At CFA Institute, new Leadership Team members are in place, computer-based testing is underway, we’re making considerable strides shoring up our IT infrastructure and organizational operating model, and we’re in the midst of globalizing the Certificate in ESG Investing, among other successes. We know all of you are busy with your own local challenges and successes as well. Thank you, as always, for your ongoing commitment and hard work supporting our members and mission.
As promised, we want to provide you early insight into the financial commitment of CFA Institute to societies for the coming fiscal year. This week, the CFA Institute Board of Governors approved the FY22 Society Funding Model and corresponding financial commitment at their quarterly meeting. Forgive the length of this update, as I want to provide a full picture of the decision and what to expect going forward.
Relatively Small Adjustments
I am pleased to share that there will be relatively small adjustments made to FY22 operational funding, despite the ongoing uncertainties to the revenue streams of CFA Institute. FY22 will be a transitional year from our current funding approach to a longer-term, sustainable model that we expect to implement for FY23 and beyond.
As we refined the funding model for FY22, our aim was to provide clarity and confidence in our financial commitment to societies, minimize disruption to society budgets and financial positions, and encourage society support for growing demand for the CFA® Program. Our ultimate goal was to keep the overall year-over-year budget allocation flat to society funding, despite significant cuts to other budgets across CFA Institute. We also considered several key factors in our funding model design, including the input and insights we gathered from Society Leaders, Presidents Council Representatives (PCRs), and Governors at the end of 2020 and data from society business plans and financial statements. The CFA Institute strategic direction also weighed into the funding model modifications, especially how CFA Institute can encourage societies to help us increase influence and relevance locally.
FY22 Society Funding Model Overview
We evaluated the current funding formula and each of the three key funding components: per-candidate, per-member, and per-financial center. Based on our evaluation, the funding formula will include four main modifications for FY22:
- A 50% increase to per-candidate support for New Level I (NL1) candidates
- A 10% decrease in support for each of the other funding components
- Two levels of protection to provide certainty and stability:
- A limit of no more than 10% reduction in operational funding for any society
- A limit to the impact of the new model on societies with reserve levels lower than 70% of total operating expenses
- The establishment of an application-based funding pool from budget savings and matching funding
The table below outlines the formula adjustments and how that will impact the FY22 funding components overall:
Read more
Under this model, 80% of societies will experience less than a $5,000 decrease in operational funding based on current member and candidate data. No society will experience more than a 10% reduction in operational funding versus FY21, even if the formula itself results in a larger reduction when applied to 30 June 2021 candidate and member populations.
We recognize that for some societies, especially newer country-based emerging-market societies, any reduction—even a few thousand dollars—could compromise financial stability. As we implement the adjusted FY22 funding model, we will closely monitor these societies. We are committed to their growth as they navigate these challenging times so, where necessary, we are instituting a floor on the impact of any reduction on operating reserves.
The combination of these protections will ensure financial resilience and sustain operations across our entire society community, so we emerge stronger together in a post-pandemic world.
With respect to the adjustments to candidate and member formula components, increasing financial support for NL1 candidates in FY22 is designed to provide greater shared revenue-producing opportunities for local societies, though we recognize that these opportunities may be limited at this point in the year and vary across the network. It is also important to note that reducing per-member funding in no way reflects less importance placed on our members and the services societies provide to them. Rather, it reflects the reality that the cost of programming and other member services has been significantly lower in the virtual environment. We recognize this decision may not be widely supported, but it is vital to ensuring our ability to adequately support societies in the year ahead within our existing budget constraints.
Last, we recognize that many societies do tremendous work in support of our regional and global strategic goals—extending the capacity, reach, and influence of our efforts in new and innovative ways. We want that work to continue but recognize the elimination of FY21 project funding has forced many societies to slow down and even stop these vital efforts. For that reason, we are re-establishing an application-based funding pool to resource initiatives that drive relevance and influence, for select product development- and advocacy-related initiatives that support those strategic goals. We expect up to $1MM to be available through the application-based funding pool. This expense will be shared between CFA Institute, through renewed contribution, and societies, through the reduced FY22 operational funding, as outlined above.
What This Means in the Coming Months
Over the coming months, we will consult closely with PCRs, the Society Partnership Advisory Council (SPAC), and key Society Leaders to iron out the details for how the funding pool application and award process will work. Over the remainder of 2021, we will also work together to develop a longer-term, sustainable funding model for FY23 and beyond. We are in the early stages of both designing this process and determining exactly how societies will inform the long-term funding model design. Our ultimate goal with this effort is, while ensuring adequate resourcing to meet our joint objectives, to support societies in becoming more self-reliant financially through revenue growth and diversification opportunities as part of the new CFA Institute strategy.
Despite the recent financial hardships and prolonged uncertainty of how COVID-19 will further impact the financial position of CFA Institute, our commitment to the global society network remains strong. We expect you have many questions and while we don’t have all of the answers, we’ve created a Frequently Asked Questions (FAQ) Guide to address the ones that are top of mind. Please read it closely and reach out to your respective Society Relationship Manager with additional questions. I also encourage you to attend one of the upcoming regional Virtual CFA Society Town Halls, where we look forward to introducing Lutfey Siddiqi, CFA, the new Managing Director for Regions & Society Relations.
Thank you for your ongoing support, partnership, and patience as we shift toward a stronger and more sustainable way of working together for our future.
Sincerely,
Randi
OUTREACH
Changes are Coming to Connexions!
In the coming months, we will make some adjustments to the content and navigation on Connexions to better reflect our strategic initiatives and to help meet your societies' needs. Notably, we will evolve our current COVID-19 Resources hub into a more general CFA Society Community Content page to help your local society share your programming, events, and publications with the rest of the community. Look for this change to be implemented soon.
Society Awards Reminder
Don't forget: Round 1 applications are due for the 2021 Society Awards Programme on 3 March! The categories, which include Most Outstanding Societies by Size, Impact and Innovation Awards, Outstanding Research Award, and Volunteer of the Year Awards, aim to recognize those in the CFA Society network who continue to deliver innovative programming and inspiring initiatives. Read more on Connexions or submit your application today!
Upcoming Surveys of CFA Institute Members
CFA Institute will be conducting research on a few important initiatives in the coming weeks. We will be soliciting members' insights for the following:
- The Future of Work in Investment Management: Careers and Culture
- The CFA Institute Future of Finance Team is gathering quantitative input for a study on work culture, attitudes, and efficiency within investment organizations. Specifically, the report will explore the impacts of COVID-19, workplace inclusion, and build upon the findings in the "Investment Professional of the Future" report. In the coming week, we will survey 50% of our members for their feedback; the other 50% of the membership will be contacted in the coming months to participate.
- COVID-19: One Year After
SOCIETY MANAGEMENT
Candidate Communications and CBT Guide
Thank you for continuing to support candidates as they navigate changes to the CFA exam schedules.
Refer to the newly created CBT Guide for Societies for critical, sensitive information about test centers and locations, the sequence of events and communications before and after a cancellation, a contact list, and more.
We encourage you to bookmark our CFA Exam Updates page, our primary source of information about expanded exam options, new testing windows, our refund policy, and more, to support candidates through their testing options.