Little Traverse Sailors is a small 501(c)(3) non-profit junior sailing program, and our financial results reflect that status. Since 2015 we have been squarely focused on establishing long-term stability, by working to align our operational income and expenses. At the same time, as a community-based non-profit, LTS strives every year to both improve the quality of our programs and expand access to them as much as possible via scholarships and fee discounts. Our financial priority is to “put money on the water” — to minimize administrative and non-sailing expenses in favor of spending that directly benefits the hundreds of young sailors in the community that we serve.
We are happy to say that our Fiscal Year (FY) 2017 results [for the year from October 1, 2016 to September 30, 2017] largely met our goals. Although operating revenues were slightly down (by less than one percent) from FY 2016, we kept expenses in line and exceeded our budget operational results. Some highlights for FY 2017:
- We had a very good unrestricted fundraising year in 2017, up about 15% over 2016.
- Overall operating revenues (after deduction of one-time items) were within 1% of 2016.
- As we add more and more valuable boats to the fleet, our depreciation expense rises accordingly (a $7,400 rise 2016 to 2017 — our biggest expense increase in 2017).
- Overall, even though we were slightly down in some revenue categories, good expense management means that we yielded what appears to be LTS’s strongest operational year yet. (We’ve had better overall years because of one-time items like donations or boat sales.)
Going forward, we are projecting that, net of depreciation and one-time events, LTS will roughly break even on operations in FY 2017. We expect to receive unrestricted donations and have a number of grant opportunities in the works; these one-time receipts will be used to help cover fleet improvements and continued expansion of the scholarship program.
- Looking back over the past several years, we’re happy to say that LTS has completed a financial turnaround that now allows it to be classified as a ‘going concern’. By contrast, in the FY 2010-14 timeframe, substantial cash donations (mostly from a small number of LTYC members) were being used to cover day-to-day operational expenses. Since FY 2015 we have managed to be at least slightly cash flow positive from operations, while investing heavily in a transition to modern, standardized instructional fleets (420s, Bugs, and Lasers).
- Going forward, we expect the basic FY 2017 framework to hold: to roughly break even on an operational (cash flow) basis, and use targeted fundraising efforts and unrestricted donations to modernize and expand the program through capital investments. For a small local nonprofit like LTS, this appears to comport with financial best practices.
- Not reflected on this document is that in FY 2016 LTS created its first-ever endowment fund, with the Petoskey-Harbor Springs Area Community Foundation. We liquidated a poor performing investment that LTS had in a local REIT to convert to a diversified investment portfolio managed by the Community Foundation. Although the amount in that endowment is quite modest at this point (just about $11,000), we hoping that this fund (1) offers another vehicle for our many generous donors, and (2) will in the long-term offer LTS even more stability and financial flexibility.
- In terms of structural financial concerns, the primary worry going forward is to try to avoid increases in the learn-to-sail program tuition. Although we plan no raises in basic fees this year, since 2014 (in order to make the program solvent) fees have gone up more than 35% for the basic one-week half-day course. Given that we run at 90-100% capacity most weeks, this makes excellent financial sense. However, it has had a real impact on our sailors. Even including scholarship recipients, our percentage of local sailors has dropped by 1/2 over the past four years. Certainly a continued expansion of the scholarship program (we have just about tripled the amounts distributed over the last two years and hope to do more this year) can address this somewhat, but we are continuing to think about ways to develop more revenue-generating LTS programming — adult sailing in particular — to offset yearly increases in most of our expenses.
Thanks to all LTS families, our generous donors, the LTYC, and others for making our FY 2017 financially sound. We can’t wait for Summer 2018! If you have comments or questions about LTS’s finances, feel free to contact the Board President, Polk Wagner at President@LittleTraverseSailors.org.