Ten Guding Principles

Defining the Financial Planning Direction of Our Association

Overview

The following principles were established to serve as a foundation from which both long-range financial planning and annual budgetary operations can be guided. As such, they are intentionally broad in purpose and scope; designed to foster NIRSA’s continued financial wellbeing, while acknowledging the many influences that affect the Association’s future financial outlook. The NIRSA Board-approved and Membership-approved Principles have been in effect since Fiscal Year 2000 and revised and updated in 2006.  These Principles should be evaluated every few years to assure they remain consistent with the NIRSA Strategic Map.

1. Purposes

The financial planning premises and fund sources of NIRSA shall be designed and used to reflect and enact the Association’s mission, policies and key priorities as articulated in its guiding documents and strategic planning initiatives. To this end, the Association’s financial planning goals and annual operating budget shall be balanced to ensure its long-term solvency and stability, while also offering sufficient flexibility to capitalize upon financial and programmatic opportunities that may emerge over time.

2. Integration of Fund Sources

To provide optimal resourcefulness in meeting its needs, NIRSA manages both an annual operating budget and a series of financial reserves. While each of these entities operates with distinct goals and purposes, all funds shall be intended to operate interdependently and as a fully integrated financial system. (Note: An attachment to this document, entitled “Description of the Financial Reserve System,” provides additional detail on the financial reserves of the Association).

3. Financial Reserves

Consistent with the previous principle, the financial reserve system of the Association shall be designated to support four major goals that provide for the:

1. solvency protection of the annual operating budget in the event of extreme or unanticipated unfavorable financial conditions that may occur in any given year;
2. protection and acquisition of capital assets;
3. long-term growth of financial assets; and
4. research and development of new initiatives (e.g.; new business ventures or opportunities) that foster the competitive position and/or excellence of NIRSA.

In achieving these specific goals, distinct reserve funds have been established. Each reserve fund shall be comprised of a balanced portfolio of investments, and shall be designed to reflect intended purpose, desired size, investment risk tolerance, and liquidity needs.

4. Financial Structure

The financial structure and resources of the Association are related to, but distinct from, the resources of the NIRSA Foundation (a non-profit entity chartered for educational, scientific and charitable purposes) and the NIRSA Services Corporation (wholly owned for-profit subsidiary of the Association). Each of these entities is governed by federal and state (Oregon) legal, taxation and financial requirements, which shall be considered in all financial planning decisions of the Association.

5. Priorities of the Annual Operating Budget

The operating budget is an annual planning document that reflects the Association’s mission, policies and initiatives and incorporates financial priorities of the Association. These priorities, listed in order of importance are:

1. legal and contractual obligations;
2. recruitment and retention of staff;
3. protection of capital assets;
4. essential or “core” member services;
5. desirable or “enhanced” member services; and
6. other, as identified annually.

To maintain adequate regard for changing and evolving financial, legal, societal, and cultural influences upon the Association, the NIRSA Finance Committee, NIRSA Board of Directors, and NIRSA National Center staff, shall annually review the annual operating budget and its adherence to these established priorities.

6. Factors Influencing the Annual Operating Budget

A variety of recurring and evolving member-driven needs, business practices, and conformance with the Association’s mission, policies and key priorities, as articulated in its guiding documents and strategic mapping initiatives, affect income and expenses within the Association’s annual operating budget. These factors shall be reviewed and incorporated into annual budgetary discussions, so that appropriate adaptations in the budget can be planned. They include, but are not limited to:

1. costs of personnel salaries and benefits, and conditions that influence such;
2. local market conditions, including taxation, property, and employment/vendor situations;
3. technology applications and costs;
4. changing member needs and expectations;
5. risk management, insurance, liability and taxation conditions;
6. the legal environment, on a local, state, and national level;
7. the volatility of the business and corporate marketplace, particularly as it affects program sponsorship;
8. new product or service innovations; and
9. other, as identified annually

Annual operating budget surpluses, though not an anticipated or expected outcome, are welcome and encouraged, as long as intended Association programs and activities do not suffer due to under expending.  In most cases, budget surpluses result from a combination of factors during a fiscal year, including:  good fiscal management; increased member (consumer) demand for goods and services; cost containment and expense reductions; application of new technologies; sound economic forecasting; and, fortuitous business activity through negotiation and contract management. Rarely do all of these factors come into play when a budget surplus is realized.  Consequently, if and when they occur, the NIRSA Finance Committee, NIRSA Board of Directors, and NIRSA National Center staff will examine retrospectively all activities that result in a budget surplus, and will consider adjustments to future annual operating budgets, accordingly.

At the conclusion of each fiscal year, the Board of Directors shall consider disposition of an annual operating budget surplus (if any) according to a plan recommended by the NIRSA Finance Committee, with input from the NIRSA Executive Director.

7. Balancing the Association’s Income Sources

NIRSA relies on a balance of income sources to meet its annual operating needs. These funding sources include both “member-generated revenues” (memberships/dues, conference/symposia fees, product purchases, etc.) and “externally-generated revenues” (corporate sponsorships, donations, grants, advertising, etc.). The annual budget shall reflect a responsible balance of these two types of revenue, such that the more predictable member-generated revenue (sometimes referred to as “hard money”) should be sufficient to cover the costs of essential Association services, leaving externally-generated revenue (sometimes referred to as “soft money”) to provide for enhanced or temporal services provided by the Association.

In addition to this premise, comparisons to the revenue source balance employed by other similar national associations may be collected by the NIRSA National Center and used as benchmarks to help the Association assess its position on this matter.

8. Pricing Philosophy of Products and Services

NIRSA shall annually review pricing philosophy used for its products and services and endeavor to develop pricing systems that are fair, marketable, competitive, coherent, and financially sound. In so doing, the Association shall examine a variety of pricing strategies that balance member services and related incentives with the need for adequate recovery of the costs of products and services, and financial growth.

The Association will consciously pursue pricing strategies that keep pace with inflation on a regular and not intermittent basis. History has demonstrated that NIRSA members are more accepting of prices for goods and services increasing annually based on an inflation factor as represented by the  Consumer Price Index (CPI) than by irregular price fluctuations that may result in immediate, significant, and unanticipated price increases.

9. Budgetary Accountability

A range of financial planning and budgetary oversight tools, including appropriate internal and external auditing procedures, shall be employed to monitor and assess NIRSA’s financial resources and success. Such systematic measures shall be used annually in ensuring resource effectiveness, performance, and accountability.  The Association will engage the services of an outside CPA firm to perform a financial audit at least one time during that period with financial reviews performed in the other years on a five year cycle.

10. Review of the Financial Welfare of the Association

Entrusted with leadership of the Association, the NIRSA Board of Directors, in consultation with the NIRSA Finance Committee and in concert with the Executive Director, shall annually review both long-range and short-term financial direction of the Association. Additionally, as is customary practice, information on the financial wellbeing of the Association shall be provided to the membership at its Annual Meeting and/or in conformance with the Association’s governing requirements.