Treasurer Presentation

CAPT Charles W. Parker, III, SC, USN

Navy Supply Corps Foundation

10 November 2018

NSCF Treasurer Role and Responsibilities

Reports to the Board of Directors; member of the Executive Committee

Financial Policy and Procedures: development and execution

Financial Operations and Reporting: preparation for the Board

Budget Planning: reviews requirements and submits annual budget

Budget Execution: coordinates with CSO on budget administration

Corpus: oversees Foundation investment activities

Business Continuity: updates and signs annual plan

Committee Oversight:

• Budget and Finance (Kurt Williams, Chair)

• Investment Advisory (Dan Pionk, Chair)

• Audit (Mike McCleary, Chair)

Other responsibilities as directed by the Foundation Board or Chair

Agenda

Budget and Finance Committee (Kurt Williams)

Chapter Financial Reporting Update

Investment Advisory Committee Update (Dan Pionk)

Audit Committee (Mike McCleary):

• 2017 Internal Audit Review

• NSCF Financial Operations Manual

• 2018 Business Continuity Plan Review

Request Board of Directors approval:

• 2019 Budget Way Ahead

• Financial Operations Manual

• Business Continuity Plan

• Fraud Insurance Policy

Budget and Finance Committee

10 November 2018

CDR Kurt Williams, SC, USN

2018 Budget (as of 30 Sept 2018):

• Donations have fourth quarter influx, approximately $226,000 to-date.

Projected full-year giving may reach $420,000 plan for 2018, however;

• Deficit (contributions minus expenses) projected for up to -$137,505.

2019 Budget:

• Initial NSCF Budget developed with committee inputs (next slides);

• Deliberation required due to -$205,433 deficit based on inputs;

• Requirement for discipline and towards balanced budget into 2019;

• Final proposal for 2019 to Board of Directors by year-end 2018.

Budget opportunities into 2019:

• Forthcoming calls to propose and finalize budget before holidays.

• Committee potential to raise funds for proposed programs into 2019.

• Rolling committee expense approvals via CSO until budget approved.

Budget and Finance Committee

Increase

NAVY SUPPLY CORPS FOUNDATION

2019 BUDGET (COMMITTEE INPUTS)

Decrease

2017 Budget 2018 Budget

2019 Budget

(Committee Inputs)

INCOME

CONTRIBUTIONS

Individuals 250,000.00 300,000.00 300,000.00

CFC/United Way 30,000.00 25,000.00 25,000.00

Chapters 50,000.00 25,000.00 20,000.00

Corporate 25,000.00 20,000.00 20,000.00

Estates 50,000.00 50,000.00 10,000.00

405,000.00 420,000.00 375,000.00

Income From Regalia Sales 1,200.00 500.00

TOTAL INCOME 406,200.00 420,500.00 375,000.00

NAVY SUPPLY CORPS FOUNDATION

2019 BUDGET (COMMITTEE INPUTS)

Increase Decrease

2017 Budget 2018 Budget

2019 Budget

(Committee Inputs)

EXPENSES

PROGRAM EXPENSES

Scholarship Program

Scholarships Paid 250,000.00 262,500.00 279,500.00

Memorial Scholarships Paid 35,000.00 22,500.00 22,500.00

Scholarship Board Expense 5,000.00 5,000.00 5,000.00

History Book to Recipients 0.00

Virtual Scholarship BD Setup 1,000.00 500.00 1,000.00

291,000.00 290,500.00 308,000.00

Recognition Program

Distinguished Alumni Program 9,000.00 7,400.00 3,500.00

Various Awards 6,000.00 8,600.00 6,000.00

15,000.00 16,000.00 9,500.00

Communications Program

Web Site Maint/Expense 30,000.00 10,000.00 10,000.00

Web Site Upgrades 0.00 20,000.00 0.00

Web Management/Training 0.00 2,500.00 0.00

The Oakleaf 21,000.00 21,000.00 21,000.00

Consulting 80,000.00 85,000.00 65,000.00

Video Selfie 13,000.00 3,000.00 0.00

0.00 0.00 180.00

0.00 0.00 636.00

144,000.00 141,500.00 96,816.00

NAVY SUPPLY CORPS FOUNDATION

2019 BUDGET (COMMITTEE INPUTS)

Increase Decrease

2017 Budget 2018 Budget

2019 Budget

(Committee Inputs)

EXPENSES

PROGRAM EXPENSES

Chapter Development

Travel 15,000.00 20,000.00 60,000.00

NSCS Support 10,000.00 4,000.00 10,000.00

Chapter Support 15,000.00 16,000.00 15,000.00

40,000.00 40,000.00 85,000.00

Heritage Legacy

Memorial Ship Displays 35,000.00 35,000.00 55,000.00

Ashore Venues 1,000.00 0.00 0.00

Travel 5,000.00 2,000.00 2,000.00

SC History Development 30,000.00 0.00 2.00

History Book Expenses 0.00 4,000.00 5,000.00

Heritage Legacy Total 71,000.00 41,000.00 62,002.00

Transition Committee 5,000.00 5,000.00 1,000.00

FAST 3,500.00 4,500.00 3,000.00

TOTAL PROGRAM EXPENSES 569,500.00 538,500.00 565,318.00

NAVY SUPPLY CORPS FOUNDATION

2019 BUDGET (COMMITTEE INPUTS)

Increase Decrease

OPERATING EXPENSES 2017 Budget 2018 Budget

2019 Budget

(Committee Inputs)

Salaries - HQ Staff 111,200.00 112,000.00 115,000.00

Payroll Expenses 8,500.00 8,500.00 8,500.00

Retirement Plan 25,000.00 25,000.00 28,000.00

Office Rent 15,600.00 16,800.00 16,800.00

Auto Reimbursements 300.00 300.00 300.00

Telephone 2,000.00 3,500.00 3,500.00

Office Expense 7,000.00 7,000.00 6,000.00

Bank Charges 2,500.00 2,500.00 2,500.00

Mailing Expense 3,000.00 2,000.00 2,000.00

Board Meetings 25,000.00 30,000.00 35,000.00

Travel 15,000.00 5,000.00 2,500.00

Insurance 5,000.00 6,000.00 6,000.00

Legal and accounting 5,500.00 5,500.00 5,500.00

Annual Audit (Internal) 700.00 750.00 750.00

Annual Audit (External) 5,500.00 5,500.00 5,500.00

Miscellaneous Expense 79.95 0.00 100.00

Development Committee CFC Application 600.00 1,155.00 1,155.00

Crescendo 0.00 5,500.00 5,500.00

Collaterals 15,000.00 15,000.00 15,000.00

Direct Mail Expansion 30,000.00 15,000.00 10,000.00

Web Consultant 35,000.00 15,000.00 5,000.00

TOTAL OPERATING EXPENSE 312,479.95 282,005.00 274,605.00

TOTAL EXPENSES 881,979.95 820,505.00 839,923.00

NET INCOME (475,779.95) (400,005.00) (464,923.00)

NAVY SUPPLY CORPS FOUNDATION

2019 BUDGET (COMMITTEE INPUTS)

Increase Decrease

CORPUS TRANSFER

@4.5% of average corpus value Restricted (Scholarships) 125,000.00 131,250.00 129,745.00

Unrestricted (Scholarships) 125,000.00 131,250.00 129,745.00

Unrestricted Memorial Scholarships 35,000.00 0.00 0.00

Unrestricted Operating Expenses 50,000.00 0.00 0.00

Unrestricted (Plan Implementation) 0.00 0.00 0.00

Deposits 0.00 0.00 0.00

335,000.00 262,500.00 259,490.00

Grand Total -137,505.00 -205,433.00

Chapter Financial Reporting

Update

May 2018

CAPT Charles W. Parker, III, SC, USN

Chapter Financial Reporting Overview

Foundation and Supply Corps Associations merged in 1996

Today’s Chapters are chartered by the Foundation

Chapter Committee Chair and ongoing coordination of activities

Foundation fiduciary responsibility and protecting 501(c)(3) status

Consistency with Foundation Financial Operations Manual

Balance Chapter autonomy with Foundation oversight

Wide variance in Chapter sizes, activities and resources

Policy outlined in Chapter Operation Manual:

• Annual Financial Statement requirement of all Chapters

• Foundation Treasurer Provides template and guidance

• Chapter President and Treasurer turnover letter and notification

• Chapters are to conduct annual internal financial review

2017 Chapter Finances Snapshot

Chapter Total Equity Revenue Expenses Net Income Contributions

Bay Area 1,485.36 0.00 0.00 0.00 0.00

Colorado Rockies 0.00 0.00 0.00 0.00 0.00

DC Area 27,877.77 105,244.20 90,108.57 15,135.63 5,000.00

DFW 684.27 0.00 0.00 0.00 2,623.28

Detroit 0.00 0.00 0.00 0.00 0.00

Great Lakes 9825.00.

Greater Boston 1,118.63 2,601.00 2,688.80 -87.80 100.00

Hampton Roads 19,169.74 32,061.79 17,772.48 14,249.31 0.00

Hawaii 8,365.97 14,444.30 12,425.86 2,018.44 0.00

Jacksonville 1,792.24 370.00 0.00 370.00 0.00

Mechanicsburg 5,807.96 40,902.47 38,905.89 1,996.58 8,000.00

Memphis 1,556.10 410.63 0.00 410.63 0.00

Monterey 7,053.35 10,551.74 7,667.81 2,883.93 0.00

Newport 425.50 28,813.09 20,946.74 7,866.35 0.00

North West 1,055.45 9,449.98 9,571.03 -121.05 500.00

NE Georgia 0.00 0.00 0.00 0.00 0.00

Ohio 0.00 0.00 0.00 0.00 0.00

PAX River 1,793.50 26,187.47 25,860.42 327.05 1,000.00

Phildadelphia 8,230.97 51,773.96 50,606.19 1,173.14 2,000.00

San Diego 7,416.82 17,626.82 19,821.16 -2,194.34 950.00

St. Louis 749.08 1,435.00 1,808.39 -373.39 0.00

SW Asia 0.00

Twin Cities 0.00 0.00 0.00 0.00 0.00

Totals 94,582.71 341,872.45 298,183.34 29,998.28

No reports: Djbouti, Great Salt Lake, Groton, Gulf Coast, Italy, Japan, Korea, SW Asia, Ventura

Investment Advisory Committee (IAC)

Update

November 2018

CAPT (Retired) Dan Pionk, SC, USN

IAC Members

Chuck Parker, MBA, PhD (Treasurer)

Dan Pionk, MBA, MA (Chairman)

Bruce Maxon, MS, CLU (Past Treasurer, NSCF)

Dennis Collins, MBA, CFP, CIMA, CPWA (Past Chairman)

Mike Kalas, MBA, CFP (Past Chairman)

Craig Doyle, MBA, MA

John Drerup, MBA, MS

Joe Dunn, MSc, MS

Pete Eltringham, MBA, MS

Jack Evans (Chief Staff Officer)

Eric Schuck, MA, PhD

Matt Webster, MBA

Bill Withrow, MBA

15

IAC Process & Methodology

Monthly Conference Calls

Strict investment discipline

Guided by NSCF Investment Policy Statement (IPS)

Continually improve metrics to gauge performance and allocation

Periodic evaluation of strategy vis a vis other foundations/institutions

16

NSCF Portfolio Executive Summary

17

NSCF Portfolio Executive Summary

18

Contributions

• 1/18/18: $7,137.76 worth of

Berkshire Hathaway stock

• 9/12/18: $50,000 donation

Withdrawals

• 1/29/2018: $100,000 Schwab Govt

Money Fund (Operating Expenses)

• 4/27/2018: $75,000 Schwab Govt

Money Fund (Operating Expenses)

• 5/08/2018: $60,000 Schwab Govt

Money Fund (Operating Expenses)

• 7/23/2018: $250,000 Schwab Govt

Money Fund (Scholarships)

Contributions &Withdrawals (YTD 2018)

19

Total: +$57,137.76 Total: -$485,000.00 (7.97%)

Actions Taken Since Last Board Meeting

Monthly Conference Calls

Rebalanced portfolio in accordance with Asset Target Allocation Model

Semi-Annual Performance Reviews of Portfolio and Holdings

Risk Exposure Analysis

Purchased Money Fund (Bank Sweep Feature)

Tracking Alternate Benchmark (Asset Class Benchmark)

20

Audit Committee

Internal Audit Review

10 November 2018

Mike McCleary (Chair)

LT James Stoltz, SC, USN

2017 Annual Internal Audit Review

Annual Internal Audit was conducted on 3-4 October 2017.

Meeting 25 Aug 2018 on implementation of above recommendations

Auditor was CAPT Dan Foster, SC, USN.

Tested elements of former Financial Operations Policy Statement

Included discussions and review of internal source documents,

as well as those from third parties and associated transactions.

Overall assessment: Satisfactory

Nine Opportunities for Improvement - identified and deliberated

Audit Committee Review of Recommendations (see spreadsheet)

Development of Financial Operations Manual

Next full Internal Audit to be conducted in 2019

New Financial Operations Manual

Implemented Changes from 2017 Internal Audit Review Develop new Financial Operations Manual (FOM):

1. Policies and procedures (accounting, donations, payables, insurance..)

2. Internal Audit (separate standalone audit procedures from FOM);

Implement more clear and disciplined budget planning process;

Provide giving methods and restriction classifications to future donors;

Budget summary report in SITREP to Board upon new calendar year;

Specified budget and expense goals via Board meetings vice FOM;

Further specify credit card policy, related audit and other procedures;

Adjust language of FOM in certain sections (i.e. vendor due diligence);

Fraud insurance due to increased cybersecurity risks.

Draft FOM prepared for 10 Nov 2018 Board approval

Recommended $2M fraud insurance policy (Hartford; $2647.00/yr)

Audit Committee

Business Continuity Plan

10 November 2018

Mr. Mike McCleary

NSCF Critical Business Processes

Financial and Legal: including donations, ongoing operations, taxes,

501(c)3 reporting and associated transactions;

Chapter and Scholarship Operations: including Chapter contributions

and event support, and scholarship application and disbursement support;

Information Management: of NSCF and Chapter data, including

Leadership, Member Lists, Vendor/Supplier and Donor information;

Communications: including NSCF website, The Oakleaf, and others;

Investment Advisory Committee: and associated accounts and

transaction support;

Seasonal Operations: including Events, Scholarship Board, Board of

Directors and Chapter President Meetings.

Risk Assessment and Mitigation

The highest impact risks incident to NSCF operations, and associated

mitigation treatment, in approximate descending order are below.

Data: Loss or theft of key systems, financial data, donor lists, etc.;

Staff: Resignation of CSO or Assistant;

Fraud: Fraudulent activities and associated operational and reputational

impact, including Chapters; additional emphasis on cybersecurity

Accommodation: Office damage or destruction, including natural

disaster, loss of utility services, water damage, loss of hard data and paper

records; and,

Contractor: Dependencies and associated failure of service (i.e.

Target Systems, which hosts the Foundation website and email servers).

(Mitigation measures for each risk area are detailed in the signed BCP)

Agenda

Budget and Finance Committee (Kurt Williams)

Chapter Financial Reporting Update

Investment Advisory Committee Update (Dan Pionk)

Audit Committee (Mike McCleary):

• 2017 Internal Audit Review

• NSCF Financial Operations Manual

• 2018 Business Continuity Plan Review

Request Board of Directors approval:

• 2019 Budget Way Ahead

• Financial Operations Manual

• Business Continuity Plan

• Fraud Insurance Policy

Question and Comments