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

A meeting of the Finance Committee of the Internet Society (ISOC) was held on Wednesday, May 9, 2018 at 13:00 UTC. In attendance were Sean Turner, Treasurer and Chair of the Finance Committee with Richard Barnes, Gonzalo Camarillo, Olga Cavalli, and Hans Petter Dittler as members of the Finance Committee.

Also in attendance were ISOC staff Sandy Spector, Chief Financial Officer and Andre Copelin, Chief of Staff and John K. Marshall, Vice President & Portfolio Manager Director and Trip McLaughlin, Executive Director, Morgan Stanley Wealth Management.

Sean called the meeting to order.

Financial Advisor Update

Morgan Stanley gave an update on the performance of the Continuity Fund account in 2017 explaining that the final balance showed an 11.39% return on investments It was noted that this high investment yield was not typical and may have been due to several factors including the current nature of the European and US markets in 2017.

Morgan Stanley predicted that in 2018 the funds performance will more closely resemble the results of other moderately conversative investment funds as those European and US markets become more stable. They noted that the Q1 2018 results of the Continuity Fund were likely reflective of this projected stabilization as they showed a 1% decrease in return on investment

Morgan Stanley gave an update on the Endowment Fund and Cash Management Account. The Endowment showed a 15.46% Return on Investments. Morgan Stanley also noted the strong performance of the account’s Environmental, Social, and Governance (ESG) investments.

Lastly, Morgan Stanley noted that the guiding policy statement for the ISOC account dated July 22, 2012 ideally should be reviewed annually and if the Board agrees to continue the investment approach as stated in the policy statement, that the date of the updated approval be added to the statement. This approach garnered approval from members of the FinCom.

Q1 2018 Financial Results

Sandy reviewed the results of the Q1 2018 financial report For the first quarter of 2018 Internet Society’s net surplus before interest was $2.259 million which exceeded the budget of $1.217 million. Due to investment and foreign currency losses during the quarter, net surplus after interest was $2.055 million. Q1 financial results exceeding the 2018 budgeted amounts was attributable to lower than planned expenditures, partially offset by lower revenue.

Sandy noted that revenue appears to be on budget as it recognized $11.15 million revenue which was only slightly lower than the budgeted amount of $11.24 million. Also noted was a campaign underspend of $572K which Sandy then projected an uptick in this category in Q2. Members of the FinCom appreciated this breakout of the campaigns in the report. Sandy then discussed the results of program costs, personnel and operating costs, board governance expenses, IETF results, temporary restricted funds, and the board designated funds.

Sandy then reiterated the cash and investments balances as previously reported by Morgan Stanley.

IASA 2.0 Transition

Gonzalo gave a brief update on conversations regarding IASA 2.0 Transiton. The members of the FinComm agreed that further discussions were needed to review ISOC’s options for support funding of the IETF. Sandy agreed to set up a meeting to further discuss this issue.

Foundation

Sandy gave a status update on the formation of the Internet Society Foundation. She informed the Committee that the Foundation’s letter of determination from the IRS that the Foundation is a Type 1 Supporting Organization exempt from federal tax under IRS Section 501(c)3 had been received. She indicated that a further update will be given to the Board during the June Annual General Meeting.

Adjournment

The meeting was adjourned at 14:10 UTC.