Food Protection Trends

COMMENTARY from the executive director
September 2005

“It is nice to be able to operate IAFP with a positive general fund balance”
By David W. Tharp, IAFP Executive Director

As you read this column in September, IAFP 2005 will have been completed as will our fiscal accounting year. But, at the time I am writing this column, we have about two weeks to go until the beginning of IAFP 2005 and about a month until the end of our fiscal year. I bring this to your attention in that one of my responsibilities is to report on the financial condition of the Association during our Annual Business Meeting. I am looking forward to doing so this year, because financially, IAFP is looking stronger than ever!

For many years, IAFP has operated with a negative general fund balance. This meant, that if IAFP were to cease operations, our debts would be paid, but monies owed to our Members for unused services could not be returned in full. Of course this was never a potential problem, or ever considered, and IAFP’s cash flow was always sufficient to pay all debts timely.

Beginning about twelve years ago when this problem became more evident, we set out on a plan to begin chipping away at the negative fund balance and to convert it to a positive fund balance, which is of course, a much more desirable position to be in! We had a few setbacks along the way, but most of the years we were able to reduce the negative balance.

Finally, with the conclusion of our fiscal year ending August 31, 2003, we obtained our goal of a positive general fund balance! That year we ended with $28,000 in the general fund. The fiscal year ending August 31, 2004 was a fantastic year for IAFP in which we added $162,000 to the general fund and at that time the balance in the general fund sat at $190,000. Our current year is shaping up to be another excellent year for the Association and pending the financial outcome of IAFP 2005, we should again add to our positive general fund balance!

This time of year always makes me nervous, not knowing how our Annual Meeting will turn out financially. I know it will be a success for the reasons of bringing Members together to share information about protecting the food supply, but in order for our year to prove financially successful, we have to have excess revenue generated by the Annual Meeting. All of our indicators lead us to believe that we will be able to improve our financial condition for the year ending August 31, 2005. Watch December’s issue of Food Protection Trends for the financial report!

One related topic that comes up when you mention the subject of a non-profit organization “making a profit” is, “how much of a profit is acceptable?” Surely, we don’t want to “over profit” from our Members or Annual Meeting, but we do want to build the Association to have a healthy financial life. Our long-term goal is to hold 50% of our annual operating budget in general fund reserves. That is the amount recommended by most association financial experts. With our current budget, that will be just over one million dollars. Of course this cannot be achieved overnight.

We are making great strides towards this goal, having accumulated $190,000 as of August 31, 2004. We hope to be able to surpass 50% of our annual budget in our reserves in the next 10 years. By doing this, the Association becomes much stronger and becomes able to make decisions that might affect the financial results for any specific year. We can try new projects and move in new directions where we may not be able to project actual results without having the fear of facing a losing proposition.