Highest standards of transparency

Let’s try to understand why the International Orienteering Federation has been losing substantial monies over the past 8 years. On the face of it, it should be easy: the IOF is an international sport federation, a not-for-profit organisation that publishes annual accounts. These are presented to the General Assembly every second year in the Congress binder and in the Biennial report. You can find the latest one here.

It should also help, that the fundamental values of the IOF clearly state that

“Orienteering is committed to the highest standards of governance and transparency in the conduct of its business”

Unfortunately, practice is always more complicated than declared values.

Super simple reports

Let’s have a look at the latest published financial report, the 2015 one. This is page 18 of the Biennial report of 2016:

PL 2015 - binder 2016

You may not have experience reading Profit and Loss statements, but this is a simple one with only two meaningful lines describing cash expenses in euros:

Personal expenses: €266,052 (40%)
Other expenses:       €400,956 (60%)

The 60% of all expenses on one line as “other expenses” gives the feeling that the leadership of this organisation is not particularly keen on transparency or on discussing financial matters of their business. This was noted also on the General Assembly, albeit with little impact. Quoted from page 3 of the Minutes of the XXVIII IOF General Assembly

“IOF CEO Tom Hollowell presented the accounts and Auditor’s reports for the financial years 2014 and 2015.

LAT commented that more detail should be provided in the future regarding expenditures. The Secretary General commented that the present accounts were in a form required by the Finnish authorities but that more detail was contained in the budget section of the GA papers.”

So highest standards of transparency for the IOF are details required by the law. Sounds like US Presidential elections, not like an amateur sports federation.

Normally the form required by authorities are the minimum standards of transparency. Nothing should prevent leadership to provide more details in easily digestible form – if they wish so.

The details in the budget section? They are here from page 118 of the Congress Binder 2016. Yes, there are some details on 2015 (though unclear if audited or not), but no info on the original budget of 2015. You have to find it in the Congress Binder 2014 and create your own table. There are no details whatsoever on the performance of 2014 that was also meant to be presented to General Assembly. It is clear that these details were not provided for discussing past results. Transparency was not the objective. They are here to provide a baseline for the proposed budgets of 2017 and 2018.

Expenditure budget 2017-18 - IOF congress 2016 Binder_web

Recently introduced simplicity

It should be noted that these super simple reports were inherited by Tom, who became CEO in 2015. They were introduced on the 2014 General Assembly, for financial years 2012 and 2013, the first ones prepared under the leadership of Brian as President and Leho as Senior Vice President.

For comparison, here is the 2011 financial report from the Congress Binder of 2012, the last one prepared under Åke as President:

P&L 2011 - IOF-Congress-Binder-2012

Striking level of detail compared to the 2015 version shown above, or any other starting from 2012. It is far from being perfect, it is not straightforward to compare it with the budget, but provides quite a bit of detail. Unbroken “other expenses” are at 5% instead of 60%.

I could not find any written explanation for the change from the details of the 2011 report to the simplicity of the 2012 and subsequent reports. Sounds unlikely that it was the requirement of the Finnish authorities, but would be interesting to learn if somebody has relevant information.

Transparency once upon a time

One may, of course, raise the question if there are any sport organisations that are really striving for transparency, or the level of detail above is really the limit one may hope for.  So let me show the financials of a sports federation that has provided transparent details at a level far beyond the IOF of the 2010s.

It is called the International Orienteering Federation – 1998. Here are the financial reports of 1996 as presented to the 1998 General Assembly:

I will not dive into details now, but one may note two interesting points reading these reports:

  • miniscule details of expenses from personal salaries to postage and cleaning – all items with budget and actuals;
  • long list of prestigious cash sponsors and commercial partners: Suunto, Skanska, Finnair, Ansvar.

Times long gone….

Questions, questions, questions

This leaves us with many unanswered questions, as usual with the IOF, unfortunately

  • What was the reason of the introduction of the super simple reports and reduced transparency under the leadership of Brian and Leho? Was it related to the continuing losses suffered by the IOF through the 2010s?
  • What was the reason that member federations quietly accepted reduced transparency and did not insist on more details published? Is it only Latvia who is really interested in the details of IOF financials amongst all members?
  • Will member federations insist on higher level of financial transparency in light of the precarious financial situation of the IOF? Will they push the IOF leadership to provide real transparency on the unexpected losses of 2016 now, instead of waiting till 2018?