Treasurer's Report: Finance Matters

by Phil Chadwick


It's Spring, and here in Wales the sun is shining, the trees are in blossom, the hedgerows are full of flowers and lambs are gambolling in the fields. Your Treasurer would prefer to be out riding his bicycle, but Spring also brings the end of the Society's financial year (31 March) and so a young-ish man's thoughts must turn instead to money.

In April, when the dust has settled on the previous financial year, we can start to get a clear picture of the Society's finances and our accountants start their annual financial review: the results of this review are presented by the Treasurer at the Annual Business Meeting each year. I spent a couple of days this week pulling together the information that the accountants need, and while some of the figures are still subject to audit and review I felt that it was a good time to share them with the members of The Society. Since 2011-12 was a year of change, I have tried to compare where we are now with how things looked a year ago, and also (as far as I can) with how they may be in a year or so.  

The Society has three areas of activity: the Annual Scientific Meeting; the Journal (Bioelectromagnetics) and the general administration and member services.  The Annual Scientific Meeting budget runs on a June-June reporting cycle, the membership year is a calendar year and the administration and Journal reporting follows the April-March financial year. That confuses the reporting as much as it confuses the casual observer, and it can result in some interesting artefacts in the accounts. I’ll elaborate on this later.


Annual Scientific Meetings

These are the summary budgets for the last two Annual Scientific Meetings. For consistency, all values are given in thousands of US dollars ($K USD).

  Seoul, June 2010 Halifax, June 2011
Registrations 164 125
Grants 148 72
Exhibitor fees 9.5 3
Other support 2 1.5
TOTAL INCOME 323.5 201.5
Local agency 38.25 0.5
ASI management fee 96 96
Room rental 30.75 5
Speaker travel 33.75 28
ASI travel 7.5 5
Officer travel 16.5 11
Student travel 12 7.5
Social event & catering 65 35
Awards & plaques 10 11.5
Miscellaneous 9.5 27
Gain (Loss) (14.5) (25)

There are some worrying indicators in these figures: grant income fell by more than half between those two meetings, and in Seoul we managed to pay both our own management company and a local organizer for managing the meeting, which is never a great idea in my view (I would stress that this is no reflection on the local organizing committee, who I think did an excellent job). Halifax was a much cheaper meeting  - about 2/3 the cost of Seoul - but because of the reduced income it lost even more money.  For me, there are two critical issues in these figures - one is the need to avoid paying for both local and BEMS management of the meetings, and the other is the size of the management fee we paid ASI.

Brisbane, the site of this year's Annual Scientific Meeting, is a wonderful venue, but an expensive option for the Society.  It is always difficult to predict exact numbers of attendees in advance, but when we analyzed the finances using the Society's historical management model, a loss of approximately $95k was anticipated.

The Journal

Our journal, Bioelectromagnetics, is run on a profit-share basis with the publisher, Wiley.  The Society supports the Editor-in-Chief and pays administrative costs associated with the editorial process.  Wiley pays for the preparation, printing and distribution costs and also supports the Editorial Board dinner and the Best Paper awards.  The Society is responsible for the cost of any extra pages that we request. The institutional and any non-member subscriptions to the Journal are paid directly to Wiley; individual subscriptions that the Society collects with membership dues are forwarded to Wiley periodically.  At the end of each financial year Wiley pays the Society half the Journal profit. For 2011-12 the Society's profit-share is $71.5K. From that, expenses of around $32.5K are deducted for extra pages, and for Editor-in-Chief labor, travel and office support. That gives the Society a projected income from the Journal for 2011-12 of $39K.  The total revenues for the Journal for 2011-12 are in excess of $270K (of that, less than $10K is from direct subscriptions by BEMS members; the rest is from institutional subscriptions that Wiley handles directly).  You can see from those figures that we currently make about 14% profit on Journal turnover.   It is worth noting that even though the number of BEMS members subscribing has fallen year-by-year for the last decade, the profit-share from the Journal rose from $45K in 2001 to $74K in 2010. In financial terms, as well as scientifically, it seems to be a strong and successful enterprise.

Administration & member services

Under this heading I have included the Newsletter, the functioning of the Board and all the support services required to run the Society.  For 2011-12 membership dues collected totalled $28K. This is one of those figures which is affected by the three-headed accounting cycle: if more members pay before 31 March than usual, membership income for that financial year can appear higher than usual – and of course the next year it appears lower.  This winter we introduced a new online renewals system, which probably boosted the apparent membership income for 2011-12 at the cost of the income for 2012-13.

We spend around $10K on the Newsletter each year, including the Editor's travel to Board meetings. Another $22K was spent last year on Board travel and costs for the Winter Board Meeting in Lyon. In addition there were costs of $2K on insurance and $7K on our annual financial review. 

For 2012-13 I have been able to halve the insurance costs by asking our broker to shop around rather than simply renew the existing cover, and I am currently looking at the basis of the accountancy costs  - which I think are far too high.

Under the management contract that was in place in March 2011, we would have paid our management company, ASI, approximately $28K including travel expenses for the Winter Board meeting.  There is an additional $10.5K of miscellaneous expenses (such as bank charges and telephone bills), which brings the total estimated expenditure for the year to $79.5K.



We currently have around $230K in an investment portfolio managed by Merrill Lynch.  Even though it is managed conservatively, this money is subject to the whim of the stock markets and in 2008 it took a substantial hit, from which it has recovered.  Around that time the investment mix was changed, on the advice of Merrill Lynch, to be more conservative than it had been.  The investment mix has no ethical dimension and this is something that as a non-profit organization we must consider even if we decide to take no action at this time.

I asked Merrill Lynch to provide information on how a standard “ethical” portfolio would have performed over the last decade compared to the current mix. The graph below compares projections for the ethical portfolio and the current mix and also historical data (that I extracted from our financial reviews) on how the investments actually performed. For comparison I have included data on what would have happened if we had left the money in a bank deposit account.


The  figures for March 2012 are:

  • actual: $230K
  • current mix: $240K
  • ethical: $220K
  • bank deposit: $210K


I shall be asking the Board at its next meeting whether it wishes to continue with the current mix, shift to the ethical one or even take the lower-risk option of a bank deposit account. Members' views are, of course, welcome.


2011-12 and longer-term projections

The table below is the projection for financial year 2011-12 based on the information I have discussed above.

2011-12 Projection $K USD
Annual Meeting -25
Journal 39
Membership 28
Administration -79.5

The figures for 2012-13 are even worse. Membership income is likely to be lower and the loss on the meeting nearer $125k than $25k. The overall projected loss for the financial year 2012-13 is approximately $145k. Combined with the 2011-12 loss, this would leave the Society with perhaps $50k in its reserves by this time next year, with a substantial projected deficit for the Thessaloniki meeting and an expectation that it (the Society) would cease to exist some time in 2013-2014.

Looking ahead

This was the scenario recognized by the Board as the 2008-11 management contract with ASI was approaching its end. At its meeting in February 2011 in Rome the Board voted to not simply renew the contract as it stood but to work on a solution that would ensure the survival of the Society. In Halifax in June 2011 it voted to have separate contracts for managing the Annual Scientific Meeting and managing the Society. The value of the Society management contract was tied to the number of members, and allowed the contractor to increase income by soliciting membership or decreasing operating costs. It was offered to, and accepted by, our existing contractor, ASI but as discussed in previous Newsletters it was ended in December 2011. The Meeting management contract for Brisbane was offered to a highly-experienced Australian company, Leishman Associates, allowing us to decrease the meeting costs by more than $100k. This contract will be awarded to different contractors for future meetings, with an emphasis on using local meeting management organizations wherever possible.

The ending of the contract with ASI cost The Society $14K in legal, financial, and other bills. We also gave Gloria Parsley a farewell payment of $15K in recognition of her many years of service in support of BEMS, in addition to the contractually-required payments to ASI.  The contract end also saved the Society over $75K, meaning that overall for 2011-12 we have made around $10K rather than losing $37.5K as projected (subject to accountants' confirmation at this time).

The Brisbane meeting is now at break-even, following the transfer of the cost of Society Officer travel to the Society's budget, which is where it probably should always have been. This means of course that the administration budget has a significantly higher component of Board expenses. The Brisbane budget, however, now includes nearly $30K of support for students. With these changes the projected finances for the current financial year look like this:

2012-13 Revised Budget Projection
INCOME from activities $K USD
Membership dues 25
Journal 39
Annual meeting (Brisbane) 0
Management ?
Insurance, accounting, etc. 7
Newsletter 10
Board 40.5
Misc. (voting, website, etc.) 5

Approximately break-even for the financial year is a much happier place for a Treasurer to be than facing an anticipated $145K loss, but of course there is no component for Society management or support included in this projection.  It is likely that we will need to invest in further development of our web services in the next year and also that we may need specific professional help in other administrative tasks.  I would be happier still if there were perhaps $20K leeway in this budget to cover that, and also to cover the unforeseen eventualities that always seem to cost us a few thousand dollars.  I mentioned above that I hope to reduce the costs of our accounting, but having reviewed almost everything else the obvious large remaining expenditure is Board support.  Changes to the size and shape of the Board, and an increased focus on electronic communication, should allow us to reduce this cost significantly.

If we can achieve these final changes in 2012-13 then we will have got through the most financially-difficult of times with a Society which has running costs fully under-control, good financial reserves and a strong basis for the future for our Journal, Meeting and member services.

I am, as ever happy, to discuss any of this with members. In fact I'd really welcome your views.

Cellphone +44 7796691402

Phil Chadwick, Treasurer
April 2012