Internet Society 2011-2013 Business Plan & Budget pot

Internet Society 2011-2013 Business Plan & Budget December, 2010 2011 – 2013 Business Plan-Dec13 doc Table of Contents Executive Summary 2011 Key Areas of Focus and Investments I Regionalization II Expanding Core Revenue - Membership and Sponsorship III Mission Integral Program Expansion 12 IV IETF Visibility 17 V Technology and Policy 18 2011 Financial Budget and 2012-2013 Outlook 19 Summary 25 20 Page Executive Summary The Internet Society’s vision, mission and values remain core to our foundation and growth We work to ensure an open accessible Internet for the benefit of mankind Our mission is top of mind in all we do, and this is the central value proposition for our members, chapters and partners We remain committed to the vision that “the Internet is for Everyone.” We strongly believe the Internet has made the world a better place Throughout its history, the Internet has been a unique platform for innovation, creativity, and economic opportunity The Internet has and can continue to improve the quality of life for people in all parts of the world The coming year (2011) will be another year of tremendous growth for the Internet Society We will take one of the most significant steps yet in ISOC’s history as we work to strengthen our impact at local and national levels while maintaining a global focus in all we Our Strategic Initiatives: Enabling Access, InterNetWorks, and Trust & Identity continue to guide our work in the long-term through their various programs In 2011 the areas of most focus and investment are: I II III IV V Regionalization: globally integrated, locally implemented activities led by Regional Bureaus, Chapters and Members Expanding core revenue: membership and sponsorship Mission Integral Program Expansion opportunities: DO Hub, Emerging Country Development activities, Extension of current Leadership Programs (Next Generation Leaders, ISOC’s IETF Fellowship, IGF Ambassadors) and Internet Standards Endowment IETF visibility; among policy makers and industry, and increased participation from emerging countries Technology and Policy; advancing technology and policy on key areas for the Internet’s development More definition and key goals follow later in this Business Plan Financials The proposed Budget for 2011 reflects overall Revenues and Expenses of $30 million (30 % growth when compared to $23 million in 2010) The majority of funding again comes from PIR (80%) In 2010 we increased our non-PIR revenues from $2.3 million to $2.5 million (8% over 2009) However, building blocks have been set, and on this momentum we expect to increase funding from non-PIR sources to $3.6 million (40% growth) in 2011, and $5 million (another 39% growth) in 2012 20 Page In 2011, ISOC’s revenues are to come from the following sources: ISOC will significantly broaden its revenue base in 2011, to be reflected in the improvement in our Public Support Test for 2011 Our long-term outlook shows that we will have reached the low point in this 5-year backwards looking calculation at about 14.2%, and ISOC will continue to improve on minimum Public Support Test levels over the next few years even as PIR’s contributions increase 20 Page 2011 Key Areas of Focus and Investments In 2011, there are several areas of expanded focus These address various strategic aspects as well as our growth strategy; and they are absolutely fundamental to our ability to scale our activities and impact There are opportunities for revenue growth associated with some of these areas, and they will be pursued in line with ISOC’s values and principles These areas represent a significant portion of our activities and investments in the coming year and hence are described in more detail here It is important to point out there are other areas that remain critically important to ISOC and the fact that they are not listed here does not imply otherwise I Regionalization The Internet Society's Regional Bureaus are at the core of our ability to scale our efforts and impact They cover functional areas such as policy, capacity building, membership, and business development Along with the Strategic Initiative leaders, they are responsible for meeting the collective goals as well as the regional goals for these Initiatives and other strategic programmatic goals ISOC’s bureaus will build collaboration and engagement around our mission, and key programs They will mobilize local support for our global efforts In a matrix-management model the Bureau is the regional hub interconnecting ISOC staff, chapters, partners, organisational and individual members The Bureau leader will manage personnel and programs across multiple functional areas and will be held accountable to deliver the achievement of revenue, member and program goals Regionalization: globally integrated, locally implemented activities led by Regional Bureaus, with Chapters and Members, to more quickly and effectively advance the openness and health of the Internet We will work to strengthen and further empower our Regional Bureaus by: a Completing the organizational alignment – each Bureau will have a full complement of named resources (direct and/or functional) attributed to them, and direct staff headcount doubles from to b Each region will have specific Member and Revenue goals, and every ISOC staff member will have region specific goals New Revenue and Member Goals 2011 Regional Revenue Goals No INETs per Region INET $ Revenue Total 2011 No Org Member Additions Org Member Revenue (15k Ave) Regional Development Revenue Individual Member % Growth 20 Africa LAT Asia N America Europe 2011 Total 20,000 2 20,000 2 40,000 70,000 50,000 10 200,000 20 30,000 30,000 60,000 90,000 90,000 300,000 175,000 50 85,000 50 40,000 50 50 50 300,000 Page c Completing the programmatic alignment across our initiatives and programs: Initiative and program goals will have region specific components and vice versa They will be jointly agreed d The role, responsibilities and expected results of our Bureau leaders will be expanded and upgraded The Bureau leader will have broad multi-functional responsibility for their region and will work in tandem with the functional champions in order to prioritize, plan and execute against ISOC’s mission and annual goals e Financial Impacts: • • • Locally centered Enabling Access programs will be transferred to the respective Bureau along with associated revenue and expense budgets Each Bureau’s budget has been expanded to include specific amounts for discretionary, promotional and local programs Consequently, the overall budgets managed by the Regional Bureaus increases from $2.1 million USD to nearly $3.9 million (a 78% increase) The successful transformation to an expanded role and increased responsibilities of ISOC’s Regional Bureaus is central to the successful accomplishment of our global mission In addition to those items called out above, each Bureau will be assigned responsibility for areas that will be critical to ISOC’s long-term success, such as Chapter development and communications, Individual and Org Member programs and sponsorship and fundraising programs Operational in five major world regions, Africa, Asia, Europe, Latin America and the Caribbean, and North America, they will fulfil their responsibilities working closely and collaboratively with members, local partners and of course, all ISOC staff 20 Page II Expanding Core Revenue - Membership and Sponsorship In 2010, we laid the foundation for strong, evolutionary growth in traditional focus areas having made significant gains in these areas The 2011-2013 business plan builds on these successes and focuses on membership recruitment and retention, regionalization of relationship management and new campaign execution, as well as continued emphasis on sponsorship and grants There will be increased support from multiple Internet Society brand awareness programs as a critical dependency We are very cognizant of the expectations on the Internet Society from key communities We remain true to our mission and principles, and any revenue accelerating opportunities will be implemented in line with ISOC’s values That is to say, we progress these activities, first and foremost, based on relevance of the activities to the fulfillment of our mission The revenue goals for all key categories are shown in the chart below The chart also includes 2009 actuals and 2010 forecast to show momentum and growth It includes revenues associated with new activities such as DO Hub, although these programs are presented later in the document Our revenue performance will accelerate across the board as shown in the chart of Goals below The most significant growth is in regional development, the INET series, and related revenue including expansions to our Leadership programs (ISOC’s IETF Fellowship, IGF Ambassador, and Next Generation Leader Program NGL (NGL)), and new drivers of sponsorship such as Do Hub In order to address our growth challenge with our members we will hire a Membership Director to focus on all aspects of current members and chapters – engagement, retention and value propositions This is a specialized expertise and will serve members and ISOC well Equally importantly, this will allow us to separate out new member development and other business development opportunities giving a much needed focus and separate business goals 20 Page In 2011, the Business Development department will manage revenue streams associated with the specific goals in the chart below, with the overall objectives to: • • • • • • • accelerated member organization recruitment; secure hosts/sponsors for 15-20 scheduled conferences and events; coordinate funding for regional development programs on three continents; seek sponsors for ambassador and fellowship programs – IGF, IETF work with the new NGL organization; work with members to further public policy initiatives; and support start-up phases of new revenue programs ( to be covered later in this document) We expect continued year-over-year growth in our revenue streams, particularly in areas such as Platinum Members, INET sponsorships, and Development sponsorships and grants We are projecting a non-PIR growth rate of 26% year-over-year from 2010 to 2011, increasing non-PIR revenues from $4.9 million to more than $6 million Most importantly, we project annual Sponsorship and Grant revenue to grow 58% from $1.4 to nearly $2.3 during that same period Capitalizing on Revenue Opportunities: Our areas of focus will be oriented within three campaigns 20 Page Member Awareness and Engagement: Drive broader recognition and appreciation of the ISOC mission in order to engage, retain, and attract members (and related dues and donations); specifically: • • • Increase Org membership and member donations from $1.1 million to $1.32 million Number of New Organizational members: 25 Organization member retention = 95% (from 90% in 2010) Organization Member Profile and Summary Our 100+ ISOC member organizations represent a broad range of industry and government entities with strong representation and revenue support from technology firms, Internet infrastructure and registries, carriers, and research organizations In 2011, we will target recruitment and retention of organizations at the Platinum, Gold, and Silver levels and reinforce the member engagement program to promote renewal and upgrade at the end of a membership year Specific member organization recruitment campaigns will include a focus on: • • Cyber Security and Network Confidence to focus attention on the Internet Society’s positions on security, trust & identity, and privacy issues, Open Internetworking (Net Neutrality) Core User Values Campaign 20 Page Individual Member Profile and Summary We are implementing an aggressive campaign to grow Individual Membership in 2011 and beyond The challenges facing the Internet continue to multiply and are increasingly being played out at national and regional levels A large and re-vitalized membership is critical to maximizing our goals and more fully accomplishing our mission Our 2011 short-term goals are to: • • Nearly double the number of Individual members from 45K (2010) to 80K (2011) Individual member dues/donations grow from $15,000 to $35,000, a 133% increase We have set, the long-term goal of million members in just over five (5) years approximately 2017, continuing to double membership each year Regionalization (Development & Events): Engage regional and national stakeholders in development programs and mission-oriented events to increase ISOC visibility, mission impact, and revenue (our Regionalization effort will provide a stronger foundation for recruitment of member organizations as well as member engagement and retention - more detail on how Regionalization supports the specific goals is found elsewhere in this package); and Sponsorship & Grants: Aligned with strategic initiatives and programmatic activities, engage organizations and foundations in order to deliver sponsorship and grant revenue as part of our efforts to engage regional and national stakeholders to increase ISOC’s impact See the following schedule below for goals: 20 Page 10 Business Development and regional bureaus will work together to advance our Strategic Initiatives (particularly Enabling Access and InterNetWorks) as well as to expand activities in Africa, Latin America, and Asia Not only will these activities support ISOC’s mission, they will enable us to partner with funders of local programs and create more impactful opportunities for support from global funders Grant-giving foundations and major gift giving organizations will be a key area of investment and activity ISOC has significantly developed and increased the value proposition and onthe-ground impact of existing programs primarily in the Regional Development department In addition to planned high-impact programs such as NGL, DO Hub and other key Internet Society programs (including regional development interconnection and related education programs), discrete IETF projects, and our formal initiatives will be packaged to attract funding via solicitation of grants and gifts This effort will be led by our newly-hired Director of Grants and Foundation Funding with support from our program and initiative teams The 2011 rollout of revenue diversification programs will provide new sponsorship opportunities for existing and new organizations The natural and planned expansion of Internet Society Leadership Development Programs will provide an important opportunity for long-term financial support from global members and supporters The Deployment & Operational Hub will provide both sponsorship and program-delivery related revenue as it ramps up in 2011 ($150K between sponsor opportunities and license/fee revenues) Similarly, we will establish a new fundraising effort to support the IETF and other standards organizations using the endowment fund structure for long-term organization stability Business Development will team with the program leaders, Regional Bureaus, and related consultancies to drive the sponsorship and related revenue to support these programs 20 Page 11 III Mission Integral Program Expansion ISOC will pursue a number of opportunities that are integral to our drive to expand our influence within the Internet community and with policy makers These opportunities are outlined in more detail and include: • • • • DO Hub – Deliver implementation-critical information for key Internet technologies and infrastructure such as IPv6 and DNSSEC across diverse businesses and industries Strategic Development Programs – Our expanded Strategic Development approach, centered on regional applications and launched in 2010, has been highly successful in terms of concrete outcomes, visibility, and revenue generation This effort will contribute to the work of our Regional Bureaus Extending and Operationalizing Current Leadership Programs – Building upon our long-term effort to support new Internet leaders with ISOC’s IETF Fellowship program and the NGL Program Internet Standards Endowment – Working to ensure the long-term sustainability of the IETF and other qualified standards development organizations Internet Deployment and Operationalization Hub (DO Hub) ISOC is in a position to provide an important service in facilitating the practical growth and evolution of the Internet by capitalizing on, and enriching, its network of members and Internet developers The Deployment and Operationalization Hub (DO Hub) will deliver implementationcritical information for deployment and operationalization of key Internet technologies and infrastructure across the diverse businesses and industries making use of the Internet today The target industries include Telecom, Infrastructure, Registries and Technology (hardware & software) The long-term goal of DO Hub is to create a sub-community of ISOC members that regularly participate in DO Hub activities Focusing on addressing specific business needs, initial delivery will focus on written content (publications) that will complement ISOC’s existing and planned openly available Internet information communications While many materials will be made available for free, where and as appropriate, the DO Hub will engage in opportunities to realize revenue for its activities: • • • Individuals – through the sale of small-fee documents or by offering paid access to the DO Hub digital library Organizations – through sponsorship of DO Hub activities, or through increasing ISOC memberships, or by providing an additional membership service to serve on the DO Hub advisory committee Licensing – tailored delivery of high-value documents The DO Hub will provide a mixture of created content and contributed content While high-value, high-touch content will likely be created by (or commissioned for) for the DO Hub, it should also serve as a repository for contributed content This will maximize its footprint and reach 20 Page 12 Examples of possible content areas include: • • • • • IPv6 deployment uses cases and best practices for bringing the next wave of operators and content providers to IPv6 usage (the pioneers providing input to the early adopters) DNSSEC – use and usage guidelines RPKI adoption IP for SmartGrid IETF specifications guidebooks The Deployment and Operationalization Hub will have to be responsive to market opportunities and conditions The importance of the first three years of this activity will be to demonstrate its viability and growth potential During this period, efforts within the DO Hub will focus on: • • • • • Building Awareness Developing Business relationships Deploying Infrastructure Developing and Delivering Content Project Management Strategic Development Programs The Internet is a fundamental engine for economic growth and social development around the world Yet in many emerging markets, the Internet remains underdeveloped and a fragile resource due to skills and knowledge shortages, inefficient use of infrastructure, regulatory challenges, and other constraints In 2011, we will elevate our priority on Strategic Development programs by moving strategy and programme development functions under the Office of the CEO and shifting full responsibility to our Regional Bureaus for project implementation The purpose of these programs is to advance the Internet landscape in emerging markets Our 2011 activities will be aimed at concretely progressing our goal of a ubiquitous, sustainable, resilient, and user-oriented Internet in emerging regions Many important Internet infrastructures that catalyze growth and robustness – such as Internet Exchange Points (IXPs), country code top-level domains (ccTLDs), and National Research and Education Networks (NRENs) – remain underdeveloped in terms of technical and managerial operations in emerging regions ccTLDs are an important component of the Internet access ecosystem, especially in emerging markets where, in addition to domain name provision, they often serve as Network Information Centre (NIC) information sharing and resource focal points To achieve our overall Internet development goals, part of our activities will focus on improving the resilience and effectiveness of these enabling infrastructures This will include broadening and deepening our ccTLD engagements to a multi-pronged project aimed at advancing the overall impact and stability of ccTLDs in the Internet ecosystem Further, in many parts of the world, critical shortages of trained and skilled Internet operational staff significantly constrain Internet growth and sustainability In Africa and parts of Latin America and Asia, we will continue to roll out our localized approach to networking skills 20 Page 13 development, and where possible, we will leverage the online platform being developed through the Leadership Program activities In 2010, ISOC received development sponsorships for substantial development projects in Africa and Asia, with revenues exceeding $300,000 In 2011, we will seek to repeat those successes and secure $500,000 in funding for regional development projects Extending and Operationalizing Current Leadership Programs The Internet Society has worked for many years to foster programs to support the development of Internet leaders Recently, this has extended to efforts for the IETF and IGF Prior to 2010, these programs focused on direct contributions to efforts such as IETF Fellowships and IGF Ambassadorships In 2010, ISOC inaugurated the Next Generation Leaders (NGL) program The result has been an increasing economic commitment to education and Internet leadership In 2009, ISOC spent over $220,000 on fellowships, ambassadorships and awards In 2010, we spent another $120,000 in course development and delivery for the NGL program Perhaps more importantly, ISOC incubated these programs within its core functional areas, drawing significantly upon personnel from SGE, PubPol, Grants Management, and Development/Education departments, as well as the Executive Management Team No fewer than eight (8) individuals have supported the NGL and the Fellowship programs The annual cost of these “borrowed” resources exceeded $400,000 in 2010 In 2011, the Business Plan includes a three-step maturation of our Leadership Programs During 2011, we will replace and upgrade the part-time efforts of the individuals identified above) and add six staff dedicated to extending the existing programs and supporting the new programs identified below Two of these individuals were significantly involved in program delivery while operating within other groups in 2010 This staff will also establish a more comprehensive library for all resources produced by ISOC (a critical dependency for several on-going programs) and further leverage the outputs from all these programs We will extend the NGL program by adding a second language (French – already sponsored), doubling the number of participants, and expanding our curriculum Beginning in 2011, we add support for the Deployment and Operational Hub (DO Hub) and the IETF Outreach projects (including an initial Working Group meeting and 5-8 IETF Roadshows to advance IETF awareness and participation in emerging markets) These are defined elsewhere in the Business plan, while the operational headcount is here What does this mean financially for ISOC in 2011? We have previously presented plans for launching the DO Hub as a mission-advancing opportunity This is new for 2011, with a planned investment of $640,000, some of which will be offset by revenues ($150,000) Also new for 2011 are the IETF Outreach projects, budgeted for $500,000 and funded from additional 2010 PIR contributions (see discussion of the 2010 “dedicated” contribution) Finally, to continue to deliver and expand on the core programs, and add cohesive management, the estimated $760,000 in resource commitment from 2010 will be increased to $1.6 million This includes the expansion of the NGL program, adds dedicated staff to NGL and IETF Outreach projects, library resources, and expansion of our overall Learning Programs (plus associated G&A overhead) At the same time, we expect to offset about $250,000 of this investment in increased revenues and believe there may be other sponsorship opportunities 20 Page 14 Internet Standards Endowment The collective challenges to the Internet and Internet Model reinforce the criticality of the Internet Society mission Preservation of the Internet model and open standards development will require intensified global action Given the existing and pending threats to the Internet/Web ecosystem, it is imperative to financially secure Internet standards bodies The Internet Society is well suited to the establishment of a long-term, stable source of funding to support the development of Internet Standards In 2011-2013, we will seek to raise a minimum $20 million dollar fund to endow the long-term stability and growth of Internet standards, focused on support for the IETF and other standards bodies as directed by donors The legal, structural, and financial requirements of such an endowment will be finalized based on legal and tax advice We envision a perpetual endowment fund (subject to periodic review and adjustment) managed by a formal fiduciary body for the benefit of Internet standards development organizations including the IETF While the endowment fund will be defined for a specific purpose, the fund will be designed so that the Board of Trustees will retain the longterm flexibility to meet the requirements of an evolving Internet standards environment The fund will be conservatively invested and distributions (withdrawals) will be managed to limit reduction of fund principal, maximize impact on long-term standards development, and significantly contribute to the Internet Society’s “public support test.” Anchor gifts demonstrate to potential donors that they are not alone in the supported mission We expect to receive early support of the endowment from ISOC, PIR, and other organizations that have expressed interest in the past Anchor gifts and the clear imprimatur of the anchor organizations are a critical first step in endowment fundraising Our fundraising effort will be led by a newly hired Director of Grants and Funding and an external consultancy that specializes in endowment fundraising This effort will kick off in Q1’2011 and expect to begin producing modest income (withdrawals of funds to support standards operational expenses) beginning in 2012 Financials The endowment fund will receive contributions that accumulate as principle in the account These funds will be invested and distributions (withdrawals) will be taken from the income each year based on a set of board-managed guidelines The charts below represent target fundraising and related income targets based on a net 3.5% annual distribution This return rate is conservative, but allows for protection against erosion over time of the time-adjusted value of the distributions Assuming ISOC Board approval and with IETF support, we will bring forward a proposed implementation to the Audit Committee and the Executive Committee for approval 20 Page 15 Conclusion The expansion and growth of the Internet as well as its elevated role throughout industry and society presents ongoing challenges to the mission of Internet standards bodies An endowment fund will ensure the long-term stability and growth of Internet standards and continued confidence in the Internet model We remain convinced this is the right time in the Internet Society’s history to establish an Internet standards endowment 20 Page 16 IV IETF Visibility The work of the Internet Engineering Task Force is a cornerstone to the open development and evolution of the global Internet In addition to its administrative responsibilities to the IETF, the Internet Society has worked to raise awareness among policy makers, technologists, and other interested groups about the IETF’s critical role, functions, and participatory working methods In recent years, this has included education about the IETF as part of campaigns on the Internet Ecosystem and Internet Model, in many presentations, speeches, policy interventions and technology workshops, as well as through the successful ISOC Fellowship to the IETF programme, among other avenues It is particularly important to advance IETF awareness and participation in emerging and developing regions, where the Internet is growing most rapidly As they increase in prominence as part of the global network, these markets will increasingly shape and influence its future from both a technology and policy perspective Ensuring a sound understanding of the IETF, and increasing participation in open standards development from these regions is essential In 2011, in addition to continuing current activities, we will ramp up in areas specifically aimed at promoting the IETF in emerging markets The work will focus in three areas: Deepening the understanding about IETF processes, current work, and participation avenues among Internet communities, Increasing direct participation in IETF working groups by Internet engineers in emerging markets, and Increasing the understanding of the IETF and the benefit of open standards processes among policy-makers Concerning areas and (outreach to Internet communities and policy makers), the work will include the development of materials, educational workshops (both “stand alone” and in conjunction with existing meetings, e.g INETs and NOGs), and direct engagements with stakeholder groups In particular, in 2010 we are adding a significant new component to our global activities - Internet ON (ION), which is a “developer conference” for Internet technologies Aimed at cultivating better understanding of emerging IETF standards and technologies by interactions with the developing experts themselves, this is an activity that lends itself to promoting confidence and interest in participating in IETF development Envisioned as a “roadshow”, with fixed global meetings per year, (the first in 2010) this series could be expanded to include regional IONs, as well Concerning area (increasing direct participation in IETF working groups), we are working in conjunction with the IETF Chair to develop in-region engagement opportunities that benefit both the IETF and regional engineers Among other options, we will be discussing the feasibility of holding an interim working group meeting (propose: Latin America and/or Asia in 2011) Other options are to model national or regional “IETF Days” To support this feasibility assessment, and explore other in-region engagement options, we will garner input from the alumni of our ISOC Fellows to the IETF program, as well as working appropriately through the IAOC and IETF leadership Increasing the visibility of the important work of the IETF remains a central concern for all ISOC staff and we are working actively to embed this in all we 20 Page 17 V Technology and Policy ISOC plays a unique role in advancing technology and policy on key areas for the Internet’s development ISOC is in a neutral position, often able to gain access where others cannot, and is recognized as carrying (credible) perspective from other groups We: • • • • • cross pollinate between organizations, ensuring broader perspectives of the interrelated requirements and realities; promote collaboration, across traditional barriers (e.g., corporate); drive cross-cutting discussions to resolve issues in the Internet’s development; work at the decision-making, future-influencing level, disseminate credible, tangible artifacts of current understanding and trends in Internet development In 2011, ISOC will leverage its position in order to achieve the targets outlined for the following annual objectives: a Advancing the Health of the Internet i Advancing the deployment of IPv6 – target is 20% of Internet traffic by the end of 2011 ii Improve the security of the Internet by promoting and advancing the use of standardized building blocks (NDSSEC, RPKI), iii Promote continued investment in and development of the common and open Internet iv Core User Values – deploy Deliberative Polls in three countries (US, Latin America and Europe) focused on Core User Values in support of numerous policy activities, such as Network Neutrality, Privacy, etc (see Appendix for a more detailed description) b Network Confidence – in order to balance user requirements for security, privacy, and reliability, we will support standards and technologies that enable trust from the network layer to the application layer, and encourage policies that enable, extend, and strengthen the chain of network trust i Engagement on key standards and technologies: measured by ISOC contributions to standards bodies such as the IETF, the W3C, Kantara Initiative, and others ii Support for key areas of technical innovation: measured by work product in key areas including a reference implementation of an identity listing service and a “DNSSEC History Project” documenting the details of DNSSEC development and deployment iii Support for policy and regulatory development efforts: measured by contributions to OECD via the ITAC, UNESCO, IGF and other international organizations iv Develop and deploy educational aids for end users: measured by work product including software, instructional aids, and hands-on events at INET and other regional meetings for such areas as Identity Management and Best practices, a digital footprint tool, etc 20 Page 18 2011 Financial Budget and 2012-2013 Outlook This Financial presentation reflects the proposed 2011 Budget, including the latest forecast for 2010 We also present an “Outlook” for 2012 and 2013 as part of our year Business Planning cycle A full Financial presentation and further details are included in the Appendix Summary Statement of Activities The proposed budget for 2011 is summarized in this Statement of Activities This statement reflects a large increase in overall Revenues, and a concurrent increase in Expenses, largely in the areas of Regional Bureaus, Membership Development, Standards & Technology, and Communications In addition, resources are dedicated to our efforts to expand activities in new areas of the DO Hub, IETF Outreach, NGL and Leadership sponsorships/fellowships The result is an annual operating surplus and a slight increase in ISOC’s Unrestricted Net Assets Restricted Funds In 2010, PIR is expected to contribute an additional $3 million to ISOC Of this amount, $1 million would be “unrestricted” and used in 2010 to make ISOC’s second contribution to W3C The remaining $2 million would be reflected on ISOC’s balance sheet as “restricted” funds, 20 Page 19 directed by PIR for the support of the IETF as determined by ISOC’s Board of Trustees at a future date This $2 million is reflected separately above as “Restricted Funds” and would be used as follows: $500,000 would be dedicated to IETF Outreach Pilots, including an interim Working Group meeting in an emerging country and 5-8 outreach “IETF Roadshows” An additional $1 million would serve as a cornerstone contribution toward a Standards Development endowment to be established by ISOC, leaving $500,000 for future designation by ISOC’s Board for IETF support Revenues ISOC funding sources are summarized in the following chart, including results for 2008 and 2009 for an historical perspective of the growth in revenue sources In 2011, ISOC projects that total revenues will exceed $30 million for the first time While a substantial portion of revenues continue to come from PIR, efforts to expand and broaden our funding base showed significant progress in 2010 and we fully expect to show more impressive results in the coming year Organization Membership/Platinum Sponsorships ISOC has added 50 new Organization Memberships over the past three years (2008-2010) However, revenues from Org Memberships have remained constant, as the loss or downgrade of a few members at the higher levels has offset the increase in membership count Sponsorships and Grants In 2011, we project non-IETF sponsorship and grant funding to exceed $1.2 million, for a doubling of this source of funding for the second straight year When combined with IETF 20 Page 20 sponsorships secured by ISOC, total sponsorship revenues are expected to exceed $2.25 million in 2011 Registration and Fee Revenues The new programs being added for 2011 are expected to generate modest but important initial revenues in 2011 These include ION registration fees, and DO Hub registrations and sales NDSS registrations are forecast to decline slightly from the unusually high attendance in 2010 PIR Contribution In 2010, as a result of stronger performance in late 2009 and throughout 2010, and the renegotiation of its contract with Afilias, PIR expects to exceed their budget estimates for 2010 by more than $4 million PIR has indicated a substantial increase in funding will also be available for 2011 with a target contribution of $24.25 million Functional (Departmental) Expenses ISOC reports its expenses according to functional area, or department Total Departmental Expenses (excluding contributions to IETF and W3C) for 2011 are budgeted to be approximately $24 million This represents a 40% increase over the 2010 forecast of $17 million Using the 2010 forecast as a base (see the detail in the Appendix), a brief explanation of the year-over-year changes for major functional areas: • • • • • • • • Regional Bureaus: In 2011, ISOC will increase staff resources in Africa and Asia The responsibility for delivering region-specific events and programs will be transferred to the Bureaus which will now manage $3.9 million in expenses, or 78% more than the 2010 budgets This budget also includes core user value Deliberative Polls in three of the Regions Business Development: In 2011, we will fill the open Fundraising position in Europe and add a Marketing Support staff member Joining this group will be one of our current event managers, who will focus on the regional INETs as both event and funding coordinator Members and Chapters: To add resources to our efforts with Chapters, Individual Members and Org Members, we will seek a Membership Director to focus on member communications, Chapter involvement, and membership growth Standards & Technology: Expenses increase substantially with the addition of a senior staff member to focus on Internet infrastructure security In addition, we will increase our focus on technology outreach programs including the Internet On series of symposiums (“ION”, formerly the Internet Technology Development Roadshow) Trust & Identity: Fully staffed since late 2009, expenses increase primarily in programmatic areas as the staff engages in increasing outreach activities in this important Initiative Strategic Global Engagement: With the first addition to this group in more than two years (and segregation of NGL development activities that have been incubated by SGE), the growth in this department reflects an increasing focus on global Internet governance issues Public Policy: This functional area was elevated to Executive level focus in 2010 The 2011 increase in expenses relates to the hire of a VP of Public Policy Strategic Development: Activities in support of regional access initiatives will increase in 2011 The overall budget reflects transferring of local staff and program delivery 20 Page 21 • responsibility to associated Regional Bureaus, allowing remaining staff to focus on program development and partnership/funding resources Communications: An additional staff resource will be hired in 2011 to focus on web-based content and social media, completing the staffing begun in mid-2010 The Communications plan includes a series of global and regional Internet user surveys, increased social marketing with the launch of the new website, and preparations for a special global INET in 2012 Leadership Programs The Internet Society has nurtured new participants in the Internet community with our IETF Sponsorship and lately the NGL Program In 2010, we look to add to our commitment to those programs, and initiate other programs to further this effort Previously, the basic “Leadership” programs (and their management) have been distributed within ISOC (Education/Development, SGE, S&T) and supported by staff in addition to ongoing responsibilities (for historical comparison, these costs have been identified for prior years) In 2011, we propose to dedicate resources more directly to the development of such Learning programs, including new efforts to further ISOC’s outreach The new programs for 2011 include the DO Hub, with two dedicated hires and a total budget of $638,000 (about 25% of which will be offset by revenues), and the IETF Outreach Pilots with a total budget of $500,000 from PIR designated funds outlined above (again, this is reflected in “restricted funds”) The current Learning Programs will be advanced by consolidating them under one department, building “e-Library” capabilities, developing sponsorship opportunities, and seeking synergies for the NGL and other Leadership curricula Added personnel will also have management responsibilities for IETF Outreach Pilots and making DO Hub work product further available Of the increase in staffing resources shown above, approximately half relates to management of new programs (including the IETF Outreach Pilot programs and adding library capabilities), while the other half relates to increased focus on and expansion of our core Learning programs 20 Page 22 Standards Development Organization (SDO) Support & Other Programs The Internet Society is dedicated to supporting the further development of the Internet worldwide ISOC’s support of the work of the IETF will continue at approximately the level seen in 2010 ($2.1 million), including commitment of an additional $429,000 for the second full year of the Tools Development effort The IASA/IETF Budget is summarized: Capital Expenditures The 2011 Capital Budget is largely comprised of the proposed IETF Tools Development project ($429,000) and the AMS related Engagement System Development ($200,000) Staffing Plan ISOC plans to add 8.5 FTEs to its core functional areas in 2011, plus 6.5 staff members to focus on delivering on the planned activities of the DO Hub, the IETF Outreach Pilots and the Learning Programs Cash Reserves ISOC’s internal policy calls for maintaining a cash reserve equal to six months operating costs Based on the 2011 expenditure levels, the minimum cash reserve level is approximately $9.5 million According to our balance sheet projections, cash reserves will remain relatively constant at current levels ($10-$12 million), thereby remaining above the six-month target Public Support Test As a public charity under Internal Revenue Code 501(c)(3), ISOC is measured against a series of tests to ensure broad public support and a broad charitable purpose As anticipated, ISOC fell below the 33.33% test beginning with the filing of ISOC’s 2007 tax return ISOC’s 2009 tax return (filed recently) reflects a Public Support factor of 15.88%, slightly better than forecast Consequently ISOC has filed with the US IRS under the 10% test with a “facts and circumstances” plan 20 Page 23 Current forecasts, based on this business plan and conservative future year assumptions show that the percentage calculation will stabilize at about 14%, and begin to rise in future years (the test is a 5-year rolling average, dampening the speed of both the downward and upward movements of the test) This forecast is based on our expectations that our efforts to broaden our funding sources will outpace the increase in PIR contribution growth 2012 – 2013 Outlook The 2012 – 2013 Outlook is reflected in the chart in the Appendix to provide a strategic view of ISOC’s financial condition over the full three-year time horizon of the Business Plan Several assumptions used in creating the 2011 Budget are applied to our 3-year financial forecast: • • • • • • ISOC will continue to support IETF operational needs at the current level throughout the forecast period, incorporating IAOC’s three-year outlook ISOC’s funding from other sources will increase over the period, including growth in sponsorships, grants, and endowment funding Staff growth in 2012 and 2013 will be slight and dependent on future revenue growth Contributions from PIR are expected to grow moderately in 2012 and 2013 Beginning in 2012, endowment fund proceeds are expected to yield a growing source of funds to be dedicated to support of Standards Development Organizations ISOC will hold a Global INET in 2012 to commemorate our 20th anniversary Sponsorships for this event will offset approximately half of ISOC’s cost for this major event Revenue Diversification and Expansion While ISOC continues to hold its core mission and values as primary, it also recognizes the need to diversify revenues beyond that provided by PIR In response to the Board resolution, ISOC will introduce new programs that follow ISOC’s mission, but also help contribute financially to that mission We continue to evaluate other opportunities, and are striving to meet the targets established for the next three years And, while we are hopeful, the budget reflects a slightly more conservative view (see graph below) In addition, Endowment funds could add long-term funding to our support of the IETF and standards setting organizations 20 Page 24 Summary 2010 was a watershed year for the Internet Society As a result, we leave 2010 stronger than ever with many clear signs of the impact we are having – nationally, regionally and globally in areas ranging from emerging market development, to policy, and of course, through greater and deeper technical strength We are proud to say this has been accomplished with greater involvement and a deepening mutual respect across the ISOC family as well as a broader awareness within the global Internet community Additionally, we managed another year of growth in our programs and activities while remaining true to our roots and mission and significantly increasing our commitments and responsibilities to the Internet Engineering Task Force (IETF) and it’s related bodies as well as the larger Internet community In parallel, we continue our efforts to ensure the organization can grow and scale for even greater impact going forward – and this is the primary driver behind our efforts in 2011 to further strengthen and empower our regional bureaus, members, and chapters There are many new developments – programmatically and organizationally This is an ambitious plan and yet in many ways no more ambitious than past years We have been building towards this for a long time and are well prepared and organized to execute this Plan and we expect great success We look forward to discussing these opportunities The entire staff at the Internet Society is very excited and passionate about what lies ahead and we hope you will share in that enthusiasm 20 Page 25 ... Endowment The collective challenges to the Internet and Internet Model reinforce the criticality of the Internet Society mission Preservation of the Internet model and open standards development... stability and growth of Internet standards and continued confidence in the Internet model We remain convinced this is the right time in the Internet Society? ??s history to establish an Internet standards... Security and Network Confidence to focus attention on the Internet Society? ??s positions on security, trust & identity, and privacy issues, Open Internetworking (Net Neutrality) Core User Values Campaign