FIRST has $8 Million?!? What did I miss?

[Kate00]

From what I understand, looking at FIRST's financials, which are publicly available, they have $8M in "cash assets." Not in scholarship funds, in cash reserve. It's definitely FIRST's money. Their increase in cash and cash equivalents from 2006 to 2007 was $1.4M, so it obviously doesn't have to do with bills to be paid. That seems a bit excessive for a not-for-profit corporation to me.

http://usfirst.org/who/content.aspx?id=78 "FIRST's Audited Financials."

[ebarker]

Originally Posted by Kate Mosley

That seems a bit excessive for a not-for-profit corporation to me.

http://usfirst.org/who/content.aspx?id=78 "FIRST's Audited Financials."

not necessarily. It is important to have a cash reserve to give a little room for the unexpected, the unanticipated, and other things they may be in their business plan.

Also a lot of the funding come from other donors with that have deemed it acceptable that they have this cash reserve.

I'd even bet that a lot of well run teams have a small cash reserve for the same reason. covering unexpected bills and sufficient operating funds as you roll over into the next year.

On the same topic - non-profits, high school clubs, etc shouldn't be accumulating stockpiles of cash just for fun. I know of an example of a high school booster organization that had 100K CDs in the bank with no potential use for the money. That was in an organization that had more in CDs than their annual operating budget.

Donors expect their contributions to be used for the program in which they contributed. For something like a high school group that means that academic year. Organizations like FIRST have considerably more leeway and can use the money when it makes the most sense.

But you still need to have a sensible cash reserve and IMHO FIRST has one.

[Tom Line]

I hear a lot of people saying things like this. I think it primarily has to do with the fact that most folks simply don't deal with numbers that large on a daily basis, so when they see a number like that (in the millions) it's a bit shocking.

It's like looking at the engine plant that I work at. Yep. We "bring in" close to a billion a year. People might look at our balance sheet at any one time and go "omg, they're rich". What they don't tend to realize is that we send out MORE than that each year to purchase all the stuff it takes to run. The remainder is made up by corporate profit - equatable to the donations FIRST gets from corporate sponsers.

A billion might sound like a "big" number - but when refurbishing an assembly line in your plant to turn out a new product costs upwards of $300 million, and you'll only use that refurbished line for 3-5 years before you have to do it all over again.... well... it starts to bring the numbers more into perspective. One decent "wage" including benefits is $75k a year. So employing just 14 people eats $1 million a year. FOURTEEN PEOPLE. We employ, just at our plant, nearly 1500.

You think utilities on the order of $300 - $400 a month are expensive at your four person house? Try a 1500 person house - with machinery running 24x7.

I understand FIRST isn't a manufacturing organization, but they have their expenses too. Broadcasts, production, planning, travel, manufacturing, legal, etc.

Hopefully this gives folks a little insight into what it actually takes to run a business.

While I'm at it, I'll also point out that this is all money that goes back into the LOCAL economy. So getting even a small production plant is a huge deal. Likewise, losing one to overseas competition is even a bigger deal. But that's another conversation entirely

[Racer26]

Yeah... $8M really ISNT that much money, and if you really want to think about it... Its pretty amazing that FIRST is running these 40-odd FRC events plus all the FLL and FTC events for just shy of $20M. I'm very certain that some of the regionals (especially the larger ones, like GTR and NYC) cost close to $500,000 if not more to put on. The Hershey Centre (home of our GTR) is a full arena complex used by the Mississauga St Michaels Majors, Ontario Hockey League team as home ice (tickets to such hockey games run about $30-50 a head). GTR rents out the main stadium, and the neighboring community pad for the pits. To do this for 4 days (wednesday setup, plus the 3 day competition) I am certain does not come cheaply.

[Protronie]

Take if from someone that has worked for a non-profit organization.
And was one of the last to leave when it went under.

If I was you I would be very happy and grateful FIRST had such a cash reserve. Yes 8M is a large number but compared to the cost of operations and not knowing what the future might bring... its a drop in the bucket.

[Madison]

Originally Posted by 1075guy

Yeah... $8M really ISNT that much money, and if you really want to think about it... Its pretty amazing that FIRST is running these 40-odd FRC events plus all the FLL and FTC events for just shy of $20M. I'm very certain that some of the regionals (especially the larger ones, like GTR and NYC) cost close to $500,000 if not more to put on. The Hershey Centre (home of our GTR) is a full arena complex used by the Mississauga St Michaels Majors, Ontario Hockey League team as home ice (tickets to such hockey games run about $30-50 a head). GTR rents out the main stadium, and the neighboring community pad for the pits. To do this for 4 days (wednesday setup, plus the 3 day competition) I am certain does not come cheaply.

It's important to realize that FIRST HQ pays little or none of the costs of operating a regional event beyond those associated with the creation and transportation of the field and the staff on hand. Venue rental, A/V, catering, pipe and drape... everything else is almost always funded by sponsorship at the regional level.

[Billfred]

Originally Posted by M. Krass

It's important to realize that FIRST HQ pays little or none of the costs of operating a regional event beyond those associated with the creation and transportation of the field and the staff on hand. Venue rental, A/V, catering, pipe and drape... everything else is almost always funded by sponsorship at the regional level.

And note that many (J)FLL and FTC events are run similarly.

Still, for the reasons above, I could see why FIRST would want a fair amount of money in the bank. Running four competitions can't be easy; running four competitions when you're absolutely out of funds until next month when registration opens or a donor's fiscal year rolls over, I imagine, is nigh impossible.

[AndyB]

Madison, that does seem to be the case. I'm pretty certain regionals fund themselves. I have worked closely with some of the Wisconsin Regional Planning Committee members and that seems to be the case there.

If you take into account that not all of the KOP is donated, the Championship is funded by FIRST directly (through sponsorships of course) and the fact that there is money needed to prototype games, keep the headquarters running, pay FIRST employees, send Paul and John to regionals... $8M doesn't seem like that big of a deal to me.

[TechieSam]

There have been some innacurate assumptions and statements made here. I'm not an accountant, but I have worked on a Regional Planning Committee and do know some of the real answers. I can assure everyone that:

- FIRST does NOT lose money, if they did they would show a loss on the report and they wouldn't have a cash fund in the bank
- The registration fees DO NOT go to pay for the Regional Events for any of the three programs
- The planning committee have to raise every penny for the events
- The cash line people are talking about is the excess funds, if that figure goes up, then they made money that year, if it goes down, they lost money.
- If as someone said, it went up over a million last year, that means FIRST brought in over a million more than they spent
- any non-profit should maintain a reserve of funds. It should be a certain amount and maintain that level plus increase for inflation. If it goes up beyond that, then people should question any fees being collected.

That's my quick comment. I'm going to go look at those annual reports on the web site and see if they show what people are talking about here.

[RobJ]

Originally Posted by TechieSam

- The cash line people are talking about is the excess funds, if that figure goes up, then they made money that year, if it goes down, they lost money.
- If as someone said, it went up over a million last year, that means FIRST brought in over a million more than they spent

It is not only that it went up by a million last year, it has gone up by over a million for the past few years. Look at the report from 2004 or 2005, the cash figure there is in the 4 million range.

[GeorgeTheEng]

Originally Posted by TechieSam

There have been some innacurate assumptions and statements made here. I'm not an accountant, but I have worked on a Regional Planning Committee and do know some of the real answers. I can assure everyone that:

- FIRST does NOT lose money, if they did they would show a loss on the report and they wouldn't have a cash fund in the bank
- The registration fees DO NOT go to pay for the Regional Events for any of the three programs
- The planning committee have to raise every penny for the events

I'd like to add a quick clarification to this. It is true that Regional Events are expected to raise all their own funds. But in the end, the contracts are signed with FIRST as a legal entity, not the Regional committees (who may or may not be their own 501c3 organization). What that means is at the end of the season, FIRST is ultimately responsible for those expenses. Most regionals do a VERY good job of raising there funds, but there are regionals that cannot generate enough sponsorship to completely cover costs. Those bills are still paid.

[Rick TYler]

FIRST's financials are perfectly normal. Their current ratio is 2.9. A business with this ratio would be considered safe and strong. Their equivalent of return on sales is about 9%. All of these numbers would be perfectly normal for a for-profit company and look to me like an organization run by conservative, professional management. There's nothing funny going on, at least from the numbers.

I have a lot more experience evaluating for-profit than not-for-profit corporations, so I can only say that if this were a for-profit I would say it's healthy and not rapacious. The nearly 30% cost of operations is higher than a charitable foundation would be, but strikes me as very reasonable for an organization that delivers a program rather than just gives money away. The Boy Scouts of America, for comparison, with a vastly higher income spends about 10% of its income on operation.

As to secret deals between Lego and FIRST, I eagerly await some credible documentation.

Yes, I do have a degree in business.

[Jared Russell]

Does anyone think that - pragmatically speaking - the registration fee is a blessing in disguise for FIRST?

We all know that FIRST is growing by leaps and bounds each year, and that is WITH a $6000 registration fee. As it is, you sometimes get the feeling that the organization is being stretched too thin.

If the registration fee was less, how many more teams would there be? How would FIRST deal with the need for more infrastructure?

FIRST loves to grow - no doubt about it - and I'd even say that in my opinion they are growing a little too fast.

But the high cost of FIRST is, realistically, the only thing letting the organization mature at a somewhat reasonable rate.

[neoshaakti]

Originally Posted by Abwehr

Does anyone think that - pragmatically speaking - the registration fee is a blessing in disguise for FIRST?

We all know that FIRST is growing by leaps and bounds each year, and that is WITH a $6000 registration fee. As it is, you sometimes get the feeling that the organization is being stretched too thin.

If the registration fee was less, how many more teams would there be? How would FIRST deal with the need for more infrastructure?

FIRST loves to grow - no doubt about it - and I'd even say that in my opinion they are growing a little too fast.

But the high cost of FIRST is, realistically, the only thing letting the organization mature at a somewhat reasonable rate.

As much as I agree with what you say, I feel that the cost of registration may be a little too pricey. Our school administrators, team parents, other random teachers and of course, the membership could not believe how expensive this program was...until I told them about NASA
I wish that registration for a second event would be half the cost of registration for the first event...but I guess I better just get working on a marketing strategy

Anyways, 8 Million Dollars is not an exorbitant amount of money to have in reserve.......

-Just a Rookie's Two Cents

[ebarker]

I gotta ask this question - business and economics 101.

Some have asserted the $ 6,000 fee is too pricey.

What price level would be acceptable ?

$ 6, or $ 600 or $ 6000 or $ 60,000 ?

Try football and band if you want to spend some real money. It will blow the doors off FRC.