financial model_may'09_input paper

AIESEC in Ukraine 08-09 │ Financial Model Re-view Project

Content:

- Brief summary of initial April’09 proposal

- LC 09-10 finances on the ground

- Concerns addressed by LCs

- Final proposal and next steps

AIESEC in Ukraine

MC-LC Financial Relations:

LC fees Model – LC perspective

May’09


Brief summary of initial financial model proposal (09-10)

LC fee components:

1st Element: AI fees - payable twice a year according to the LC cluster

2nd Element: Exchange fee - 300 UAH for X

3rd Element: Development Fund – 330 UAH per LC per quarter

LC 09-10 finances on the ground

To see the reflections of the suggested re-view of the National financial model there was taken the

reality of one Ukrainian LC “N”. General info about the LC:

- Big cluster

- Predicted X realization till the end of 08-09 term – 70 X RE (current RE - 32)

- Current budget situation (as per end of Q1 – March’09):

Revenues (DONE): UAH

Expenses (DONE) UAH

Companies 26000

Administration costs 7031

EP 9545

Representative costs 4000

TN 300

Talent Management costs 821

PBoXes 10000

PBoXs costs 14230

Non-x projects 14500

Non-x projects costs 27440

Other LC incomes 1040

Conferences 3500

Foundations and grants 0

LC fee 6568

National Partners 2315

Total 63590

Total 63700

- Current X pricing:

EPs: DT – 800 UAH, other pools – 1500 UAH

TNs: DT – 300 UAH, other pools – 1500 UAH

- LC “N” goals 09-10: Total X RE - 120

EP 75 RE (40 DT, 35 others), TN 45 RE (45 DT)

LC “N” budget Projection A (no financially stable LC improvements)

X Goal X distribution X incomes (current

pricing)

EP 75 40 DT, 35 others 84500

TN 45 45 DT 13500

Total 98000


Main revenues 09-10 possible predictions

UAH

Main expenses 09-10 possible predictions

UAH

EP (current pricing) 84500

Administration costs (20% more than 08-09) 8437,2

TN (current pricing) 13500

Representative costs (20% more than 08-09) 4800

Companies (as 08-09) 26000

TM costs (without projects) (20% more than 08-09) 3888

PBoXes: 4 projects with 7000 UAH incomes 28000

PBoXs costs 56000

Non-X projects (as 08-09) 14500

Non-X projects costs (as 08-09) 27440


Conferences: all conf cycle covered 28415

Total 1 (current pricing) 171500 LC fee: AI fee component 3850

Dev Fund component 1320

X fees: TN - 300 UAH per TN RE 13500

X fees: EP - 300 UAH per EP RE 22500

Total 170150,2

Projection A explanation:

Revenues: - incomes from X are taken without any changes in LC “N” pricing 08-09

- Incomes from companies are taken as in the previous term

- Incomes of PBoXes: these are taken as 45 DT TNs in terms of 4 LC PBoXes.

If in average the costs of DT PBoX is 14000 UAH (when nor food, neither accommodation is raised) it is

projected that one PBoX itself is covering half of its own costs (7000 UAH).

4 LC PboXes * 7000 UAH=28000 UAH

- Incomes of non-X projects are taken as in previous term

- Other LC incomes are projected for 5000 UAH that is taken from minimum level of work organized

with LC alumni, government and foundations/grants

Expenses: - administration costs are increased for 20% from the previous term

- Representative costs are increased for 20% from the previous term

- TM costs (without projects) are increased for 20% from the previous term

- PBoX costs are calculated as LC continues to cover PBoXes from the LC budget, what in total for 4

PBoXes will be 56000 UAH from LC budget.


- Non-X costs are left as in 08-09 (what in fact should be decreased by EB 09-10 if right conclusions

from the previous term are done – because the expenses on such non-X projects (27440 UAH)

organized by LC in 08-09 were twice higher than incomes received from them (14500 UAH))

- Conferences expenses are noticeably increased from 08-09 and include ALL conferences*

*conferences costs calculation table

Travel Costs Fee

Summer FMs 150 UAH*7 ppl=1050 7ppl*110 UAH*3 nights=2310

Autumn functional meetings 150 UAH*7 ppl=1050 7ppl*110 UAH*3 nights=2310

New Horizons 150 UAH*4 ppl=600 4ppl*110 UAH*4 nignts=1760

LCPM 150 UAH 120 UAH

Winter FMs 150 UAH*7 ppl=1050 7ppl*120 UAH*3 nights=2520

SprinCo 150 UAH*7 ppl=1050 7ppl*120 UAH*4 nights=3080

EuroCo 6700 UAH-MAU Kiev-

Lisbon direct flight 225 euro*11UAH=2475

TtT 150 UAH*2ppl=300 2ppl*110UAH*3 nights=660

SellCo 150 UAH*2ppl=300 2ppl*110UAH*3 nights=660

Spring LCPM 150 UAH 120 UAH

Total 12400 UAH 16015 UAH 28415 UAH

- LC fee components:

AI fee based on the re-viewed LC clusters approach will be for appr. total 350 euro for LC “N” that is in

big cluster (350 euro*11 UAH= 3850 UAH)

Dev fund payments will be 4 quarterly payments*330UAH each=1320 UAH

X fees will be for 120 X RE 36 000 UAH.

Conclusions: in the situation of only one side of fin model implementation (MC X fee increase, adding

of other components), without any adapting actions in the LC “N” and any adjustments in terms of

this LC revenues management (in the X pricing, as well as PBoXes financing from the LC budget and

realization of non-X projects that are bringing less incomes to the LC budget than incomes that they

generate), But! even with increases in LC “N” expenses that were not in place in the previous term

(coverage of all conferences, more admin, represent, TM, PBoXes costs) the ending balance of the

LC “N” 09-10 is positive.

LC “N” budget Projection B (partial financially stable LC improvements)

X Goal X distribution X incomes (possible EP

pricing adjustment)

EP 75 40 DT, 35 others 110000

TN 45 45 DT 13500

Total 98000



UAH


UAH

EP possible (DT - 1000, others - 2000) 110000


TN (current pricing) 13500





PBoXs costs 56000





Total 2 (possible EP pricing) 197000 LC fee: AI fee component 3850




Total 170150,2

Projection B explanation:

The only one suggested adjustment in LC “N” is in the EP fee pricing: DT EP fee from 800 UAH to 1000

UAH, other EP fees from 1500 UAH to 2000 UAH.

Conclusions: with the only adjustment of LC EP fees the balance of LC “N” at the end of 09-10

increases for 25 500 UAH (197000 UAH (projection B)– 171 500 UAH (projection A)). This is still leaves

PBoXes financing from the LC budget and realization of non-X projects that are bringing less incomes

to the LC budget than incomes that they generate, and having increased expenses that were not in

place in the previous term (LC “N” covers all conferences, has more admin, represent, TM, PBoXes

costs).

Ending balance of the LC “N” 09-10 is positive.

LC “N” budget Projection C (partial financially stable LC improvements)

X Goal X distribution X incomes (possible DT TN pricing adjustment)

EP 75 40 DT, 35 others 84500

TN 45 45 DT 22500

Total 98000



UAH


UAH

EP (current pricing) 84500


TN possible (DT fee - average 500UAH) 22500





PBoXs costs 56000





Total 3 (possible TN pricing) 180500 LC fee: AI fee component 3850




Total 170150,2

Projection C explanation:

The one suggested adjustment in LC “N” is in the DT TN pricing: DT TN fee from 300 UAH to average of

500 UAH (that’s going from current LC “N” reality when from part of DT TNs 0 UAH are taken, other part

– can be taken for 1000 UAH (e.g. summer camps)).

Conclusions: with the adjustment of LC DT TN fees the balance of LC “N” at the end of 09-10 increases

for 9000 UAH (180500 UAH (projection C)–171 500 UAH (projection A)). This is still leaves PBoXes

financing from the LC budget and realization of non-X projects that are bringing less incomes to the

LC budget than incomes that they generate, and having increased expenses that were not in place

in the previous term (LC “N” covers all conferences, has more admin, represent, TM, PBoXes costs).

Ending balance of the LC “N” 09-10 is positive.

LC “N” budget Projection D (financially stable LC improvements)

X Goal X distribution X incomes (possible EP and

TN pricing adjustment)

EP 75 40 DT, 35 others 110000

TN 45 45 DT 22500

Total 98000



UAH


UAH

EP possible (DT - 1000, others - 2000) 110000


TN possible (DT - average 500) 22500





PBoXs costs 56000


Non-X projects costs 14500



Total 4 (possible EP and TN pricing) 206000 LC fee: AI fee component 3850




Total 157210,2

Projection D explanation:

The suggested adjustment in LC “N” is

- In the EP and DT TN pricing: combined Projection B and Projection C.

- In making “zero based non-X projects”: having incomes and expenses of such organized activities

if not revenue-generating for LC – at least for sure not disadvantageous, so incomes from them

equal to their costs.

Conclusions: with the adjustments of LC EP and TN fees the balance of LC “N” at the end of 09-10 is

48790 UAH. Here it cuts expenses from LC budget for non X projects, and still leaves PBoXes financing

from the LC budget, and has increased expenses that were not in place in the previous term (LC “N”

covers all conferences, has more admin, represent, TM, PBoXes costs). If for LC “N” to strive to

implement the logic of realization of self-supporting (if not profitable) PBoXes – the balance of LC “N”

at the end of 09-10 increases to 76 790 UAH (incomes of PBoXes equal to their costs).

FOR YOUR INFORMATION 1: the same projections were made for one more Ukrainian LC “Z” (also big

cluster), where the X goals 09-10 are 130 RE. The current X pricing there is: DT EP 120 euro, others EP

fees 180 euro, TN fees (except DT) - 220 euro.

Without any adapting actions from the LC “Z” side when new fin model is implemented, and having

the same approach in budgeting LC expenses as for the LC “N” budget Projection A – the balance of

the LC “Z” at the end of 09-10 will be 69 360 UAH.


FOR YOUR INFORMATION 2: these all is calculated on the actual LC budgets the most recent once

available in MC at the moment. In the excel doc attached each LC can do the same basic

calculations based on their current actual budgets and LC 09-10 X goals.

Concerns addressed by LCs

1. DT TNs costs.

- The only possibility for country to continue to focus on massive DT TNs realizations is in addressing

the issue of their profitability: implementing fees, covering them from grants, etc. (all the

possibilities were mentioned by Masha in her mail). And that’s clear for all that for sure it is not

easy, but required for LC that sees this pool as the main to capitalize to drive growth. In terms of

general resource management if this is not ensured – this can’t be a focus – nor for MC, neither for

LCs.

- The argumentation of 300 UAH fee for ALL the TNs: out of all the DT TNs realizations done till current

moment – 75% were done due to the national cooperations.

And actually the 300 UAH per X RE is financially explained (which basic MC costs it is covering), the

current 150 UAH – are not financially grounded. In terms of next MCs human and financial

resources management if the fees for DT TNs are left without changes (150 UAH), the management

of even the same number of national cooperations as in 08-09 doesn’t seem as possible, thus the

realization of at least the same number of DT TNs as in 08-09 might have a question mark as well.

2. MC coaching and support

- The quality and satisfaction of both sides involved in the process of coaching can be ensured only

in case of BOTH of them equally participating in sharing the expectations, and demanding the

RELEVANT content for the LC at particular moment of time from the LC coach, when the space is

provided for this. If this is not happening (and wasn’t happening) – the content is (was) unified for

the common country needs at the moment.

- Another part of coaching happening not at the LC visits – is much more significant than 3 LC visits-

what unfortunately wasn’t mentioned: when providing on-going consultancy to functional VPs

(after 11 p.m. talks, or even when needed 24h availability etc.) These are the services that can’t

be numerically reflected (as it is possible to do with the costs of the LC visits).

- The LC development approach 09-10 (with MC VP LCD and LCs development clusters) is

essentially focused on the LC coaching improvement.

- Discharge topic that was also brought. When LCs are not paying any kind of fixed MC fee for

coverage the basic MC costs (separate one from the fixed MC X fee per X RE), and they pay more

only for X results delivered (only MC X fee), it means that MC is also feeling LCs participation in their

budget only when they are supporting LCs in more X realizations.

Thus anyway MC is not receiving any money from LCs for nothing – only when the LC is performing.

So the logic behind of the LC taking decision at the discharge procedure should be driven by the


evaluation of MC team as the LC coaches and functional VPs: to which extend the initiatives of

the team are reflected on the LC performance, and if it is satisfactory or not.

3. Coverage of MC budget

As calculated in the previous input document the overall MC budget will be around 634227 UAH (as

was planned for 08-09). So LCs are participating in it for 44 % (282000 UAH) (in case of minimum 800 X

RE) – all the rest is still keeps to be MC ER targets for sales.

4. Reflection of suggested fin model on LCs is simulated in the 1st part of this document.

Regarding the planned activities that are connected with such re-view of financial relations, the

one that I’ve communicated to the MCP elect, VP F and VP ER are as following:

“Crucial next steps for Fin Model implementation:

- Proper MC budgeting and reporting in correspondence with LCs X goals

- Adjustment of National compendium – Financial regulations part

- Strong education of LCs on X pricing and budget tracking

- Professional management of the Development Fund

- Better insight of the timeline of LC fees calculation dates

- Clear ER targets for MC (saleable National projects, and diverse product portfolio)”

5. Restricted fund clarifications

What should the principles be of restricted funds in AIESEC?

Should make the functioning of entities easier

Governed/overseen by another entity – e.g. MC/national plenary or separate board

Aligned with focus areas of the entity

Description, account balance and policies should be made transparent (but not necessarily

through the compendium – could be on a wiki instead)

Should easily link to the organizational direction

Basic info

Name of Fund Development Fund

Description

A fund held by MC and designed to support

entities of national organization with growth

initiatives around the organizational goals and

developments of LCs.

Money

Income streams Quarterly payments of LCs and MC

Examples of usage

International cooperation development – promo

materials for international conferences and

cooperations, participation at the international

Growth Days, others GNs conferences etc.;

CEED programs establishment – incoming and


outgoing;

LCs legality improvement and case solving;

Infrastructure development (20% of the total

amount of money in the fund will be allocated to

such expenses coverage).

What is the upper limit of

the fund? 20 000 UAH

What is the minimum level

for the fund? 1 000 UAH (at the end of the financial year)

Authorization Who decides what is

spent? National Plenary

Reporting

What is reported on? Budget, action plan, execution, results

Who is reported to? National Plenary

How often is the fund

reported on? Each Legislation Meeting

The guarantees of targeted money usage from the fund will be ensured through required details in

application to the fund: where the return of the national investments from the particular activity

funded would be required to submit and to report on after the money usage.

Final proposal

LCs fee is proposed to be comprised of 3 elements:

1st Element: AI fees - payable twice a year according to the LC cluster:

approximate LC AI fees 09-10 will be: cluster #1 – 350 euro (2 payments for 175 euro), cluster #2 – 280

euro (2 payments for 140 euro), cluster #3 – 210 euro (2 payments for 105 euro) - (final released by AI

at the end of July’09).

Measures

# Local

Committee

Number of

students in

city (A)

Number of

companies

(B)

Number

of X Re

Number

of

members

in LC (D) Co

effic

ien

t

(Co

ef)

1 Kiev 423400 219633 31 91 0,8770

Cluster #1 2 Ternopil' 17762 7778 61 79 0,4864

3 Lviv 86000 30965 29 55 0,3560

4 Dnipropetrovs'k 88430 53785 22 48 0,3355

5 Donets'k 84903 41351 15 47 0,2878

7 Odesa 76402 43011 8 36 0,2258

Cluster #2

6 Kharkiv 107224 55798 8 20 0,2146

8

Ivano-

Frankivs'k 35000 9434 18 39 0,2123

9 Sevastopol' 28000 12847 10 35 0,1683

10 Simferopol' 55000 17492 8 30 0,1676


11 Mariupol' 25000 8189 12 19 0,1255

Cluster #3 12 Lugansk' 47892 18348 3 17 0,1082

13 Berdyans'k 7000 2956 8 24 0,1062

14 Uzhgorod 14882 4874 6 18 0,0884

15 Rivne 21000 8660 6 15 0,0881

2nd Element: Exchange fee

X component will be counted as fixed sum of money:

Realized TN fee – 300 UAH

Raised EP fee – 150 UAH

Realized EP fee – 150 UAH

Clarifications to the EP fees proposal:

After the insight to the LCs reality, in order

1) to align the EP fees payment procedures in LCs with MC payments, and

2) initial organizational goals (X REALIZATIONS)

the final proposal is to pay EP fee in two payments (when EP is RA – 1st part, and 2nd – when this EP is

RE).

As it is happening in some LCs, what is from the EPs servicing perspective healthier, as well as this is

what brings financial sense to the process of actually X delivery (realization), not only raising activities.

This brings us focus not only for raising right profiles, but as well – the commitment to the high quality

services delivery for the EPs raised.

For all forms that will be raised till the moment of LC fee Q2’09 calculations, and realized after this – the

X fee to MC will be paid only in amount of 150 UAH (as for EPs realized).

All EP forms that will be put in the system after the Q2’09 calculation fee will be already calculated as

per proposal: 150 UAH for every EP RA, and when the EP will be RE – 2nd 150 UAH will be calculated.

3rd Element: Development Fund

The payments are made by LCs each quarter in the amount of 330 UAH.

Legislation Proposal

(1) LC clusters system for AI fee distribution up-date

(2) Final proposal of Fin Model (LC fee components and their amounts)

(3) LC fee Q2’09 calculation:

(3a) calculation of LC fee Q2’09 to be done for the period of time from 15th

March’09 till 25th June’09


(3b) 1st part of AI fee 09-10 to be included into LC fees Q2’09 calculations

(based on the new LC clusters for AI fee distribution)

Q&A: till 8 p.m. 5th of May, Tuesday

Voting: from 9 p.m. 5th May, Tuesday till 6th May 2 p.m., Wednesday

- All full member entities (LCs: Lviv, Kyiv, Simferopol, Sevastopol, Mariupol and

National Committee)

- Votes to submit for every suggested proposal: (1) – For or Against, (2) - For or

Against, (3a) - For or Against and (3b) - For or Against.

For any questions: [email protected], [email protected]

mailto:[email protected]

mailto:[email protected]

financial model_may'09_input paper

Documents

lc incomes

lc pboxes

uah incomes

uah incomes

lc cluster

lc alumni

quarter lc

ukrainian lc