[Osmf-talk] Operating reserves

[joost schouppe]

Safety policies aren't without a cost. For example, the policy to lock the
cockpit in airplanes from the inside has undoubtedly prevented some
hijackings. But it has also increased the likelihood of a pilot committing
murder-suicide with their plane. In this case, coming up with a policy eats
Board energy that might be more wisely invested elsewhere, and it reduces
flexibility of the Board to deal with unforeseen events. I think the main
benefit is that there is less need to trust the Board, since their freedom
is restricted in a way that should automatically safeguard the Foundation.
However, I personally trust the Board to make the right calls when it comes
to decisions like this. I think a simple statement about having the goal of
maintaining three (or two) years of reserve would be enough to provide a
guideline for spending ambitions, and would be enough to call the Board out
on if they seem to be overspending.

Op ma 14 dec. 2020 om 22:50 schreef Jean-Marc Liotier <jm at liotier.org>:

> As a new member of the Board, I wish to start term my with a fundamental
> topic - the Openstreetmap Foundation's operating reserves.
>
> In answer to a guest question during the December 12th General Meeting,
> Alan Mustard mentioned that the Openstreetmap Foundation strives to keep a
> reserve amounting to three years of operational expenses. The Treasurer's
> report's profit and losses
> <https://wiki.osmfoundation.org/w/images/1/12/OpenStreetMap_Foundation_Limited_-_Profit_and_Loss_2020.pdf>
> show yearly operating expenses amounting to 130k£ and the Balance Sheet
> <https://wiki.osmfoundation.org/w/images/2/25/OpenStreetMap_Foundation_Limited_-_Balance_Sheet_2020.pdf>
> shows net assets at 621 k£ - of which even the 400 k£ in the reserves
> savings account does cover about three years. From a cursory survey of
> non-profits, three years is at the prudent end of the range, so I think it
> is a reasonable goal to continue pursuing.
>
> Nevertheless, this satisfactory state of affairs remains the informal
> result of the Board's cautious management. In keeping with my pledge of
> reinforcing the Openstreetmap Foundation's financial sustainability, I wish
> to take it a step further and advocate for the Board to produce an
> Operating Reserve Policy for a Board-Designated Operating Reserve.
>
> As a novice in the business of operating reserves policies, I have sought
> best practices and found the Grantmakers in the Arts' Operating Reserve
> Policy Toolkit for Nonprofit Organization
> <https://www.giarts.org/sites/default/files/Operating-Reserve-Policy-Toolkit_1stEd_2010-09-16.pdf>
> to cover a lot of ground - interested individuals might wish to take a
> glance.
>
> Among other things, an Operating Reserve Policy would need to include
> procedures, governance and conditions for drawdown and replenishment.
>
> This comes too late to be made a topic of the 18th December Board meeting,
> so I'll propose it for the January meeting. Meanwhile, let us please
> discuss the desirability of such policy and what it might entail.
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Joost Schouppe
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