By Michael Baadke
The American Philatelic Society’s board of directors conducted a telephone conference Nov. 2 to discuss, among other matters, the proposed 2016 APS and American Philatelic Research Library budget and the proposed guarantee by the APS of a line of credit to complete construction on the library.
Board members participating in the meeting were: president Stephen Reinhard, vice presidents Alex Haimann, Yamil Kouri and Mick Zais, treasurer Ken Nilsestuen, secretary Ken Grant, directors-at-large Nick Lombardi, Kristin Patterson and Steve Zwillinger, and past president Wade Saadi. Director-at-large W. Danforth Walker did not participate.
Among those also present and participating in discussion were APS executive director Scott English, APS chief operating officer Ken Martin, APS controller Rick Banks, APS manager of shows and exhibitions Megan Orient, APRL president Roger Brody, and APRL treasurer Bruce Marsden.
Executive director’s report
Scott English addressed the areas of finances and APS membership during his presentation to the board. The society is currently experiencing a budget surplus of more than $200,000 over the planned 2015 budget, in large part because of vacancies that occurred on the APS staff early in the year, and the longer-than-anticipated effort to hire a new executive director (the position English filled in August of this year).
English reported APS membership numbers at 31,171, a decline of 767 members from this time last year. Although a bump in membership during the current renewal season is likely, “I do not expect we’ll reach 32,000, which is where we closed the year in 2014,” English said.
The society’s 2015 fundraising efforts raised $472,174 in cash donations through the end of October, including 322 donations during October that raised $41,426. Roughly one-quarter of that amount, English said, consisted of donations made in response to a direct appeal in association with a matching grant for the society’s Stamps Teach program.
A joint APS-APRL strategic planning committee has been formed with seven members, including three from the APS board (Ken Nilsestuen, Dan Walker and Mick Zais), three from the APRL board (Roger Brody, Bruce Marsden and Charles Wooster), and one member who serves on both boards (Steve Zwillinger).
The committee has met twice so far, English said, reviewing the APS-APRL operating agreement, the legacy contribution policy, space utilization for the current library space, financing for the library construction, and a joint strategic plan.
The committee for the Campaign for Philately reconvened after 14 months of limited activity and met Oct. 26, English reported. The group’s discussions covered three basic types of giving to the society: annual giving, planned giving, and major gifts (large contributions).
Raising funds to complete the new library is a prominent goal for the group, to reduce the amount of outside funding required for completion. The development of a marketing plan to promote this goal is anticipated.
Plans call for work on the library to be completed in summer 2016, with a formal opening in October.
APS show activity
The APS manager of shows and exhibitions, Megan Orient, told board members that she was looking for an appropriate venue for the Tiffany Dinner during World Stamp Show-NY 2016. Although the dinner usually draws about 75 to 100 individuals, Orient said that some estimates suggested 150 to 250 might attend the dinner in New York.
A concern is that the potential high cost of the dinner could cause members to stay away from the event.
Rather than focus on making the dinner profitable, board members discussed creating a break-even event that could, at the same time, raise funds from other activities, such as an auction.
Elections review board
The APS executive director and the editor of the society’s journal, American Philatelist, are charged with making decisions related to publishing campaign ads for APS candidates and “promoting the discourse among Society members.”
In the event of a disagreement about such decisions, a member will now have the option of appealing to a newly formed elections review board.
The APS election guidelines have been revised to reflect this change:
“The Society’s ethical standards as stated in the applicable By-laws, applicable Code of Ethics and this Policy apply during the election process. The Board of Vice Presidents shall deal with election-related complaints against a candidate or a member (including violations of the applicable By-laws, applicable Code of Ethics, and this Policy) pursuant to the APS' usual complaint resolution procedures. A separate three member Election Review Board will review candidate complaints about election-related decisions of the editor and the executive director. An Election Review Board will be appointed by the president with the concurrence of the APS Board on or before January 30 of the year in which the election is held. Members of the Election Review Board shall be limited to former officers and directors of the Society who are not currently in office, candidates for office, or closely associated with candidates for office.”
Ron Lesher, Allen D. Jones and Denise Stotts are the appointed members of this new board.
2016 APS and APRL combined budget
Nilsestuen presented a summary of the combined 2016 budget for the APS and the APRL. That budget forecasts a net surplus of $271,000, which includes sustaining and contributing donations from members totaling approximately $79,000.
A change in the society’s employee health insurance costs, an increase of 14.3 percent for 2016, resulted in a total cost increase of $27,000, with $12,000 passed on to employees, who will also see a deductible increase from $500 to $2,000.
The budget calls for a 2 percent increase in employee salary packages, with no bonuses and no increase in retirement funds.
Discussion initiated by Wade Saadi asked why the employees must shoulder part of the health insurance cost increase if the society has a budget surplus of $271,000.
Nilsestuen explained that employee costs come from the operations area of the budget, which has a surplus of $14,000. Using $12,000 to fund the health care increase would diminish the operations budget surplus to around $2,000.
While the insurance coverage is already in effect, Saadi suggested reviewing the situation at the Jan. 28 board meeting at Ameristamp Expo.
“We maybe should be doing a little bit more for the employees,” Saadi said.
The APS budget as presented was approved unanimously by the board members.
Line of credit for the APRL
Completing work on the American Philatelic Research Library requires up to $600,000 in addition to funding already allocated, which breaks down to $400,000 in additional construction costs due to permitting changes for occupancy, up to $100,000 for shelving, and up to $100,000 in relocation costs and furnishings.
For that purpose, the library board expects to accept a line of credit from First National Bank, and the APS board members began a discussion about co-signing or guaranteeing that line of credit, so that the library could obtain more favorable terms from the bank.
English explained that the full line of credit would be available, but perhaps not all of it would be used.
“It is my hope that with the Campaign for Philately we will be able to raise as much of that money as possible without having to draw into that line of credit,” English said.
Saadi said that he would like to recommend that the board provide that support for the line of credit, and spoke about friction that has existed recently between the separate boards of the APS and the APRL.
“I think that some of the things that have caused the friction are these loans to finish the library,” Saadi said.
Saadi described the various loans, long-term liabilities and guarantees backed by the APS totaling more than $9 million, as evidence of support the APS has given the APRL in the past.
“I would like the APRL to give the APS a lease for the space it currently occupies that doesn’t have a rent increase until such a time when the loans are paid back, kind of a quid pro quo,” Saadi said.
“The reason for that is I think this is one of the last remaining sore spots between the two boards,” Saadi added.
The APRL owns the American Philatelic Center in Bellefonte, Pa., which houses the library. The American Philatelic Society is a tenant in the APC building.
APRL President Roger Brody expressed reservations about Saadi’s proposal, saying the subject of the lease agreement between the two boards, which is under consideration by the strategic planning committee, was being interjected into the terms of the line of credit guarantee.
“Frankly, I think you’re going to find opposition on the APRL board to this addendum to the loan guarantee,” Brody said. “Keep in mind that the $9 million we talk about is not an obligation of the APS; it’s an obligation of the APRL, which we are capable of financing over a period of time.”
Nick Lombardi proposed that the APS board guarantee the line of credit without requiring the lease agreement guarantee that Saadi proposed.
“The APS and the APRL are for all practical purposes and will always be for all practical purposes one organization,” Lombardi said. “In my mind, give the guarantee to the APRL. If we want to talk about what theoretical rents we’re going to pay in the future, do that for another time, but let’s get this thing done and over with.”
After additional discussion, the board voted on the motion by Saadi, which Secretary Ken Grant read aloud:
“A motion that the APS serve as guarantor or co-signer to a $600,000 line of credit for library completion and occupation, contingent on the APRL maintaining the APS lease at its current level until the mortgages or loans are satisfied.”
A roll call vote resulted in yes votes from Haimann, Kouri, Zais, Patterson, Saadi and Grant; and a no vote from Lombardi. Nilsestuen and Zwillinger abstained.
The motion passed, and will be sent to the APRL board members for their consideration.