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August 22, 2006 Subj: Alumni Association Leadership Update; August 2006 Refer to: Central Region Letter 08-06 **** Dear Central Region Alumni:
As I pointed out in my other Newsletters, my duty to communicate with you is made clear by the Alumni Association Bylaws/Operating Manual: “…being a Trustee of the Association involves serious responsibility...Of utmost importance is the responsibility to communicate effectively in explaining to our individual constituencies about issues, initiatives and activities of the Association.”
The following Leadership Update was recently received from Alumni House and I am passing it on to you verbatim. Please note that, as with other Leadership Updates, the report includes activities of the USNA Foundation in addition to the activities of the USNA Alumni Association (which has no fund-raising responsibilities after the 1999 amalgamation). ************ Leadership Update August 2006 This update comes at the end of FY 06 as we reflect on the accomplishments of the previous year and look forward to the challenges of FY 07. Happy (fiscal) new year! Financial ResultsWe are closing the books on fiscal year 2006 (1 July 05 - 30 June 06). Over the next few weeks the Treasury team will be making the final entries before presenting our financial statements to our auditors, McGladrey & Pullen, LLP. The auditors will be on board in September and they will make their report to the Joint Finance and Audit Committee and the respective Boards in November and December. Until then, all the financial facts and figures presented here and in all other communications and documents should be considered preliminary and subject to change. In other words, although not precisely accurate, they are certainly directionally correct. In fiscal year 2006, through the combined efforts of the senior leadership team, our staff and volunteer guidance and oversight, the Alumni Association and Foundation's financial condition strengthened. The consolidated assets of our two organizations as of 30 June will be about $181 million while our net assets increased to $148 million. Total revenue (from investments, contributions, services and dues) is expected to exceed $44 million. One of our most important mission metrics, support to the Naval Academy, will be nearly $15 million for the fiscal year, including over $1.2 million in unrestricted support. For the fifth consecutive fiscal year, we will show an operating budget surplus - in fact, this year it may exceed $2 million. This surplus includes realized gains from the sale and transition of our core investment portfolio to our new Chief Investment Officer firm - TIFF (the Investment Fund for Foundations). It is our intent, with support from the Joint Finance and Audit Committee, to segregate a large portion of this surplus as an operational reserve giving us some flexibility as we move into the sustaining phase between campaigns and while we continue to support the needs of the Naval Academy. In addition to the investment gains, the surplus can be attributed to the FY 06 success of SACC (Service Academy Career Conference) and exceeding our targets in unrestricted contributions. Total expense is anticipated to exceed budget by 4%. The variance is attributable to several areas including increased printing and publication costs (Shipmate magazine), technical support for web services, legal expense related to renegotiation of several contracts and planned giving issues and our decision to increase insurance coverage levels on some of our key, historic properties. The present and past overall budget surpluses are important indicators of our increased financial prowess and viability. They boost our unrestricted net asset base (reserves) and may be called on to help us weather future financial and economic storms that are inevitable in the not-for-profit business. Surpluses and additions to the reserves are always welcome, but never guaranteed. And although we are most pleased with this year's results and our five-year track record, we all must remain mindful of the uncertainties that lie ahead as we transition from a campaign-oriented operating model to one of sustaining philanthropic efforts into the future. In my view, we are well positioned to do so. Staff We end the fiscal year at a full complement of staff - 75 full time and 14 part time employees. The number of employees has trended down over the past couple years as we seek to properly size the enterprise, while fulfilling our missions. Labor is the single largest expense component of our operating budget, about 52% of total expense. We've managed to slow the growth of labor expense over the years by judicious use of part time employees and careful selection of benefit packages. At the same time we need to retain the critical members of our workforce with fair and equitable wages and create an employment climate that makes the Alumni Association and Foundation an attractive place to work. This requires a balanced, disciplined approach - which, I believe, we're pretty good at. Going forward we will continue to seek ways to keep this aspect of our expenses in check while always moving towards our goal of being recognized as an "employer of choice."
Fundraising
From a fundraising perspective, fiscal year 2006 represented another stellar year for the United States Naval Academy Foundation. It was a year of transition . from a campaign environment to a non-campaign environment, as the Leaders to Serve the Nation Campaign ended at the fiscal year's midpoint on 31 December 2005.
During the first half of the fiscal year (1 July -31 December), we successfully closed out the Campaign. In the end, many thousands of generous donors amassed documented commitments totaling $254 million. Thus, we surpassed both the Campaign's original goal ($175 million) and its revised goal ($225 million). By any measure, the Campaign was an extraordinary success. And, none of it would have been possible without the solid leadership of dedicated volunteers - Alumni, parents, Campaign Executive Committee members, members of the Foundation Board of Directors and literally dozens of others who helped inspire and motivate donors along the way.
During the second half of the fiscal year (1 January-30 June), the Foundation, cast into a "non-campaign" environment for the first time in its brief but productive six-year history, maintained a strong fundraising momentum. When the books were closed on FY06, the Foundation had registered about $30 million in new gift commitments and nearly $34 million in gift receipts. This included $6.9 million in unrestricted gifts to the U.S. Naval Academy Annual Fund, vs. a goal of $6.8 million. The Annual Fund is the lifeblood of the Alumni Association & Foundation enterprise and is also an important, unfettered resource for the Naval Academy Superintendent who uses it to jump-start programs and fund unexpected priorities.
Several significant, new "post-campaign" commitments were recorded during this period, including:
Going forward, the Naval Academy Foundation's over-arching goal is to institutionalize and nurture a culture of consistent philanthropy among our donors, stakeholders and volunteers. The Foundation's leadership is strongly committed to the principle that fund raising must be closely aligned with those strategic priorities at the Naval Academy that are appropriate for private gift support. Equally, the Foundation is committed to expanding and improving our donor stewardship and conducting business in such a way that effective and prudent use is made of charitable contributions. Alumni & Member ServicesWe begin this fiscal year with renewed vigor as we remain focused on all of our growth objectives, especially growing our membership ranks and growing in our value-added services to our members. Our objective is to "grow and nurture the Extended Brigade," to create a large cadre of informed advocates, and be the stewards of a culture of support for today's Naval Academy and Brigade of Midshipmen. Current membership is nearly 51,000 including more than 46,000 life members; almost 4,300 annual members (alumni, parents, corporations, friends); and 989 provisional life members (Class of 2006). The membership number does not include the growing ranks of joint members (spouses). Additionally, all but 9 of the 1,242 incoming plebes in 2010 signed up as Life Members on Induction Day, and more than half of their parents are enrolled in a four year membership plan. With the return of the Brigade of Midshipmen in late August, we expect to add another 1,000 or so provisional life members when we activate the Class of 2008. In 2006, through 3 SACC events, 260 corporations paid for exhibits with 1,280 candidates participating, compared with 225 companies and 1200 participants in the previous year. Furthermore, gross revenue from SACC in FY06 was nearly $870,000 surpassing FY05 and FY04 revenues of $550,000 and $410,000 respectively. As a reminder, SACC is a joint venture with the Graduate Associations of the other federally funded service academies. The Naval Academy Alumni Association manages the program and revenues and expenses are shared proportionately. Throughout the year, we have had many opportunities for the 50-Year Class to motivate, inspire and support today's Brigade of Midshipmen not only with their physical presence, but also with speakers. A few examples of the Another Link in the Chain (ALITC) program include: o The Family picnic for the Class of '06 during Commissioning Week drew over 1,700 people with a strong presence by the Class of 1956, '06's "Another Link in the Chain" sponsor class. o Distinguished members of the Class of '56 were on hand at 06's graduation to personally present engraved Ensign/Second Lieutenant bars to each newly commissioned officer. '57 is now on deck with '07. o '58 will join '08 for their upcoming Commitment Dinner just before the start of the Academic Year. o During '09 Plebe Recognition Ceremonies, the Class of '59 presented each midshipman an anchor collar device marking the promotion to 3C midshipmen. o On Induction Day for 2010, over 2,500 family members attended the Welcome Picnic. The Class of '60 had almost 40 classmates present to meet and congratulate the families. They have begun their four year commitment to support these midshipmen until graduation. o Altogether, there were 20 distinct ALITC events involving over 100 Alumni in support of their respective 50 year successor class With the graduation of Class of 2006, there are now more than 52,000 living graduates of the Naval Academy. o Our geographical bond with alumni has reached a new and significant milestone with 100 affiliated chapters worldwide. o The Council of Class Presidents, the leaders from our 74 active classes, continues to grow in its value and purpose. o Our 83 national parent clubs continue to stay connected with the Alumni Association and Foundation. Since last summer, more than 14 major reunions from the classes of 1940 to 2000 have been supported by staff to include online registration, reservation of venues and support of execution of events. Almost 6,000 Alumni and guests returned to join with classmates and learn about today's Academy. Events in Ogle Hall continue to be successful with 88 events held in FY06 generating over $163,000 (exceeding the projected goal of $122,000). In late March, we publicly honored four distinguished graduates through the Distinguished Graduate Award program at a moving ceremony in Alumni Hall: Captain Thomas Hudner, Jr. '47, USN (Ret.); Admiral Kinnaird R. McKee '51, USN (Ret.); General Robert T. Herres '54, USAF (Ret.); and Admiral Charles R. Larson '58, USN (Ret.). These living role models inspire and motivate as their achievement and service are highlighted and honored. Please provide your recommended 2007 nominations to us before 1 November 2006. · During the most recent admissions cycle, more than 10,700 applicants competed for 1,215 appointments. 61 Foundation prep students entered with 2010 and 75 candidates accepted an offer to attend Foundation prep schools this fall to become members of the Class of 2011. Although the number of applicants was down, the Class of 2010 is a well balanced class with approximately 20 percent women, 22 percent ethnic diversity and 85 percent high school varsity athletes. Retention at USNA during the last four years has also exceeded projections. · Academy Awareness Representatives (AAR) assist in local communities with the admission process. All of our USA chapters now participate in the AAR program - only 68 had a designated AAR in FY 05. · As communications extends its reach and range, it does so through several media - not just Shipmate. The web sites, printed collateral and email such as this Leadership Update have enabled us to address important issues in a timely manner. By the end of this month, I expect to announce that a new, remodeled and exciting web site is up and running, which will have enhanced graphics, pertinent content, better (easier) navigation and improved functionality. Facilities In May, the Alumni Association Board of Trustees approved a capital budget which incorporated a project of American Disabilities Act related improvements to Ogle Hall. Since then we have stood up a project office under the leadership of Tim Kobosko, VP of Information Services. We plan on working closely with the chairman of the House Committee and with the Executive Committee. We will provide you more information on this historic, large and complex project at the November meeting in addition to sending out communiqués once we have a better idea of the project's timelines - perhaps later next month.
Looking Ahead June marked the 120th anniversary of the founding of the Alumni Association. As I have said before, our mission and purpose have remained constant since that first meeting in 1886. We have a proven track record with our constituents in a variety of areas - services, communications, information services support, finance - and we intend to continue to build on this reputation. The Leaders to Serve the Nation Campaign exceeded our expectations and has been critical in our establishing a culture of philanthropy internally and with our generous alumni.
The growth objectives of Plan 2010 have provided us the targets to which we have been driving for the last several years, and the plan is now being reviewed and updated where necessary under the able leadership of Perry Martini '71 and Dan Lear '68. While the Plan 2010 mid-term review is under way, it is already providing valuable insights to senior management. The final review will be briefed at the next Board of Trustees meeting. On a personal note, I am particularly pleased that our senior leadership team has now been together for 5 years. This stability and their leadership in the areas for which they have responsibility have enabled us to execute our strategy of growth through partnership and synergy to reach our objectives in ways that we could only dream about 5 years ago. At the Alumni Association we have been given a 120 year old legacy that has been our distinct honor to nurture and build upon. Our commitment is to pass this legacy on to those who will follow so that tomorrow's Naval Academy and Brigade of Midshipmen benefit and continue to produce leaders of great character for our nation.
As always, thank you for all that you do and continue to do for today's Naval Academy and Brigade of Midshipmen. Any of us here on the senior leadership team are happy to answer any questions you may have regarding FY06 results or the way forward. We also look forward to seeing many of you 'around the Yard' as we begin the new academic year. Go Navy! George George P. Watt, Jr. President and CEO U.S. Naval Academy Alumni Association & Foundation 410.295.4090
120 Years of Service to the Alma Mater and its Alumni
Visit us at www.usna.com
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