Budget Answer Thread
313 views
Skip to first unread message
Todd Hagopian
Nov 21, 2022, 11:22:52 AM11/21/22
to lnc-bu...@lp.org
Hello Folks,
I am making a budget answer thread. As you get questions from constituents, please send them to me privately, and I will put the question and answer on this thread (to keep the thread clean and easy to read). Hopefully, this will make the budget more transparent and leave less room for interpretation. I will answer what I can. Thank you!
I am making a budget answer thread. As you get questions from constituents, please send them to me privately, and I will put the question and answer on this thread (to keep the thread clean and easy to read). Hopefully, this will make the budget more transparent and leave less room for interpretation. I will answer what I can. Thank you!
Secretary LNC
Nov 21, 2022, 11:23:29 AM11/21/22
to lnc-bu...@lp.org
You are wonderful
___________________________________________________
In Liberty, Caryn Ann Harlos
LNC Secretary and LP Historical Preservation Committee Chair ~ 561.523.2250
Todd Hagopian
Nov 21, 2022, 11:27:58 AM11/21/22
to lnc-bu...@lp.org
First Questions:
Question: Why did the budget drop dramatically? Is the party in trouble?
Answer: No, it did not. No, we are not. The 2021 non-convention revenue results will hover around $1.6M this year. The 2019 (corresponding year in the previous cycle) revenue was $1.5M. This year, the budgeted revenue is $1.7M, which is an increase over the corresponding year in the previous cycle and an increase over last year's non-convention revenue. Any indication otherwise is a purely political manipulation of the numbers.
Todd Hagopian
Nov 21, 2022, 11:28:06 AM11/21/22
to lnc-bu...@lp.org
Question: Did we cut software/IT expense in this budget?
Answer: No, the corresponding GL Codes are 8190 (software, hardware & other IT) and 8240 (computer services). We have reclassified one contractor into the computer services budget, as it stands now. Even without that change, the total budget for software/IT expense has gone up year over year.
Todd Hagopian
Nov 21, 2022, 11:39:29 AM11/21/22
to lnc-bu...@lp.org
Revised Answer, fixing typo to read 2022 numbers instead of 2021 numbers:
Question: Why did the budget drop dramatically? Is the party in trouble?
Answer: No, it did not. No, we are not. The 2022 non-convention revenue results will hover around $1.6M this year. The 2019 (corresponding year in the previous cycle) revenue was $1.5M. This year, the budgeted revenue is $1.7M, which is an increase over the corresponding year in the previous cycle and an increase over this year's non-convention revenue. Any indication otherwise is a purely political manipulation of the numbers.
Todd Hagopian
Nov 21, 2022, 12:07:43 PM11/21/22
to lnc-bu...@lp.org
Question: Are we spending the appropriate amount on Ballot Access?
Answer: Based on how we exited the 2020 election, and due to a number of states causing additional issues since, 50-state Ballot Access is a large challenge for 2024. As such, we have budgeted more 2023 spending for Ballot Access than any budget since 2016, with a lot of additional funding planned for 2024 as well. If this budget passes, as is, the LNC will be committing an enormous amount of our budget towards the 50-state Ballot Access goal.
Todd Hagopian
Nov 21, 2022, 1:33:40 PM11/21/22
to lnc-bu...@lp.org
Question: I am not aware of fundraising contractors, what is the contractor expense for fundraising?
Answer: I will not be specifically responding to any salary/contractor questions, due to EPCC making those calls throughout the year, and the confidentiality that goes along with many of those decisions. What I can tell you is that if there are contractor expenses laid out in the budget, as there are in fundraising, those will be dollars that the staff can use to contract out fundraising activities as they wish. These plans may, or may not, already be outlined. The cost of revenue (growth expense) portion of the budget is in place in order to help the staff have the resources available that they will need to hit the revenue projections and the contractors are a portion of that equation.
Todd Hagopian
Nov 21, 2022, 2:03:07 PM11/21/22
to lnc-bu...@lp.org
Question: Is it true that fundraising and membership has cratered since the convention, causing a smaller budget?
Answer: No, this is completely false. From January 1st 2021 to May 31st 2022, National LP Membership dropped 16.0% (down 3,216 members). Since May 31st, the National LP Membership has risen 0.6% (a gain of 106 members). The downward trend has actually been reversed.
From a financial standpoint, the first four months of the year before convention netted $510,283 of Revenue, for a monthly average of $127,571. If we exclude the great convention revenue month, so that we can compare apples to apples, the five months since convention have netted $684,254, averaging $136,851. This represents a 7.2% increase in average monthly revenue since our convention.
Draw whatever conclusion that you would like. But, any statement saying that membership, or revenue, has cratered since convention is completely false. The budget is significantly impacted by total number of members, which is obviously lower than 2020/2021 due to the significant membership decline from January 2021 through May of 2022. Not throwing stones, this is absolutely normal after a Presidential year, just as having a lower budget in the third year of a Presidential Election cycle has been the norm. To be clear, they are highly correlated. Just wanted to set the record straight on this.
Todd Hagopian
Nov 21, 2022, 3:12:27 PM11/21/22
to lnc-bu...@lp.org
Question: Why does the 2019 FEC report revenue not match the 2019 LP Revenue stated in another question? Are you lying?
Answer: No, there is no lie. The FEC requires us to report on a cash basis. Article 9, Section 2 of the National Bylaws mandates us to use GAAP, which requires us to use accrual basis accounting. In 2019, specifically, there was approximately $160K put into the restricted convention fund, which was not recognized revenue until convention happened in 2020.
So, the short answer is - No, all of the numbers in the previous Q&A answer were correct. To elaborate, the proposed 2023 budget also does not include convention revenue (since it won't be recognized until 2024), so the comparison I made is completely apples to apples.
Todd Hagopian
Nov 22, 2022, 2:06:23 PM11/22/22
to lnc-bu...@lp.org
Question: Follow-up on the FEC vs. P&L accounting methods. Does GAAP allow for a different accounting method if you have a reporting agency that requires it? I thought I have heard of this? If not, could we make a bylaws change to make it so that the two reports match going forward?
On the second question, a bylaws change could certainly be made. I tend to believe that small organizations, or companies, should run their financials on a cash basis so as to control cash better. This is particularly true if you are already required to report on a cash basis for other reasons, like the FEC requirements. I would be in favor of examining a potential bylaws change, as this would make our accounting easier (only having to do it one way) and make it easier for members to understand our financials (since they would match the FEC reports). However, I am not entirely sure that the auditor can audit non-GAAP financials, or if they do, they may have to perform a different audit. All of those implications, and cost changes, would have to be evaluated as well. No easy answer, but I would be open to the discussion and would be happy to assist the bylaws committee if they chose to look into it.
Answer: This question was asked when I first got into the role. My initial determination was that GAAP does not allow for cash basis accounting in any scenario. I am perfectly happy being proven wrong if someone can find something to the contrary.
On the second question, a bylaws change could certainly be made. I tend to believe that small organizations, or companies, should run their financials on a cash basis so as to control cash better. This is particularly true if you are already required to report on a cash basis for other reasons, like the FEC requirements. I would be in favor of examining a potential bylaws change, as this would make our accounting easier (only having to do it one way) and make it easier for members to understand our financials (since they would match the FEC reports). However, I am not entirely sure that the auditor can audit non-GAAP financials, or if they do, they may have to perform a different audit. All of those implications, and cost changes, would have to be evaluated as well. No easy answer, but I would be open to the discussion and would be happy to assist the bylaws committee if they chose to look into it.
Todd Hagopian
Nov 22, 2022, 3:43:30 PM11/22/22
to lnc-bu...@lp.org
Further follow-up on the GAAP Discussion: The Operations Director noted that, as a non-profit, we are required to use GAAP, or modified GAAP (which we use now). So, as the Operations Director noted, our best chance to move away from that system is to eliminate the IRS.
Long-term goal, as much as I would like to lay it out as a 2023 objective.
Rich Bowen
Nov 22, 2022, 4:14:53 PM11/22/22
to lnc-bu...@lp.org
To further expand, we could generate our financials internally on a cash basis, but it would require converting our financials from cash to GAAP each year in order to complete the audit. This would cause us to incur additional accounting/auditing costs and staff time, and not worth the extra resources in my opinion.
Rich
Rich Bowen
Libertarian National Committee
At Large Representative
Audit Committee Member
Ballot Access Committee Member
Convention Oversight Committee Member (Chair)
Executive Committee Member
Todd Hagopian
Nov 23, 2022, 3:42:22 AM11/23/22
to lnc-bu...@lp.org
Question: Based on some of the labor moves that National is making, are we in financial trouble like the beginning of 2022?
Answer: I cannot discuss anything labor related, but I can tell you that we are in an extremely good financial position. In fact, there has only been one brief period, over the past five years, where we have had a cash reserve this healthy.
Todd Hagopian
Nov 23, 2022, 4:07:15 AM11/23/22
to lnc-bu...@lp.org
Question: It sounds like you are doing a lot of "spinning" to make the numbers sound good. What do you say to that? Are there any areas where we do need to improve?
Answer: Everything in life is a math problem, and I have answered every question using actual numbers. Most of the people arguing that the numbers are being "spun" are doing so without using any real numbers, or are answering for a different question than was asked. If you have something where you think the numbers I have given are not true, please alert me and we can have that discussion.
Of course, there are many areas we can improve. This year's budget is built off of year's worth of data on how much an average member gives in non-convention memberships/donations each year. We can increase that revenue in two ways: Either we increase the number of members, or we increase how much the average member gives in non-convention memberships/donations each year. The staff has plans to work on both of these initiatives. In addition, we have done quite a bit of analysis on cost of revenue, and ROI, of various initiatives and the staff will be making adjustments to improve ROI going forward. Going even further, we need a long-term strategy to stabilize the revenue of the party so that our financials are more predictable with less up/down swings, so we need to focus heavily on growing our monthly donors, which help accomplish those goals. Again, the staff has plans to address this.
So, no, not everything is rosy and great. Lots of things need to be improved, and budgets can always be amended if progress on these initiatives is made in the future.
Reply all
Reply to author
Forward
0 new messages