LPCA ExCom starting to face fiscal reality

If Starchild and I could agree that Sep 15 in Millbrae was the most encouraging LPCA ExCom meeting we've ever attended, then that's got to be a sign either that the LPCA is making progress -- or that the apocalypse is nigh.

Don Cowles reported that Angela's sudden departure has kept him from having completely current financial numbers for us, but he stressed again how bad our projected finances are and thus how badly we need to fundraise. Somebody pointed out in response that in recent years much of our funds came from UMP and Operation Breakthrough, but those programs have ended and will not be a revenue source in the future. I took this as underscoring my long-standing contention that we're not going to fundraise our way around the termination of those two huge programs, and that we need to look at expenses.

We read the status update of Audit Chair Jerry Dixon, who wasn't able to attend. He seems to think that he needs thousands of dollars to finance an outside audit that wouldn't even be done by the 2008 convention, and says that Mark Johnson has disengaged from the audit over his disagreement with that need. The ExCom sided overwhelmingly with Mark on this topic. I stressed again that what ExCom and the delegates need from an audit is not the re-checking of the Treasurer's math and the accuracy of his transcription of the numbers from invoices and checks and receipts into our budget. Instead, what we need most is a clearer picture of what the labels for the numbers mean, and another level of granularity for the bigger numbers. The primary mystery to be cleared up is: how does the roughly $45K/yr we spend on office staff and expenses break down, what do we get for it , and can we get by with less? I cited the information in Beau's report (below) as finally explaining what our non-salary office expenses are, and said that an audit just needs to 1) do the same thing for our staff expenses and 2) answer the 13 questions for the audit committee that I earlier emailed out (appended below) . Chuck Moulton was stressed the importance of an independent audit as a confidence-builder for our delegates and donors, but nobody could recall the LPCA ever spending thousands of dollars on one. Ted Brown said audits have been done on a volunteer basis. I asked for an example of prior art for Audit Committee reports, and was pointed to recent convention minutes. The 2005 minutes give a 3-sentence report saying the 2003 records were fine. The 2004 minutes include a one-page report about the 2002 records saying that they're basically fine, but that it would be nice to have more details about office expenses. I was very encouraged by the sentiment of the ExCom that the audit needs to clarify our finances and expenses (and thus identify potential savings) more than anything else.

Beau's report on his handling of office operations since Angela's departure was very encouraging. He has very quickly identified about half a dozen ways to save on recurring expenses, and is working on a proposal to close the office and make its operations more distributed and online. He is documenting the procedures and mechanics of the office's operations, and seems confident that they can be streamlined so as to not require a full-time Executive Director costing us roughly $40K/yr. Since a dollar saved is equivalent to a dollar fund-raised, it looks to me like Beau is poised to become by far our top-performing fundraiser.

California Freedom is costing us about $26K/yr to publish. Mark Johnson proposed a moratorium on its production until we are no longer sliding towards bankruptcy, but the idea had no backers due to the obligation we have to produce CF for members who pay the full dues that includes a CF subscription. I pointed out that we're spending $9K/yr in layout costs so that CF can have nice columns and stories that break across pages, whereas the layout costs of the similar email "eFlyer" we've started producing are zero. I suggested that $9K/yr in layout costs are a pretty extravagant way to spend members' money as we slide toward insolvency. There seemed to be wide sentiment for finding some cost savings here, but Cam McConnell said the meeting was almost over and that we should work offline on bringing our newsletter expenses into alignment with our membership model. Chuck Moulton suggested that dues should finance the newsletter, recurring donations should finance office/staff operations, and fund-raising should be for specific programs. I think that's almost right, except I would say that dues should finance both the newsletter and core office operations (renewals, database, etc.), and that all other programs and non-essential operations should be financed by program-specific fundraising and program-specific recurring donations. This would allow the funding behaviors of our members to act as a clear market signal telling us how much they value our various activities.

The committee adopted the proposal Chuck and I put on the agenda to post human-readable contact info on the LPCA web site for ExCom members who desire to do so.

Chuck and I also put the filling of LNC vacancies on the agenda, but this turned out to be the one dim spot of the meeting. Aaron Starr is now LPUS Treasurer and so his LNC seat as our rep (alongside M Carling) is now effectively vacant, with 2nd Alternate Scott Lieberman routinely filling in for him. Ted Brown moved to formally put Scott in Aaron's seat, but the motion was divided into vacating the seat and then promoting Scott. The first motion succeeded, but there was dissent on the second. Lawrence Samuels said that Scott was "one of these reformers" and was "pro-war". I quoted from a recent email from Scott saying "basic non-interventionism, combined with overwhelming retaliatory military force, is the best way to go." This satisfied Bruce Dovner and perhaps others, but the result was that Scott lost a narrow voice vote in which about half the committee abstained. The agenda item then ran out of time before we consider whether to make Scott 1st Alternate and to consider me for one of the open spots. (It now seems unlikely that I would have won one, as I had just cast the only vote against endorsing an anti-war rally sponsored by ANSWER, which is led by marxist-leninists from the Workers' World Party.)

In other news, the committee voted (over the nays of Ted, Chuck, and me) to make Starchild push his chair back from the table, and he complied. Various members of the committee successfully moved to allow Starchild to be heard as raised his hands at various points, and his comments were quite constructive. Afterward he agreed with me that this was the most encouraging ExCom meeting he'd ever attended.

From the gallery, Brian Miller spoke in favor of a resolution that the LPCA call on the Governor to endorse the gay marriage rights bill before him, and also announced an extremely generous $500 donation to the LPCA. During the public comments at the beginning of the meeting, Miller briefly and elliptically asked the ExCom to address the recent unpleasantness regarding Tim Campbell's remarks about Angela Keaton, but the committee took no official action.

-----Original Message-----
From: Brian Holtz [mailto:brian@holtz.org]
Sent: Tuesday, July 17, 2007 11:40 PM

I spent the evening studying the reports available to members and came up with a set of high-level questions that I as a member would want to see answered by the Audit Committee and the larger LPCA financial management team.

June Balance Sheet

• What are the details of the "current liabilities" ($10K - county distributions?) and "loans payable" ($3K) mentioned in the June report?
• What is "deferred revenue"? The convention minutes show it dropping from $20K to $5K over CY2006, and the June report shows it back at $20K.
• How much (if any) of the $51K in accounts receivable in the June report is not OB pledges? Was the growth from the $30K reported at the April convention purely the result of discovering new OB victories?

2006 Actuals

• The convention report says 2006 recurring gifts totaled $57K, but the June report reports $21K more revenue than the convention report, with recurring gifts only at $35K, and a new category of "performance-based gifts" at $43K. I take it this is revised accrued 2006 OB pledge revenue to be collected in 2007 as a result of OB victories discovered after the convention? If so, what is the nature of the $15K of additional performance-based gifts anticipated in the budget adopted in June?
• Why were county party distributions so low in 2006 (~$12K) compared to the previous four years ($33K - $44K)? Dues revenue was $54K in each of 2005 and 2006, but was $44K in 2005.
• Can we break down the 2006 $10K of "other revenue" to one more level of detail? The March minutes say that $5K is list rental and $800 is interest. Is the other $4K all CF advertising revenue?
• How does the $10K in 2006 direct mail solicitation and $3K in telephone solicitation roughly break down between the possible purposes e.g. membership prospecting, membership renewal, pledge solicitation, OB solicitation, and cruise attendance solicitation? We should try to break down expenses by purpose/program as well as by type (e.g. phone vs. mail).
• The March minutes report $4K in 2006 HQ travel and $3K in "outside services". Could we get about a sentence more of description for each of these?
• The March minutes report almost $3K in telephone expenses in 2006. How did we spend that much? AT&T says it offers businesses unlimited long-distance calls for $20/month ($11/mo the first year). I bet Richard Rider could hook us up with some kind of unlimited long-distance plan that would cost only a few hundred dollars a year.

2007 Budget

• What will be done with the $15K budgeted for campaigns and elections in 2007? If this is for finishing the discovery of 2006 OB victories, then why do we accrue new 2007 OB revenue discoveries against 2006, while accruing new 2007 OB expenses against 2007? Is there any way to avoid spending any of that $15K?
• Why are member communications budgeted at $24K for 2007, vs. $18K in 2006? There doesn't seem to be a strong relationship between issues published and expense. The figures I have are: 2002: 9 @ $12K, 2003: 11 @ $13K, 2004: 12 @ $20K, 2005: 12 @ $28K, 2006: 9 @ $18K.
• Why are we budgeting $20K for member recruitment in 2007 compared to $300 in 2006, while projecting a drop in dues revenue (from $54K to $50K)? What do we think 2007 dues revenue would be without spending that $20K? Don's spreadsheet shows nothing being spent on recruitment from 2002 - 2005.
• What are the "other fundraising costs" of $5K in the 2007 budget, and why are we budgeting $20K in direct mail fundraising? The analogous figures for these categories were: 2006: $15K, 2005: $12K, 2004: $6K, 2003: $7K, 2002: $15K. What do we think 2007 dues revenue would be without spending that $25K?

The Dallas Accord: RIP 1974 - 2006

Iraq tops many polls as the most important issue of the day. But in ten years, Iraq will likely be almost as irrelevant to American politics as Monica Lewinsky and impeachment are today. For the timescale on which the LP needs to strategically plan, the antiwar issue will have even weaker legs than it had in 2004, when a perfect antiwar storm for the LP yielded only a few raindrops. Our party's strategy needs to be built on issues chosen for their

• left/right balance,
• multi-decade legs,
• favorable longitudinal demographics (i.e. appeal to the young and/or parents),
• differentiation from other parties -- or at least opportunity to be seen as the trend-setter, and
• solubility by market- and freedom- oriented approaches endorsed by mainstream libertarian economists and think tanks.

These criteria point to issues like:

• healthcare
• retirement security (i.e. the S.S. pyramid scheme)
• education
• market-smart environmentalism
• victimless crime
• gay rights

The unified field theory that can promote freedom and progress in all these areas simultaneously is destatization through decentralization -- eliminating federal control of these issues so that the less-free states and localities have to eat the dust of (and respect the decisions of) the more-free states and localities. I'm only recently realizing how tragically important it is that the LP has what amounts to serious brain damage in this area. Radical federalism -- maximizing competition among polities according to what political principles they follow -- is the best hope for both libertarianism broadly and (paradoxically) anarchism in particular.

However, the LP has an anarchism-sized blind spot that makes it formally oblivious to the critical importance of the institutional design of government. The LP's anarchist minority has for over three decades ensured that the LP is utterly irrelevant to the great debate (can you say Public Choice Theory?) in America about the institutional design of government -- a debate in which the broader libertarian movement has played an influential role. Even though constitutionalism has been the central campaign theme of nearly every Libertarian presidential candidate, anarchist groupthink and inertia has ensured that the LP's official position has been that all the levels of government are indistinguishably evil.

This blind spot, this brain damage, this anarchism-shaped hole in the LP's cerebral cortex, has a name: the Dallas Accord. This was the LP's 1974 political-suicide pact in which the anarchists made the minarchists revoke the 1972 Platform's endorsement of the existence of the state, in exchange for the dubious concession that the Platform would not explicitly say that the state would be formally abolished once the LP had finished eliminating all the state's roles and tools. The Dallas Accord was unceremoniously repealed at the 2006 Portland convention, not so much through the infamous plank retention vote, but rather by someone slipping in this sentence: "Government exists to protect the rights of every individual including life, liberty and property." (I think the hero here was Mik Robertson, who was in charge of consolidating the old Crime and Victimless Crime planks. The sentence was never quoted on the 2006 PlatCom email list, and I have no record or memory of any of us on PlatCom or the Convention floor objecting.)

Tom Knapp in 2003 called for his fellow anarchists in the LP to trade in the 1974 Dallas Accord and, for the good of the party and the cause, make the LP "an open organization, not only representing, but welcoming, all people who want less government and more freedom." Let's finish that job in Denver.