financila model project_april'09 input paper

AIESEC in Ukraine 08-09 │ Financial Model Re-view Project

AIESEC in Ukraine

MC-LC Financial Relations:

LC fees Model

April’09


Current situation (08-09)

MC – is a strategic body the main aim of which is to serve Local Committees and support them

in their growth and goals achievement.

The difficulty on getting fund raising to MC is that it takes time that could be used in LC

Development. While the structure of MC is build according to its ultimate role – so that only one person

in MC team (MC VP ER) is working on MC needs, while the rest positions are focusing on the LCs

support.

Current contribution of LCs to MC budget is about 7% (634227 UAH divided on 42715 UAH

received from LCs), which in fact covers only AI fee 42000 UAH, leaving 715 UAH for covering other MC

administrative and operational costs, as well as infrastructure development and strategic growth

investments.

So in this case the rest 93% of money are supposed to be covered from MC ER area, which

shows enormous dependability of MC (and as a consequecy - the whole country) from external

environment and supplementary activities.

If to take LCs realities into the consideration, the situation is turned out to be vice versa.

Around 60% of its profits LCs get from core activity – X, what is financially sustainable and

healthy. Actually business logic of any sustainable organization is that it should get return on its

investments and its main activity.

Financial Model/LC fees proposal

New financial model is designed, according to mentioned already points during the Spring LCPs

meeting, as well after the working group meeting in Kyiv in April’09 (LCPs Kyiv, Odessa, Simferopol,

MCP (c), MCP (e), MC VP Fin (e)) adjustments, with following aims and characteristics:

Enable MC focus on supporting LCs to achieve performance and growth;


Reduce MC dependability on external environment and create interdependency between our

goals and our incomes, fostering motivation to goals achievement;

Establish interconnection between costs for LCs coaching and profit from core product –

cancelation of regional fund and including this item into the X component of LC fees.

Ensure healthier financial inflow from LCs to MC in order to correspond to AIESEC Ukraine and

Global Assossiation financial operations.

LCs fee is proposed to be comprised of 3 elements:

1st Element: AI fees - payable twice a year according to the the LC cluster*.

Payable in Q2 invoice Payable in Q4 invoice

Affiliation fee 50% 50%

Global IS fee 50% 50%

Strategic development fee 50% 50%

X Mngt support fee 50% 50%

Talent Mngt support fee 50% 50%

Country development fee 50% 50%

Global fund contribution 50% 50%

International trademark fund Mngt

contribution 50% 50%

Individual assessment Tool

contribution 50% 50%

Strategic Meetings Travel Fund

Contribution 50% 50%

Growth Network Fund Contribution 50% 50%

*Reconsidered LC cluster system in order to balance payments up to the clusters (5 LCs in each

cluster), as well as it is taking into the consideration not only external measures, but also internal.

Measures

# Local

Committee

Number of

students in

city (A)

Number of

companies

(B)

Number

of X Re

Number

of

members

in LC (D) Co

effic

ien

t

(Co

ef)

1 Kiev 423400 219633 31 91 0,8770

Cluster #1 2 Ternopil' 17762 7778 61 79 0,4864

3 Lviv 86000 30965 29 55 0,3560

4 Dnipropetrovs'k 88430 53785 22 48 0,3355

5 Donets'k 84903 41351 15 47 0,2878

7 Odesa 76402 43011 8 36 0,2258

Cluster #2

6 Kharkiv 107224 55798 8 20 0,2146

8

Ivano-

Frankivs'k 35000 9434 18 39 0,2123

9 Sevastopol' 28000 12847 10 35 0,1683

10 Simferopol' 55000 17492 8 30 0,1676


11 Mariupol' 25000 8189 12 19 0,1255

Cluster #3 12 Lugansk' 47892 18348 3 17 0,1082

13 Berdyans'k 7000 2956 8 24 0,1062

14 Uzhgorod 14882 4874 6 18 0,0884

15 Rivne 21000 8660 6 15 0,0881

Where:

A - Number of students in the city (should be up-dated on the yearly basis – here data from

2008)

B - Number of companies (should be up-dated on the yearly basis – here data from 2008)

C - Number of X RE in the previous calendar year (here - 2008)

D - Number of members in LC average for previous calendar year (taken from 4 2008 quarterly

Talent Audits as an average)

n - Quantity of LCs in country

i - LC for which coefficient is calcutated

2nd Element: Exchange fee

X component will be counted as fixed sum of money – 300 UAH - taken for each REALIZED TN and

each RAISED EP.

Where this money will be applied:

LCs coaching expenses;

Support for MC Human Resourses (MCP, MC VP LCD, MC VP Fin);

Travel and Fee of Legislation Meetings (IC and IPM) to the MCP ;

Legal issues (trademark registration and MC re-registration);

Basic costs of MC (Infrastructure and maintenance; partial administrative costs).

3rd Element: Development Fund

Development fund is a restricted fund, which is introduced to support specific MC and LCs initiatives

and activities in terms of:

International cooperation development – promo materials for international conferences and

cooperations, participation at the international Growth Days, others GNs conferences etc.;

CEED programs establishment – incoming and outgoing;

LCs legality improvement and case solving;

Infrastructure development ( 20% of the total amount of money in the fund will be allocated to

such expensesn coverage).

The maximum amount of fund proposed to be legislated as 20 000 UAH.

The payments are made by LCs eah quarter in the amount of 330 UAH.

The minimum amount of money in the fund at the end of one AIESEC year is 1000 UAH.

The application and reporting processes are regulated by the compendium.

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Proposal in numbers

Assuming that AIESEC in Ukraine is commited to minimum of 800 X RE we have:

800*300 UAH = 240 000 UAH

Money for AI fee are calculated according to the invoice sent by AI annually in the end of July.

The sum is divided between LCs according to cluster – appr. 42000 UAH - and allocated to 2 payment

periods – before IC and before IPM (accordingly – in Q2 and Q4 LC fees).

Sum of money in the Development fund we will not count, as it is restricted fund and the total

amount of money in it and its target usage will be decided through legislation process.

Total amount : 240 000 + 42000 = 282 000 UAH

This amount would be used:

Description Value, UAH Comments

LC coaching 16 000 Based on MC and NST LC coaching

visits expenses

Travel and Fee IPM and IC 28 838 Based on the value for 0809

HR costs for MCP, 2VPs 36 000

Administrative costs 143 567

Rent and infrastructure maintenance

costs: average 12 000 UAH per month.

Based on the value for 0809

Representative costs 19 130 Based on the value for 0809

AI fee 42000 Based on the value for 0809

Legal 35 000 Trademark registration costs and MC

legality

Total 320 535

So in the end the final result of the application of this value would be:

320 535 UAH - 282 000 UAH = - 38 535 UAH

Basic MC costs Value collected

In proposed model MC costs (AI related, basic administrative and representative costs and cost

connected with LC coaching) are covered on 87% by 3 elements of LC fees.

Main Conclusions

- The LC’s participate in the MC budget allowing to its members to focus more on who to leverage the

results on LC’s (LC Coaching)

- This system should use also regular reports on where the money is being applied in order to increase

the accountability .


Main Next Steps

- During next 10 days the questions are appreciated – to the MCP current

and elect, MC VP Fin elect, LCPs working group.

- On the 1st week of May LCPs 08-09 should conduct virtual legislation of the

proposed model.

- The LC fees Q2’09 are calculated: 1) with old X fees (15 € per X RE), and 2)

old LC clusters for the last part of AI fee 08-09 distribution.

Proposition : to make X fees Q2’09 calculation for the period of time from

15th March’09 till 25th June’09 including (instead of 15th March-15th June). So

releaze the calculated LC fees for Q2’09 on 25th June, and LCs to make

payments till 30th June.

Reasons: a lot of X of term 08-09 will be RE after 15th of June; MC 08-09

current financial situation and striving to leave positive balance for the MC

09-10 and no debts.

- Taking into account transformation period from old to new model, the 1st

part of AI fee 09-10 to be included into LC fees Q2’09 calculations (based

on the new LC clusters for AI fee distribution).

Reasons: MC 09-10 able to pay 1st amount of AI fee in time at IC 2009 and

meet this membership criterion.

- LC fees Q3’09 will be calculated already with new fee per X RA (EPs) and

RE (TNs), and new amounts of LCs contribution to the Development fund.

- LC fees Q4’09 will include 2nd part of AI fee 09-10, taking into consideration

currency exchange rates adjustments and final AI invoice for country fees

received at the end of July’09.

For any questions: [email protected], [email protected],

[email protected], [email protected], [email protected],

[email protected].

mailto:[email protected]






financila model project_april'09 input paper

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