Green Party Riding Executives: What do you think of revising the Revenue Sharing Agreement?

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I just read a blog post over at Dave Baglers’ blog. Given that of late, Dave has been unashamedly defending the Central Party status quo against all comers, I have drawn the conclusion that this is a trial balloon being floated by centralising forces, (read: The current Leadership), at the hollowed out Ottawa head office. Dave, if it ain’t so, then by all means respond in the comments.

Here’s a copy of the RSA as enacted. (Thanks Dave): Revenue_Sharing_Implementation_Plan_as_adopted_Nov-20-2005_formatted

I’ll get to my meat and potatoes argument about the viability of the RSA in a minute, but first a little background. The Green Party of Canada is in a financial pickle. In my humble opinion, this is a self-inflicted wound. The GPC has extremely predictable revenues. There is the federal per-vote subsidy, which is shared with Electoral Districts, and Provincial Divisions according to a predictable formulae. There are pretty stable revenues from the central Party’s fundraising. (yes, I’m referring to those emails you get once or twice per month). There are election expense refunds, which are one time shots to re-imburse funds after a general election. That’s it on the Revenue side. On the expenses side of the equation, there are payrolls, rent heat and lights, Insurance, some travel for council purposes, and a plethora of other, predictable period expenses. Then there’s discretionary spending.

A well managed organisation would look at an extremely predictable revenue flow, and then allocate their resources according to a priotised list of things-to-do-that-cost-money. Mandatory processes, like reporting and compliance would be top priority. Why? Because they are legal obligations. Other totally predictable obligations would be funded in descending order of priority. Council would be there to argue with staff over priorities, and to make sure that priorities like team building trips to the Bahama’s don’t get off the ground. Once you get to the point in your list where the money has all been allocated, you have a budget. When you want to argue about additional priorities, you either craft a plan to enhance your’ resources, or you bump something off the list to make way for the new priority.

This process isn’t rocket science. It’s something that the Prussian Civil Service excelled in back in the 1600’s, and it’s called budgeting. The Prussians did it well, which is why they rose from obscurity, and became a Great Power. Now if you fail to follow a process something like this, it doesn’t change the resources you have to dispose of. It doesn’t change the obligitory expenses either. By itself, what it does do is ensure that you don’t have many unexpected surprises.

Last month, the Green Party membership was surprised to discover that there was a fiscal emergency. Organisers had to be sacked, Catherine Johansen ‘resigned’ from the Election Readiness Committee, and a whole bunch of panic started in the Ottawa office. All of a sudden, the election debt had to be retired, and as if by magic, there just isn’t enough money in the darned bank. Now the terms and conditions of the election loans were clear and explicit. The payroll costs were 100% predictable. The discretionary spending? A total grab bag of unprioritised spending. Jobs for friends in Nova Scotia. Toss a whack of money to Adrian Carr’s Provincial Division in BC. Let’s toss $50 grand to the SGI Campaign for Elizabeth. Yes, I know that the last item was supposedly the top priority for the Party, but where were the cuts to the budget to accomodate it? Did council even consider that this brand new top priority meant that organisers had to be fired? Were YOU aware that you were going to lose your’ Provincial organiser because of it?

Remember folks, within ten minutes of the electoral returns being publicised, our Leader and her council knew within 5% what their resources would be. If they knew what one was, they could have created a Schedule of Receipts and Disbursements that nailed cash flows by date, within a very narrow band. Did they do so? NO. Did they prioritise and exercise their fiduciary duty to the membership? NO. This so-called crisis was created by our Federal Council, and it was created by Elizabeth May, plain and simple. Now some will accuse me of a biased, and unbalanced attack, because I have posted this blog. That is untrue. I would lambaste anybody who mismanaged my Party’s operations so badly. Some people would encourage me to refrain from public criticism, because it may spoil the electoral chances of Elizabeth May in SGI. My response is, don’t shoot the messenger. Our finances are pretty public, and there are opposition researchers eagerly awaiting our next public accounting. Better a trickle of negative reporting now to turn it into yesterdays news that much quicker. If we wait until the ‘AHA!’ moment when the finances are public, then timing is outside our control.

So what’s this got to do with the title of this post? By now that’s becoming obvious, no? If council is truly planning to revoke the ‘Sharing’ part of the Revenue Sharing Agreement, then I would like to be on the record before the bunfight begins. Revoking the RSA will be promoted as an ‘Emergency Measure’. The emergency was a product of fiscal incompetence. I would personally prefer to revoke council, and the Leadership, and I suspect that, were the truth known, a substantial portion of the Green Party membership would be upset enough to share this opinion. The root cause of the problem is that our Leadership is not competent to manage our money. The RSA was created out of a huge bruhaha back in the day. It was argued over, negotiated, brokered, debated by the membership, work-shopped, voted on by the membership at large, and finally, grudgingly enacted by Council. Dumping it to grab some more resources will not fix the incompetence in Ottawa. It will simply paper over the cracks. It’s absolutely guaranteed that the Leadership will continue to fritter, and fail to set priorities, so we’ll be back in the hole again immediately. In the meantime, the EDA’s will be boiling mad, and out for the Leaderships blood. Can you spell: Recall Motion? Not very good politics, eh?

The RSA was predicated on several motions passed by the membership in years gone by. It was intended to promote the formation of EDA’s, while still allowing for the Party Hub in Ottawa to have predictable cash flows. There are arguments that could be made that not all EDA’s use the money wisely. There are arguments that could be made that the RSA was created by council, therefore it can be revoked by council. There are also arguments that could be made that Provincial Divisions are really problematic under the Elections Act. While these arguments may have lot of merit, it’s moot. Why? Because the membership has spoken, council was fulfilling their mandated role when they enacted the RSA. The EDA share has definitely promoted EDA formation, and endurance. Even in the lamest EDA, there is a degree of continuity because they don’t want to abandon their bank account, and revenue sharing cheque. Who cares if some of them aren’t picture perfect organisations? The membership mandated that they get a share, this mandate has proven very effective at achieving it’s stated purpose. Just take a look at the last elections results. A growing number of local campaigns are breaking the 10% threshold, and surprise, surprise, they all have EDA’s in place to back them up.

Provincial Divisions are another kettle of fish. The membership, and RSA mandated that Provincial Division formation be promoted as well. That was before it became abundantly clear that the revisions to the Election Finances Act had rendered PD’s obsolete in Canada. Because Provincial Divisions are not legally seperated from the National Party accounts, it is problematic to ask the Party’s financial agent to be responsable for the books and spending decisions, unless thay are as directly under the Agents control as the National Party is. Why go through the cumbersome exercise of transferring money, and then scrutinising it seperately?

So now we have come full circle. As usual, I have digressed, and tread a tortuous path to my conclusion. We have a Leadership race coming up. Our current Leadership has demonstrated that they are not competent to fulfil their fiduciary, and governance duties. Draw your’ own conclusions, but perhaps you should consider a new Leader? One who can actually demonstrate some competence in the real world? Stay tuned, and soon I’ll be able to table another option for you, and I think you’re gonna like her and her team!

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32 Responses

  1. “Given that of late, Dave has been unashamedly defending the Central Party status quo against all comers, I have drawn the conclusion that this is a trial balloon being floated by centralizing forces, (read: The current Leadership), at the hollowed out Ottawa head office. Dave, if it ain’t so, then by all means respond in the comments.”

    1) I haven’t been defending the status quo that’s why I wrote a blog about reforms I would like to see with the RSA. I also think that there is lots of room for improvement in many areas.

    2) You conclusion is wrong.

  2. I’d take issue with some elements of your description of how Revenue Sharing came about. Support for it was almost unanimous—I think I was the only person arguing against it.

    The provincial divisions were added into the mix as a sop to the Saskatchewan Greens, who wanted to organize the entire province from the head office of the province. As near as I can tell, that was to ensure ideological purity (they were a bunch of hard Marxists.)

    As for the idea that revenue sharing helps build EDAs, I’d suggest the opposite. Giving the money to crappy organizations doesn’t make the organizations better, it just helps those crappy organizations survive between elections. We would have been much better served if the money had been saved by the head office and used to hire good organizers who could then build strong EDAs. Unfortunately, the way things have worked out, I suspect that the head office would have wasted the money if they had kept it—so my theory has pretty much proved to be as wrong as the other.

  3. @ Dave, I stand corrected. The RSA is flawed in a few respects, but it would be, shall we say, unwise to open it up right now. The premise is more than sound though, and the RSA is more significant with the passage of time.

    @Bill,
    I guess it depends upon what date you are discussing. If memory serves, there was an ongoing fight, for a long long time. It was debilitating. It tired everybody out. It inflamed other issues, and was the cause celebre for dissidents like Kate Holloway, and numerous others. There was the promise of RSA during the 2004 election, then there was the drawn out attempt to welch on the promise. It wasn’t at all controversial by the time the membership passed it, because the battle was well over by then.
    I’ll stand by what I’ve said. The RSA does promote continuity at the EDA level. Sure there are some lame ducks out there, but the basics are in place for when a competent individual shows up to pick up the reins. No amount of prodding and poking by head office can ensure continuity the way a thousand bucks in the bank does. I would be willing to bet that the vast majority of these dormant funds does end up getting spent during the next election, and it’s probably spent with way more effect than throwing another $ half million at useless TV advertising.

  4. @Bill: Actually, the SK Greens had less than 1% of the membership at the time. I could tell you a couple of stories about who planned what with the Provincial divisions new revenue source, but I won’t rake them over yet again. Suffice it to say that Adrian Carr has done what many planned to do with a Provincial division, and it’s cash riches.

  5. I agree that it is a bad idea to direct the $-per-vote subsidy to organizations that cannot budget properly and will waste it.

    But I’m talking about central HQ, not the EDAs.

  6. As a newly minted CEO , Newmarket Aurora EDA I do like the continuity that the RSA funds give many EDAs. I do however realize that money issues could well sink the party and we need a major push to increase members, donations and manage expenses.

    I could put up with a temp stop of the RSA to pay off the debts but under normal conditions and until the party helps build strong EDAs we do need that cash. Party debt default is “not normal conditions” however and we should probably suck it up and move one, what choice is there? Default on the payment is not an option.

    We also need to get some control on spending so what little money we do have is not spent on really crappy TV spots
    Like really they cost a lot and sucked,, I could have done better 25 years ago when I was doing RTV at Centennial college. They were just as bad as the IGGY in the forest spots, they had no point.

    If we fix this problem it should not be allowed to happen again, get a grip on the budget people!

    I am also not pleased that the request to stop the RSA payments was the equivalent of negative billing and we were ambushed over the holidays with no time to meet on the issue.

  7. @John O, John, do you mean to say that you’re not happy with the present administration! ;-)

    @Carter, welcome to my little blog! The bank loan could not be pushed aside, which is why there was/is a crisis. The die is pretty well cast for now, and the shortfall will be met by kneecapping all central Party spending. I don’t think that’s a bad thing anymore, because the status quo ante was unsustainable. Now the piper is being paid. I completely agree though that it must NOT be permitted again. Making a mistake once is just that, a mistake. Making the same mistake again is something much worse.
    What would you say to a constitutional amendment that stipulates that loans cannot exceed half of the election spending, and that the proceeds of the Election expense rebate be directed stright towards paying off the election debt? That way, every loan is fully funded, and retired a few months after the election is over.
    We cannot avoid incompetence always, and at all times. If there is no latitude to make mistakes, then there’s no latitude to be daring and innovative. BUT there will frequently be missteps, and outright bad decisions. At least if we limit borrowing, we are limiting the damage that any one leadership and administration can do to our Party. I don’t trust council one little bit any more. So it seems sensible to bind them hand and foot. JUUUST enough rope to hang themselves if that’s their predeliction.

  8. I’m for any control that forces us to be fiscally responsible in our own house, If we can’t run a budget this size how can we aspire to run a nation.

    Do we have a full accounting of what is owed and its structure?

  9. Yes, pretty well. If you have a look at the EC site, then you can dig up the auditors report. I think I saw it somewhere in the members zone as well. Material items, like debt, and terms thereof are reported in the notes. The bank debt is solid, just around $1mm and needs to meet schedules. There are some chunky private loans though, and I suspect those people are going to have to whistle for their money for awhile. Bank debt should be off the books soonish.

  10. As the party is not terribly helpful helping us organize or promote fund raising perhaps we need to go open source and just have the EDAs in a region work together rather than wait for the organizers, who may or may not have jobs, is there any resource for this?

    As a doomer, I believe in localization, should we cut out the Provincial reps and just work together where suitable, especially in metropolitan areas?

  11. Oh, for an auditor and INTERNAL CONTROLS.

  12. I think you are painting an inaccurate picture of the so-called “predictable revenue flow”. How do you propose to predict the length of time between elections and hence how much subsidy you receive to pay off any debt. ?

    How do you predict the amount of money that will be raised from future fund-raising?

    I was not involved in any of the decision-making around those issues and I am still not in that loop but as a small businessperson I can appreciate that there is an element of uncertainty and calculated risk in the decision making around campaign spending.

  13. Eric, you asked questions and I will answer them, as I did, as a federal council member, based on common sense.

    How to predict the length of time between elections?

    You don’t. You take on an election debt which you can repay – from increased revenues – within one year. Subsequent years are used to fundraise for the next election.

    In 2008, we tripled our election budget expecting to triple our vote (and triple our annual revenues, allowing us to repay the debt.) We didn’t triple the vote, and Elizabeth and her strategic voting interviews are a BIG part of that failure. .

    Future fundraising? You’re right, it can’t be predicted, so you budget based on *past*, demonstrated fundraising.

  14. Of course its no consolation my pointing out all this before it happened in sept/oct/nov 2008 but it certainly helps over come some of the trashing I got then

    Good thread and thank you for putting something out to the members in your circle….lord knows it will never be said at our own vehicle for it at green party.ca which by the way is now hidden and buried
    Mind you it was once just completely gone in the period above as well…yes when we actually needed it MOST !!

    I have said I myself will stand up and run against e may and I will

    It makes no improvement in canadian politics that I can see to elect her and destroy the green party

    Sorry I am in the Green Party…not the e may party

    I have a plan..one I was working on quite well before the stabbing I took from e may sept 4 2008…and it can and will work and actually already started to last election
    At least we will have a choice as I am sure many others will and should also stand up!

    TAKE BACK YOUR PARTY
    IF YOU DO NOT…WHO WILL?

  15. Hi Eric.
    By definition, a predictable flow is a series of regular payments over time, as opposed to a stock, or large one time chunk. You can match an inflow against an outflow, and balance the two. Like for example, a quarterly subsidy payment is matched against a quarterly loan repayment.
    If you are planning towards a debt schedule, you plan by amortizing the debt, and match the debt repayment schedule against your revenue flow. That’s the trick in finance, matching stocks to stocks, or flows against flows. It’s just two different ways of measuring the same thing.

    The point I made about predictable flows is that the debt will be repaid, over a short time frame, in specific amounts, on specific dates. From the second the election was over, the revenue flows were entirely predictable, not how long they would go on for. At a bare, (and not very prudent) minimum, the expenses should have been adjusted to match revenues pretty well as soon as the returns are in.
    If the next election comes before the debt is retired, then tough bananas. We would have to suck up the fruits of our improvident borrowing, and sacrifice the next campaign on the alter of our past profligacy.

    Excessive borrowing carries a lot of risk, doesn’t it? Clearly, the borrowing was excessive in the last election. I really wonder how well the risk was calculated? If you’re a businessman, then you know that part of your job as a manager is to identify, and control risks. I don’t think I like the results of the campaign spending gamble made by the Party.

    Anyway, it’s all moot, because at least the bank debt was on a fixed schedule. The Party didn’t anticipate that schedule very well, and I frankly don’t know how that could possibly happen. I’m at a loss as to how they could operate in an environment where you KNOW that a series of payments must be made, and you KNOW what money you are getting and when, and you KNOW that what you get is less than what you’re spending, and yet you continue to spend at that level. I don’t get it. Doesn’t anybody prepare any financials? Not even a cash flow? You don’t need any fancy accruals here, just a simple set of books on a cash basis. For god’s sake, you or I could do it in an afternoon, and so could a couple of million other Canadians.

    You asked about predicting cash flows from fund raising. Well that’s pretty stable. Make it a function of membership numbers, project forward while adjusting for fluctuations in the membership numbers. I’ll bet this metric will be accurate to 5%.

  16. I tried to post this at babybaglers site and it was bounced so ….

    “””dave what you should be doing instead is convincing your ottawa buddies to look to the obvious for more money and stop trying to undermine the real party..the grass roots

    I hear they have some private company doing our phone solicitation for funds and they get to keep …get this …50 % !!

    YES THATS FIFTY PERCENT !!!

    Now how about we take all those concerned with losing their jobs and let them do the phoning as MEMBERS !!! for their wages instead???????????????

    The party is and has been mismanaged plain and simple but then I have built many million dollars companies with million dollar budgets and have an opinion based on years of results

    I was also by the way in the financial services world for years as a bank manager…a bailiff …a collection supervisor and a department head at revenue canada.

    Whether you like it or not change will have to come.

    It is stupid to ignore your members strengths as we hired close contacts with no qualifications except being yes men and women

    Read it quick before dave deletes it please””

    Thanks Matt for not being like davey

  17. @shavluk: I just replied to your comment on my blog. So it wasn’t bounced. It’s up there. Did you think that maybe I didn’t read this blog? Or are you just dishonest? Maybe confused? or perhaps more likely high?

  18. I’m going to try to stay away from even light editorializing, and address the practicalities of some things that have been said. [Is there a way to get highlights for these comments?]

    “The bank loan could not be pushed aside, which is why there was/is a crisis. The die is pretty well cast for now, and the shortfall will be met by kneecapping all central Party spending. I don’t think that’s a bad thing anymore, because the status quo ante was unsustainable.”

    The consequence is not just kneecapping central party spending. All the staff cuts and the EDAs voluntarily forgoing their RSA payments cannot even get very close to covering HALF of the quarterly bank loan payments.

    The rest can only be covered by taking out new private loans. Robbing Peter to pay Paul. There is of course a limit to that private loan honey pot. A limit in the best of times, let alone when the lenders know you are in trouble. Those private loans have previously only been taken out for election campaigns, and are needed then. Now they will be ‘used up’ to make up for the shortfall on making the quarterly bank loan payments.

    Even for a drastically scaled back central election campaign those private loans will be vital. And very likely they cannot be supplemented next time by a bank loan.

    “What would you say to a constitutional amendment that stipulates that loans cannot exceed half of the election spending, and that the proceeds of the Election expense rebate be directed stright towards paying off the election debt? That way, every loan is fully funded, and retired a few months after the election is over.”

    Intuitively, the right approach. But unworkable.

    In the first place, the rebate already is directed right back- its part of campaign budgeting [even for people whose financial management capabilities are questionable]. So that already happens.

    And when you operate from a debt position its an empty gesture to say or stipulate that only half the campaign spending can come from loans. You can say, and get, the other half out of revenues. But the end effect is still to increase your indebtedness.

    Your call for better hands on the financial management is really the only answer.

    And while the current crew has had to admit to really deep problems- albeit when they no longer could avoid the admission… they still aren’t admitting fully to the implications and to the very tough choices that in practice they are still making for you.

    • Hi Ken,
      I’m surprised it took you so long to weigh in!
      I guess I could wander around the ether, dig up all the revenue side numbers, but the expense side is totally opaque. When a significant percentage of the operating costs are consulting fees, and no disclosure in the notes, how the hell do you estimate the relative importance? If the consulting fees are actually the salaries of the financial agent, then they are pretty inflexible. If they are actually contract staff, then they’re more flexible. In broad terms though, the GPC has something like $3.5 mm rev. Out of the $2mm rev sharing, they’ll keep maybe 65%, for $1.3 net. Fundraising, another $1.2 net. If half the cash flows go to debt repayment, then the bank debt is cleared in year 1, and the private debt in year two. Pretty brutal eh?

      As far as bringing the house in order, where there’s a will there’s a way. Not a pleasant way perhaps, but if things are coming down around our ears, the best bet is to bite the bullet, and come forth with a brutally quick repair job. 6-9 months with a couple of staffers to keep compliance and donations happening. Retire the bank, and private loans. Remember the bitter lesson, and practice what we preach from that point on. Fiscal sustainability.

      As far as your’ point about budgeting for the election expense rebate, back to first principles. If you are budgeting with the objective of being debt free 3 months after the election, then that’s what the rebate is allocated towards. We need to get away from the idea that the current election is all that matters. Elections are predictably becoming more frequent. Spending is important, which is why we should never constrain ourselves, and jeopordise our freedom of action in the subsequent election. Sure we can leverage our cash flows, but not to the point of constraining our ability to grow the Party in between elections.

      As far as future bank lending, unfortunately the banks know as well as we do that they will definitely get their pound of flesh. The elections act forbids a forfeiture, and the Banks could enforce through many channels. As long as there are rebates, and the bank can impose a preferred position, the banks will happily lend to us.

      I cannot believe what I am writing!! This is a Party that preaches sustainability. Seven generation stuff. Is it all just a cheesy sales pitch?

  19. Some background on my experience that allows me to interpret what I see.

    I am also a business person, and have an accounting backround.

    I also had experience in campaign funding.

    But when the annual financial statements and budget forecasts would come up at NS NDP Council I was only LESS lost than most of the other delegates. There is just too much about party funding that is unique, so I never felt I could independently and criticaly assess.

    That changed when I got invloved in drawing up those budgets. Which is an entirely different animal than riding campaign budgeting- though when you participate actively in both, you see how much they interact.

    The point in giving that story is that without the kind of background I have, its probably unlikely that people could for example, go the EC filings where all the debt schedules are on file, sprinkle in a few current known details, and see the full implications.

    That said, I’ll bet that 2 or 3 people with a little business or non-profit board background could sit down and pore over the documents and what is known… and from having others to bounce off, develop the independent critical skills required.

    Obviously the ideal would be that one of those is a Councilor. But anyone who can work the data will find that it gets into circulation.

  20. Hindsight is always 20/20 but on balance I can see the case for what is effectively a $1.5 million campaign debt (50% of $3 million) based on polling numbers, momentum, fundraising during the campaign and leader profile. I would have shared risk however with EDA’s in the event results where not a high as projected in return for a share of this 3 million in direct services to them.

    Yes, It is a higher risk approach and required a very effective use of this money to control risk. I agree with the one year pay-back model in this apparently serial minority government situation.

    John, you said you were on Council at the time so I do not understand why you are critiquing a decision you were involved in making?

    It is unfortunate that fundraising efforts – while good – could not make up the full shortfall. I expect this significant belt tightening will put us in a better financial situation for the next election.

    • Yes Eric, $1.5 would have been a much better number to deal with! So long as it’s actually dealt with that is. It’s a little difficult to oblige the EDA’s to share a risk if they aren’t party to the decision to incurr it.
      Based on past practice, I would like it if the GPC were to develop a severe debt aversion after this debacle. Hopefully, longer term campaign debt will be another third rail that doesn’t get touched in elections moving forward. Wouldn’t it be nice if we really worked on improving fundraising, and then tucked away the fruits of our labours to contest the next election? If 50% of our campaign spending were debt, that would be paid back out of the expenses rebate, then every penny saved for the next election would be matched by the federal government, and we would be perpetually debt free. That’s a nice set of habits to promote. Every dollar we don’t spend today, we get to spend twice in the next election.

  21. I agree 100% with John and Matt about the predictability of both the revenues and expenses.

    Of course noting is totaly predictable. But the predictability in GPC finances is more than sufficient.

    Fundraising is not a lot more than 1/3 of revenues, and the 2009 contributions were 10% more than the previous non-election year of 2007. Where is the predicatbilit probelm.

    The budgeting for the 2008 campaign was both a big mistake in itself, and the beginning of a pattern of doing the opposite of what is prudent, AND compounding the problems inexoberably set in motion with new problems. Plus refusing to deal with a situation that had the warning signs of untenable a year ago, and was obviould so by summer of last year.

    By the amount the 2008 campaign planners borrowed and spent, they clearly budgeted and fully expected a net campaign debt [after rebates] of $1million plus.

    Thats double the order of earlier campaign debts.

    And I doubt there could have been any basis for that besides stuff like “we’re bigger and better now, so we can do this.” And maybe looking at the amounts fundraised in 2008 and projecting that to the future, and/or projecting an even bigger vote share and therefore subsidy increase than the substantial one the GPC actually got.

    Those kind of projections are things you hope for, and work hard to get, but you NEVER budget your debt on EXPECTATIONS like that. Never.

    John is right. In the conditions of repeated minority governments you MUST plan to retire your debt in one year. You only borrow for the campaign as much as you can retire in one year. And in predicting what you can retire out of operating surplus per month, you use conservative side predictions of revenues…. NOT the revenues you think you have a good shot at.

    And paying off a $1million debt instead of half that is way, way more than twice as difficult. Thats a basic rule of debt management that this crew clearly doesn’t know about or thought they could ignore. Doesn’t matter which.

    Once the mistake was made, difficult rectification was inevitable. But your leadership spent a year fiddling while Rome burned, even engaging in some expensive new projects that Matt noted above, and then suddenly dump the whole thing on everybody.

    And remember, there are plenty of tough decisions yet to be made. Let alone ones already made that I doubt they have told even Councilors the future implications of. And every day that as choices are made, more consequences you are being locked into that are you are not being told about.

    Leaders and managers aren’t supposed to be going public [even internally] about every one of those consequences. So you have to trust that they will tell you about the fundamental choices.

    You are in practice giving your trust to people who have hidden what they did for a long time, and now have even more reason to hide and downplay the consequences of what they are doing.

    Good luck with that.

  22. “It is unfortunate that fundraising efforts – while good – could not make up the full shortfall. I expect this significant belt tightening will put us in a better financial situation for the next election.”

    I sort of answered to that already. but I had not seen this, so I’ll make it explicit.

    Fundraising was 10% better than the previous non-election year. [And the mood of 2009 was very similar to 2007 as far as when the next election was/is expected.] It would have taken an INCREDIBLE fundraising year, and/or a really big leap in vote share to bring in enough revenue in 2009 to pay down the campaign debt they committed to.

    And as noted, the ‘belt tightening’ is only a fraction of what you need to put your self in a TOLERABLE financial situation for the next election…. even if you have another 18 months until that election.

    Thats what they aren’t telling you.

    The path you are on now, with all the belt tightening for a year and a half, and a national campaign that is cut to half what the 2008 budget was, at the end of that you’ll still have a $1million plus hangover.

    Its just impossible to run a national campaign without adding something to the debt. So even if its only the half million like in past campaigns…. Thats half a million, plus the about half million you will still have not repayed of the current $1million debt.

    And what do you suppose the effect will be on the vote share of halving the national campaign spending, plus a lot if not all of the EDAs having less money to spend locally because their RSAs were reduced or eliminated? And that your Leader has been less visible for a long time?

    You may well be lucky enough that the vote share is not effected. Campaigners don’t plan on going down. But financial planners have to be ready to deal with it if it happens. And if the vote share goes down ANY, thats yet more pressure in the financial cooker.

    ================

    And if it isn’t apparent already:

    Any EDA volunteering to ‘deferr’ their RSA payments has very little hope in ever seeing that money. And zero hope of seeing it when it is promised at the next election. Thats when the central party will LEAST be able to pay it.

    It doesn’t take deep thinking to see why even in parties with less severe financial troubles than the GPC has now, suspension of revenue sharing never turns out to be ‘temporary’.

    And even without doing any financial analysis:

    Someone comes to you and says I can’t pay the $100 per month I owe you, because it doesn’t leave me enough to make my mortgage payments. But don’t worry, I’ll make all the missed payments up to you next year.

    Would you believe them?

  23. “As far as bringing the house in order, where there’s a will there’s a way. Not a pleasant way perhaps, but if things are coming down around our ears, the best bet is to bite the bullet, and come forth with a brutally quick repair job. 6-9 months with a couple of staffers to keep compliance and donations happening. Retire the bank, and private loans. Remember the bitter lesson, and practice what we preach from that point on. Fiscal sustainability.”

    I agree it. It would be easy to read what I have been saying as “You are doomed.”

    But its more like “You are doomed, on this course of action.” Belt tightening alone just cannot fix this situation. Its going to require leadership. You have a Leader. But you don’t have leadership.

    EVERYTHING has to go out on the table and get aired to rectify the current situation. They are just tinkering, and not talking, let alone putting everything on the table.

  24. “As far as future bank lending, unfortunately the banks know as well as we do that they will definitely get their pound of flesh. The elections act forbids a forfeiture, and the Banks could enforce through many channels. As long as there are rebates, and the bank can impose a preferred position, the banks will happily lend to us.”

    I think this is a secondary point, but thats not true.

    They have the rebates as security. So you are half-right in that they will ultimately get their pound of flesh.

    But that does not mean they will make another loan. That kind of collection is somewhere they don’t go if they don’t have to. If they think there is a significant risk they will have to force collection, they will not make the loan.

    I can’t say what they will say when it comes up. But one thing they are going to look at is that they will know about all the cuts and the new private loans that were required to pay them. They are paying close attention.

    And they know that the decisions made to do that are a very volatile internal political process… where who knows who will have theri hands on the levers later.

  25. Ken, I bet the banks have all had a nice little heart to heart with Elections Canada, and MiniRev. types. Enforcement could be pretty cheap and effective if subsidy flows could be garnished. Still, they wouldnever make aloan that they really thought would require litigation to collect.
    I will wager that they simply do not want to be making political loans, and there is no commercial rationale that would justify the costs of operating within the Elections Act(s). Once they’re making political loans, they will be terrified of accusations of political favouritism, or unduly influencing the political process. So long as the principle doesn’t disappear, they really don’t have a choice, do they? I may be wrong, but politics is, well, complicated when you are a huge, regulated company.
    I for one would never make a loan to a Party based on commercial rationales.

  26. Erich, Mark and I were indeed on council when the last election budget was approved. The budget was approved based on a mix of donations, private loans and bank loans.

    Without violating confidentiality, I will say that Jim Harris won approval of his budget by providing a credible repayment plan. (Hint: the GPC added 300,000 new votes in 2008, each worth $2/year. )

    Jim stepped away after the election, and the party did not follow his repayment plan. Instead, as far as I can tell, it used the extra revenues to expand payroll, not make debt payments.

  27. I just poked into the minutes of the last two council meetings, and they were pertinent. There was a motion sponsored by Rob Brooks to require future election loans to be supported by a budget demonstrating that the loans could be fully repaid out of the election expenses rebate. The wording is a little odd, and I would suggest, well, what I suggested above. Limit the loans to no more than half the campaign expenses, and allocate the rebate to retiring the loan. It’s a prudent move I believe. Council will revisit this motion in February, after staff have looked at ways and means.
    Michael Moreau is the new chair pf the budget committee. Good luck with that one Michael. Just be aware that everything will now be your’ fault. Be very sticky about accepting rosy projections, or you will wear the results.
    Adrian Carr is in charge of a fundraising committee, tasked with looking at new sources of funds. According to the minutes, her preoccupation is with raising more loans from private lenders, and squeezing the EDA’s for ‘loans’ of their revenue sharing funds. Since these funds are to be repaid when the next election is called, this amounts to a re-financing of a portion of the debt. We are borrowing more money to pay off our existing loans, much as Ken S. commented above. In all fairness, I was happy to see that they also are going to experiment with seeking new sources of funds. I am not so happy that these new initiatives are expected to contribute half a million bucks to next years budget, heavily front end loaded with $150 k in this current quarter. ( The next 8 weeks or so).
    Well, I wish them luck in their endeavours. If they only manage to pass the motion restricting election debt, then there will be hope for the election after the next election. We are going to have to do some serious rebuilding after this crew is done for.

  28. Matthew:

    A resolution restricting election debt is only good if the new Council chooses to follow the dictates of the previous one. (Or that the existing Council decides to follow its own resolutions.) I’ve never seen much evidence in the past that any GPC Council was self-aware enough to even understand, let alone do that.

  29. “In all fairness, I was happy to see that they also are going to experiment with seeking new sources of funds. I am not so happy that these new initiatives are expected to contribute half a million bucks to next years budget, heavily front end loaded with $150 k in this current quarter. ( The next 8 weeks or so).”

    Note that word ‘experiment’.

    Its a good thing for people to do. Something they should do. [And something Carr as herself a major expense and presumed leadership aspirant would be well advised to deliver.]

    But I was part of a collective history of learning the hard way to keep your necessary optimism for major fundraising improvement separate from your budget planning.

    EXPECTING a half million dollar fundraising improvement in a year, with $150K in a couple months- thats a sick joke.

    Funny how $150K in first quarter new sourced fundraising- thats the same estimate I have for the shortfall of making the quarterly bank loan payment.

    The amount that will actually be covered by going to the private loan honey pot. In fact, as those words were spoken about getting $150K extra new fundraising, someone was already out there soliciting for the loans required.

    Thats not ‘optimism’- its cruel deception.

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