2011Q3 Reports: Treasurer

Graeme Hirst, Treasurer

Attached are four files summarizing the ACL's finances for the calendar year 2010.

(1) Our balance sheet, which shows our assets and liabilities:

Because our base currency is the ever-shrinking US dollar, but much of our assets are in euros, our bank-balances appear to have increased as of the end of 2010, compared to 2009, even though we spent more USD than we took in. Of course, from a euro perspective, our bank-balances have decreased.

Moreover, our bank balance on 31-Dec-2010 was artificially high because we still had substantial unpaid bills from ACL 2010 Uppsala at that point.

In fact, our actual equity -- assets minus liabilities -- dropped markedly in 2010 to under $600,000 (see line "Total equity" near the bottom of the balance sheet). We can't let it get much lower than that. We need to maintain substantial equity for two reasons: (1) We need to be able to survive disastrous losses on conferences, perhaps two in the same year [see below]. (2) When we sign contracts with hotels and convention centers for $100-200K of conference services, these businesses are extending us a very large amount of credit (even though we also pay big deposits), so we undergo credit checks which, obviously, we need to pass.

(2) Our overall profit and loss statement (technically so-called even though we are a non-profit organization and therefore have surpluses, not profits):

Note that some lines on this sheet are misleading because they are horizontal sums that aren't particularly meaningful (such as the sum across conferences of the costs of each component of the banquets at Uppsala and Los Angeles). See below for the more-interesting details of major expense and income classes.

(3) Profit and loss statement for conferences:

We had a very bad year for conference finances.

(a) ACL 2010 in Uppsala only just broke even (actually a $2000 loss on a $460,000 event). This was almost entirely due to the rapid decline in the value of the US dollar against the Swedish krona (which was even greater than the dollar's loss against the euro). We priced registration for the conference and sponsorship in USD, but we had to pay our bills in SEK. When it came time to pay those SEK (in September 2010 and March 2011), they cost us USD 57,000 more than on the dates the expenses were incurred. In other words, what would otherwise have been a reasonable conference surplus of about 12% (we aim for about 15%), had the values remained stable, was completely wiped out by adverse changes in currency values.

(b) NAACL 2010 in Los Angeles had a large loss, more than $59,000 (and no currency exchange was involved). Moreover, $9,750 in promised sponsorships from two companies is still outstanding (we are chasing them); if these have to be written off as bad debts, then the loss would climb to $69,000.

The key reason for the loss was simply that the conference attracted far fewer people than we planned for -- about 550 registrants for the main conference instead of 650 -- so income was markedly less than anticipated. But expenses did not drop correspondingly; many expenses are largely or wholly independent of conference size. Some expenses were higher than budgeted.

One high expense worth particular note was the banquet, which suffered from a surprisingly large number of gate-crashers -- about 60 of them, due to very poor security. Moreover, although it was an open-air banquet on the library lawns, the gate-crashers seem to have been almost wholly conference guests, not random people walking over from the street. Security was supposed to be the caterer's responsibility. We ended up paying for 30 extra people, and the caterer took the expense of the other 30.

(c) One good note: EMNLP 2010 in Cambridge, Mass., made a substantial surplus for SIGDAT, $34,000. The key factor in this was the extremely low cost of the venue compared to what we would normally have to pay, thanks to MIT.

(4) Profit and loss statement for the CL journal, membership, and operations.

(a) The journal, of course, has no income any more. The costs, about $71,000 in 2010, are supposed to be covered by membership fees and surpluses from conferences.

(b) Membership is required for attendance at any ACL conference, and not many people pay for memberships any more except when registering for their first conference each year. (Also, we still have many multiple-year memberships current from past years when we "gave away" one-year memberships, or membership extensions, with HLT registration.) We grossed $68,000 in memberships in 2010; the cost of processing and other membership services was about $15,000, leaving a net income of $53,000 in this class.

(c) Miscellaneous income and operating expenses: Income here includes such things as interest on our bank accounts and bonds, and expenses include office rent and utilities, insurance, bookkeeping and accounting, Priscilla's time not allocated to other specific classes, and, notably in 2010, the cost of developing the ACL Portal. Some artifactual items turn up in this class too. This year, there is the reversal of a liability for an annual bill for MIT Press (their erratic billing leads to this kind of thing), and a notional foreign exchange loss (in USD) arising from a renewal or reinvestment of some of our euro assets. Setting the artifactual expenses aside, the excess of "real" expenses over income this year was about $48,000. Covering these expenses from membership fees leaves us with $5000 for the costs of the journal.

(5) General comments: Obviously the current situation is unsustainable. We need substantially more income from such sources as conference surpluses and perhaps from continuing organization-level sponsorships.

This year's conference losses were, to a great extent, just bad luck. Conference budgeting is necessarily full of guesses and probabilities, and currency variations (which can just as often be favorable as adverse, and sometimes have been) just add to that. We try to be cautious in our projections of attendance, but budgeting with a too-low break-even point may lead to registration fees that are too high and that by themselves risk lowering the attendance rate. Nonetheless, it is clear in hindsight that we should have been much more pessimistic about the Los Angeles conference and built in a larger buffer.

I have commented before about the tendency to ever more expensive conferences (in grander venues with grander banquets), because every local organizer naturally wants to put on The Best Conference Ever. But this leads to an unsustainable escalation, and registration fees cannot keep pace. We need to rein this in. Our conferences must of course be pleasant and enjoyable to attend, but they must also become more economical. Unfortunately, the size of our conferences limits our ability to use low-cost venues; we are spending more time in large hotels and convention centers and less time on university campuses with consequent diseconomies of scale.

We also need to rethink how conferences interact with chapter finances. Under the present arrangement, it is the chapters, not top-level ACL, that take most of the surplus or loss of our conferences. Specifically, the chapters get 100% of the surplus or loss of their own conferences, and 50% of that of the international conference when it is held in their territory. Only when the ACL conference is held in Asia can ACL get 100% (and in 2009 we shared with AFNLP, who jointly sponsored the Singapore conference as an IJCNLP).

The rationale for this arrangement made sense at the time it was made. Central ACL and the journal were largely self-supporting, and this arrangement gave the chapters a little revenue for Good Works. This is no longer the case; central ACL operations, especially publications, require more funds, and, arguably, the chapters require less -- or, at least, they do not require half or all of the 15% surplus that we must assiduously aim for in future conferences. Equally, in view of the NAACL Los Angeles results, the chapters might wish to be more insulated from large losses. I have therefore made a proposal to the ACL Exec for changes to these arrangements, which will be discussed at the Exec meeting in Portland.