============================================================================== ISOC Document Title: Report on Progress concerning the Recommendations of the ISOC Advisory Council Author(s): Anthony M. Rutkowski, Executive Director, International Secretariat Date: 1994.07.15 Body: Advisory Council Document: 94-002 Revision: basic Supersedes: - Status: advisory Maintainer: Anthony M. Rutkowski Access: unrestricted ---------------------------------------------------------------------------- 1. Recommend that the ISOC AC be allowed to seat one third (1/3) of the positions on the ISOC BOT. 1.1 See 4.2, below. 2. Recommend that the ISOC AC appoint four ex-officio (non-voting) liaison members to the BOT and request that the BOT appoint one or more return liaison(s) to the ISOC AC. 2.1 See 4.2, below. 3. Recommend that when the ISOC budget is presented to the ISOC BOT, this budget should also be presented in full to the ISOC AC for Comments. 3.1 Annex 1 contains the ISOC budget as presented by the President to the Board at the 5th meeting in Prague. Comments are welcome 4. Recommend that the special status of the Charter ISOC Members be revoked, while recognizing their contribution. 4.1 BACKGROUND The concept of Charter Members is found in the Society's By-Laws; it is not in the Articles of Incorporation. Charter Members are defined in Art. VI, Sec. 2 of the By-Laws as a special category of organizational member - to consist exclusively of CNRI, Educom, and RARE, or up to 3 additional non-profit organizations they agree to include. No additions have been made since the Society's founding. In two specific cases Charter Members have additional privileges: 1) Under Art. III, Sec. 2 of the By-Laws, Charter Members "...shall at all times have a right to designate one Trustee who shall thereupon be appointed by the Board." Such Trustees are exempt from any term limitations or standing for election. 2) Under Art. VIII, Sec. 1 of the By-Laws, the Board cannot make any amendment to the By-Laws "...which adversely affects the rights of a Charter Member without the unanimous consent of all then-existing Charter Members." Although it might appear that Charter members have an absolute veto power on all changes to the By-Laws, the Articles of Incorporation of the Society themselves can be amended pursuant to paragraph 7.B. by a 4/5ths vote of the trustees in office as they pertain to the election or appointment of trustees in paragraph 6. The basis of Charter Members originated from the uncertainties in funding the Society during the startup period, and the possibility of significant initial monies being provided by the Charter Members. This is reflected in Art. VII, Sec. 3 which states that Funds contributed or advanced by the Charter Members to establish and further the activities of the Society shall be duly recorded and shall be subject to reimbursement by the Society if and when the financial situation of the Society permits. In the event of the dissolution of the Society, any residual Society funds shall be used to reimburse pro rata the Charter Members for any such contributions and advances made but not previously reimbursed. The receipt of significant contributions at the outset from other organizational members have rendered this provision essentially moot, although CNRI has contributed significant overhead and other services for which it has never been reimbursed. In addition, the Charter Member mechanism was also felt to act as a potential moderator to the organization's being taken in an inappropriate direction through unforseen circumstances. 4.2 POSSIBLE COURSES OF ACTION The Advisory Council resolution adopted at its Prague meeting and Rick Adams on behalf of the Council state that whatever usefulness the Charter Member category and the priviliges such Members enjoyed during the Society's initial period of operations no longer exist, and should be eliminated. The three year startup period of the Society will soon be over. It is reasonable to reevaluate all special provisions in the By-Laws at this time. The Board of Trustees could appoint a subcommitte consisting of members of the Board and members of the Advisory Council to examine the current By-Laws and make a recommendation to the Board on whatever changes should be considered now. At a minimum all references to the start-up period should be removed. The need to review the types of members Members, their roles and privileges could also be reviewed by this subcommittee. ============================================================================== Annex 1 Internet Society Financials 5th Meeting of the Board of Trustees Prague June 1994 ----------------------------------------------- Internet Society Balance Sheet 31 December 1993 ASSETS: Current Assets: Riggs - 14838710 $331,700.42 Citibank - 17107736 $39,928.66 Accounts Receivable-Ind Dues $4,567.00 Accounts Receivable-Org Dues $170,000.00 Accounts Receivable-Other $3,266.00 Accounts Receivable-Educom $38,319.58 Prepaid Expenses $307.92 Deposits $4,000.00 Inventory $8,503.77 consigned Inventory $7,025.00 TOTAL Current Assets $607,618.35 Fixed Assets: Computer Equipment $2,399.05 Accum. Deprec. - Comp Equip. ($39.98) TOTAL Fixed Assets $2,359.07 Other Assets: Organizational Costs $80,450.31 Accum. Amort. -Org. Costs ($23,919.90) TOTAL Other Assets $56,530.41 TOTAL ASSETS $666,507.83 LIABILITIES; Current Liabilities: $330,013.66 Accounts Payable $42,007.63 Deferred Revenue-Ind. Dues $15,000.00 Deferred Revenue Org. Dues $895.48 Sales Tax Payable TOTAL Current Liabilities $387,916.77 TOTAL LIABILITIES $387,916.77 CAPITAL: Fund Balance $180,000.97 Year-to-Date Earnings $98,590.09 TOTAL CAPITAL $278,591.06 TOTAL LIABILITIES & CAPITAL $666,507.83 ----------------------------------------------- Internet Society Balance Sheet 31 December 1993 Income Revenue $84,586.95 8.4% Revenue-OrganizationDues $860,000.00 85.6% Revenue-Advertising $450.00 0.0% Revenue-Proceedings $2,720.00 30.0% Revenue-Other Sales $107.00 0.0% Revenue-Meetings $55,864.45 5.6% Donation $500.00 0.0% TOTAL Income $1,004,228.40 100.0% NET INCOME $1,004,228.40 100.0% Expenses Salaries, Wages, Fringes $146,149.16 14.6% Postage $20,810.71 2.1% Printing $47,986.44 4.8% Telephone and Courier $9,465.84 0.9% Media Services $3,141.85 0.3% Materials and Supplies $32,244.37 3.2% Travel $34,431.48 3.4% Meetings $5,586.72 0.6% International Filings $2,909.16 0.3% Professional Services $53,770.52 5.4% Administration $125,332.36 12.5% Facilities $135,776.72 13.5% Miscellaneous $314.00 0.0% Other Expenses $289,200.78 28.8% TOTAL Expenses $907,120.11 90.3% OPERATING PROFIT $97,108.29 9.7% Other Income & Expenses Other Income and Expenses $1,481.80 0.1% TOTAL Other Income & Expenses$1,481.80 0.1% PROFIT BEFORE TAXES $98,590.09 9.8% NET PROFIT $98,590.09 9.8% ----------------------------------------------- Internet Society 1994 Cash Flow Estimate 24 May 1994 Cash NOW (Riggs) 235,619.00 Money Market (Riggs) 70,921.00 Citibank 164,965.00 SUBTOTAL 471,505.00 Organizational A/R 300,500.00 Individual A/R 36,812.00 TOTAL 808,817.00 Expenses CNRI (Jan.-Mar.) 107,051.00 CNRI (Apr.-June est.) 54,000.00 Legal (May-June est.) 17,000.00 Acct. (May-June est.) 9,000.00 Payroll (May-June est.) 15,000.00 Other exp., travel, etc. 24,000.00 UUNET Service 8,000.00 July-Dec. est payroll 300,000.00 Newsletter 72,000.00 TOTAL 606,051.00 NET 202,766.00 Notes: 1. Without INET'94/JENC ISOC income ($100k) 2. Without IETF $100k expense 3. Reduces working capital from $278k to $202k 4. Without further fundraising ==============================================================================