Board Finance Committee (BFC) Minutes
BFC Attendees: Sébastien Bachollet, Cherine Chalaby (Chair), Chris Disspain, and George Sadowsky
Other Board attendees: Steve Crocker and R. Ramaraj
Staff Members Present: Akram Atallah, Chief Operating Officer, Xavier Calvez – Chief Financial Officer; Kurt Pritz, Chief Strategy Officer; Michelle Bright, Samantha Eisner, Diane Schroeder, and Amy Stathos.
The following is a summary of discussions, actions taken and actions identified:
- BFC 2013 Schedule: The BFC reviewed its FY13 work schedule.
- FY13 Budget Recap: The BFC reviewed the FY13 Budget recap.
- Contingency Fund: The BFC reviewed the status of the Contingency Fund, which is currently at US$3.4 million.
- Operating Fund: The BFC reviewed the operating fund status.
- Reserve Fund: The BFC reviewed the status of the reserve fund currently at US$54.4 million.
- New gTLD Account: The BFC reviewed the status of the New gTLD Accounts, currently at US$352.3 million. ICANN is preserving the capital in these accounts.
Reserve Fund Target Setting: The BFC discussed how ICANN might set a target for the size of the reserve fund, including benchmarking against other organizations. The CFO confirmed that there is no specific requirement that ICANN must meet, but there are a couple of methods that could be adopted: a ratio of operating funds (for asset maintenance or renewal), or funds sufficient to cover wind down costs. The benchmarking work identified organizations with reserve funds ranging from three months to two years of operating expenses, with most around one year of operating expenses. In those applying the wind down cost method, they evaluate all the costs that the organization would occur to stop all contracts/assets and bring the operation of the organization to a close. The BFC noted that as a decision is made on the target for a reserve fund, a clear rationale will be needed to inform the community and future Board members, and to assist in future reviews. The rationale should include a discussion of why the fund was set at the amount selected, as well as possible uses for the account. A discussion was had on the possibility of identifying a minimum and a maximum target, or the possibility of creating a rolling forecast based on the future budgets.
- Staff to organize all discussion points raised within conversation and present to BFC.
- Staff to develop paper for finalization and decision in the BFC.
FY14 Budget Improvements: The BFC received a report on the community inputs and work to improve the FY14 budget planning process, noting that work will be finalized with the community while at the Toronto meeting. The community discussions have focused on solutions that are capable of implementation. The main improvements that will be implemented are the mapping of the Strategic Plan to the execution structure for ICANN's operation; expanding the framework phase to allow for more detailed information and provide more time for interaction with community; and advanced scheduling of community calls. The BFC discussed the need to coordinate this work with the strategic planning cycle. The BFC requested a concrete recommendation on improving the budget process timeline. The BFC also discussed the community working group role in refining the budget process.
- Staff will provide a concrete recommendation to the BFC on the timeline and process by 20 November 2012, assuming the community work concludes in Toronto. The proposal is expected to be implementable in this cycle.
- Formalization of the Contingency Fund amount: The BFC discussed the formalization of the Contingency Fund, such as the exact percentage for the fund and process for accessing and monitoring. The BFC suggested that a historical review of the fund, to see if the prior size has been sufficient for requests, might be helpful.
New gTLD Program Changes: The BFC discussed that the FY13 budget was decided before the Board decided to stop digital archery in the New gTLD Program. Under digital archery, the evaluation of applications for new gTLDs would be evaluated over two years; the applications are now being evaluated over one year, which requires the escalation of costs previously estimated over a three-year budget. The BFC discussed how to reflect this in the New gTLD Program budget.
- Staff to produce new forecast to account for variance from the FY13 budget related to when the costs for evaluation of new gTLD applications in the first round will be incurred.
New gTLD Financial Reporting: The BFC discussed the initiation of standard and regular reporting of the revenues and expenditures in the New gTLD Program to allow tracking across time. This would also track the payments back to the reserve fund, etc. This more specific reporting would be in addition to the reporting already underway.
- Staff to provide a template for this additional reporting.
- Office Space: [Redacted for confidentiality]