IEEE Finance Review

1. IEEE Finance Review Harold Flescher NPSS FinCom Chair

2. 2012 Preliminary Actuals vs Budget(Unaudited) *Net Budget includes: Interactive Content Project, Initiatives, R1-6 Strategy

3. Major Variances • Revenue • Primarily unanticipated IP revenue (ASPP-AICTE (India)) ~$5.5M • Sections Revenue (revenue for sections not included in budget)* • Expense • Regions/Sections expense not carried in budget* *Offsetting

4. IEEE Reserves • Prelim. 2012 – $269.8M • Reserve Risk Requirements – • Upper Limit - $307.1M • 70% point - $215.0M • Above the 70% point, the BoD may approve reserve spending rules

5. Reserves • So we have great reserves. • Does this matter if we can't use them?

6. Spending Rule • The BoD has approved the budgeting of 4.5% of IEEE Investable Assets (LT Inv Fund) to be used for new and continuing initiatives • Up to 1.5% for History Center, Awards, Honors Ceremony, IEEE Foundation and Fund Raising functions • Up to 2% for New Initiatives Committee • Up to 1% for OUs with balanced budgets whose reserves exceed 50% of annual expenses • For individual S/Cs, each may budget up to 3% providing the integral of all of TAB not exceed the 1% number

7. What this means to NPSS • Budgeting - For Budgeting Purposes, we may budget for initiatives in the following year up to 3% of our reserves. What this means is that in any single year, we can have a negative budget of up to 3% of our reserves • Spending - Within any year, we may spend up to 50% of our previous year’s Operational Surplus (actuals positive to budget excluding investment returns ~300k). This spending will be shown in the ongoing forecasting process and does not impact future budgeting.

8. Discussion • Given that increasing initiative money (normal and special) will be used in the future, who are the right people to use that money: • Those closest to the members who earn the money? • Those closest to members who don’t earn the money? • Higher level elected volunteers and staff who are furthest from our members?