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

[Mary]

My team old team had to fold due to the cost a few years ago, but I\'ve been looking to start a new FTC or FRC team again. Reading various threads the past couple weeks, I\'ve seen ideas to increase team fees to pay for ref training, I\'ve seen that FIRST is charging $45 per person to attend the championship party and the FRC reg fee is still $6,000 per team while FLL and FTC teams have to pay $1,000 - all seem really high, but it\'s a non profit so I never really questioned it.
Then I saw a thread where people said FIRST has over $8 million cash in the bank now. How can this be true? If they have $8 Million in cash, why was the fee increased on our team a few years ago? If they have $8 million, why do people have to pay extra beyond their Championship reg fee to go to the team party and why can\'t first pay for things like ref trianing? I know I haven\'t been involved the last couple years, but I was shocked to see that FIRST has accumulated $8 million dollars. If so, why haven\'t they lowered the cost of the fees for teams.

It doesn\'t make sense for a non profit to be making millions by charging schools such high fees. I\'m sure this would bother others, so I\'m not sure what I\'m missing or not realizing is a logical explanation. Anyone know?

[AdamC]

I'm not a FIRST expert, but I'm assuming it has to do with A) the very high price of renting out the venues for competitions (34 full-size stadiums for a complete weekend, plus the Georgia Dome and the accompanying convention center) really adds up. B) They have to have money for the FIRST scholarship that they give out to many students. C) FIRST has to pay the on-the-payroll workers who are part of the organization (ever seen FIRST HQ?).
Plus, they could always use a little extra bank to fund new regionals, expand other ones, and the various other things FIRST has to do. Sure, much of the cost of running FIRST is written off on the backs of large corporations, but FIRST must still pay a little of its own.

[ebarker]

FIRST finances are open and well understood. They lose a boatload of money each year and without additional top level sponsorship they would not exist.

The fees, for example the $ 6,000 FRC fee doesn't even come close to paying the expense for a FRC team to compete, after you add in parts costs, facility costs, etc.

THe amount of money that they may have on deposit at any given moment is of no great significance. What is important is how the cash flow is going, income and expense, and what the balance sheet is doing. If they had 8M in deposits on some particular day, they probably had 8M in bills to pay on that date or very soon.

The 8M number you probably heard was the amount of scholarships given each year. It is NOT 8M on deposit. It is 8M of someone elses money, usually university or foundation money in dribs and drabs that add up to 8M. But it is definitely NOT FIRST's money.

But they are definitely not making money. A year or two ago I think the numbers for a typical team to get the KOP and complete a regional had expenses that were over twice the fee you paid for FRC registration. It was sponsor material and cash donations that made up the difference.

If you are interested about starting a new team, there are lot of resources that are available to help new teams learn how to become self-sustaining. Contacts on this website can help lead to advice and strategies, there are mentors and members that have knowledge that can be tapped, and other resources too.

[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]

I'm not going to teach an account course here but you can get FIRST financial information here:

http://www.usfirst.org/who/content.aspx?id=78

The financial report is here:
http://www.usfirst.org/uploadedFiles...Financials.pdf

This might be a good project to visit an accounting teacher or mentor and learn more about how this works.

If you look at the balance sheet on the date the report was issued they did have 8M in cash and equivalents. They also had 8M in liabilities.

On the income and expense report they had a net income of 1.1+ M on revenues of 24.5 M. You need to have some headroom on the income or you can't pay the bills. A million bucks doesn't go very far these days, not like 50 years ago.

Now please draw your attention to the line item for FRC expenses - it is $ 17 M which works out to roughly $ 11,333 per FRC team. There was only 12.7 M in program registration fees, for ALL programs.

Where is the difference. Outside sponsors had to punch in 9.8 M to cover the shortfall.

Everyone now please hold up your hands and shout: THANK YOU FOR YOUR SPONSORSHIP !!!


Like I said before, whenever you are ready to start a team there are resources available to help become self sustaining.

[Al Skierkiewicz]

Let us not forget the need to pay the staffers in Manchester. You need to keep some money in the bank to pay salaries, rent, and taxes. On an organization like this, prudent planners like to keep six months of expenses in reserve. That varies of course with annual cash flow expectations.

[GaryVoshol]

Please look at the FIRST financial statement for Fiscal 2007: http://www.usfirst.org/uploadedFiles...Financials.pdf

Yes, FIRST did have $8.1M on hand as of June 30, 2007 (end of the fiscal year). But you need to look deeper.

Income from program fees was $12.8M. Direct costs of running FRC, FTC and FLL total $19.8M. The difference is made up in contributions: $9.8M in 2007. The total budget was over $24M.

So what did you miss? The fact that FIRST is planning for the future. Mary's team folded for lack of funds - they lost contributors. FIRST is banking some money now due to the uncertainty of future contributions. Being a non-profit doesn't mean they have to spend every cent every year. Prudent fiscal management of funds means there will be a carryover from one year to the next. If the surplus gets to $30M or $50M, clearly higher than the entire budget, that is troublesome. Any operation absolutely must have a cushion of at least 10% of budget. Since so much of the FIRST budget is based on contributions, a 30-35% cushion is not excessive.

[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.