The Funding Question - the final part
Over a few days I’ve presented a rationale for the Board decision to propose an increase to the income generated from within orienteering and I've tried to answer a few of the questions that have risen since the AGM proposal to raise membership fees and levy was published.
The questions I’ve tried to provide some background on or provide my views on are:
Should British Orienteering continue to be a ‘National Governing Body of Sport’?
What level of funding is required to act as a National Governing Body of Sport?
How we might plug the gap in funding; what are the options.
How should I vote at the AGM on the Board proposal to fund British Orienteering?
How can we fund British Orienteering to assure the future?
I hope you will now feel confident that you understand the background to the decision to place the proposal before you and can cast your vote confidently. However you vote, we want to understand where you stand on the key issues.
The complete 'discussion' can be found here
If you’ve followed the discussion through to this point you will appreciate that there are a number of matter to be clarified before we can develop a robust strategic budget and address the issue of how we raise funds from within the sport.
The key questions will include:
What sort of National Governing Body of Sport do we want British Orienteering to be? Inward facing and primarily focused on servicing member and club needs – or outward facing, being able to meet the needs of members and clubs whilst also being able to deal with organisations interested in developing orienteering and the use of orienteering outside the direct orienteering family.
What are the realistic costs in maintaining British Orienteering able to deliver on (1)?
How should income be generated to cover these costs?
The Board believe British Orienteering should be an outward looking NGB, able to develop orienteering as a sport within the UK. The Board also agree that British Orienteering should be in a position to access government funding when the funding programme is in line with the strategic objectives of British Orienteering.
The Board believe this requires a minimum staffing structure that will be determined once the work on the Strategic Plan has been finalised and the Plan agreed.
We have a good picture of the costs which we have already shared with members along with the knowledge that a realistic but fairly minimal British Orienteering operation will cost around £275,000. To deliver the services currently delivered will cost approximately £375,000.
So these are the costs, what of the income?
Removing government funding from consideration, our current income is generated in the following manner:
Membership fees (£51,429 in 2015)
Major events (£27,000)
Trading & commercial activities (£38,910 almost all used to service the same activities)
Athlete contribution to talent & performance programmes (Net £0 as it is used directly to fund athlete travel, accommodation, etc)
If we discount the Trading & Commercial activities the total income is approximately £209,000.
This means to operate in the way the Board believes is appropriate there is a shortfall of £66,000 based on the minimal structure. This figure will be less in 2017 as we will continue to be supported by Sport England for the first quarter, to the end of March.
The Board believes the only realistic viable sources of income are membership, levy and major events.
I think we have tried in the past to equate an income stream with an expenditure stream, for instance:
Income stream Expenditure
Membership Governance: AGM, Board & steering groups
Personally I think this is quite a dangerous approach as so much of our expenditure is shared across the income streams associated with membership and levy; for instance, is insurance associated with member or participation? Similarly, National Office and staff costs are also shared across both income streams.
An easier approach is to agree a balance between the budgeted income through the membership and levy/major events. For instance, we could take the 2012 AGM proposal that was adopted with the balance between the two budgeted income streams of not greater than 1:3 respectively. That means that if we are budgeting to generate £275,000 we would be aiming to bring in £65,000 from membership fees and £210,000 from levy and major events.
Based on the 2015 membership and participation figures this would result in membership fees of £7.50 senior and £2.50 junior and a levy of £1.75 which will generate just over the annual £275,000 required. This means that membership is less than the 1:3 ratio but only by 2%.
Then in future years we increase income to match inflation or if we agree a particular need/expansion with members we can easily calculate the membership and levy income required to meet the target figure.
Other approaches to generating income might include:
We could reconsider the national/local membership scheme: experience would indicate that it wasn’t a good scheme as the number of national members declined as people realised they could do much if not all of their orienteering reasonably locally and pay less as a local member. It put pressure on to have a higher National membership fee to accommodate the lower local membership fee.
Reconsider the levy approach to different categories of levy based on the ‘level’ of an event. Again we have experience of such a scheme which indicated it corrupted the event level structure with some clubs choosing to put events on at a lower level to avoid the higher rate. It’s also true that currently around 43% of participation is at Level D which means any differential levy becomes challenging with higher costs impacting mostly on participants at event levels C through A. It’s also possible to anticipate that the events being placed at Level D would slowly increase making the differential levy scheme even more taxing on those participating at higher level events. In reality we want to encourage people to participate in the higher level event not tax them for doing so.
Charging a higher levy for participants on UKOL competitions which creates a differential by competition rather than event levy. This also might put participants off competing in a slightly higher cost event.
In my opinion all of these possibilities are more complex and, being a fairly simple person, I prefer to keep the membership and levy schemes as simple as possible!
Hopefully I’ve given you a reasonably insight into the thinking of the Board when it created the membership and levy proposal for the 2016 AGM. It is without doubt true that the Board in putting the proposal before members wanted to engage members in discussion. I also hope that I’ve helped you think through some of the ideas about how British Orienteering can be funded in the future.
We now need to know your views so that we can take them into consideration whatever the outcome of the vote on Friday.