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TREASURER'S REPORT: SEPTEMBER 2005

The Society for Conservation Biology received its first audit of our finances and reporting, and the independent consulting firm found our 2004 records to be in compliance with accounting principles. That's very good. The auditor pointed out that that although our procedures were more or less the standard for an organization with few staff, more separation of accounting functions among individuals will be necessary in the future.

Although this is the first audit SCB has received, our books have been independently "reviewed" in previous years and were found to be in compliance with accounting standards. A review is less rigorous than a full audit. As our budget grows, our programs become more complex, and we seek new sources of funding, an audit becomes important. Potential supporters want to see the audit. And it's good insurance that we're not neglecting business operations while our primary focus remains the conservation of the Earth's biological diversity.

2004 HIGHLIGHTS

-- Expenses were ~US$1.458 million against revenue of ~$1.358 million, resulting in a one-year deficit of ~$100,000. This deficit was unplanned and staff and board recognized during the year that it was a possibility due to a unique set of circumstances: a 5% shortfall in revenue and $35,000 advanced for the 2005 annual meeting that will be recovered in 2005. The shortfall was covered by available cash, and did not decrease the Board Designated Reserve.

-- The Board Designated Reserve increased ~$112,000 during 2004, ending the year at ~$887,000 market value. This was excellent performance given the market generally. Stephen Humphrey, former Chief Financial Officer of SCB, continues to manage our investments with the involvement of the Treasurer and Executive Committee.

Income

-- Conservation Biology generated 60% of SCB's income, including a ~$280,000 surplus to fund other work. The surplus is positive, but the Board of Governors is moving to diversify our funding base.

-- Conservation In Practice broke even in 2004 due to grant support; it accounted for 26% of income.

-- The remaining 14% of income was from agency contracts for services we administer, grants, and miscellaneous sources such as non-subscription memberships, in-kind donations, and interest on investments.

-- Overall net assets of SCB increased by ~$12,000 to ~$1.673 million during 2004.

Expenses

-- 54% of expenses was associated with publications and the Web site.

-- 21% was devoted to the Executive Office, which manages the affairs of the organization, raises funds, conducts marketing, and undertakes a wide variety of other tasks. Executive Office staff time that is focused on program, such as support for the annual meeting, publications, and other tasks, should be allocated to those tasks, but our current accounting system does not allow us to reallocate easily. This will be corrected in our 2006 budgeting and accounting system. The point is that Executive Office costs are not just overhead.

2005 YEAR TO DATE HIGHLIGHTS (JUNE)

-- We anticipate that we will meet income budget projections for the year.

-- Net assets have increase by ~$240,000, due to increased profit sharing receipts and in anticipation that profit sharing will remain at that level for 2005.

-- Staff positions budgeted for the full year were filled in March and April, which should reduce overall estimated expenses.

-- The Board of Governors has adopted a strategy for 2005 to invest in substantially increasing our capacity, including our income, over the next five years.

-- The Board Designated Reserve has increased a modest ~$29,000 thus far this year, to ~$916,000.

-- SCB's cash position is strong.

CHALLENGES

SCB confronts several challenges that we are confident we can meet. The recently completed strategic plan [see SCB newsletter 12(3)] addresses these. Among those challenges most important from a financial a financial perspective:

-- The possibility of open access undercutting institutional journal subscription revenue.

-- Maintaining growth of Sections outside North America and integration of all Sections; it costs more to be global.

-- Investing in new staff that are essential to our mission, and, in many cases, may generate new revenue. New staff include a meeting organizer, policy staff, and development staff.

The Board of Governors and Executive Office are committed to diversifying and expanding SCB's funding base. We also are committed to meet the financial challenges to journal revenue posed by open access to publications. (SCB remains committed to insuring global dissemination of information to conservation biologists notwithstanding financial obstacles.)

If you would like a copy of SCB's 2004 audit please contact the Executive Office.

David Johns, Treasurer

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