Profit or Not?

“Marx was right” I was murmuring to myself when I read the Minutes of the 2018 IOF General Assembly. It was Karl Marx who stated in Die Deutsche Ideologie (1845) as part of his criticism of the Hegelian idealism, that Nicht das Bewußtsein bestimmt das Leben, sondern das Leben bestimmt das Bewußtsein.”  That is, “It is not Consciousness that determines Life, but Life determines Consciousness.”

In the Congress binder of the 2018 IOF General Assembly it was shown that the 2016-18 period the IOF made no profit. In the minutes of the GA it was stated that the IOF’s financial status has been stabilised, and after all, the IOF is a non-profit organisation and the goal is not to make significant profit. This appeared to be in stark contrast with the over €300,000 profit plans presented to the GA 2 years earlier in the 2016 Congress binder for the same period by the same leadership, and the statement that the surplus was required to strengthen the IOF’s financial position. Apparently changes in life changed the thinking of the IOF leadership.

The planned and expected profit figures of total profit for the 2016 – 2018 period are shown below. You may find more details in my previous post IOF Financials – the past is dark, the future is unclear.

iof total profit 2016-2018

 

In the Minutes of the 2016 General Assembly under Section 15.2 “Membership fees and budget for the years 2017–2018” it was stated that

Leho Haldna presented Council’s proposal for the budget for the fiscal years 2017 and 2018.

LAT requested information about how the planned surplus in the budget was to be used, and also asked where the proposed increase in development funding was shown in the budget.

TH [Tom Hollowell] responded that the IOF’s capital and reserves should be strengthened and that the surplus was primarily intended for this purpose.

In stark contrast, under Section 10 in the Minutes of the 2018 General Assembly, under “Report by the Council on the activities of the IOF since the last Ordinary General Assembly”, it reads that

President Leho Haldna (LH) presented the report on the activities of the IOF in the period since the previous General Assembly in 2016 […]

The report also included how the IOF’s financial status had been stabilised during the last congress period. LH wished to make the statement that the IOF is a non-profit organisation, and that the goal was not to make significant profit, but that these funds should always be reinvested into the activities of the organisation.

For the uninitiated the above views of the IOF leadership only two years apart may sound like contradictory to each other. For the avoidance of doubt, one may find that the reason for the significant shortfall in the delivered profit was not reinvesting in activities, but the IOF’s inability to deliver the sponsorship and other external income as planned by the IOF leadership. Although there appears to be some inconsistency across various representations of IOF budgets, forecasts and accounts, my best estimate is as follows:

 

iof sponsorship income 2016-18

What is clear, is that in the beginning of 2016 the capital and reserves of the IOF stood at €114,630. In August 2016 the IOF leadership believed that an extra €300,000 addition was required for the capital and reserves of the IOF to ensure stability. After two years there were virtually no funds added to the reserves. Yet, the IOF leadership declared that the IOF’s financial status had been stabilised. Either a financial miracle happened, or Marx was right and changes in life changed the thinking of the IOF leadership.

It is also notable, that the realisation of 2018 that the IOF is a non-profit organisation came only two years after the largest annual profits were planned in the IOF’s history.

Ten years underperformance - Sept 2018

 

What has changed? Apparently, nothing more than Life made the IOF leadership realise that they could not deliver the fantastic profits they dreamt up.

We have to bow to the wisdom of Karl Marx.

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