of-Month Financial Reports are attached. The October End-of-Month Financial Reports are attached. The reserve dropped to $415,669, which is $370,377 above the reserve target of $45,292. October had some extra expenses: $20,000 contributed to the Mark Miller Campaign, $15,500 for the annual audit, and $6,400 Kentucky legal expenses.

Tim Hagan

You can view the report here.

Libertarian Party National Committee: Proposed Budget and Building Fund Pay-Down

au bureau_0020Today was an active discussion day for Libertarian Party financial issues to be dealt with at the upcoming LNC meeting December 10-11, 2017.

From Treasurer Tim Hagan:

The draft budget to be considered at next month’s meeting is attached. Some notes:

The Operating Budget worksheet, column F (highlighted in blue) is the budget to be considered. Its numbers are derived from the yellow-highlighted column in the Acct Detail worksheet. The footnotes at the bottom of the Acct Detail worksheet explain how we came up with the 2017 numbers.

Many of the numbers are based on the 2013 and 2015 numbers. We are predicting that membership will be 19,583 in January, dropping to 15,000 at the end of next year. This gives an average throughout the year of 17,292, which is 28% higher than the average of 2013 and 2015 membership. Some revenues and expenses are increased 28% to account for this increased membership.

Because of our accounting method, the value of the office shows up as a fixed asset with the mortgage as a long-term liability, and paying down the mortgage’s principal is a transfer from checking to the mortgage. Likewise, the bequest held in a trust is also an asset, which gets transferred to Cash in the books when we receive a check. Rows 46 and 47 on the Operating Budget worksheet show these transfers so the spreadsheet can show the surplus or deficit of the cash. For the cash flow, the draft budget has a net deficit of $154,900.

The following conversation also occurred (excerpts) on the building pay-down issue:

Sam Goldstein:

I intend to make a motion at our next meeting to spend a good portion of our 2016 surplus to make a payment on the principal on our office mortgage.

Not knowing our final numbers at this time lends some uncertainty to that number, but I would like to start the bidding at $150,000. That amount ought to leave us in a very favorable position as to our ongoing reserve for unforeseen expenses over the next few years.

Does anyone want to offer a lower/higher amount? If so, what is your reasoning.

Joshua:

Well, here’s one answer – imagine we, as an LNC, had absolutely no ideas. We just couldn’t think of a single thing we want to do beyond what we’re already doing. Then, obviously, we should pay as much as we can towards the mortgage, get down to bare subsistence, and hope that when it’s paid off, that LNC is more creative than we are.

On the other hand, we could believe that we have IDEAS, BIG IDEAS, LOTS OF IDEAS, and that it is vitally important that we act now, not those jerks who might be on the LNC in the future. In that case, we should pay what we shorted ourselves last year and leave it at that.

I don’t think either of the two answers above is correct, but the point is, where along that spectrum are we? Also, what pressing things are there that need to be done now? I’d suggest this: we just received record Presidential vote totals and saw a large spike in membership. It would be appropriate to take action to retain the new members, and attempt to get more commitment from those voters. Perhaps a survey of our new membership is in order so we have a better idea of why they joined and what they want.

After all, wasn’t enhanced cash flow one of the selling points that convinced a previous LNC to purchase a {noun deleted to avoid controversy}? Isn’t it also the case that, if we adhere strictly to the Wiener Rule, there will be no balloon payment due? Granted, of course, any delay in payments changes the calculation, so we’d need to pay somewhat more than we were short last year to continue that rule. Granted, too, that every additional payment will decrease overall money spent on interest.

In 2017, I’d like to see us do more to help candidates coordinate and build ground-games. I’m hoping to continue over the term to promote my proposals regarding appointments and “let national be national,” both of which take money. I’m sure others have ideas, which can either out-compete mine or be done simultaneously, that will also cost money.

Even so, I’d like to pay substantially more than what we owe ourselves towards the mortgage. I would also note, as I pointed out at the e-meeting, that this year’s enhanced revenue hasn’t been across the board. In fact, recurring gifts, last I checked, were below budget. I’d encourage optimism, and I absolutely will not say “well, we’ll never see a year like this again” but a lack of recurring gifts does raise the possibility of coming back down. If I believed we’d never see such success again, and that we were just returning to normal, I’d say throw as much of it as possible at paying down the dead pledge. If recurring gifts were up, I’d probably say the same thing. I think, though, that what we do now will determine if we will continue on an upward trajectory, or instead return to ‘normal,’ and that this might be worth some investment.

Before committing myself to a number, though, I’ll want to hear from the Treasurer. I might also favor making this decision after the budget is approved.

Me:

Though these numbers will have changed since October, at that time our principal was $430,598.33. It appears that we budgeted in 2015 $67,300 for Building Fund revenues to pay $60,000 towards the mortgage (as per the Policy Manual) and $7,300 for a house letter (I don’t know what that means), but only raised $22,435.63. Was that $22,435.63 paid? Or did it go into shorted reserves? Also have we already paid additional principle yet this year?

I believe Robert Kraus said we paid $27,500 extra towards principal in 2015 and $22,000 extra toward principal in 2016. If this is correct, we were short $32,500 in 2015 as per the Policy Manual, and I do not see a Policy Manual provision for even-numbered years to make additional principal payments.

Tim in October said he believe he would be comfortable with a figure of about $200,000, and that is the figure that comes to my mind as a total for the two years, at a minimum, so that would be right around Sam’s initial bid of $150,000 (more precisely it would be $150,500). That would be the minimum I would like to see.

I echo Joshua’s concern of other projects we may wish to do, but this was already decided to be a priority back when we got the mortgage, and I do not like the way it seems we make promises and then… are like, oh well…. such and such. That is what I see as happening so far with the website, and if we made this priority, let’s fulfill it first. We passed a Policy Manual provision to “pay off the office mortgage as quickly as possible” so let’s do it. And set a fiscal example. On a related note on “let national be national” that keeps getting used… to borrow a phrase that Joshua likes to use in other contexts, I don’t find it helpful as it is “content-less” 🙂 I don’t think anyone wants to have national be other than what it should be- it is what it should be that is precisely the issue. Slogans aren’t helpful in planning. I am of a view that the LNC is too hands off in some things, and that there are things that we must have as LNC level decisions and that is “national being national” and I have made some of those things clear in the website discussion in which I think we seriously abrogated some duty.

Joshua Katz:

A house letter is a fundraising letter. Robert can provide more details, but my understanding is that the $22,453 was paid. It was, however, less than the $60,000 we were supposed to pay.

You are correct, the Wiener Rule was mandated only for odd-numbered years. While I have not run the numbers myself, my understanding was that, if followed, that rule would eliminate the balloon payment and amortize the loan over its lifetime. The effect of the rule was to remove the enhanced cash flow in odd-numbered years, where it was believed it would be less helpful, but maintain that benefit in even-numbered years. In odd years, we would pay the same as we were paying in rent; in even years, we would pay less.

That was, to my understanding, the spirit. (I was, of course, not present when it was adopted, but I was present the first time it applied.) As I mentioned earlier, when we were preparing the 2015 budget, there was discussion about eliminating that rule, which I strongly opposed. In the end, we did not change or eliminate it, which in my opinion is a good thing. We did budget the money. Unfortunately, the way the rule operates does not guarantee that the money will be paid, and it was not. I would be open to strengthening the rule for the future, but keep in mind that standing rules having their application outside the meeting context cannot be suspended, so some care is needed not to lock ourselves in too tightly.

In any case, yes, it was decided that this would be prioritized, and I agree fully with prioritizing it. That’s why I began by saying that I considered paying back what we shorted last year (plus interest) to be the absolute minimum. I don’t see the adoption of that goal, though, as meaning that we won’t expand in other areas until it is paid off, just as it obviously doesn’t mean that we can’t have staff until it is paid off. If we followed the rule as stated there, and as it is intended, we’d achieve the goal of paying it off before the 10 year balloon payment. “As soon as possible” is unclear, particularly when phrased as a goal, but I don’t think it means we need to pay all the spare cash we’ve got – it certainly doesn’t preclude that, either. My suggestion, again, is that we regard paying our Wiener Rule commitments as inflexible – that’s the difference for 2015 and the full amount for 2017 – budget for other programs we regard as important now, and then pay the difference towards the dead pledge, rather than trying to determine how much more to pay above Wiener Rule commitments before determining what else we’ll do. Of course, though, when decided how much to budget to other programs, we should have in mind that everything we budget means we’ll be doing less to pay down the mortgage, so the threshold for adoption of a project should be not only that it’s worth the cost, but that it’s worth the cost plus interest over time, just as if we had to borrow the money to finance it.

To repeat a point I’ve made before, we’ve got to think more strategically when we budget, and reference budget lines when we spend money. I think it encourages the wrong sort of thinking, and confuses people, try to decide whether or not to spend X on Y out of “the universe” rather than spend X on Y out of the budget line for things like Y, which is Z.

Regarding “LNBN,” I’m not sure how much you’re hearing it tossed around. Since it’s my phrase, I guess I hope you’re hearing it tossed around a lot, but I’ve only seen it tossed around by me. In any case, yes, it’s a slogan and content-less without context. I just meant it to indicate the thrust of the things I want to see us do, which I see as “those things that require a national reach and organization.” The one I harp on the most is appointments, but I’d also include doing more outreach to the DC Press Corps, certain lobbying operations, and a few other things. I didn’t specify here, because I wasn’t arguing here for anything specific, just saying that I expect over the term to introduce motions which, if adopted, would cost various amounts of money, and that I think others will do so as well. It is not about board governance per say; that’s another pet issue of mine, but a separate one. I do think more care as regards governance can lead to clearer goals and better facilitate their achievement, as well as clarify what goal-setting means, but that’s an indirect connection.

Me:

Thank you for clarifying what a house letter is. I meant to inquire before. So it seems like my figures are roughly correct, so I will be looking for a minimum $150,000 paydown which is well within the range that Tim said before we could handle.

And I have expressed before that I think “oh we budget but don’t have to actually pay” is pretzel twisting by the LNC of expert level. I would favor strengthening the rule to stop that gaming. And I think “as soon as possible” being made into anything other than the most we can do is also unacceptable, but I suppose this will be the subject of debate. I think members thought this would be a lot more rigourously applied and would understandably feel, and I would if I step back and put my member hat on, that the LNC is not doing what they expected. Which is to get rid of this debt as soon as possible… I feel like I am Alice – The question is whether we can make words mean so many different things.

On LNBN, yes, I hear it from you. And I don’t think turning us into a Washington ladies and lads who lunch is the answer – but we have disagreed on that before (and on whether only things that “require” – another “flexible” word – a national reach and organization is all we should be doing), and that is a different subject.

Most critically, from Tim Hagan:

I will call your $150,000 and raise it to $207,500. I request we add 20 minutes to the December meeting agenda for a motion to make a payment on the principal on our office mortgage.

The mortgage’s loan rate is 4.85% with a balloon payment at ten years, which is in July 24, 2024. Robert was kind enough to furnish the attached load amortization spreadsheet. I ran five scenarios on it to get the amount of interest we will pay from December 2016 to when the balloon payment is due, and to get the amount of the balloon payment that will be due at that time.

Without any more prepayments (not paying an extra $60,000 on odd-numbered years):
Interest: $139,400.40
Balloon payment due 7/24/2024: $301,040.34

With the current policy of paying an extra $60,000 on odd-numbered years:
Interest: $84,900.77
Balloon payment due 7/24/2024: $6,540.71

Paying an additional $207,500 in the December payment, and not paying extra in future years:
Interest: $45,751.59
Balloon payment due 7/24/2024: $0.00

Paying an additional $150,00 in the December payment, and paying an extra $60,000 on odd-numbered years:
Interest: $32,805.22
Mortgage gets paid off July 2021.

Paying an additional $207,500 in the December payment, and paying an extra $60,000 on odd-numbered years:
Interest: $19,879.20
Mortgage gets paid off May 2020.

As you can see, paying $207,500 in December will eliminate having a balloon payment in 2024 and will save at least $39k in interest. If we keep the Weiner rule, it will save $65k in interest and have the mortgage paid off four years early. The targeted Reserve is the sum of all monthly occupancy, labor and governance expenses, which comes to $45,292. At the end of October, the reserve was at $415,669, so I am comfortable with paying $207,500, even if next year’s budget has a large deficit. We will have new reserve number before the meeting.

The trust from a bequest has $167,404. We have been taking the maximum allowable amount out each year for the general fund. A law passed December 2014 now allows national political committees to have a separate segregated building fund with its own contribution limit of three times the limit for the general fund. We have not done this before, because we needed the bequest for the general fund, but we can transfer up to $100,200 from the bequest to the building fund and use those funds toward making a payment on the mortgage principal.

My preference is to pay at least $207,500 toward the mortgage principal to save on interest payments and to ensure no balloon payment. If that passes, then I would favor reducing the policy to budget an extra $60k on odd years.

Me:

That sounds like the smart plan. Future Libertarians will thank us. I support your higher amount.

The whole discussion can be viewed here.

Libertarians on the Rise

unknownI am preparing my Regional Report and did some number crunching and discovered this in increases of BSM memberships:

ALASKA membership up 51.7%

ARIZONA membership up 41.7%

COLORADO membership UP 63.0%

HAWAII membership up 53.7%

KANSAS membership up 43.9%

MONTANA membership up 85%

UTAH membership up 93.5%

WASHINGTON membership up 89.7%

WYOMING membership up 50.0%

Putting the Party in Libertarian Party

2ynfhblFrom an LP.org email blast:

Party at Headquarters! The Libertarian Party will host a party at our headquarters in Alexandria, VA to celebrate 2016 successes. The party is from 7 p.m. to 10 p.m. on Saturday, December 10 at 1444 Duke Street in Alexandria, VA in conjunction with the quarterly Libertarian National Committee (LNC) meeting. We’ll send another email with details soon, and post updates as they become available. Click here for updates.

Non-Confidential Portion of Campaign Contract

20160314_contracttransparencyhomepagegraphic2As reported previously on IPR, there had been a struggle within the LNC on an initial eternal secrecy clause with the contract with the Gary Johnson Campaign. Chair Sarwark was able to have that portion removed, and on September 30, 2016, posted this to the LNC Business List:

screen-shot-2016-11-11-at-1-02-56-pm

Sarwark informally asked LNC members to keep the non-confidential portion to themselves until after election day. Accordingly, here is the non-confidential portion of the contract. This IPR editor/LNC member will release the confidential portion after the expiration of one year as agreed.

Notice what isn’t in the contract that was in the sample contract distributed before the Convention:

screen-shot-2016-11-11-at-1-17-09-pm

LP.org: Seeking Volunteers for IT Committee

volunteers-neededFrom the LP.org blog:

Seeking volunteers for IT Committee – apply by November 23, 2016

by Wes Benedict on November 11, 2016 in Executive Blog
The Libertarian National Committee is seeking three to five volunteers to serve on its IT Committee. Additionally, even if you are not interested in serving directly on the committee, if you are an IT practitioner and are willing to volunteer your services occasionally, we’d like to hear from you as well.

The IT Committee helps our national headquarters and state affiliates evaluate and implement technology and tools. Examples of areas where the IT Committee may focus include:

websites
membership databases
email systems
get-out-the-vote technology
donation systems
security
social media integration
Examples of some of the tools that are used by the national Libertarian Party and state affiliates include:

Website content managers: WordPress, NationBuilder, Drupal, Weebly, Joomla
Membership databases: Raiser’s Edge (by Blackbaud), Nationbuilder, CiviCRM, SalesForce
Broadcast email systems: iContact, Constant Contact, Mailchimp, NationBuilder, CiviCRM
Donation systems: PayPal, NationBuilder, Authorize.net, ClickandPledge, CiviCRM, IATS, Piryx
The committee will meet and do most business online or via conference call. On rare occasions it might have physical meetings but expect 95%+ of the work to be online

You don’t have to be a software developer or web designer to apply to the committee. The party also has hardware needs like networking, servers, telecom and office equipment. If you know how to create RFPs, RFQs, make good LOE estimates, or construct the business case for technology, please consider applying. With three to five members to appoint, we are looking for a breadth of experience to ensure the IT Committee can make good evaluations that lead to technology and budgetary recommendations to the full LNC. Our recommendations will influence the party’s IT budget for 2017 and 2018.

Job Requirements:
must be a team player
must have broad technical background
must have understanding of ROI and TCO calculations
should have 4+ years as an active member of the LP
should have 10+ years IT experience
should have experience in consensus building
IT managerial and/or decision making experience preferred
volunteer management preferred

When you apply, please provide:

a resume and/or a summary of your IT technical and managerial experience a brief note with your ideas for improvements in the LP’s IT platforms description of any IT work you’ve done for the Libertarian Party Upload the information above preferably in a single PDF here: https://lpaction.org/it-apps/

Please apply by November 23, 2016.

Sincerely,

Ken Moellman & Sean O’Toole
Libertarian National Committee

October Membership Report Released

membshipreport-smallThe October Membership Report has been released, and a copy can be found here. I have started to compile a running chart of how our Region’s BSM numbers are growing.

screen-shot-2016-11-07-at-7-54-31-pm

This report has some interesting charts as usual.
Active Donors continue to go up:

screen-shot-2016-11-05-at-3-31-26-pm

But New Donors continue to go down (after a drastic drop):

screen-shot-2016-11-05-at-3-32-02-pm

Lapsed donors are no longer on a downward trend (this is a concern):

screen-shot-2016-11-05-at-3-33-16-pm

But renewing donors went back up:

screen-shot-2016-11-05-at-3-34-12-pm