Minutes of the Meetings of the Finance Committee of the Internet Society

A scheduled meeting of the Finance Committee of the Internet Society (ISOC) was held on Thursday, February 26, 2015 at 14:00 UTC. In attendance were Jason Livingood, Treasurer and Chair of the Finance Committee, with Dave Farber and Sean Turner as members of the Finance Committee. Hiroshi Esaki sent his regrets.

Also in attendance were Kathy Brown, ISOC’s President and Chief Executive Officer, Greg Kapfer, Chief Financial Officer, and Sandy Spector, Director of Finance. John Marshall and Trip McLaughlin from Morgan Stanley were also in attendance for the first part of the meeting.

Jason called the meeting to order.

Investment Results

John Marshall from Morgan Stanley walked the Committee through Continuity Fund 2014 year -end results. John noted that the earnings for the Continuity Fund exceeded the benchmark and accomplished the goals outlined in Internet Society’s Investment Policy.

Trip McLaughlin from Morgan Stanley walked the Committee through investment results of the $10 million PIR Board Designated Contribution, noting that the funds were held in liquid investments with a high priority set on protection of assets rather than optimizing the rate of return. Greg noted that the maturity of these funds was established to be no more than 24 months to preserve principle and to estimate the potential need for liquidity. Greg and Kathy noted that the use of a portion of these funds ($5 million as a rough estimate for discussion) might not be required within that 24-month timeframe. Greg asked John and Trip to assist the Committee in reviewing the returns and risks that might be experienced with a longer investment horizon. Greg was tasked with following up on this topic for presentation to the Committee.

Continuity Fund Review

Greg reviewed the target for the Continuity funds, noting the current balance of $14.6 million. This amount includes $.5 million that was the result of ISOC’s 2014 surplus, including earnings on its invested funds. Greg and the Committee agreed to be prepared to review Continuity Fund long-term targets at the annual general meeting. The Committee also asked Greg to review Public Interest Registry’s reserve funds and practices as they might impact ISOC, working with PIR’s CFO.

2014 Results

Greg reviewed 2014 unaudited financial results previously submitted to the Board of Trustees at the February meeting in Singapore, including a draft 2014 Statement of Operations and a draft Balance Sheet for December 31, 2014. Greg noted that favorable revenue, as well as, lower program and IETF costs resulted in an operating Surplus for 2014 of approximately $1.0 million. Kathy noted that at its February meeting the Board had directed management to add $.5 million of the surplus to the Continuity Fund, with the remaining surplus to be used to fund a Curation Project and other programs for which the Finance Committee will be apprised.

AOB

The Committee noted the next meeting was scheduled for May 7th.

With no further business, the meeting was adjourned at 15:00 UTC.