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<p><font face="Helvetica, Arial, sans-serif">Is anybody still in
doubt as to why the Board asked for an amendment to the AoA so
that we could create, inter alia, a budget committee that
includes Foundation members not on the Board? :-)</font></p>
<p><font face="Helvetica, Arial, sans-serif">The Board is taking
note of all of these comments, and the chairperson of the Board
reserves the right to enlist for said committee individuals
sharing good ideas on this talk list. ;-p<br>
</font></p>
<p><font face="Helvetica, Arial, sans-serif">cheers,<br>
apm</font></p>
<p><font face="Helvetica, Arial, sans-serif"><br>
</font></p>
<div class="moz-cite-prefix">On 12/15/2020 12:12 PM, Christopher
Beddow wrote:<br>
</div>
<blockquote type="cite"
cite="mid:CADzfi1W42YGwiVt-wT-0K+1GDq8R19F8CgowUeR6cY9CCemsGw@mail.gmail.com">
<meta http-equiv="content-type" content="text/html; charset=UTF-8">
<div dir="auto">I am a novice on these topics but following so I
can learn more.
<div dir="auto"><br>
</div>
<div dir="auto">If I may add a suggestion for critique: could we
consider several tiers or compartmentalized reserves? This
seems it may reduce risk. For example:</div>
<div dir="auto"><br>
</div>
<div dir="auto">1. Core reserves: absolute last to be touched
and covers operations for 3 years at an all volunteer level</div>
<div dir="auto">2. Auxiliary reserves: covers 2 years of "nice
to have expenses" which aren't required in #1, could include
paid position such as site reliability </div>
<div dir="auto">3. Temporary reserves: covers 1 year of expenses
for things that are more experimental, reactive, or otherwise
outside the core and close to core needs. A position like iD
maintainer could fall here or in #2 depending on perspective,
but in a sense this reserve gives all programs a 1 year
earning that funding is due to be cut, while auxiliary gives a
2 year earning, and core would expect that everything is about
to collapse at 3 year mark. </div>
<div dir="auto"><br>
</div>
<div dir="auto">If this is too complicated and a simple 2 or 3
year operating reserve which has a single category of
"critical needs" is better, then I don't defend my position
too strongly and defer. </div>
<div dir="auto"><br>
</div>
<div dir="auto">Chris Beddow </div>
<div dir="auto"><br>
</div>
</div>
<br>
<div class="gmail_quote">
<div dir="ltr" class="gmail_attr">On Tue, Dec 15, 2020, 08:50
Craig Allan <<a href="mailto:allan@iafrica.com"
moz-do-not-send="true">allan@iafrica.com</a>> wrote:<br>
</div>
<blockquote class="gmail_quote" style="margin:0 0 0
.8ex;border-left:1px #ccc solid;padding-left:1ex">
<div>
<div>First, congratulations to Jean-Marc Liotier on your
election!</div>
<div><br>
</div>
<div>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>
<div><br>
</div>
<div>For that we can refer to the document "<a
href="https://www.giarts.org/sites/default/files/Operating-Reserve-Policy-Toolkit_1stEd_2010-09-16.pdf"
target="_blank" rel="noreferrer" moz-do-not-send="true">
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>
<div><br>
</div>
<div>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>
</div>
<div><br>
</div>
<div>==============================</div>
<div>On 2020/12/14 23:47, Jean-Marc Liotier wrote:<br>
</div>
<blockquote type="cite">
<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>
<br>
</div>
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</blockquote>
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