Conversations: The Matter of Money
- Behrooz Fattahi (2010 SPE President)
- Document ID
- Society of Petroleum Engineers
- Journal of Petroleum Technology
- Publication Date
- February 2010
- Document Type
- Journal Paper
- 12 - 14
- 2010. Copyright is retained by the author. This document is distributed by SPE with the permission of the author. Contact the author for permission to use material from this document.
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As I travel to various regions of the globe these days, members enthusiastically ask many questions about SPE International (SPEI). However, one particular question that I am always asked is why our services and products are not free. One member in the audience in Singapore even accused SPEI of not being serious about dissemination of technology, since we charged fees for papers in the SPEI eLibrary (now part of OnePetro). In another part of the world, a college professor asked why SPEI does not admit young professors free of charge to conferences, since these professors are the future leaders of the industry’s research and development.
Our professional society is a not-for-profit organization. This means that it is organized and operated on a cost-recovery basis—an organization that does not seek profit. So, how do we pay for providing value to our members? Who provides the funding to operate this complex global organization? You as members should know the answers to these questions, and that is why SPEI publishes its financial statement annually on SPE.org (see www.spe.org/about/governance/financial.php).
The cost-recovery nature of our professional society requires SPEI to generate revenues to pay for the costs of its services. This also means that a favor to one group of members will have to be at the expense of other members. Although the organization does not try to balance its revenues and expenses on an annual basis, it maintains a balance over a longer period of time. There are several sources of revenue and expense, namely meetings, membership, education and professional activities, and print and electronic media. SPEI also has an investment fund, which is managed by an outside investment management firm and governed by a policy set by the board of directors. A volunteer Investment Advisory Committee (IAC), made up from the SPEI Vice President-Finance, SPEI Foundation treasurer, SPEI Chief Financial Officer, and two investment managers from two large industry institutions, provides expert advice to the board. Because of their nature, investment funds are not included in SPEI’s budget. However, with IAC’s advice, and depending on the investment market performance, funds are periodically extracted and spent on special member programs.
SPEI’s financial year starts on April 1; the budget process starts in November, and culminates in a final approval by the board of directors at its March meeting. Similar to many large organizations, the process starts with the feedback from various departments, and is eventually rolled up into SPEI’s budget request for the upcoming financial year.
The major source of SPEI’s revenue is from meetings. Every year, roughly 65 to 70% of the total revenue is generated through technical meetings, conferences, forums, and workshops. Rough contributions from other components of the revenue are membership (your dues) at 10 to 15%, education and professional activities at 1 to 2%, and print and electronic media at 15 to 20%. While there is revenue generated through each source, the net cash flow tells a different story for each of these segments.
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