2017Q3 Reports: Treasurer
Treasurer's Report to ACL Executive for year ended 2016-12-31
Graeme Hirst, Treasurer
July 2017
ACL has continued to grow financially as our conferences increase in size. In 2016, our largest conference ever gave us our largest surplus ever, although this was mostly due to good luck with currency movements and we will use some of this windfall to hedge against future adverse currency movements.
A problem that has been rare until last year, but which occurred several times in 2015 and then again in 2016, is companies or organizations that commit to a sponsorship not following through with payment, possibly after having received the benefits of sponsorship such as display of logos. It's not clear why this has increased. Possible causes include an overall increase in the number of sponsors, and hence in the number who are flaky; less aggressive chasing up of pledges by Priscilla because she lacks the time to do so; and changes in economic conditions or corporate strategy that take us out of consideration. (I will spare the offending sponsors the embarrassment of being named here in the hope that we might yet receive future fulfilled sponsorships from them.) Nonetheless, sponsorship of our conferences is up overall.
More details are shown in four linked files summarizing our financial results for 2016.
FILE 1: Our balance sheet, which shows a snapshot of our assets and liabilities at 2016-12-31:
On 2016-12-31, we had about $1.57 million in cash and investments and another $122,000 in abstract assets such as deposits and advances that we have prepaid for future conferences. Against this, we had liabilities of $118,000, which includes multi-year memberships and projected expenses of year-end bookkeeping and audit.
In sum, our equity is $1.57 million, up from $1.12 million last year.
A substantial proportion, around 29%, of ACL's equity is in the discretionary subaccounts of chapters and SIGS. At year end NAACL's subaccount balance was $73,500, and EACL's was €20,000. SIGs collectively had $353,000, of which $224,000 is SIGDAT's and $42,000 is SIGDIAL's. Other SIGs have balances ranging from a few thousand dollars down to zero or less (SIGPARSE has a $2700 deficit).
We need to maintain very substantial cash reserves and equity -- ideally $1.5–2 million -- for three reasons: (a) We need to be able to survive disastrous losses on conferences, perhaps two in the same year. In particular, we need to be well hedged against adverse currency-exchange fluctuations (see below). (b) When we sign contracts with hotels and convention centers for $500,000 or more 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 have sufficient assets to pass. (c) Even with this credit, we still have to pay large five-figure and six-figure deposits for venues well in advance of any revenue from the event.
FILE 2: Our overall profit and loss statement (technically so-called even though we are a non-profit organization and therefore have surpluses, not profits), with a comparison to 2015:
Note that some lines on this sheet are horizontal sums that aren't particularly meaningful (such as the cost of conference bags or coffee breaks summed across all conferences), and some are artifactual (in particular, category 4540, chapter revenue, is actually just an internal transfer of funds from the surplus of a NAACL conference to the NAACL chapter). The category names and their usages have changed slightly from 2015 to 2016, so a complete alignment is not possible.
Our gross revenue in 2016 (including artifacts) was $2.44 million, well up from $2.02 million in 2015. Overall expenditure in the year was $1.95 million, giving a net surplus in the calendar year of $490,000. This is not the exact surplus on our operations for the year, because it doesn't take into account various liabilities incurred in 2016 that had not been paid at year end nor payments in 2016 for 2015 liabilities. Our liabilities at year-end were approximately $85,000, including large amounts awaiting invoices from MIT Press for the Computational Linguistics journal and to Weyond Conferencing for video recording at our conferences.
Nonetheless, it is clear that we had a healthy surplus on operations in 2016. This surplus will help restore our assets to a higher level, and give us some breathing space for new initiatives.
FILE 3: Profit and loss statement for conferences:
Note: The "bottom line" figures on this spreadsheet include only 2016 transactions, and do not take into account expenses that were incurred in years prior to the conference nor belatedly paid sponsorships that were not received until 2017. Both of these factors are, however, incorporated into the figures below.
Of our three major conferences in 2016, two had surpluses and one suffered a loss.
(a) ACL 2016 Berlin made an extraordinary surplus of $490,000 (48% of revenue), far larger than any previous conference surplus. The reasons for this were the following: The conference was much larger than expected, and so we achieved some economies of scale. And it was relatively cheap to put on. Humboldt University did not charge us for the space we used, and the catering at the coffee breaks and welcome reception (although not of high quality) was also rather cheaper than usual as we were not paying the premiums that hotels and conference centers charge. (Catering at the social event and poster sessions was at the more-usual cost, however.) The conference was particularly notable in attracting many unusually large sponsorships.
The biggest single factor, however, was favourable movements in currency exchange rates. The cost of the euro, in which most of our expenses were incurred, dropped 22% against our reference currency, the USD (in which registrations were collected), between the time that the conference was planned and the time that most of the bills had to be paid.
It should be noted that much here was good fortune or dumb luck. Conference registrations might have been merely at, or lower than, the levels that we originally anticipated, especially if some event (terrorism, volcanic ash clouds) kept people away. And, in particular, the currency exchange fluctuations that, on this occasion, reaped a windfall for us could have just as easily gone the other way and led to a deficit for the conference. For example, in 2010, a USD 50,000 surplus at ACL 2010 Uppsala was completely wiped out by adverse changes to the SEK / USD exchange rate just in the short period between the time that the conference ended and the time that the bills had to be paid.
It would be foolish, then, to simply regard the entire Berlin surplus as general revenue to use for whatever we like. Rather, we need to use much of it carefully hedge ourselves against future adverse currency events by establishing an account for that purpose in euros while the euro is still relatively cheap. The ACL Exec has approved the establishment of a $350,000 currency hedge account to be drawn from the surplus, to be held in euros in Europe and watched over by the European Treasurer. The remainder of the surplus will be shared between central ACL, the SIGs that sponsored workshops at the conference (prorated on a person-day basis), and the EACL Chapter as per our usual practice for ACL conferences in Europe.
(b) NAACL 2016 San Diego had a surplus of $31,313 (5.2% of revenue), shared between NAACL and SIGLEX (sponsor of SemEval).
(c) Unfortunately, EMNLP 2016 Austin had a deficit of $7695 for SIGDAT (-1.4% of revenue).
Overall, the result was a surplus for the organization as a whole. These results -- both an unexpectedly large surplus and an unexpected loss -- demonstrate the difficulty of predicting attendance, and hence income, and costs despite our best efforts at budgeting and prognostication. Sponsorships too are highly variable and unpredictable.
In addition (not on the spreadsheet), I have near-final results for EACL 2017 Valencia, which made a small surplus of around €12,250. Initially, it appeared that the conference had made a deficit of about €5000, despite being much bigger than originally planned (and hence spreading the fixed cost of the venue over many more registrations), as registration fees had been set lower than usual. Fortunately, international sponsorships received directly by the ACL made up for the deficit and more.
FILE 4: Profit and loss statement for the journals, membership, and operations:
(a) The CL journal, of course, has no direct income any more. The costs, about $44,400 in 2016, are covered by membership fees and surpluses from the ACL conference. They comprise the cost of the editor's part-time assistant and services (copyediting, typography, online distribution) by The MIT Press.
(b) The costs of TACL are also covered from membership fees and conference surpluses. Mostly for its paid editorial assistant, TACL had a cost of $18,700. TACL's costs will rise considerably in 2017 as additional professional services are engaged.
(c) Membership is required for attendance at any ACL conference, and many people do not pay for memberships any more except when registering for their first conference each year. We grossed $231,000 in memberships in 2016; the cost of processing and other membership services was about $27,000 (two-thirds of which is credit-card fees), leaving a net income of $204,000 in this class.
(d) Miscellaneous income and operating expenses: Income here includes such things as interest on our bank accounts and bonds, and realized gains or losses from changes in the value of currencies. Expenses include office rent and utilities, insurance, bookkeeping and accounting, Business Manager's time not allocated to other specific classes, and the costs of maintaining the ACL Portal and ACL Anthology. Our net operating cost was $68,600. Covering these expenses from membership fees leaves us with about $135,000 for the costs of the two journals ($63,000) and our other activities.
Not shown on these spreadsheets, because they cut across a number of categories, are scholarships, sponsorships, and other awards to student members and to outside organizations. These include awards to students to attend conferences, the waiver of registration fees at conferences for student volunteers, and sponsorship of CL- and NLP-related events held other organizations. These awards are made by the chapters from their subaccounts (in particular, NAACL's support of NACLO and of South American CL and NLP events), by central ACL through the Walker Fund, and by the organizers of student research workshops at conferences from funds that flow to us specifically for this purpose from sources such as the U.S. National Science Foundation and some of the conference sponsors (and hence may appear as conference income and expenses). In 2016, these awards totaled $123,500, made up of $8000 in support by chapters for other events, $70,400 in support for student travel and conference registration, and an additional $45,100 in waived conference registration fees for student volunteers.