[ivfdf-discussion] Report to 2008 Festival and Initial Discussion Document

[IVFDF Central Treasurer]

Inter Varisty Folk Dance Festival
Treasurer: Dr Ian Thompson

Treasurers Report 2008

Bank interest continues to provide good income; we had a further 
donation from IVFDF 2006, Cambridge of just over £550.  We are moving to 
using online banking, this retains all the safeguards of needing 
multiple authorisations to confirm payments without have the round robin 
of posting partially signed cheques around the country.

Accounts Statement
  <details removed for security reasons (and it doesn't paste in well)>

Future

Edinburgh 2007 is still to repay the £1000 loan plus 50% of any profit 
they made.  We need to agree underwriting for 2009 as appropriate and 
agree a loan for whoever is taking 2010.


Central IVFDF Financial Policy

Background

For those who have not been at IVFDF before let me provide some brief 
background. Each year is a separate instance (c.f. franchise) of the 
festival, groups bid to run the event in 2 years time. Each instance 
gets the option of a start-up loan in the 2 years prior to running the 
event, and then a year before the event has the option of applying for 
and agreeing limited underwriting, to cover the situation where despite 
the best efforts of the organisers that instance of the festival, it 
makes a loss.  In exchange for the use of the IVFDF name (i.e. 
franchise), an instance is expected to return at least half of any 
profit it makes to the central fund so that it can continue to provide 
these loans and underwriting for festivals in future years.  Due to the, 
usually 2 year, lead in time taken to plan and organise an event there 
can be a number of independent instances running at the same time; i.e. 
the last year, the current year and the next year, and possibly even the 
people bidding for the year after!

Current status

Taking into account the £2000 currently out on loan and possible gains 
from both 2007 and 2008 festivals we now have a central fund balance in 
the vicinity of £10,000. With our current fund value and present 
interest rates we have an income of about £250 per year

Financial policy

Given the current status, I therefore feel that we now need to 
re-examine the financial policy for Central IVFDF.  To date that policy 
has centred on the principle of collating enough funds to allow start-up 
or “bridging” loans to be made to each instance of the festival with the 
aim of having a pot in the region of the typical turnover of a festival 
(circa £10,000 to £12,000) to ensure that there were enough funds to 
cope with reasonable underwriting costs (circa £1500 per live festival 
instance).  The central fund must also support the administrative costs 
of the central officers (Treasurer, Archivist and Development Officer), 
though to date these costs have been minimal (so far around £50 over 3 
years), though the role of Development Officer has not yet been 
exploited to its’ full potential. Given that at any one point there may 
be up to 3 festival instances in existence, then that means that if the 
loan amounts we give remain at £1000 then we need at least £3000 just to 
cover loans. Similarly given that typical underwriting amounts are up to 
£1500 we might possibly be regarded to need at the very least another 
£4500 to cover this potential liability.  Clearly with rising costs and 
inflation these figures are likely to rise over future years.

Future Options

We are now reaching a point where the funds we have are likely to be 
able to provide well for our needs and should therefore consider some 
alternatives as regards these funds.  We should also consider a number 
of scenarios, firstly that future festivals continue to be as successful 
as recent years and the fund continues to grow, secondly we need to bear 
in mind that there may be future festivals which aren’t as successful 
and we may have to take a loss in funds one year, and therefore need to 
have enough funds to accept that loss without it making a big effect on 
overall operation of the system.
If we do end up in the former situation and have ongoing income I would 
wish to ask the question of what we should do? I feel that we need to 
find a use which helps the wider IVFDF community as a whole.  Options 
include:
•	reducing the % return on profits which an instance must return to the 
central pot, whilst the pot remains over a certain fixed value (or, more 
future proof, a % value of average of the last 3 festival turnovers), 
and allowing instances of the festival to keep more of any profit they 
make. Possibly, via some sort of sliding scale of returns relative to 
the funds in the central pot. Personally, I don’t think this is a good 
idea as it is needlessly complicated to administer and only provides 
additional benefit to those festivals who are successful whilst the 
central fund remains of a suitable size.
•	Another option, and one which I might personally prefer, could be the 
provision grants to member societies in respect of the travel of their 
members to IVFDF.  Clearly this would have to include some safeguards 
and should perhaps be targets at societies with certain needs (e.g. 
smaller numbers of members unable to benefit from group travel plans or 
those with longer distances to travel and therefore higher costs). Such 
a scheme would have to be capped to a certain value each year and would 
continue to depend on there being enough funds in the account.
•	Do you have an alternative idea?
Given that we have some time before we need to make a decision due to 
being excessively cash rich I would propose the following: that a group 
on interested parties taken from the IVFDF community discuss the 
potential options over a specific discussion e-mail list and present 
proposals back to the ivfdf-news list in time for the possibility of 
making the needed changes to standing orders or constitution for IVFDF 2009.