2011-01-30 Finances

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  • date: 2011-01-30
  • time: 1800
  • attending: Strand, Willow
  • summary: make it so we never almost miss rent again

Contents

Goal

  • main goal is community, paying rent is a symptom of this
  • organic growth, not forced
  • balance money for starter projects with money we just don't have
  • need to have an emergency fund
  • more wiggle room than we currently have
  • fail early and often
    • This is a fail, but it's not time to fail out
  • develop self maintenance

General Notes

  • we anticipate 70 members at around $50/month for right now : 3500$
  • maker/hacker culture as being last-minute fixers, might just pay dues in chunks as a donation of sorts
    • working together, a bit more slowly, means we'll be able to accomplish much more than we would be able to do on our own
    • paying in advance being incentivized rather than needing to ask for back rent
  • expenses are often about half of what rent is
  • we don't invite people to become members because we want their money, we invite people because we want their hands, brains, and hearts on these projects, in this community
  • need to reinvest in community with project funds

Strand's Estimated Budget

The following budget is very rough, and all numbers are based off of rent.

  • Rent = Rent (Tautologies are taught.)
  • Utilities = Rent / 2
  • Emergency Fund = Rent / 4
  • Project Fund = Rent / 4

The sum of rent, utilities, a regular emergency fun contribution, and a regular project fund expenditure is two times rent.

Right now, Jigsaw is only capable of paying Rent and Utilities. In fact I would recommend contacting our utility providers and negotiating with them, as this may allow us to continue to pay rent during this budgetary crisis.

I estimate, based on past experience, that Jigsaw will be capable of maintaining a membership of seventy members contributing an average of fifty dollars a month. This is slightly higher than past levels, but to keep the estimates simple we are not including donations, which historically have been approximately twelve percent of our revenue. Put another way, if Jigsaw has 62 members contributing an average of fifty dollars and receives twelve percent of its income from donations, then it has the equivalent of seventy members.

In the fall, Jigsaw had membership numbers between fifty and sixty. each member contributing abut fifty bucks a month.

Our budget will be dictated by our current location for the next five months. After that point I recommend that we relocate to a space which has a rent of 1750 per month, and plan on building our resources in that location for one or two years.

This budget assumes that we may need to take on a loan of 5000$ and repay that loan in payments of 250$ per month from July 2011 to June of 2013. At that rate of repayment this loan would actually have a larger APR than many business loans. We would face difficulty in getting loans however, as we have existed for fewer than three years.

Time Period Rent Utilities Debt Emergency Fund Project Fund Membership Dues Total Outgo Total Income Total
February - June 2011 -3100 -1550 1000 0 -100 3500 -4750 4500 -250
July 2011 - June 2013 -1750 -875 -250 -437.50 -437.50 3500 -3750 3500 -250

Dues paid in advance with a discount may function similarly to a loan... And the rate of discount we have on dues prepaid is seventeen percent, so if we have faith that we will be able to maintain an organization of at least 70 members contributing an average of 50 dollars a month, a loan is not a terrible idea.

Both of the present and future budgets have shortfalls of 250 dollars... However the future budget has a feature that our current budget lacks, inessential expenses. If there is a bad month, we do not need to pay out of the project fund or in the the emergency fund, it's merely a really good idea that we continue to pay into those, as they are essential to us being able to improve our space, attract new members, and prevent budget crisis in the future.

Issues at Hand

  • dues reminders not being sent out
  • sort on making rent
  • win conditions for Jigsaw in the next 2.5 years
  • a 'primary strategy' for ensuring that Jigsaw's finances are sustainable

Potential Solutions

Membership

Meeting all financial demands through membership dues is our end goal. Anything else should be icing on the cake.

ways to work on this

Fundraisers

Events for which the purpose is good times and bringing in money

  • Primary reason for celebrations is celebration (confer James Carlson's What is a group

Upcoming event: March Fundraiser

pros and cons

  • timely to organize
  • amount of money going in not always what comes out
  • getting enough people - demands promotions

Grants

Writing to city, state, and other entities for money to support our events and community

pros and cons

  • take time and research to write
  • take time to return
  • report on status of thing grant was written for (good and bad)

Loans

  • Apply for loan to cover expected deficit
  • Loan for $5k paid back over two years is around $6k (about 10% - which is less than the discount we're giving for paying 6 months in advance)

pros and cons

  • not just making money, but also interest
  • beholden, can't just walk away if things go south

(I have a strong opinion about not taking on debt. What do we need in order to not take on debt.-Robin)

Appeals to the Community

Request support from community members

pros and cons

  • member/community based, beholden to people we know and love already
  • possibly lower interest
  • if we fail, you know the people you are responsible to

Need an Emergency Fund

Need fund that covers 3 to 6 months of no income at all

  • proposed $437.50/month until $10,500 is reached (6mo at $1750/mo for rent)
  • try to contribute one quarter of rent's total each month to emergency fund

I don't have a workshop problem.

The first win is automatic Funding the project (Jigsaw) should be tricky, but not impossible. The "big win" isn't making rent

It's making community
Then making things larger than the individual.

Our budget is a tool which can assist people in being awesome

Problems I want to address in our budget
  1. Recurring issue of being short on rent.
  2. Project fund
  3. Emergency fund

invitation and expectation for involvement

Notes towards a primary strategy

  • Organic growth
  • sustainable budget
  • word of mouth
  • good experience
  • a message that doesn't need shaping
  • a method of self-maintaining

Strand's pre-meeting notes

My pitch

On marketing and money

Seth Godin says something really interesting: "BMW has a marketing department called Engineering and they keep making stuff that people choose to talk about."

How do we support Jigsaw financially?

We focus on being welcoming, genuine, hosting excellent events, inviting people back with permission, telling folks they are capable, never deriding or name calling others, and not being an exclusive clubhouse.
It's not "we're great, we'd like you to come back," it's "you are great, would you please come back."
@schwern says: "Criticize things, praise people."

1 good experience might get someone to tell a friend. 1 bad experience will get someone to tell 10 friends negatively. 1 great experience will get people to bring their friends.

Why?

  1. We don't have enough hands for this project. Or hearts, or brains.
  2. We don't have enough events and classes.
  3. We don't have people telling others about us enough.

I think the starter project idea is brilliant. And we can't fund it. Maybe we can get through donations, but right now our hands are tied by our budget. Right now our expenditures look like this Pie chart with rent taking up two-thirds, and utilities taking up one-third. Here is what I think they should look like: Pie chart with rent occupying one-half, utilities one- quarter, and both project funds and savings occupying one-eighth.

Our average member contributes about one month's rent to Jigsaw every year.

Based on past performance in the next six months our average member will contribute 50$ a month and we will have 70 members. These numbers may be slightly off, but not much. This gives us a monthly budget of 3500$/mo. Under our current lease our average expenses will be approximately 4500$. We need to pursue getting a loan of 5000-10000$.

If we take on debt of 5000$ in the next six months and move to a space which is 1750$/mo our expenses will be the following for July 2011 t0 june 2013:

Rent: 1750
Utilities: 875
Emergency: 437.50
Project: 437.50
Debt: 250

At the end of 2 years we will have paid 6000 off the debt and accrued an emergency fund of 10,500$, or six months rent at 1750.

After we've paid off this debt and accrued this fund we need to spend the time and effort at 1750/mo.

70 members contributing 50 dollars a month is the likely result if we do our general maintenance... emailing people, etc... And this is best done by hand.

If we don't seem like we really are a community-operated, volunteer-run, genuine group in our communications we will be ignored and no one will tell their friends.

We want this project to be sustainable--which means this big, OMG, we need money, nao! should be our last--which isn't to say we can't do regular polite ask in the future, but we need to make sure we're awesome first.

Seattle is 600,000 people. at 60 members we're 0.01% of Seattle. That's actually a big slice. If we grow to 1/20 of one percent we'll be 300 people. The only way to do that is genuinely connecting, hosting excellent events, and inviting people back.

What Do I Mean When we have someone on hand representing Jigsaw and they make sure the space is ready (tables setup or torn down, etc) and clean. Hopefully this person doesn't spend the hour before the event being our janitor.

During events the host can participate and chat, or just work on his knitting and let folks approach him. During an event she might make a brief announcement along the lines of "this is Jigsaw, this is the donations box, here are ways we communicate (events newsletter)"

Primary Strategy

Our primary strategy in my recommendation is that we pursue:

  1. Organic Growth
    • Word of mouth
    • good experience
    • a message which doesn't need to be shaped
  2. We develop self-maintenance
    • Encourage people to work together and invite people in
    • leadership as using connections to introduce people to another.
    • preferring to build people up
  3. sustainable budget
    • Debt as a stopgap
    • two years to accrue emergency fund
    • reinvest in community with project funds


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