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TREASURER'S REPORT TO THE MEMBERSHIP

We recently received the final version of SCB's financial audit for 2007. SCB received a "clean" report, which means that the auditor found that SCB's financial records fairly represented our financial situation. The tables and analysis presented here are based on the audited records.

Accounting regulations require that we track income and expenses in the year they are legally obligated. This system provides an important picture of our finances, but is not always the most useful representation for SCB members, the staff who administer SCB's programs and budget, or the Board of Governors that provides oversight. Therefore, this report interprets 2007 in light of additional information.

SCB's income and expenses for 2007 are expressed in Table 1 [not included in text versions of the newsletter]. There are three different totals; these are intended to clarify rather than confuse.

"Total" represents our income and expenses for 2007 per accounting rules. Our income includes a one-time payment from Wiley-Blackwell of $500,000; this is part of SCBÕs contract with Wiley-Blackwell to publish Conservation Biology. This one-time payment skews our income upward and results in expenses that are only 89% of income. The Board of Governors decided to budget this payment over seven years, allocating $70,000 to each year from 2007 through 2013. "Total without signing bonus" reflects this allocation, reducing income by $430,000 to represent 2007 more realistically. This results in expenses of 105% of income and a $129,363 deficit for 2007. This deficit, while cause for concern, is not quite as problematic as it first appears. "Total without signing bonus and transfer to BDR" reflects our income for 2007 without the $58,308 transfer to the Board Designated Reserve (BDR), which represented half of the net proceeds of SCB's 2006 annual meeting.

Table 1 does not include funds carried forward from previous years. Funds sometimes are received in one year for multiple-year projects; there may be surpluses in one year that are available in the next; or income may be received in a prior year as when a donor makes an award in December for the following year. Conservation magazine, which shows a 2007 deficit of $110,362, was able to carry forward approximately $69,000 of unspent funds from 2006, reducing the 2007 shortfall.

The fact remains that 2007 was a close year; it is better to maintain at least a modest surplus, and when possible a surplus sufficiently large that we can add funds to the reserve. Because SCB's budget is increasing in complexity and size, we will increase our capacity to monitor income and expenses in real time, making financial data available to managers and the Board more frequently.

The surpluses and deficits among the programs are typical. The annual meeting deficit is largely an artifact of the transfer of funds to the reserve. SCB just about broke even (a deficit of $4000) on the 2007 annual meeting.

Income from Conservation Biology continues to provide major support to many SCB programs even without the one-time Wiley-Blackwell payment, with income of $935,000 and expenses of $443,000. Although revenue from institutional subscriptions is important, so is income from individual members; this later category has shown a decrease after growing for several years. This is probably the result of people accessing the electronic version of Conservation Biology through their library's subscription -- the so-called "free-rider phenomenon.

"Overhead" costs are running under 7%, which is quite respectable. But more probably needs to be spent on development activities given our growing fundraising goals and the difficult climate for fundraising.

Table 2 shows the relationship between planned and actual income and expenses.

Income was 93% of planned with the Wiley-Blackwell payment, or 89% without. Expenses were 84% of planned. Income is lower than planned in large part because $400,000 in income for the annual meeting -- held in South Africa -- is not considered Society income, and because Conservation magazine's income was $200,000 below projection for the year. These apparent deficits were partially offset by the Wiley-Blackwell payment and by higher-than-planned income in Administration, Development, and Policy. Expenses for all programs were lower than planned with the exceptions of Sections, Administration, and Development.

Our balance sheet at the end of 2007 was healthy, with good liquidity and minimal liabilities.

The return on the Board Designated Reserve was a very respectable 9.64%, especially given market volatility. The BDR has lost value in 2008 as has the market generally, but we are in a better position than the market overall. See related note.

David Johns

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