Introduction

XBRL International (XII) is a standards organization currently funded by a membership model, with revenue coming from the jurisdictions and conferences. This was a fine model when the XBRL standard was young and large accounting firms and the AICPA saw the benefits from being generous with their support.  Conferences were seen as a moneymaker for XBRL International, and funding was adequate to support  a startup standard. XII goals were clearly definable, and “easy” to achieve, which also limited costs.

Since then the model has grown old and revenue growth has been constrained, and with each passing conference, there are quiet conversations about “how do we change the model, because this one isn’t working”. (Some recommendations at the end, but first the background).

Why is this not working? Because these sources of revenue are not going to grow in step with what the organization needs in order to move to the next level.  Let’s look quickly at the revenue side. Of course, any figures have to be estimates for anything later than 2008. The latest available IRS Form 990 that all US not-for-profit organizations must file (and is public) is from 2008. (If you are interested in the XBRL US Inc form 990 – for example if you are a member of XUS and are interested in what they are earning and spending) then you’ll have to settle for the 2007 version. You can find both by entering “XBRL” as the Organization Name on this page: http://foundationcenter.org/findfunders/990finder/

Jurisdictions (yesterday’s model):

There are approximately 20 – 22 XII jurisdictions, depending on the time of day (19 are visible on the www.xbrl.org website, excluding the provisional jurisdictions and direct member organization), and of course Romania (Welcome). Each jurisdiction pays an annual membership fee of US$25,000 (or 25% of membership fees collected in-country for any amount over $100,000. It has been clear for some time that there is little incentive for a jurisdiction to bring in more than $100,000 in membership fees, and most jurisdictions earn far less than that. Jurisdiction revenue in 2008 (according to the Form 990) was US$586,077. It will take a miracle for that number of grow significantly.

Of course the jurisdictions will find ways to ensure that their membership fee revenue, the only revenue subject to the XII rules, never exceeds the $100,000 level. If it does, they find other ways to classify the revenue so that it is not considered membership fees. Of course, in many cases, $100,000 would be a fantasy, and some jurisdictions in the past have not been able to pay that.  In one case, a jurisdiction went for more than two years without paying dues, but was not dropped due to concerns this it might appear that XII might be losing jurisdictions. Eventually the jurisdiction withdrew.

Conferences (yesterday’s revenue):

International conferences provide the other primary source of income for XII. As you know, the 20th XBRL International Conference will take place in Rome in 6 weeks time. XII splits the profits of international conferences with the host jurisdiction, delivering back 25% of profit, while keeping the other 75% of profit. Some conferences are fantastic money-spinners, others are complete duds.

Sponsorship revenue is not going to increase. This is the 20th conference. How unique will a vendor’s message be, or how compelling the opportunity? In the current economy, with discretionary spending limited and conference attendance falling, why would a firm focusing on one market pay for sponsorship at a conference with limited participation from that specific market.

Some jurisdictions have held local conferences, some as early as 6 weeks before hosting major international conferences, usually at a fraction of the attendance cost, with all profits going to the local jurisdiction.  After all, conference revenue is not classified as “membership fees” and therefore does not need to be shared with XII, while XII will happily remit 25% of profits from conferences in which the local jurisdiction put in a huge amount of work.

So what to (not) do?

There are some things that XII can do, and some things that XII should definitely not do. I will give only one example of what not to do.

Do not appoint a Board of Advisers (or any other “board”) with unstated objectives. The Board of Advisers was formed with the externally stated goal of providing support and advice to the ISC. Fundraising was far down on the list of responsibilities. Behind the scenes and in ISC meetings, it was clear that the primary purpose of the Board of Advisers was to raise money for XBRL International. I am not certain members of the Board of Advisers understood that it was assumed that this was their role.

Now some things to Do:

1. Review the membership criteria. Create a category of individual members. There are enough functioning models to follow; it should not be difficult to find one. The AICPA, IIA (Institute of Internal Auditors), ISACA (Information Systems Audit and Control Association), and any number of other standards setting organizations have an individual membership.

2. Consider additional membership categories or participation options, with a view to exchanging recognition for cash.

3. Enable direct organizational membership, especially for organizations in geographies with no jurisdiction. XII says it has this, but only has five direct member associations. This can change and can be a source of revenue.

4. Consider the creation of non-geographic jurisdictions. Examples include industry based (Higher Education, Not-for-profit/NGO) to represent the needs of specific groups.

5. Revamp the conference programme and process. Rationalize conferences and have all XBRL conferences run under the leadership of XII, as least in terms of a fee for use of the brand. Hold one annual XII International Conference.

6. Certainly explore an individual certification programme, but only if there is an individual membership option – providing certification without membership is, frankly, silly and will be seen as a revenue option, little better than a mail-order university.

7. Provide more outreach like the current XSB outreach programme. Get to a wider audience, engage with stakeholders.

8. Provide recognition for participation in working groups.  The XSB is the one major working group that actually has, or appears to have, sufficient member participation. I expect if you added up the total number of ‘active’ members of all the other working groups, the list would be shorter than the number of members of the ISC.

9. Regular (monthly, bi-monthly) magazine/e-zine paying for itself through advertising revenue. For goodness sakes, it works for most other organizations – once they have a membership base adequate to support such communication.

10. I have already made suggestions on democratizing the ISC. Let us see if any of these are taken up. Most importantly though is bringing in new blood and breaking the club. XII should not try to emulate the Freemasons where only the inner circle grants others access to those of like mind. XII should be more like a cult, reaching out and doing all it can to bring others in.

11. Look at ways to capitalize the XII royalty free brand. Does this include charging for print versions of documentation, limited (pay) access, or other fee-for-use scenarios?

These are only a few ideas; there must be many more. In addition, I am sure that the ISC is thinking carefully about them all, just as they were when I was on the ISC in 2006. Then, sitting on the outside the only real change I have seen is a larger ISC, a disbanded Board of Advisers and a new Board of Directors, proposed by-law changes (sent surreptitiously to me, not something not made publicly available to members).

Frankly, it is time for some changes, or XII will continue to muddle along.