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Subj: George Watt August 2003 Leadership
Update
Refer to: Central Region Letter 26-03; September 3, 2003
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PLEASE DO NOT HIT REPLY TO E-MAIL ME. I WILL NOT GET IT. E-MAIL ME DIRECTLY
AT MY USNA ALUMNI CLASSMAIL ADDRESS, len.wass@1964.usna.com
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Chapter Officers - Please give this e-mail the widest possible distribution
among your members and other alumni in your area.
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This Leadership Update was just received from George Watt
'73, CEO of the Alumni Association. It contains important information
and I urge you to read it. Here is his update:
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Leadership Update
August 2003
The Brigade is back and an unusually busy summer comes to a close. Last
week I had the pleasure of briefing the 59th Superintendent of the U.S.
Naval Academy on our mission, goals and operations for the Alumni Association
and Foundation. VADM Rempt has also met with Admirals Trost, Larson and
Lynch. All of us have compared notes and we are delighted by his commitment
to partnership and his genuine appreciation of our joint support of the
USNA mission. I look forward to introducing Admiral Rempt to each of you
as we enter a home and away game football (and cultivation-stewardship)
season. In the meanwhile, please read his "Supe's Call" in the
September issue of Shipmate and please ask your constituents, classmates
and shipmates to do the same.
As promised in our last Leadership Update I intend to share the following
with you:
- The unaudited results of a remarkable fiscal year ended on 30
June 2003.
- A campaign update, made more exciting by the largest single gift
in USNA history.
- Progress at Navy-Marine Corps Memorial Stadium (and direct you
to our website for a "virtual tour")
- The Shipmate survey and where we are going.
- A very brief update on the Two Rivers project mentioned in a previous
Update.
Fiscal Year Wrap
Let's start with wishing all of you a Happy New Year! That is, the fiscal
New Year that began on 1 July 03. June 30 marked the close of our FY 03.
Currently the treasury staff is busy closing out the year while preparing
for the annual audit. Hank Sanford and I have previously used the nautical
term - confused seas - in describing the environment we faced in FY03.
Although it is thankfully behind us, I can say with pride and confidence
that it was also a year marked with dedication, focus on mission, and
a better than expected bottom line.
From an operating budget perspective we did quite well - in balance with
a small operational surplus. It may be more appropriate to say "remarkably
well" considering where we were in January. Many of you will recall,
at the mid year point we forecasted a deficit of nearly $1M due primarily
to a sharp drop off in investment income which we use to support operations.
The senior leadership team took proactive measures and tightened things
up significantly. Yet, even with an additional budget cut in operating
expenses in the last half on the year, we were still forecasting a deficit
of $400K. In the final quarter of our year our investment performance
improved, helping the overall revenue position. The portfolio performance,
along with strong unrestricted gift receipts, better than anticipated
revenues from operations, and significant cost containment, closed the
gap allowing us to end the year in balance.
A bit more about cost containment. Although the revenue position improved
beyond the forecast, expense reduction and precise management action in
reaction to the deteriorating economic news was critical to our satisfactory
close. With 5 months remaining in the year we reduced expenses another
$600K beyond what was committed in the revised budget. On an actual to
budget basis the operating expense was $10.9M against the original budget
of $11.9M. It should be noted that this was accomplished with no adverse
personnel actions, and without reducing our unrestricted commitment to
the Naval Academy. An organization-wide hiring freeze was put in place
last December and those open full time positions were backfilled with
part-time and/or job sharing.
Our balance sheet continues to strengthen. Total and net assets have grown,
despite modest growth in total liabilities due to a line of credit to
support stadium renovations. Our investment portfolio grew from $78M at
the end of FY 02 to $86M at the end of this year. Our cash position is
strong, and a key measurement, "support to USNA" (an important
part of our mission) increased to $21M from $17M the year before (largely
due to capital gifts associated with the Levy Center, the Robert Crown
Sailing Center and the renovation of Navy-Marine Corps Memorial Stadium).
A new financial management/accounting system is in place (Financial Edge)
due in large part to the superior work of Dorothy Hammond. For the first
time our general ledger is now integrated with the gift accounting and
fund raising database. This will allow us to provide timely and accurate
financial information to all of our stakeholders. BZ to Dorothy, Hank,
Gerrie Farmer, Tim Kobosko and the entire Treasury & Information Services
teams for their hard work.
Summary: Our goal of "growth in financial prowess" is within
our grasp. We are navigating the confused seas mentioned earlier and we
continue to exercise due regard. Our management and financial control
processes continue to improve. And, although there is some optimism regarding
the overall economic picture, we have booked a very tough budget for FY04.
We will attempt to execute a consolidated operating expense budget that
will come in below $10M (for the first time since the "new"
Foundation was created). We remain appropriately concerned about the markets
(which now includes the bond market) and the general economic environment.
As prudent mariners, we remain vigilant, we have taken precautions and
we will act to ensure the safety of the ship. Expect an alert and taut
watch team in the year ahead.
$10 Million Gift
By now I trust that every one of you knows about the incredible $10 million
gift from Jackson Stephens '47. This extraordinary gift (received in total
on July 31st) was the culmination of dedicated hard work by our own Dr.
Dan Struble '83 working with Jack's classmate and volunteer fundraiser,
Ambassador Vern Weaver. When all was said and done, the Class of '47 museum
project had a significant matching gift, the Navy Marine Corps Memorial
Stadium had a name for its new field - Jack Stephens Field - and we are
now much closer to achieving our $40 million goal for the stadium's renovation.
With Jack's gift, the largest single gift in service academy history,
the campaign total now exceeds $162M. As you may remember, it was only
last month that I sent out a news release regarding our passing the $150M
milestone! On that note, we are confident that we will soon pass another
significant milestone as we continue to advance the margin of excellence
at the Naval Academy. For the original $175M goal is just that: a milestone.
However, with much done, there is also much more to do. We continue to
seek another $10M for the continuation of stadium renovation and we must
meet our commitment to the Naval Academy to fully fund each of the center
of excellence goals approved by the Foundation Board of Directors. Thanks
in advance for your support as we press on with the Leaders to Serve the
Nation campaign.
Navy-Marine Corps Memorial Stadium
I was at the stadium this weekend. There is nothing I can write or say
that will do the transformation of our nearly 45 year old stadium justice.
Skid, Terry Murray and Athletic Director Chet Gladchuk have collaborated
on a "virtual tour" of sorts. If you cannot make our opening
game this weekend to experience the stadium personally, your next best
opportunity is to visit our website. It includes information on not only
the stadium but also Navy Football. Please direct all of your constituents
to:
http://www.usna.com/Features/2003_2004/Stadium/Stadium.htm
One more item regarding the stadium. Although this has been an incredibly
positive and historic story, we still experience some who seek negatives
no matter what we do. Many of you have helped us get the gouge to our
alumni, parents and friends. Yet a few (the 10% that never get the word)
were appalled that we were "…re-naming the stadium." A
reminder and some reinforcement for all of us who care about Navy-Marine
Corps MEMORIAL Stadium: The field is named Jack Stephens Field. The Stadium
will always be Navy-Marine Corps Memorial Stadium. We look forward to
the field's dedication at one of this year's home football games, and
we especially look to the rededication and memorialization of the stadium
planned for next year. If any of you would like us to send you the original
and complete press release on the Stephens gift, please email Skid Heyworth
(skid@usna.com).
Communications & Shipmate
Over 4,000 of those polled online earlier this summer participated in
the Shipmate survey. Although we do not have the complete findings and
recommendations, the "early look" results will surprise no one:
Alumni (and parents) read the magazine; Alumni generally always read class
notes; they like the way Shipmate looks; they strongly prefer not reading
it on the Web; and they feel that 10 issues per year is "just right."
Concurrently, we conducted an internal audit, and we have found numerous
opportunities to improve the magazine operationally (and fiscally) that
may be invisible to our subscribers and scribes.
For now Skid Heyworth will act as the Editor-In-Chief as we seek an Associate
Director of Communications to assist with day-to-day operations and assume
the role of managing editor of Shipmate. This person will fill the "billet"
vacated when Mike Collins left. We will see more integration of the Web
with the magazine, and vice versa, along with themes that are coordinated
across the enterprise and the Naval Academy. In the short term, we will
publish and ship our September, October, and November issues.
Skid will soon brief the Alumni Association-Foundation senior leader team
and the standing communications committee on the learnings from the survey.
Under his leadership we intend to develop a communications organization
and enterprise-wide capability that continues to push our message(s) out
while being more coordinated, consistent, and timely. It's a huge undertaking,
but one we are confident will be successful and reap great benefits for
the Naval Academy, Alumni Association and Foundation. If you have any
questions or insights regarding Shipmate and/or our overall communications
direction, please write to skid@usna.com.
Two Rivers
In the last Leadership Update I informed you of an opportunity brought
to us by a partnership of local developers who intend to create a large
active adult community in Western Anne Arundel County - near the old Navy
Academy dairy farm. The initial proposal provided for a gift of 20 acres
of land within the community in exchange for our support of the project.
It might be the understatement of the year, but the Two Rivers project
has generated much attention from our Alumni constituency and from the
local community. However, despite much activity and good information exchange,
we are where we were two months ago -- ready to move forward provided
we have: 1) A satisfactory proposal from the developer, and 2) The approval
of the Alumni Association Board of Trustees.
As of this writing, we don't have a proposal to react to. In fairness
to the developers they have been very busy working the county approval
process and, in fact, have gained initial approval from the county council
- an important and significant milestone. They have a lot more to do over
the next year. In the meantime, the partners/developers have reinforced
their desire to partner with us on the project. What that means is not
clear at this point, but for now, the ball is in their court. Rest assured
we're not expending any resources towards the project other than to monitor
progress and check in with the AA BOT Executive Committee. Should we learn
more, you'll hear more.
Summary
As we head in to our "busiest" season here at the Alumni Association
with Home Football Games, Homecoming, and Army/Navy events we are reminded
of the importance of the connection between Alumni and the Naval Academy.
Membership in the Alumni Association is our Alumni's strongest venue to
make that connection. We have made great strides in the last few months
growing to over 49,500 members as we continue to strive toward our 60,000
member goal. For the first time, Life Membership exceeds 43,000. Joint
"spouse" Membership continues to grow with 1,350 members, and
the Alumni Association's newest program Corporate Membership, launched
on July 1st, brought 14 Corporations on board with 81 new individual Associate
Members. The staff of the Alumni Association cannot do it alone. We need
the leadership and support of our volunteer board members, and the class-chapter-club
presidents. Membership is not only a privilege, it is a responsibility.
Ask your classmates, shipmates and friends to "get connected and
stay connected" through their Alumni Association. Together, we'll
make this season a successful one on all fronts.
A final and important thought…your Alumni Association & Foundation
continues to meet or exceed its growth goals and our campaign and financial
objectives. As you read about other not for profit organizations experiencing
financial duress; staff layoffs; donor malaise; and unfortunate gross
and unethical irregularities among their leadership I hope you and your
many constituencies will continue to place your trust, and your hard-earned
resources, into this organization as your number one philanthropic priority.
We know we have earned your trust and we also know we must continue to
earn it each and every day. Thanks for all you do as volunteers and special
thanks for all you will continue to do as we work together to fulfill
our mission to provide necessary moral, mental and physical (fiscal) support
to the United States Naval Academy.
G O N A V Y !
G.P. Watt, Jr.
President and Chief Executive Officer
USNA '73
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