Peru BOD Minutes

[realarch]

The minutes of the last BOD meeting in Peru have been uploaded to the palms.org site. Apologize for the delay, there was some back and forth discussions and I wanted to make sure I was receiving the approved minutes from Susan Hubble, the recording secretary. I'll talk to Dean to see what format is best to upload here.

Tim

[Ken Johnson]

Thanks Tim!

[George Sparkman]

Very good.

Thanks Tim.

[realarch]

Let's see if I can upload them here.

IPS_2013_Peru9.pdf

[Jerry@TreeZoo]

Wow. Some really good, forward thinking stuff and some really not so good stuff. I wish there were more contested races for Directors.

[_Keith]

Let's see if I can upload them here.

IPS_2013_Peru9.pdf

Thank you, thank you, thank you. I had no desire to log into the IPS site to read what should have been posted here simultaneously in the first place, imho, that is.

[_Keith]

Let's see if I can upload them here.

IPS_2013_Peru9.pdf

I didn't have time to read this thoroughly but on a quick perusal, what stood out most was the book inventory of $65,000 requiring an insurance rider of $60,000, the discussion of creating a staff position to manage it. I assume there are some storage cost somewhere. Adding all of that to the original acquisition cost, well, I would have to see the net profit after expenses here, but at first glance, I just don't see the logic in this as opposed to a deal with a 3rd party seller, being rid of the liability, management costs, etc. I would love to know more details.

[Jerry@TreeZoo]

Let's see if I can upload them here.

IPS_2013_Peru9.pdf

I didn't have time to read this thoroughly but on a quick perusal, what stood out most was the book inventory of $65,000 requiring an insurance rider of $60,000, the discussion of creating a staff position to manage it. I assume there are some storage cost somewhere. Adding all of that to the original acquisition cost, well, I would have to see the net profit after expenses here, but at first glance, I just don't see the logic in this as opposed to a deal with a 3rd party seller, being rid of the liability, management costs, etc. I would love to know more details.

Keith,

I was thinking the same thing. I always thought that the IPS had a deal with a book supplier not actually carrying a book inventory. It would seem that after a few years of staff, storage costs and insurance, that $65K in value would actually turn into a liability not an asset. Maybe I am missing something.

[bgl]

You're not missing anything.

[Mauna Kea Cloudforest]

Let's see if I can upload them here.

IPS_2013_Peru9.pdf

I didn't have time to read this thoroughly but on a quick perusal, what stood out most was the book inventory of $65,000 requiring an insurance rider of $60,000, the discussion of creating a staff position to manage it. I assume there are some storage cost somewhere. Adding all of that to the original acquisition cost, well, I would have to see the net profit after expenses here, but at first glance, I just don't see the logic in this as opposed to a deal with a 3rd party seller, being rid of the liability, management costs, etc. I would love to know more details.

Keith,

I was thinking the same thing. I always thought that the IPS had a deal with a book supplier not actually carrying a book inventory. It would seem that after a few years of staff, storage costs and insurance, that $65K in value would actually turn into a liability not an asset. Maybe I am missing something.

And the online store doesn't even work. I tried to order three times and gave up and ended up buying from Amazon, which was cheaper anyway. Given that many bookstores have gone bankrupt, this seems like a bad idea.

[_Keith]

A note to the PT and IPS Leadership.

First, I realize that most of the IPS Directors do not come here on PT, and need not be reminded again. However, let' hope that most if not all members of the PT committee do come here, particularly, the Chairman. Perhaps it should be the job of the PT Committee, to pass these types of communications, in some type of summary form of course, from PT to the BOD and to the appropriate committees. Yes, yes, I know it has already been discussed. But input from more and more people who care should not be summarily dismissed under the idea that just because something was discussed in the past, even in the recent past, that there is no point in discussing it again.

Maybe a communications from the PT Committee spokesperson in writing to the BOD, like, "you know more and more people are looking at this bookstore operation, questioning the financial and logistic viability and making suggestions we move in another direction. Last month x users on PT who read the Peru BOD minutes made comments supporting x." Possibly this will help with what has been also heard from BOD members, like "its been discussed x times with no action taken."

These thoughts posted are not criticisms, they are input from paying members "who care enough to actually read, think and pro-actively contribute."

Sincerely,

Keith (IPS Dues Paying Member & PT Financial & Content Contributor)

[Ken Johnson]

This issue of too many books must not be easy to contend with. IPS has had this going on for as many years as we have been in the publishing business. It would be interesting to find out some more history, I remember some but there is some I do not know. Maybe someone will tell us? What is the involvement of IPS in publishing these books and what contracts are in place now? What books are they? How have we gotten rid of extra books in the past?

I have been through several years worth of minutes. It is a lot of reading and it is not possible to confirm all the details of what the minutes contain. For example there are contracts and such that are not included in the minutes. Our annual budget will point a reader in the direction of where we spend money but the contracts themselves are not as easy to view. Maybe we can get some copies of those too? At least in the Directors section or even on the web site with a members sign in but as we all know the members section here is ONLY open to members but even at that anyone can get this info and copy it. Insurance, web administration, PT Mod, book deals, etc.? It is all available for the asking.

I hope we can all learn more about how to help IPS by understanding the business behind it and how we can offer our free help to make it better when possible.

[Kim]

Interesting that you all focused on the books just now. Very serious discussions have been underway. I will not risk derailing them by any further comment, except to say the Board is on task.

[Jerry@TreeZoo]

"Treasurer Jackson described the budgeted expenses for 2013 which greatly impact the bottom line as follows:

Printing costs ($38,000),

Management Fees ($20,000),

Tax Preparation ($8,000),

Brokerage Fees ($12,000),

Grants ($28,000)."

The printing costs seem high and if you read further on to what Zona and Dransfield recommend for printing of "Palms", it is spot on. Good thoughts on that. I am impressed.

Management fees I suppose is for PT Moderation and tweaking and also for the main website. I assume that is in line and not excessive.

$8K for taxes seems high but filing for a 501c3 can be a tremendous PITA. I bet a good CPA could tell us how to streamline and reduce some of these costs. I don't know.

Brokerage fees seem way out of line. Is the account growing enough to rationalize this? I would get out of Merril Lynch and go to discount brokers. Bitcoins? Ha!

In reading the minutes, it seems that the Risk Management Committee pretty much runs the show. Risk management people are generally risk averse and the best way to avoid risk is to do nothing. That is just a sense I get.

Another general feeling I get is that there are a few people completely unaware of Palm Talk and a few who are dead set against it. I hope they don't become president.

[doranakandawatta]

Another general feeling I get is that there are a few people completely unaware of Palm Talk and a few who are dead set against it.

It's why I wouldn't give my vote to some IPS candidate who never comes (or rarely , only to control...) and participate to Palmtalk.

[PALM MOD]

Management fees I suppose is for PT Moderation and tweaking and also for the main website. I assume that is in line and not excessive.

Jerry - I do not know that to be the case.

In any event the approx. $11,000/yr. expense for PT (administration and web hosting) was offset substantially the last twelve months by approx $5,000 revenue from the Jan. 2013 Fund Raiser, and $3,000 from advertising.

[Jerry@TreeZoo]

Management fees I suppose is for PT Moderation and tweaking and also for the main website. I assume that is in line and not excessive.

Jerry - I do not know that to be the case.

In any event the approx. $11,000/yr. expense for PT (administration and web hosting) was offset substantially the last twelve months by approx $5,000 revenue from the Jan. 2013 Fund Raiser, and $3,000 from advertising.

You mean it IS excessive? JK

Anyway, there are only a few ads so 3K is good. If you open up the ads it should really bring in revenue.

[Ken Johnson]

Another general feeling I get is that there are a few people completely unaware of Palm Talk and a few who are dead set against it.

It's why I wouldn't give my vote to some IPS candidate who never comes (or rarely , only to control...) and participate to Palmtalk.

It is not only the PalmTalk issue Phillipe. There is some other behavior by some Directors that may be out of line with a Florida based 501C3. I hope they understand what the Sunshine Law is as it says EVERYTHING a non profit does is open to the public.

[Kim]

Jerry -- I appreciate your interest in a financially healthy IPS. I should weigh in on a couple of your questions since I am Finance Chair.

Taxes and accounting costs are running perhaps 30% below projections now that the transition has been made to a standardized quarterly accounting system. The change from older practices was an expensive, but necessary progression. Any volunteer accountants out there? Going forward those costs may decline further.

Brokerage fees and going to discount brokers -- well, I might invest differently myself, but that is beside the point. The Board of Directors owe a duty to the Endowment to exercise reasonable care, skill, and caution to comply with the scope and terms of the Investment Policy Statement adopted in 2010. The Board takes very seriously its responsibility to sustain the Endowment for future generations of Grants. Recognizing the importance of prudent investment, the Board has chosen arms-length professional management as the most appropriate method of investment. The Board retains the option to change investment firms, management, and investment style as long as the result conforms to the Investment Policy Statement requirements for diversification, balance, and flexibility. Present fees which include oversight by the ML Trust Deparment for compliance with the Investment Policy Statement are about 1.6%, not so high as to interfere with the ability of returns to meet objectives. The IPS Endowment is small by endowment standards, with limited pricing clout. ( For the record, I am not authorized to direct investments.)

[Jerry@TreeZoo]

Jerry -- I appreciate your interest in a financially healthy IPS. I should weigh in on a couple of your questions since I am Finance Chair.

Taxes and accounting costs are running perhaps 30% below projections now that the transition has been made to a standardized quarterly accounting system. The change from older practices was an expensive, but necessary progression. Any volunteer accountants out there? Going forward those costs may decline further.

Brokerage fees and going to discount brokers -- well, I might invest differently myself, but that is beside the point. The Board of Directors owe a duty to the Endowment to exercise reasonable care, skill, and caution to comply with the scope and terms of the Investment Policy Statement adopted in 2010. The Board takes very seriously its responsibility to sustain the Endowment for future generations of Grants. Recognizing the importance of prudent investment, the Board has chosen arms-length professional management as the most appropriate method of investment. The Board retains the option to change investment firms, management, and investment style as long as the result conforms to the Investment Policy Statement requirements for diversification, balance, and flexibility. Present fees which include oversight by the ML Trust Deparment for compliance with the Investment Policy Statement are about 1.6%, not so high as to interfere with the ability of returns to meet objectives. The IPS Endowment is small by endowment standards, with limited pricing clout. ( For the record, I am not authorized to direct investments.)

Kim,

On taxes, I realize that a fair sized 501c3 like the IPS has greater accounting and tax reporting responsibilities than the average 1040. On top of that I see an audit required that will cost an estimated $3500.

I realize there are perils and pitfalls when managing other people's money, like a charitable endowment. You could be overcharged and lose money that way. You could be given bad investment advice and lose money that way. You could go way too conservative and lose opportunity. You can do all three at the same time and no director wants to be in the cross-hairs when a bad investment report comes in.

The first and easiest thing to do is cut costs. There are lots of responsible firms with great records that would manage the money for a third of the 1.6%. Shop around and pick the best, or even the two best and let them each know they are competing with the other for your business. And yes, splitting the endowment in half is plenty large enough investment to get good deals.

Everyone gets bad investment advice and even the best investor makes plenty of mistakes. Warren Buffet's original Berkshire Hathaway, the company he bought and named his whole shebang after, is the biggest dog he owned. Diversification is the key here. Ladder your risks. Don't put all your eggs in the same basket. Blah blah blah, ad infinitum. It is the oldest but best advice there is.

Missed opportunities are one of the greatest problems besides cost. I know the Board is risk averse, but without risk there is no gain.

One of the last things I learned is where to seek advice. You don't go to a brick layer or a plumber or an insurance salesperson or a landscaper for investment advice. You go to them for brick laying and plumbing and insurance policy and landscaping advice. So don't listen to me or anyone else on here. Seek out the best, most honorable, honest and successful investment adviser you can.

So, to make a short story long, the IPS can do much better and should not be afraid to.