[Osmf-talk] Treasurer's Report

[Roland Olbricht]

Hello Steve, hello Courtney,

I'm extremely happy for your feedback. We need to arrive at a short
enough one-pager such that people can understand the financial health of
the Foundation. The thread on community got only few responses.

So I'm open for concrete suggestions for improvements as e.g. Courtney's
table. I'm not convinced now that a GAAP conforming report for YTD would
be understandable for the majority of the Foundation's individual
members. So it is not a good investment in time if I go into that grade
of detail, but I would rather like to work with you to make the report
compelling.

In my ideal understanding, the financial health indicator for members
and mappers would be a ticker on osm.org that says something like
"OpenStreetMap is founded now up to ${date}", where "${date}" is
something like "2026-08-11 08:15", and a $15 donation would push that
date immediately by 15 minutes to give instant feedback on the donation.
This would be an amount of time that has the same ratio to the year as
the donation has to our yearly budget. But this leaves way too much room
for interpretation to not confuse other people, because buying a server
and even paying a monthly salary are rather one-time events than
happening per minute.

The current form has evolved over the year. We have for the accounting a
professional accountant, and these are well detailed. However, the board
had the concern that not even the board could easily detect if a working
group or some other thing would grossly overrun budget.

The form that I have published has been developed to show to the board
that no working group or other thing has overrun its budget. So it is
not intending to conform to any standard but to be such that at least
all board members can understand it.

Steve has asked:

> Actual     Amount      Description Remark
> 66 367.91   521 000     Donations   Planned target of the donation drive
>
> This implies we’ve hit about 13% of our donation goal. Is that the correct interpretation or can we represent this in a clearer, more standard way?

This is the correct bank account interpretation, because we have not yet
seen large donations to materialize, not on the bank accounts and also
not Purchase Orders or any other forms of contracts for donations. There
have been more than one new corporate member, but this is not visible in
this line.

An alternative representation would be to lower the expected "Donations"
cell and raise the expected "Corporate Income" cell accordingly to
represent to expectation that most of this money will come from
corporations.

I would like to explicitly acknowledge here that our fundraising
volunteers are doing exceptionally great work. It is expected and
understood that we see the final benefit of the donations drive not
before mid-2024 or even later, because decision making for larger donors
takes time.

Note that the money from this fundraising campaign aims to bring us
through FY2026. This is where currently our reserves end. In this sense,
it is more a, probably confusing, side-effect that one can track the
going of the individual donations portion of the fundraising campaign by
interpreting these numbers in this YTD.

> As someone who works on the fundraising side of things, I have the same
> question as Steve, plus several others.
>
> To start, with regard to the fundraising, I can answer Steve's
> particular question. The issue is that in the current table the "broad
> base"  category of fundraising has been incorrectly conflated with the
> overall fundraising goal. So that the fundraising report should look
> something like this:
>
> Type	FY2020	FY 2021	FY2022	2023 YTD	2023 Goal
> Broad base				66,367.91	100,000
> membership				6,769.67
> corporate membership
>
> 			107,590.22	300,000
> SotM				17,985.69
> 0ther gifts					100,000
> total				*198,713.49*	500,000
[..]
> Importantly,*this is fundraising for FY 2024*. No fiscally responsible
> organization would fundraise "as you go" for the current year's
> expenses. It is confusing that the numbers for FY24 fundraising goal
> seem to have been matched to the FY23 goal for budget.

This has been an explicit board decision, and I promise to insist for a
different approach in the future. The rationale has been that it
confused people if the budgeted income is different from the budgeted
expenses, and that cash that materializes in the bank accounts shall be
visible as income.

As said, our reserves currently suffice into FY2026.

> Which brings me to my many questions about the "expected" reporting.
> 1. What is this year's budget, based on this year's expected expenses?
> The numbers in the table do not look like a current year budget for
> several reasons:
> a.) "Reserves" are not budgeted expenses, so why are they reported as
> such?  It would, indeed, be nice to know, somewhere, what are the
> foundation's reserves and how the foundation contributes to them, but
> that should be a different table.

There are a couple of conflicting concepts here.

The expenses for servers are expected to be distributed unevenly over
the years. In my understanding, the correct approach to this would be
use depreciation, show buying of hardware as conversion from fungible
assets to fixed assets, and build a structured approach of
- how much hardware depreciation we expect in the next years
- a multi-year forecast when we need to buy how much hardware
- a representation of depreciation as expenses to set clear how much
money we need a year on average for hardware
- show the rest of the OWG budget for services (power supply, network
etc.) as a different item

The board did explicitly not mandate to break it down that detailed
because it would be too confusing. However, I would like to make visible
in the budget that we need a budget about 200k GBP a year on average to
renew our current fleet of servers and have hosting on the same size we
have now. Having a padding line item "OWG reserve" had then been the
compromise to represent that we need on aver age 200k GBP for OWG, and
that sudden spikes in years with many servers to review are not the
OWG's fault or a surprise.

If you have a good representation for that, the board and I are for sure
more than happy to change the representation. There had been no point to
push through a representation that not even seven competent people had
been able to understand - the competing approach with explicit
depreciation had been to incomprehensible.

The second conflict is with when to realize corporate income. We have a
handful of corporate members that have not paid their yearly renewal and
are ghosting on any attempts to contact them. In strict accounting, you
would put that claim dubious but have it still in the books. In
practice, no so member has even later paid, and the Foundation has no
credible way of pressure to enforce payment of these invoices. I'd
simply throw them out after three communication attempts, but, Courtney,
you have rightfully pointed out that this would be a missed opportunity
at least for the larger members where we might want to get back into
contract.

There a decision missing like "eject after second dunning letter
everybody below Silver level and treat everybody on and above that level
as defaulting in the books, even if the contact continues". We had an
approach for that but it had not found a majority, because it centered
around severing ties to unreliable debtors.

> b) What is the current year operating budget in actual GBP?  Because the
> only way to know if we are "in the red" or "in the black" for the year
> is if we know what is the actual budget for this year in real money, not
> in hypothetical money.
>
> I have other questions:  2. What is the year on year top level
> comparison for the budget so that it is possible to know some context?

 From an official of view, we are presenting in Dec 2023 to the members
that we have started in 2022 to employ and pay for Grant. This is an
artifact from that our FY fits extremely bad with the date of our AGM.

So neither exists a year over year comparison nor would it be of much
help, because we are just starting to see the cost of employing people.
This does not mean that it is impossible to do, but that it takes time
to build it in an understandable way.

> How is this year compared to other years?  It is always illuminating to
> compare the past with the present. 3. Why is the "overhead" number not
> included in the main budget, but rather marked there as N/A?

The overhead is listed below in the detailed break out. You are the
first to ask for the sum explicitly in the cell, so it now makes sense
to invest time in copying the sum from below into that item.

> To me, in the simplest terms, the top level budget, based on the numbers
> currently being reported, should look something like this:
>
> type	fy2020 actual	FY2021 actual	FY2022 actual	2023 to date	Q423
> expected	2023 planned
> OWG				41, 339.43		169, 197
> EWG						50,000
> LG				5,168.64		1000
> Other WG						5000
> Personnel				181,018.14		275,000
> Overhead				16,268.84		40,500
> SotM				533.95		0
> debt
> Total				202,989.57		371500
>
>
> If the previous years were filled in and if we knew what the operating
> reserve was, we could have a real conversation about the health of
> the organization. As it is currently reported, it's impossible to know
> what is going on at all. I find this deeply problematic. If this level
> of detail is not something that should be public, that is fine, but then
> something else should be reported here.  (Please note that I didn't
> report any numbers that were not already in the treasurer's report. I
> simply put them in a different table.)

As pointed out, no-one has asked for this, so other things have got
priority.

> With both of these new charts in hand, I am able to see something that
> inspires another question.  4.) Why are we reporting almost 18,000 in
> revenue from a SotM that is not taking place? [..] Or are they monies that came in from last year's
> SotM in FY 2023?

This in money from the last SotM that has been booked in FY2023. There
is the necessity to set up contracts with large corporations that have
to get this through their internal decision making process, and this has
taken much more time than expected.

> The reporting of the OSMF finances has troubled me for a long time, and
> as someone involved in the fundraising, I want to note that if we are to
> credibly ask for donations, small and large, we owe the people who give
> to the foundation a level of reporting that matches standard accounting
> practice on a quarterly and annual basis.  We don't have to give all the
> details, but we do have to offer a rational lens into how we are
> managing our finances. If we can't do that with a volunteer
> board, because it does take time, we need to pay someone.

We pay for professional accounting. This works well, and the problem to
solve is to have a good idea how to present it and then a lot of
one-time work to set that up. Guillaume has started this already some
time ago, I have taken over to have something this is good enough to
present it to the board. And we are now working towards something that
is understandable by the average member also without an accounting degree.

There are the yearly fiscal reports, see here
https://osmfoundation.org/wiki/Finances
and the unanimous feedback on them is that they are incomprehensible to
our members (and most likely some potential donors, too). Having an
incomprehensible report per quarter instead is not a solution.

So I'm happy to work with you and anyone else interested in on a further
format that is comprehensible for the average member an can be easily
kept up to date from the existing bookkeeping.

 From my understanding, the next steps would be
- to make the server fleet needs more explicitly, such that you can see
what we have spent on operations in past years and relate that to the
OWG's budget (which is prudently careful for contingencies)
- to properly sort one time donations in the past from those which have
a chance to be recurring, their ringfenced portions, and the interaction
with the expenses for employment
- to then make up a multiyear past expense and income overview that
enables to understand what we reasonably could expect as income and
expenses for the next few years to come

I'm happy to shift priorities here if you have better ideas. We are on
our way to make the financial state of the Foundation understandable.

Roland