ADHO Budget and Revenue Distribution June 2009

Comments and discussion points

Introduction

2008 was the first full year of SDH-SEMI (SDSM) membership of ADHO, and a number of teething problems arose, two more serious than others. First, there have been continuing problems with the new OUP online subscription system, and a number of Canadians experienced difficulties in subscribing to LLC. Melissa Terras has been working with OUP and SDH-SEMI to resolve these. Second, the 2008 distribution of 2007 income saw a significant rise in funds allocated for shared ADHO activities, from 26% to 60% of revenue. This had the effect of reducing the distribution to the three constituent organisations, and this was particularly difficult for SDH-SEMI, since its anticipated share of around 3,000 gbp was reduced to 1,134 gbp. (There was also a sharp fall in the payments to the other two associations of course - ALLC from 19k to 11k and ACH from 12k to 6k - but the reduction had much less impact than for SDH-SEMI.)

Prompted largely by this latter issue, the ADHO SC began to consider ways in which to ensure that the revenue distributed to each constituent organisation would not fall below some appropriate minimum. In the ADHO admission process with SDH-SEMI, the financial models used produced a figure of around 3,000 gbp. This would be a reasonable target therefore.

Assessment of income

The calculations used to develop proposals for revenue distribution are shown in the accompanying annotated spreadsheet. The first stage in the process is assessment of contribution to income.

The income contribution of each constituent organisation (CO) is assessed on the basis of:

  • Institutional subscriptions by region, where ALLC is associated with Europe, ACH with the USA, SDSM with Canada, and the 'Rest of the World' (ROW) is spread across the three COs.
    Note 1 : OUP includes Russia in 'Europe'; for ADHO calculations these subscriptions are moved to ROW.
    Note 2 : Data on direct Institution subscriptions and Consortia subscriptions are provided separately by OUP, and are shown together in the ADHO calculations.
  • Individual subscriptions, based on the choice made when an individual subscribes to LLC, with the options being ALLC, ACH, SDSM and Joint.

In the past, the ROW institutional subscriptions and the Joint individual subscriptions were shared between the COs on a pro rata basis related to the basic subscription data.

Recommendation 1
That the sharing both of ROW institutional subscriptions and Joint individual subscriptions should be on the basis of equal shares to each CO. This has the effect of slightly diluting the shares of the larger COs and enhancing that of smaller COs. It is therefore a measure that will serve us well in the future when new COs are admitted.
Note The previous method and the recommended method are equally arbitrary. It would make sense, therefore, to choose the method that we believe to be in our best current and longer term interests.

We receive as income from OUP 70% of the profits on LLC. A gross allocation of income to each CO is calculated by sharing out this amount on the basis of the income assessment calculated above.
Note: Although the 70% profit share is the formal basis of revenue distribution, certain additional payments are received from OUP for 'editorial expenses', and these have been added to the profit share figure in the last two years to give a slighly higher total for distribution.

Expenditures - ADHO activities

Expenditure planning occurs in four phases:

  • The previous year's budget has to be analysed against the actual expenditures incurred, and provision made for the surplus or deficit that results.
  • The first calls on the new budget are the agreed subventions to support each of the three journals.
  • In addition, there are now a number of jointly agreed activities. Most of these have been agreed on a standing basis, but others may be agreed by the ADHO and Association steering committees at their regular conference meetings.
  • The balance after these commitments have been deducted is distributed to the COs.

Together these groups of expenditures constitute the ADHO budget for the current year. All expenditures are allocated pro rata to the COs on the basis of the assessed income contribution calculated above.

The second SDH-SEMI issue described above brought to light the fact that the total budget agreed for 2008 represented 60% of the income received from OUP, up from 26% in the 2007 budget. The ADHO and CO steering committees may want to consider from a strategic point of view what proportion of the income should be allocated to shared activities and what proportion should be retained for the individual COs to pursue their regional objectives.

Recommendation 2
That ADHO and CO steering committees consider how best to accommodate both the potential for jointly funded activities and the common interests that are best served through the regional responsibilities of each CO separately, perhaps by agreeing target percentages of expenditure over income. While it is certainly the case that we all stand to benefit equally from the jointly funded activities - and the smaller COs correspondingly stand to gain higher pro rata benefits - it is nevertheless important that each CO has the resources to take regional intiatives from which ADHO and international digital humanities more widely can benefit.

Revenue distribution 2009

The accompanying spreadsheet includes a provisional budget for Other ADHO Expenditure, based on the standing budget. On this basis, with the small surplus from the 2008 budget plus the increased income from OUP, the modified Income Assessment models described above result in a provisional distribution in which ALLC and ACH revenue would be slightly up on the 2008 distribution, but the revenue for SDSM would show a larger increase, well above the 3,000 gbp target. This is welcome, but perhaps we should consider going a bit farther this year.

Recommendation 3
That a one-off supplementary payment to SDH-SEMI should be made in recognition of the very low distribution in 2008 resulting from the sudden increase in the Other ADHO Expenditure budget. The accompanying spreadsheet suggests a one-off payment of 1,200, funded pro rata by reduced revenue for ALLC and ACH. The rationale for the amount shown - 1,200 gbp - is that the average of the adjusted 2009 distribution and the low 2008 distribution would be a little over the 3,000 gbp target figure. The combined measures described above provide a basis on which we can have confidence that the 2008 situation can be avoided in the future.

The ADHO SC needs to review the various budget elements for 2009, in particular the Other ADHO Expenditure budget, and to take a view on Recommendation 3 above. The resulting budget recommendations will then be passed to the CO committees for their consideration, and a final decision will need to be taken by the ADHO SC at its reconvened meeting on Mon 22 June.

Individual subscriptions: Finance and governance

If Recommendation 1 is agreed, specifically that individual subscriptions are shared equally across all COs in the Income Assessment process, it follows that the category of 'Joint' subscriber will no longer have financial implications.

There are two related matters to consider. From the beginning the category of Joint subscriber has caused difficulties for OUP in both the online and print subscription forms, and perhaps more importantly it continues to be a source of confusion for subscribers, especially new subscribers.

The rapid growth in the number of Joint subscribers has been very heartening in terms of its expression of confidence in and commitment to the ADHO project, but there are potential governance issues that arise from the situation where a majority of subscribers gain the right to participate in the governance of all COs - which number three at present but we all hope the number will increase in the future. In particular joint subscribers have the right to stand for election and to vote in all three COs, which may become problematic even with only three COs.

Two ideas have been put forward as a possible solutions:

  • To remove the Joint member option from the subscription process, but retain the individual COs, so that each subscriber selects the one CO in which they wish to participate as an active member. (Note that the choice would have participation and governance consequences only - i.e. there would be no financial consequences.)
  • To remove all CO options from the subscription process, and allocate CO membership on a geographical basis, by analogy with the procedure for institutional subscriptions.
    Note This was the model put forward at the beginning of the ADHO discussions, and it was rejected at the time because a significant number of members expressed a wish to be able to retain long-standing involvements with a particular association.

Recommendation 4
That the ADHO and CO steering committees consider the subscription and governance issues, and work towards an agreed policy as a matter of urgency.

Resp: Harold Short
Date: June 2009
Status: Document for ADHO and association committee meetings June 2009.

 

 

-- Main.HaroldShort - 15 Jun 2009