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<div class="moz-cite-prefix">First, congratulations to Jean-Marc
Liotier on your election!</div>
<div class="moz-cite-prefix"><br>
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<div class="moz-cite-prefix">Regarding reserves, people are making
good, thoughtful comments. I needed a framework to help me think
about it, so I wrote this.<br>
<br>
THE FRAMEWORK<br>
Policy can be seen as a set of rules to implement our
organisational strategy. Strategy is informed by our mission
(Section 3 of the AoA) and the long term vision of the
organisation (missing). So in any organisation there will be
likely be a hierarchy of plans, each more detailed than its
parent, ending eventually in a large list of short-term tasks.<br>
<br>
There is currently a draft strategy prepared by Allan Mustard
circulating privately among board members. I expect that the
document will be made available for the rest of us at some stage,
and will be adopted by the Board after members comment. In the
strategy document there will surely be a statement about our
financial strategy. <br>
<br>
To reliably implement our financial strategy we could put in place
many rules (policies), to keep the Board on-track and accountable.
If we choose that path I would like to see that all the policies
related to financial prudence (not just operating reserve) are
linked to and guided by the strategy document. So the ordinary
member can say to the Board - "We have this financial strategy and
these rules. Why are you not complying with them?" Which
addresses Jean-Marc Liotier's concerns and "all contractual and
moral financial obligations of the OSMF" as suggested by Christoph
Hormann. Noted however that Joost Schouppe trusts the Board, as
do I, and he is less enthusiastic about rule making to keep them
in line. <br>
<br>
By posting this context I'm not proposing we stop discussing the
reserve policy and wait for the strategy process to complete. It
is useful to air the issue and I would support an interim short
rule proposing maintaining an operating reserve to be put to the
Board in January.<br>
<br>
HOW MUCH BUFFER<br>
For determining the quantum, the best reserve amount, that is a
different topic. Should we be "increasing the reserves by quite a
bit" as Simon Poole suggests.</div>
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<div class="moz-cite-prefix">For that we can refer to the document "<a
moz-do-not-send="true"
href="https://www.giarts.org/sites/default/files/Operating-Reserve-Policy-Toolkit_1stEd_2010-09-16.pdf">
Grantmakers in the Arts' Operating Reserve ... </a>" that was
suggested by Jean-Marc Liotier. The authors very sensibly propose
a risk based analysis to determining the proper operating reserve
to hold. <br>
<br>
Risk determination normally is done by considering how likely is a
feared event and how serious will the impact of the event be. You
then set up ways to reduce the likelihood of the event, to reduce
the impact of the event and actions to recover from the event. For
example; if we have a super-reliable income stream our risk is low
so we can keep a lower reserve, but if we depend on the
unpredictable mood swings of a few large donors our risk is high
and we need a big operating reserve. <br>
<br>
If we follow a risk based approach then holding an operating
reserve can be seen to be an action taken before a feared event to
mitigate (lessen) the impact of our income stream crashing. It is
here that you take into account the risk of terminating
contractors and the risk of Brexit issues that CH raises. The
risk evaluation will point to an appropriate quantum of reserve to
hold. Allan Mustard's suggestions for ending consultancies and
cutting costs to "circa $120K" are post-event mitigations that we
can take to adapt our organisation to continue after an income
stream crisis. <br>
</div>
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<div class="moz-cite-prefix">Note that any policy, on any topic, not
just finances, can be linked to a risk analysis, which is a useful
management tool.<br>
<br>
I hope that helps.<br>
<br>
Craig Allan<br>
OSM:cRaIgalLAn <br>
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<div class="moz-cite-prefix">==============================</div>
<div class="moz-cite-prefix">On 2020/12/14 23:47, Jean-Marc Liotier
wrote:<br>
</div>
<blockquote type="cite"
cite="mid:8d2efe52-d584-be01-3a0f-7f11ef0e2c85@liotier.org">
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<p>As a new member of the Board, I wish to start term my with a
fundamental topic - the Openstreetmap Foundation's operating
reserves.</p>
</blockquote>
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