We normally share our financial statements in posts about public board meetings, since that is the time when board members approve the statements. However, I wanted to give this quarter’s update its own blog post. We’ve made many changes to improve our sustainability over the last few months and I am fully embracing our value of communicating with transparency by giving insight into our progress.
First, a word of thanks
We are truly thankful for all the contributions that our community makes to help Drupal thrive. Your contribution comes in the form of time, talent, and treasure and all are equally important. Just as contributing code or running a camp is critical, so is financial contribution.
The Drupal Association is able to achieve its mission to unite the community to build and promote Drupal thanks to those who buy DrupalCon tickets and sponsor the event, our Supporters and Members, Drupal.org sponsors, and talent recruiters who post jobs on Drupal Jobs.
We use these funds to maintain Drupal.org and it’s tooling so the community can build and release the software and so technical evaluators can learn why Drupal is right for them through our new marketing content. It also funds DrupalCon production so we can bring the community together to level up skills, accelerate contribution, drive Drupal business, and build stronger bonds within our community. Plus, it funds Community Cultivation Grants and DrupalCon scholarships, removing financial blockers for those who want to do more for Drupal. And of course, these funds pay staff salaries so we have the right people on board to do all of this mission work.
I also want to thank our board members who serve on the Finance Committee, Tiffany Farris (Treasurer), Dries Buytaert, Jeff Walpole, and Donna Benjamin. They provide financial oversight for the organization, making sure we are the best stewards possible for the funds the community gives to us. I also want to thank Jamie Nau of Summit CPA, our new CFO firm. Summit prepares our financial statements and forecasts and is advising us on long term sustainability.
Q3 Financial Statements
A financial statement is a formal record of the financial activities of the Drupal Association. The financial statements present information in a structured way that should make it easy to understand what is happening with the organization's finances.
Once staff closes the books each month, Summit CPA prepares the financial statement, which the finance committee reviews and approves. Finally, the full Drupal Association Board approves the financial statements. This process takes time, which is why Q3 financials are released in Q4.
You can find the Q3 financial statements here. They explain how The Association used its money in July, August, and September of this year. It takes a little financial background to understand them, so Summit CPA provides an executive summary and they set KPIs so it is clear how we are doing against important financial goals.
The latest executive summary is at the beginning of the September financial statement. In short, it says we are sustainable and on the right path to continue improving our financial health.
“We are working on building an adequate cash reserve balance. As of September a cash balance of $723K is 14% of twelve-months of revenue. Summit recommends a cash reserve of 15%-30% of estimated twelve-month revenue. Since Drupal’s revenue and expenditures drastically fluctuate from month to month [due to DrupalCon] a cash reserve goal closer to 30% is recommended.
Through August we have achieved a Net Income Margin of 4% and a Gross Profit Margin 33%. Our goal is to increase the Net Income Margin to over 10% during the next year.”
- Summit CPA
Improving our sustainability will continue to be an imperative through 2017, so the Association can serve its mission for generations to come. Financial health improvements will be achieved by the savings we gain over time from the staff reductions we did this summer. Another area of focus is improving our programs’ gross margins.
You can expect to see the Q4 2016 financials in Q1 2017. You can also expect to see our 2017 budget and operational focus. We are certainly excited (and thankful) for your support and we look forward to finding additional ways to serve this amazing community in 2017.