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

[Boydean]

If you really think about it, the $6 thousand dollars of reg. is almost nothing for what get in the K.O.P. Have you ever been on the side of BUYING 10seats(is it 10?) of Inventor, to my knowage it is alot more than $6grand, and thats only one thing.

As far as the regional goes, I have heard from multiple sources that FIRST runs their own production crew to do these, that in its self cost WAY more than you can ever image(cough...Pipe and Drape...cough), I can see them keeping little more money in the bank to keep in mind that if some one would want to make a regional they would have the money to purchase everything for it. Soooo....if you think about the amount it takes to run a show like that for three days the cost just goes out the roof. Thats why you don't see every regional being runned like the boston regional(who--ah....big screens).

[TechieSam]

From what I see in the published annual reports, it looks like FIRST used to carry a cash reserve right around $3 million about 4 or 5 years ago. Since then, they've been generating a little over a Million in profit each of the last 4 years, which is how they've gotten up to a cash reserve of over $8 million.

I understand the $3 million reserve, and I would understand trying to have it raise 10% or so a year. But over $1 million a year does seem excessive, especially if the schools are supplying some of that reserve in registration fees.

[quote=Boydean;734911]If you really think about it, the $6 thousand dollars of reg. is almost nothing for what get in the K.O.P. Have you ever been on the side of BUYING 10seats(is it 10?) of Inventor, to my knowage it is alot more than $6grand.

As far as the regional goes, I have heard from multiple sources that FIRST runs their own production crew to do theseQUOTE]

- much of the kit of parts, including all the software is donated and totally free for FIRST, so there's no expense there
- I know our committee had to raise around $70k to cover the A/V production of the regional contracted by FIRST, so that and almost all regional expenses are paid by the regional planning committee and local sponsors, not by FIRST

[Chicago1st]

I also have worked with a planning committee here for a bit and I'll say I've been troubled by two main things in FIRST the past couple years, the financials of FIRST as being discussed here and some issues with the FLL - FTC programs, but that's another issue.
My problem with the financials is if you look back to when FIRST had a $3 Million Cash reserve (which I think all agree is prudent), they raised the FRC registration fee $1,000 per team. They had about 1000 teams then, and about 1500 now. The cash reserve went up about a milion a few years ago, and about 1.4 million last year.

It bothers me that the registration fee increase has generated about an extra $1-1.4 million in revenue for FIRST each year and the cash reserve has gone up almost exactly the same amount each year. To me, the fee should go back down to $5,000 if the reserve is well over $5mil. I can see no justification for maintaining the increased fee when it clearly isn't needed anymore.

[Racer26]

The one that's always gotten me was the extra $4000 for extra regionals/championships. That to me seems like using the richer teams to subsidize the poorer ones, which I personally don't really agree with. Especially since many offseason events charge AT MAX $300 per team, an amount I feel is much more reasonable, and I could even stomach as much as $2000 with alot less difficulty than the $4000 they do ask.

[Rick TYler]

Originally Posted by 1075guy

The one that's always gotten me was the extra $4000 for extra regionals/championships. That to me seems like using the richer teams to subsidize the poorer ones, which I personally don't really agree with.

I think it's terrific. What's wrong with sharing the FIRST experience with students who barely get a team together? There are a lot of reasons teams are "poor," ranging from lack of experienced adults to raise money to coming from areas with little sponsor money available. None of these reasons are in the control of students. Having "rich" teams who can afford multiple regionals subsidize teams that barely scrape together the money for the KOP sounds fine to me.

I'm not convinced this is what happens, by the way. Regionals don't make money, as a rule, and cost a fortune to stage. The entry fee doesn't really cover the cost of the event -- I'm on the FIRSTWA committee and I know how much fund-raising went into the Seattle event.

EDITED: Someone mentioned that the fee to participate in FLL and FTC is $1,000. I don't know about FLL, but we paid $275 each to register our FTC teams. Since we already had some Vex parts, our budget for the year was about $3,000 (not including championships), with more than $2k of that going to IFI for parts, not to FIRST. This came to $150 a student, which is much more cost-effective than the typical FRC team. When I was still with 1294 we spent about $8,000 and had 20 students involved, which comes to $400 a student. This is why I think FTC is the growth program for high school students: FRC is just too expensive to have a program in every high school.

[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.

[Amanda Morrison]

Originally Posted by TechieSam

But over $1 million a year does seem excessive, especially if the schools are supplying some of that reserve in registration fees.

Okay, let's put it this way:

• Many people assume many things about the FRC KOP. It is unwise to do so. FIRST is dealing with many different vendors who have many different arrangements with FIRST. To assume everything is totally free, or that FIRST gets charged for all of it, is unfair.
• FIRST sends representatives to FLL, FTC, and FRC events around the globe to support the volunteers that run the events, quality control, etc. Even for a relatively small staff, this adds up VERY quickly.
• FIRST no longer runs with a skeleton crew to get things done. As the program grows, the staff grows as well.
• FRC also hires companies to help them cover what they cannot, from event planning and logistics, to limited marketing, to making sure the electronics in your robots and on the fields run correctly.
• FIRST HQ - There are building and maintenance costs associated with everyday happenings.

All in all, it's completely unfair to this program's management and staff to assume that they're simply charging teams for the sake of charging them... FIRST is lucky to have the Finance and Development departments that they do, which have worked hard to keep up with the growth of the program (a feat in itself).

And think of what is demanded from them:

• Staff to stand by the phones during business hours (and extended overtime during some periods of the year).
• Development of new technologies for the KOP each year, and people to manage those partnerships.
• Development and maintenance of scholarships available to students.
• Available resources - everything from media guidelines, press releases, logo formats, website updates, agendas, order forms, game manuals, and supporting materials, to name a few.

Every time something breaks, every time teams ask to have something changed, even every time an honest mistake is made, it's probably liable to cost FIRST money. That's just business. Someone has to eat that cost.

For FRC alone:

• If you want to talk numbers, they have 50 Kickoffs, 41 Regionals, and a Championship Event which holds 343 teams this year.
• Just by a quick look at their portion of the website, they have approximately 50 pages which need to have the correct information posted at all times.
• There are 67 vendors which contribute to the KOP. That's 67 companies (and at least 67 representatives) that FIRST coordinates the shipping and potentially the kitting of their stuff, individually, each year.
• I'm sure shipping costs must be atrocious - moving 10 or 11 fields all over the US, Canada, Brazil, and Israel at least 42 times (one for each regional, and then Championship). And building each of those fields... that's probably pretty costly, too. The more regionals there are, the more fields they need.
• There are 26 trophies of varying size given out at each event. Without even worrying about the banners, medals, or pins at this point, you're talking 1,066 trophies for just the regionals alone and not including spares. Let's say FIRST gets a break on trophies for buying in bulk, and each trophy costs $30. (They are pretty much pure acrylic, after all... but I have a sinking feeling that they're probably much more than that.) You're talking almost $32,000 in trophies alone.

I'm just throwing out numbers here to help show you how large the responsibilities of FIRST really are (and this is only the FRC program, FLL is at least 8-9 times the size of FRC and much more international). And hey, even if they budget every year, I'm sure they have the same problems as every company where budgeted costs don't cover everything.

I'm just trying to play devil's advocate here to show you that there's a lot more to FIRST than what they let show at events... and it probably is even more than I wrote here. Unlike you guys, I have a hard time believing that they run on as little as they do.

[Beth Sweet]

Amanda, it sounds like you have a solid grasp on what's going on here, thank you for clearing up some of the misconceptions.

This thread, along with many of the preceding ones, seem to bring up 1 big point: there are a lot of questions and misconceptions about FIRST's financial situation. I don't think that these questions will be cleared up on here, and I would hate to see potentially wrong information getting people worked up over nothing.

This year, FIRST has done an excellent job at increased communication. Using this initiative as indication of intent, I have an idea.

FIRST frequently hosts conference calls on miscellaneous topics. Would people be interested in (something that would definitely need to be done after Championships) doing some sort of a conference call where, in a non-attacking and non-aggressive manner, someone from FIRST's financial department would be able to answer questions? This seems like something that, if requested properly, I would imagine FIRST would consent to, rather than have incorrect information floating around, and people getting angry about it.

I by no means have the ability to say that this will happen, but perhaps if there is substantial interest, a few of us could write into FIRST, requesting such a call to be held. This seems like the productive way for those who are concerned to voice concerns and to get answers.

Is this something that people would be interested in?

[ebarker]

Originally Posted by TechieSam

From what I see in the published annual reports, it looks like FIRST used to carry a cash reserve right around $3 million about 4 or 5 years ago. Since then, they've been generating a little over a Million in profit each of the last 4 years, which is how they've gotten up to a cash reserve of over $8 million.

The 8M is not a cash reserve. They have liabilities that offset that. The net is something over 1M.

Also, they are not generating profit. They are by definition a non-profit. A for-profit pays the profit to shareholders/owners. Since FIRST is a non-profit the cash remainder reserve rolls over to the next year.

[GaryVoshol]

Originally Posted by Rick TYler

Someone mentioned that the fee to participate in FLL and FTC is $1,000.

That's the cost for teams to attend the Championship, not initial registration.

[JaneYoung]

Originally Posted by Beth Sweet

I by no means have the ability to say that this will happen, but perhaps if there is substantial interest, a few of us could write into FIRST, requesting such a call to be held. This seems like the productive way for those who are concerned to voice concerns and to get answers.

Is this something that people would be interested in?

If this were to be pursued, it could have an educational aspect attached to it. How does the non-profit work and what has to be in place for that to work? How does the reserve work? What impact does the budget, the amount in reserve have on soliciting/keeping sponsorships, vendors, venues, political support, global support/recognition? An overview/big picture and some details involved in the business aspect/funding.

That would be cool. The business plan/package is a large part of every team, every event and regional planning committee, and FIRST.

If they were to share some of their thoughts and expertise with the FIRST community, it would be beneficial and clear away myth and misperceptions.

[ebarker]

Originally Posted by Beth Sweet

I by no means have the ability to say that this will happen, but perhaps if there is substantial interest, a few of us could write into FIRST, requesting such a call to be held. This seems like the productive way for those who are concerned to voice concerns and to get answers.

Seem like a more effective way is to submit questions to FIRST and let them generate a FAQ that they can post on their site and CD can link to. The issues raised here are basically financially eternal.

[Tom Line]

I think setting up a call would be a great idea. Have everyone submit questions here on Chief Delphi and then have a couple mentors select the best questions to be asked on the call.

For a second, pretend you are the person running all of FIRST. You goal - your hope - is that someday you will create a self-sustaining program that doesn't rely on goodwill and contributions to continue functioning. Then you see financial statements like you see on the FIRST site, that clearly show without all that good will, your awesome program wouldn't exist.

Then you sit down with your program leaders and start talking about things like... liability. Insurance. Acts-of-God. You compare your balance sheet and your $8 million in the pocket to what you're hearing: One lawsuit (say from a major injury at a competition.. like a lost finger, or lost eyesight, etc etc) could wipe you out in legal fees. One major sponsor pulling out could bankrupt you inside 2 years. One act-of-god could destroy your National Championship (like...say a tornado) and you would either have to refund all that money or pay out-of-pocket to get another location on incredibly short notice....

In my opinion, $8 million isn't much cash. I'd say FIRST is healthy - but if I were running it I'd still be pretty darn nervous that a single event could spell disaster.

[The Lucas]

Originally Posted by 1075guy

The one that's always gotten me was the extra $4000 for extra regionals/championships. That to me seems like using the richer teams to subsidize the poorer ones, which I personally don't really agree with.

Every time someone argues about how teams shouldn't be allowed to attend multiple regionals, I have to fight the urge not to simply repost this as they obviously don't see the . This pricing structure (multiple event teams subsidize single event teams) makes perfect sense when you look at FIRST's goal of growth. The cost of the kit is one of the biggest obstacles to starting new teams. A higher kit price would stunt growth. Teams attending multiple regionals also increases the number of regionals which helps FIRST grow in that area. Bottom line: would you rather pay $8K (high kit price) for one regional or $10K ($6K +$4k) for 2. It is your choice to make based on your team's situation, and a choice is how it should stay.

Originally Posted by Amanda Morrison

Okay, let's put it this way:

• Development of new technologies for the KOP each year, and people to manage those partnerships.
• Development and maintenance of scholarships available to students.
• Available resources - everything from media guidelines, press releases, logo formats, website updates, agendas, order forms, game manuals, and supporting materials, to name a few.

Every time something breaks, every time teams ask to have something changed, even every time an honest mistake is made, it's probably liable to cost FIRST money. That's just business. Someone has to eat that cost.

With the major electronics changes coming next year to all the different competitions, I am glad FIRST has more stored assets than normal. Hopefully everything works out flawlessly, but we all know this is rarely the case (remember Murphy's Law). FIRST may need to incur considerable costs fixing the problems, so it is nice to know they have the resources.

[Amanda Morrison]

Originally Posted by The Lucas

With the major electronics changes coming next year to all the different competitions, I am glad FIRST has more stored assets than normal. Hopefully everything works out flawlessly, but we all know this is rarely the case (remember Murphy's Law). FIRST may need to incur considerable costs fixing the problems, so it is nice to know they have the resources.

Good thought! Even though in my post I did not defend the $8M cash reserves but instead the cost of entering the program, I thought I would do some research of my own.

Take a look at some of these articles (most of them are a quick read):
http://www.compasspoint.org/askgenie/details.php?id=65
http://www.nonprofitissues.com/publi.../point/67.html
http://www.nonprofitsassistancefund....Reserves06.pdf
and especially
http://www.proctorconsulting.org/cashreserves.html


So, it appears this standard procedure for many non-profits - after all, they need to have some cash flow to survive - and it seems as though the basic understanding is that FIRST is operating with as much cash-on-hand as they believe that they need in an emergency.

What's an emergency? Well, this year's tornado scare was a pretty big emergency. Imagine FIRST and FIRST's event management folks trying to reserve a new venue and get all considerations complete in just a few weeks (if it would have come to that). Imagine if something major went wrong with the Kit and a drastic, expensive change needed to be made last minute. Imagine if they needed to cancel a season of FRC for some drastic and terrible reason and refund all teams' money. Imagine if FIRST was sued.

So... I guess I'll be the first one to go out on a limb and say... hey FIRST Finance and Development folks, thanks for thinking ahead (and thinking of us).