A dispute with web builder that has tied up $552,067 in funds, zooming severance and legal payments from firing 16 staffers en masse, “whopping” rent of $430,000, zooming board expenses and other financial woes were told to IABCers yesterday.
Russell Grossman, a U.K. government employee who succeeded Robin McCasland as chair, and treasurer Terry Cerisoles of Turner Broadcasting System delivered the bad news to the Annual General Meeting yesterday at the annual IABC conference in Toronto.
Expenses of $6,195,556 exceeded revenues of $5,666,483 by $529,073. Net assets plunged to $680,013 as of Dec. 31, 2013 from $1,209,086 a year earlier.
Cerisoles said that IABC, despite the loss in 2013, is still “in good financial health,” noting that it has cash and investments worth $2,045,162, a 22% decline from the 2012 total of $2,627,995. Mutual funds total $1,219,645 vs. $1,247,201; cash and cash equivalents, $137,428 vs. $949,592, and certificates of deposit, $688,089 vs. $334,497. Dues income declined 7.8% to $2,917,858.
Dispute With Web Firm Ties up $552K
Grossman told Dave Murray who hosts the writingboots blog, that the “vendor originally selected for the job of revamping the IABC website “has not delivered.” The vendor was Extractable of San Francisco.
The result is that the audit lists $552,067 in “intangible assets” vs. the previous total of $88,125. Included in the new total is $386,400 for “website development, currently on hold due to a contract dispute,” and software worth $211,250. Accumulated amortization was $45,583.
Grossman, while not mentioning the name of a new developer, said a “new website, and all its back end, will go live shortly.”
An e-mail and phone call have been made to Extractable for comment.
IABC Picks up Board Expenses
Board expenses have risen 25% to $589,189 because IABC now picks up travel expenses of the board whereas in the past the directors paid their own expenses.
Grossman said the previous policy was a burden to the directors “as a result of service to IABC.” The board is now “competency-based rather than filled by those who can simply afford to serve from their own pocket.”
International travel expenses are significant because of the international nature of the board, he noted. Five of the 13 current directors, besides Grossman, are based outside the U.S.—Jane Mitchell, London; Michael Ambjorn, London; Vita Kernel, Slovenia; Sharon Hunter, Canada, and Ritzi Ronquillo, Philippines.
The “single greatest ongoing expense” is the office lease in S.F., which Grossman said was “a whopping $430,000” and which runs to 2016. He said efforts are being made to relieve this burden perhaps by subletting part of the space, “a fair amount of which is unused.”
The accreditation program, which has been suspended, lost $270,000 in the past five years “with the greatest losses in the latter years.” About 10% of members are ABC.
Grossman said IABC made “very little investment in data infrastructure from 2001-2011 either in hardware or software” and the need to replace them “came together.”