Changes don't come easily for many, whether as basic as a change in a marketing color scheme to major changes such as staffing configurations within a system. Successful changes usually come from researched data analysis, to that gut feeling based on past practices and experiences that we know work.
The IAFC board of directors is no different in how it makes decisions: usually after research and data is reviewed, the value and effects on the entire membership are weighed. Most chief officers know this as high-level strategic thinking.
|Proposed FY 2014 Revenue
|Proposed FY 2014 Expenses
|Proposed Change in Net Assets
The recent economic challenges have required all of us to rethink what we do and how we do it and to be at a strategic level. In most departments around the world, budgets have been slashed, service levels impacted, personnel reduced or positions not filled, travel is curtailed, dues are suspended—and I could go on and on.
The IAFC feels that impact in major ways. When dues are cut from local budgets, it cumulatively impacts the IAFC in a big way. When travel to conferences is cut in your budget, the IAFC has lower attendance at our conferences, which results in less revenue, less participation and loss of exhibitor support. When the federal government shuts down or reduces its budget, there is less money for grants to fund the myriad projects that impact the fire service in the wildland area, emergency management, Near Miss, etc.
I hear from time to time that the IAFC is in bad shape and people worry about the services we provide. Let me assure you that even with the budget challenges we all face, we're not in bad shape and we continue to provide top-level service to our members. We're striving to work smarter and make sure we use our funds in the most effective manner to further our mission.
The preparation of the 2014 IAFC budget proved to provide challenges in order to meet the strategic direction of the association. Last April, the board set a goal of increasing its operating reserves (currently 39%). The board adopted a goal of moving our operating reserves to 50% and a plan will be developed to do that over the next few years.
Early budget preparation included a survey to the board with considerations including:
- Why the IAFC exists
- Potential cost-saving items
- Potential revenue opportunities
- Time/focus issues
These items then were weighed on value (low, moderate, high) and action needed (keep/pursue, consider, eliminate/don’t pursue).
The 2014 IAFC balanced budget of $11,313,310 includes a number of changes to set a financial direction for being able to increase the net assets over the next several years.
The High Level
The IAFC will continue to be a trusted provider of information and a source for effective practices. We'll continue to produce conferences and provide education to the members of the fire service. Government relations will remain a core purpose of the organization. The IAFC will continue to fund recruitment efforts and allow for pilot membership programs as appropriate; 2013 membership has seen a rebound and total membership levels are above the 2010 numbers.
Minimal revenue increases are budgeted for 2014; 2013 didn’t perform as expected due to reluctance by our exhibitors to come to Fire-Rescue International in Chicago and a lower number of attendees who registered for FRI.
The federal government shutdown also had a negative impact, as we were unable to complete some work and projects in 2013 as expected. Personnel levels are budgeted to remain the same with a slight increase. The IAFC’s personnel costs are no different from many of your departments and account for 47% of the expenses.
Travel and Meetings
Travel costs continue to be a large expense on the IAFC budget. While significant travel is required for many of our grant and contract programs, grants and contracts pay for 100% of the costs associated with those projects.
Several changes were made to reduce travel costs during the year: IAFC leadership will continue to travel to interact with our members, our divisions and our sections. Representation of the organization is critical and funds are provided to continue to be present at key events.
Travel is being reduced by only holding two face-to-face board meetings, eliminating the funding for a division secretaries’ meeting and eliminating the travel reimbursement for the IAFC representatives to CPSE.
The IAFC travel policy was amended as a way to be better stewards of our funds and continue to be in compliance with federal law.
Over the years, the IAFC sections’ assets have continued to grow due to all of the great work they produce. In 2013, the section treasurers and I began holding teleconferences in order to produce consistent budgets that would be tied into the overall 2014 operating and programs budget.
One of the key principles used was for each section budget to be balanced without using net assets for normal operations expenses. This was accomplished in this budget year and still gives our sections the ability to do projects that meet their missions.
We also accepted our newest section, the Executive Fire Officer Section, which has conditional approval as an IAFC section, pending the collection of dues from 150 members.
FRI continues to evolve and change each year. The experience for this year’s conference in Dallas—historically an excellent performer for the IAFC—will again provide top-quality education and networking opportunities. Performance is expected to be better than last year’s conference.
FRI has significant costs as well as the potential for significant savings. FRI accounts for approximately 50% of the operating-budget revenue. Strategic changes to bring higher dividends while not significantly changing the conference experience include holding one general session, increasing non-compete exhibit hours and holding a presidential luncheon instead of the historical evening celebration.
IAFC Programs and Participation
The vast majority of programs offered by the IAFC is produced by National Programs and has external funding sources. It's anticipated that a majority of those programs will continue, and we continually look for new programs that will provide our members and the fire service tools to use in their day-to-day operations.
After a lot of thought and deliberation, we did eliminate funding for the one scholarship the IAFC funded for the Harvard Fellowship. This was a tough decision, given that we have done this program for more than 25 years, but the $13,000 cost for one person was just not a good use of our funds in the current situation.
Investment in ESCI
Emergency Services Consulting International is a separate for-profit company in which the IAFC owns a 57.5% share. The IAFC investment in ESCI continues to produce dividends. ESCI is profitable, and money earned has remained at ESCI for operating capital. This is one resource that I would encourage all our members to consider as you need consulting services or assistance.
During the budget discussions, the board was presented with a financial policy for the future. Best practices in association management recommend a goal of maintaining at least 50% of the annual budget in liquid reserves. The primary purpose of this operating reserve fund is to help ensure the long-term financial stability of the association. It allows for responding to varying economic conditions and changes affecting the association’s financial situation and the ability of the organization to continuously carry out its mission. This was approved and a long-term financial plan will be developed and presented to the board in the future.
The IAFC is on solid financial footing. The last five years have been challenging for us as an association, but then it has been a challenge for the fire service as a whole. As the fire service always does, we rise to the occasion, we change to fit our environment and we do what it takes to be successful. 2014 will be a good year. With the continued support of our members, our corporate partners and our funders, we'll make 2014 a great year for all.