Member Update: Revised 2014-2015 Budget
June 5, 2014
Dear AWA Members:
In connection with presenting a revised 2014-2015 budget for member vote, first we want to thank the many members who gave us feedback and comments over the past several weeks. Second, we recognize the concerns that have been raised on the allocation of estimated direct expenses based on office staff time associated with fundraising activities and as communicated on May 22nd, the AWA Board listened to your concerns and subsequently withdrew the budget previously circulated on May 15th. We encourage members to read further for additional information regarding the revised budget subject to approval by members at General Meeting scheduled for June 19th at 12:30 in the AWA office.
The Executive Board has revisited the various scenarios and assumptions and agreed on a revised budget. To help AWA members understand the FY2014-2015 budget, we draw your attention to certain facts about our current financial situation, our strategies in the coming year, and the key assumptions in our budget set forth below.
- Membership declined 13% to 820 FY2013-2014 from 937 in FY 2012-2013;
- Income from membership, local activities and Asian tours for this fiscal year is expected to decline between 15 to 20% compared to last year;
- Operating expenses for FY 2013-2014 is expected to increase between 10 to 15% year-over-year given higher office and maintenance expenses at Arion Commercial Centre; and
- Given the decrease in our income and increase in expenses, we expect AWA to incur a deficit before depreciation between HK$150,000 and HK$200,000 for FY2013-2014. This compares to a surplus before gain from Monticello and depreciation of HK$243,000 in FY 2012-2013.
A key focus area of next year’s budget is to close the gap between our income and expenses by adopting more structured membership strategies and initiatives to attract and retain members, attract dedicated volunteers to assist with advertising sales for AWAre, offer a better and easier online experience to our members through the launch of our new website, and improve engagement with our volunteers.
One of the key challenges we face in running AWA in Hong Kong is the continuing increase in operating costs, in particular building maintenance and management and salaries. The move from Monticello, a residential unit, to Arion Commercial Centre inevitably increased our operating expenses.
We are very fortunate to have a group of wonderful and capable volunteers to support and contribute to our member and fundraising activities. This enables us to maintain a very lean structure with only three part time staff covering many aspects of our operation from membership inquiry, IT systems and the website, member communication, events sign-up, fundraising support, bookkeeping, banking and legal matters.
The purpose of establishing two reserve funds, the Operating Reserve and Property, Maintenance and Technology Reserve, is to use the money we gained from the property sale and ensure the long-term health of AWA. These two reserves were set up for specific purposes and are not intended to fund ordinary operating losses of AWA.
Ultimately, the Board has a fiduciary responsibility to maintain financial accountability of the AWA. The Board acts as trustees of the organization’s assets and must exercise due diligence to oversee that the organization is well managed and that its financial situation remains sound.
To ensure the long-term sustainability of AWA, future Boards need to develop appropriate strategies to ensure, at the minimum, the income of the organization is sufficient to cover its costs.
Key highlights and assumptions of the FY 2014-2015 budget are:
- Effective from July 1, 2014, a surcharge of 3% will be added to credit card transactions paid by members/non-members for membership fees, local activities, Asian tours, and donations;
- The annual membership fee has been increased to HK$980 from HK$850 per annum and changes to a 12-month rolling term effective as of July 1st upon the day of joining/renewing;
- Administrative fees for local activities and Asian tours will increase:
Local activities (in HK$) FY2014-15 FY2013-14
Member 80 70
Non-members 160 140
Dragon boat 330 300
Asian tours (in HK$) FY2014-15 FY2013-14
2 day trip 150 100
3 to 5 day trip 360 300
6 to 7 day trip 480 400
Over 7 days 600 500
Guest fee 1,200 1,000
Cancellation 1,100 1,000
- Losses from AWAre magazine are anticipated to decrease from approximately HK$120,000 in FY 2013-2014 to HK$80,500 next year primarily by improving advertising sales with a new volunteer with advertising sales background to help us, and/or if necessary, by reducing the number of issues to manage costs. The Board is to monitor the financial results of AWAre closely and take appropriate measures;
- Increased salary expenses of 4.3% are aligned with cost of inflation, as per the year-on-year Consumer Price Index published by the Hong Kong Census and Statistics Department; and
- Based on the current proposed budget, we have estimated a deficit of $59,499 for FY 2014-2015.
Along with this memo, members are encouraged to review the revised budget posted on the website. We look forward to seeing you at the meeting and encourage you to vote in person or by proxy.
The AWA Board