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.
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.
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?
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.
That’s the cost for teams to attend the Championship, not initial registration.
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.
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.
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.
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.
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/public/features/point/67.html
http://www.nonprofitsassistancefund.org/files/MNAF/ArticlesPublications/OperatingReserves06.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).
As a 501©3 foundation, FIRST also submits IRS form 990. It’s a matter of public record, and contains some more specific financial details.
(By the way, for older FIRST 990s, go here and enter “222990908” in the EIN field.)
Look specifically at page 20 of that document.
Amanda needs to add another zero to her estimate of awards costs.
It cost over $900,000 to make the fields, plus nearly another $.5M to ship fields and robots (drayage costs).
Well over $2M in KoP costs not covered by donations.
Lots of $$$ for kickoffs, regionals and Championship.
That tax return covers the 2006 season, when there were 1133 teams and 33 regionals. Some interesting numbers:
KoP cost to FIRST per team: ~$2000
FRC Regional cost to FIRST per event: ~$150,000
FRC Regional cost to FIRST per team: ~$4400
Shipping/Drayage cost to FIRST per team: ~$425
Playing field cost per team: ~$800
Championship cost per team that went (258 teams): ~$7300
Sounds like your $6000/$4000 registration fee goes a long way
Gold star! Doing the research is just as important as doing the math!
The FIRST person I talked to at the Davis Regional did tell me that the local committee needs to raise about $200,000 to hold an event and that none of the registration fees from teams at that event go towards that amount. So a 50 team regional sends FIRST about $200,000 and the teams send FIRST $300,000 in registration fees. So the event generates $500,000 but costs much less.
I think FIRST should have extra cash in the bank, that sounds smart. But after 3 million, or 5 million or now 8 million, when do they stop buliding that cash account at the expense of team fees? Now that they have $8 million, they should reduce the fee back to $4,000 or $5,000 like it used to be to help more schools be able to afford to join FIRST or start a FTC teams. If they don’t lower it, they’re just going to add another $2 million in profit next year which is money coming from schools and sponsors like NASA and GM, that doesn’t make sense. If it’s not needed, let the schools keep the money for parts and travel.
If FIRST reduces registration fees in recognition of this $8M y’all think they keep in reserve, it may actually encourage growth.
More teams competing will require additional regional competitions; more fields, more staff, and larger transportation costs.
FIRST will collect less money and have increased expenses. That ought to work out well for everyone. 
That’s funny M.
I’m not an econ major, but I know many companies find they make MORE money if they lower the price a bit so more people can buy it. Per team costs should always go down the more teams they get, and if more teams can play and pay $5,000, then their revenue wouldn’t go down either. Doesn’t change the fact that they already have $8 million in reserve and should stop using team fees to build a bigger cash fund. Sorry, just seems what they should be doing if they’re a non profit and the mission is to get more schools to do FIRST.
Wow, what a GREAT idea! FIRST has a couple years’ experience as a 501©3 (intentional understatement), it would be beneficial to teams for FIRST to explain what it means to be a 501©3, how it handles its fundraising, how it handles its growth, and so on. Almost a Chairman’s Award presentation by FIRST for the teams…
Of course, I think it would be awesome for FIRST to release a “State of the Union” - to make public what it’s doing with respect to future growth (new tournaments/events), future technologies, sustaining, and others. If they didn’t have 501©3 status, they could be a publicly traded company, and then we could buy stock and get investor updates/information!
-Danny
Having some reserve is important for any organization or program. The loss of a major sponsor can wreck havoc in this program. Suppose NASA, because it’s own budgetary issues, is not able to support FIRST at the current level next year. This may impact grants for rookie teams, but more importantly, reduce sponsorships for regionals.
This modest ($1M?) reserve gives FIRST some flexibility in dealing with these sorts of situations without having a meltdown.
Having a BLACK number on the bottom line is MUCH better than a RED number. That’s about all I know about business ;).
Absolutely. !! Jane’s idea is sheer genius, certainly the best idea in this thread. I hope it happens.