[TheForge] Re: The ABANA Trust

[craig.schaefer at verizon.net]

The problem IS that ABANA wasn't financially successful.  If it were, you'd have those cash reserves and not be looking to cash out the Trust as well.


CraigS
Gresham, OR



>From: Kagele at aol.com
>Date: 2007/10/26 Fri AM 10:59:13 CDT
>To: theforge at mailman.qth.net
>Subject: [TheForge] Re: The ABANA Trust

>ABANA conferences have always depended upon conference revenues for a  
>portion of the
>operating budget as well as seed money for new  conferences.  It has been a 
>given that inland
>conferences generate more  money, because of ABANA membership concentrations, 
>than West
>Coast  conferences.  It is also a pattern that off-conference years generate 
>less  revenue.  The
>reason that ABANA did not proceed with a conference in  2008 is due to a 
>number of factors in
>addition to economics i.e. lack of a  time-dedicated conference chair, high 
>site costs, etc. 
>However, the specific  financial problem that ABANA has was present before 
>the  Seattle
>Conference.  A conference is a high-risk venture  financially.  Bad weather, 
>gas prices, terrorist
>attack, you name it,  could cause a cancellation.  The primary goal 
>financially is to balance  the
>conference budget.  The second goal is to provide a conference fee  that is 
>within the financial
>means of most members.  If the conference  can do that and still generate a 
>profit for ABANA, so
>much the better.   However, no conference has ever been intended to provide 
>the primary  and
>exclusive funding for ABANA in off-conference years.  Like any  business, 
>ABANA has always
>relied on it’s accumulated earnings, from it’s  conferences, dues, sales, 
>etc. to stabilize it’s
>finances from one year to  the next.  In non-conference years membership dues 
>income dips.   In
>conference years dues income and conference revenues have always added to  
>ABANA’s
>accumulated earnings.   Without the cushion of accumulated  earnings, ABANA, 
>like any
>business, will have a cash-flow crunch in the lean  years.  That is precisely 
>where ABANA
>finances are today.  The  reason?  Several years ago ABANA had more than 
>$150,000 in
>accumulated  earnings.  All of this money was locked up in the ABANA Trust.  
>It  remains there
>today.  It is essentially dead money.  Other than  providing a few thousand 
>dollars in scholarships,
>it has no further utility  to ABANA.  Given it’s paltry rate of return, 
>inflationary  decrease,
>administration fees, and decline in dollar value, it is actually  losing 
>significant principal each
>year.  Most importantly, it totally  eliminated ABANA’s effective cash 
>reserves which had always
>been available in  non-conference years and which traditionally provided a 
>cushion for  operations
>and conference planning.  Without access to it’s accumulated  earnings, 
>ABANA, like any
>business, has to start from scratch to rebuild  operating capital.    Having 
>done estate planning for
>some 35  years, I am not unfamilar with trust economics. At the time of the 
>Board’s  decision,
>Tim Ryan and I warned ABANA of the long-term consequences of  burying all of 
>it’s operating
>funds in the backyard.  Tim said, “You  might need those for a rainy day!”  
>It was inevitable,
>given the past  pattern of ABANA finances, that the decision would eventually 
>catch up to  the
>organization.  The ABANA Trust has destroyed ABANA’s  liquidity.  While 
>providing some
>meager scholarships for the few, it has  destroyed it’s ability to 
>effectively carry out its
>educational mission for  the many. The problem is not that ABANA has not been 
>financially
>successful.  The problem is that it decided to permanently deprive itself of 
>it’s life blood! 
>
>
>
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