AERC has grown dramatically in the services that we provide to our sport and our members in the past few years. We have also grown in membership and revenuesÑbut not as rapidly. At the midyear meeting in San Antonio, the board of directors focused on our aspirations for the future and the challenge of matching those aspirations to our financial reality. Like most organizations (and families), we are better at thinking of ways to spend money than to bring in more money or cut expenses.

The first reality was that the projected budget for 2006 developed by our Finance Committee showed more than a $100,000 gap between projected income and expense. This is not quite as alarming as it sounds because AERC in the past few years has always constructed a conservative budget where expenses were overestimated and revenues underestimated. So perhaps 25% of the gap can be attributed to conservatism. Nevertheless we must develop a more realistic budget that closes the gap. The main drivers of the gap are:

1. AERC now has both active trails grants and research programs to support endurance riding. These programs are integral to the purpose of AERC as defined in the bylaws (see box). Moreover, these programs have two specific benefits. First, we must have activities like this to maintain our tax free status as a 501(c)3 nonprofit organization as defined in our bylaws. Second, and more importantly, we need to work closely with the land managers, particularly the federal government, to keep our trails open and our sport healthy.

2. We are now directly funding the insurance for ride managers throughout the country. The vast majority of ride managers are strongly supportive of this. We did not increase fees when we first undertook this as we used accumulated surplus.

3. Sponsorship revenues are projected to be down significantly because we are likely to lose one of our largest sponsors. We are working to retain this sponsor. I have challenged the board to find new sponsors and offered to call any company where we develop a good lead. I invite any of you to contact the office, the AERC Sponsorship Committee or myself if you have any good leads.

4. After consulting the membership and getting a solid majority of support, we are paying for the board of directors travel expenses to BOD meetings. The purpose of this was to encourage more people to run for the board, particularly those for whom the travel expense to the BOD meetings would be a burden. Here again, I have challenged the board to find more sponsors or lose this privilege. As an aside, the BOD are nonpaid volunteers who give generously of their time. During the weekend of the mid-year board meeting, for example, the board members collectively spent more than 350 hours of donated time serving AERC.

5. We have greatly expanded the scope of our member services:

very strong website and tech support

greatly improved Endurance News

far larger education program

We serve about 20% more members and ride entries than in 1999 with a smaller staff and 10% less office budget. And we are doing a better job. That's productivity! Our office of two full-time and two part-time staff professionals works very hard to serve the members and receives very high marks.

6. AERC has not raised dues or fees in about a decade. This is highly unusual as service organizations such as ours are subject to inflationary pressure on the cost side much more so than high-tech companies. In light of the expanded insurance coverage and the expanded scope of services, one option the board will consider is increasing AERC rider fees, day member fees, and/or annual membership dues.

When I was elected treasurer of AERC in 1997, I discovered much to my horror that AERC was teetering on the brink of financial insolvency due to lack of membership renewals and problems with financial management. Through the hard work of then-President Dane Frazier, the next president, Randy Eiland, and other members of the board of directors, we successfully solved those problems. Fortunately, AERC has a good cash reserves today, although we still do not have the reserves that I believe a nonprofit organization like AERC should have.

I am determined to keep AERC financially healthy. Today our choices to close the gap are the same as any organization: increase revenues, cut expenses, or use the surplus from prior years. The board is carefully considering specific measures in each of these areas. You will be hearing more about our ideas over the next few months. We welcome constructive ideas from the membership. Share your ideas and your priorities for AERC. Let us hear your ideas via the AERC online members' forum or by directly contacting your board members and letting them know your priorities.