Why are we here today

1
Why are we here today?

• To understand
• - The Boards decision (on July 18) to rent
  unused office space of AINVA
• The conflict (for-profit business by nonprofit)
• Preliminary steps for business

2
Relevant background

• Board Meeting on June 17
• - Identified insufficient fund as central issue.
• Susan White generated rental idea.
• - Committee formed to explore options and
  strategies to generate additional funds.

3
A need for more funds

• Insufficient funds forced cancellation of two
  prescheduled AINVA programs in the past two
  months
• - Asthma Walk
• - Burke Swimming Competition

4
Assumption and reality

• Many of us at AINVA feel that Programs and
  Services funds have been wasted in maintaining
  the property.
• Figures show only 2 (21,000) of the total
  revenue (631,634) goes to property maintenance.

5
Distribution of revenue
6
Missed target

• AINVA target is at least 75 for Programs and
  Services. Did not meet target. Need to increase
  funds.
• Can AINVA cut down on staff or salary? No.
  Because we have only 9 full-time staff, and
  average salary is 42,000/yr.

7
Boards decision

• Board decided AINVA can rent 4 of its 6 office
  rooms to outside party(s). Idea borrowed from
  Guthrie.
• Guthrie Theater launched Costume Rental LLC in
  partnership with the Childrens Theater. Revenue
  pays for storage cost and generates cash flow.

8
Financial/Social implications

• If 4 rooms (2000sf ) are rented out at the
  prevailing rental rate of 28psf, AINVA can
  generate an estimated 672,000/yr.
• Additional revenue will help AINVA achieve target
  of putting 75 back to Programs and Services,
  without cutting down on administration and upkeep
  costs.

9
Legal/Ethical issues

• To increase donor confidence, AINVA should have
  its annual audit readily available for review
  (from Aug 01, 05).
• It must be understood that the business is
  separate from, but in support of AINVA.

10
Challenges

• - AINVA is not a typical office building. It has
  inherent flaws in office design.
• This limits number of potential customers.
• - Besides, rental business is not AINVAs area of
  expertise. It doesnt have resources to carry out
  business without outside help.

11
Points to ponder

• Can AINVA provide initial investment (for a
  year)? Yes. Business has potential to pay back
  investment cost.
• Can staff contribute time/skills (for 12 months)
  to help business? Is it feasible? No. Number of
  staff low. Has no subject-area expert(s).

12
Preliminary steps

• Must have a business plan. (by Aug 29, 05)
• Must estimate initial set-up cost, annual
  operating cost, and possible revenues. (by Aug
  29, 05)
• Must seek consulting service (Sept 29, 05) or
  must form a Rental Team (Oct 15, 05) to include
  at least one legal counsel, accountant, office
  space rental real estate agent.

13
In short

• - Board understands AINVA mission to disseminate
  information at grassroots, not to get distracted
  in profit-making business.
• - Profits from rental business will be put back
  to enrich programs and services.
• - AINVA can stay credible to its donors and still
  be able to do its rental business on the side.
• - To get started, it needs outside consultation
  and separate management to handle this venture.