Hi Derek, I think I've covered all of your questions below. If I've missed any, please let me know. Also, we'll be releasing a more comprehensive document announcing this effort to the membership in a short period of time (likely prior to or in conjunction with the LOPSAgram coming out).
Thanks for the questions and the interest. How much does forming this sub-corporation cost? We have allocated $10,000 for start-up funds for this corporation. $5,000 will be contributed by LOPSA, and $5,000 will be contributed from a private donation. How much does all the lawyering to figure out formation/legalities cost? We are in contract negotiations with an attorney who specializes in NJ Non-Profit corporations. The initial retainer is $2,500, and we are waiting on an estimate of the total time necessary for the procedure to be completed. The legal fees will be paid from the start-up fund. How much overhead is involved in managing a completely separate second entity, cost-wise? Initially, the plan for the management of the subsidiary will consist of three directors, each paid $250 per Board meeting (which will be held quarterly). One of the directors will function as the President and acting manager of the corporation, who will be paid on a per-event basis at below market rate, initially. There will be a maximum of one LOPSA Board Member on the Board of the subsidiary in order to maintain a clear separation of corporate entities. How much revenue does LOPSA (the 501(c)(3)) actually see from the conferences? The way things were, the only income that LOPSA (the 501(c)(3)) took from the conferences was the income from the memberships. At $40 per member, this comes to around $8,000 per year, which is around one-fourth of the membership revenue in the 2014 budget. With a for-profit subsidiary, if the included memberships are continued, those funds would continue to be paid as specified in a contract. In addition, LOPSA would receive dividends from the subsidiary when the subsidiary’s Board of Directors elected to pay them. We will consult with our legal advisor(s) on the most appropriate way to determine these payments, and whether it should be pre-scheduled or ad-hoc. In terms of the profitability of the individual conferences, it has varied in the past because of a variety of factors. Generally speaking, Cascadia IT Conference costs between $30,000 and $40,000 to put on, and LOPSA-East costs around twice that. The direct income from tickets has not quite covered that cost. Breaking even requires sponsorship and profit requires more, obviously. How many members renewed or became members in 2013: The LOPSA membership at the end of 2013 was around 850 members. Given the way that our CRM stores data, and the membership report structure at the time, it’s not possible to determine the number of student or non-paying memberships accurately, but as student memberships have been on a steady increase, it is safe to say that there were fewer then than there are now (123), and there are very few complimentary memberships (under 10) due mostly to hardship. How many of the above were Cascadia IT or LOPSA-East: Around one quarter of paid LOPSA memberships come from our LOPSA conferences. Cascadia IT Conference 2013 resulted in 122 LOPSA memberships, and LOPSA-East 2013 resulted in 139 LOPSA memberships, so 261 of around 850 LOPSA memberships came from conferences in 2013. I hope this helps. Thanks again. All the best, --Matt On Thu, Jul 31, 2014 at 11:39 PM, Derek Balling <[email protected]> wrote: > > On Jul 31, 2014, at 11:24 PM, Matt Simmons <[email protected]> wrote: > > I suspect that we could argue that it is, in fact, related to furthering > the exempt purpose of the organization, but there's a significant chance > that the IRS wouldn't see it this way, and I don't see the need to risk it. > But IANAL. We'll have one on retainer for these kinds of questions as we go > through the formation, if that ends up happening. > > > I think - as a member - a question that is obvious here comes to mind: > > *- How much does forming this sub-corporation cost?* > *- How much does all the lawyering to figure out the formation/legalities > cost?* > *- How much overhead is involved in managing a completely separate second > entity, cost-wise?* > > as compared to > > *- How much revenue does LOPSA (the 501c3) actually see from the > conferences.* > > Because if the latter doesn't exceed the former, we need to seriously > think about walking away from that idea, most ricky-tick. We've taken on > enough cash-flow-negative burdens already in this organization's history, > and are trying to get rid of them, we don't need more. > > Here's two questions that I would be interested in getting an answer to: > > In 2013: > > - How many members (total) either became paying members or renewed > (regardless of the source of that payment/renewal)? [exclude there > Student/Comp/etc. memberships] > - How many of the above were via either Cascadia-IT or LOPSA-East? > > I'm genuinely curious to know the breakdown there. How dependent is LOPSA > on those conferences for having paying members of any kind? > > Without having a lot of facts and figures at hand, my gut tells me that > this FEELS a lot like a desperate attempt to keep the "mandatory-membership > machine" operational, possibly at the expense of good financial solvency. > It harkens back to the "member-lock-in" points I mentioned in the previous > e-mail thread, as though the national org is desperate to maintain that > lock-in at any cost. > > And if we're investing cash flow just to keep the "mandatory/automatic" > member-base churn rate low, it raises some (to me anyway) obvious questions > about overall viability of the organization. > > D > >
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