End of Life Plan
Free Geek annually estimates the amount of money needed to operate and the amount of money needed to settle any outstanding financial commitments. If cash on hand drops under an amount that would cover forty-two days (6 weeks) of operating expenses and the needed amount to settle outstanding financial commitments, then Free Geek will shift to shutdown mode in order to settle all outstanding commitments and clear out hazardous e-waste from building. Free Geek's board of directors may also authorize the termination of the organization, in which case Free Geek will also shift to shutdown mode.
- Annual estimates
- Each year we should search through our files for any agreements, contracts, active grants, pending grant applications, and leases that may be in effect. These documents will be used to determine our outstanding financial commitments.
- Cash on hand
The amount of money in the Free Geek's safe, bank accounts, and all other liquid assets.
- Free Geek's current assets excluding any non-cash inventory.
- Shutdown mode
- The main activities of the organization would be redirected to terminating the day to day business of the organization, emptying the building of all hazardous and non-hazardous material. Some of Free Geek's regular activities could continue during this phase as long as they further the aim of ending the organization's activities. Sales, refurbishment, and disbursements could continue as needed, or items could be processed for recycling.
- Forty-two days (6 weeks) of operating expenses
- This should typically be calculated by first determining the last calendar year's actual operating expenses (all expenditures including cash-based cost of goods sold, but excluding non-cash expenses)and multiplying by 11.54%. Other circumstances that affect expected expenses should be taken into account if there are known and significant changes.
- Outstanding financial commitments
- This should be determined by examining all active grants, pending grant applications, contracts and leases and determining the amount needed to settle them. This may be the entire balance on the life of the contract, but it may be a lesser amount if there is a buy out clause in the agreement. For example, the current lease with McGuire Bearing says we can end the lease with four months notice, so four months worth of rent would be a part of the outstanding debts amount.
- As decided Board of Directors meeting October 2008 the plan was simply "If cash on hand drops under $75,000 shift to shutdown mode to clear out hazardous e-waste from building". The board also approve a one time budget expense of $1000 to have staff to estimate/refine cost of shutdown (in 3-6 months) and policy. This work was not completed in a timely manner. We revisited the matter in 2012.
- As Free Geek has grown and changed, it has become apparent that the $75,000 trigger amount is too little. For example, Article 21 of the Collective Bargaining Agreement requires 30 days notice of layoffs, and a shutdown would almost certainly be considered a layoff situation. $75,000 represented about three weeks of operating expenses in 2010 and 2011. Management suggests doubling this amount and re-phrasing the amount to be a formula, rather than a flat fee.
- The above policy was presented to the board of directors on list and at the meeting of April 11, 2012. Suggestions from the board members were incorporated, and the policy now stands.
RfS 19:37, 14 April 2012 (UTC)
Below is the always-in-progress staff plan for implementing the policy:
- empty the building of all hazardous and non-hazardous material
- identify material that can be sold (without compromising our mission or principles or legal obligations)
- identify material that can be given away (without compromising our mission or principles or legal obligations)
- Day 1
- Cash on hand drops below trigger amount. Layoffs of all bargaining unit staff are announced to the union. Notification to board of directors and key volunteers are sent.
- Day 2-7
- Identify all creditors
- Hold a board meeting to apprise the board of the situation. Schedule an official dissolution board meeting.
- Identify job counseling options for staff.
- Identify alternative nonprofits that may be able to service clients and customers.
- Determine what reuse-bound items will be diverted directly to recycling.
- Estimate and schedule vendor pickups.
- Pay or settle outstanding debts.
- Inform all contracted donors and vendors of imminent closure of Free Geek's business and facility.
- Day 8
- Union has until this day to respond, requesting a meeting to discuss options. This meeting should be scheduled a soon as feasible, even if before this date.
- Day 9
- Notify donors. Halt hardware donation receiving. Re-orient all jobs to shutdown activities.
- Day 10-29
- Honor staff, board, and volunteers. Give them credit and thanks.
- Hold a board meeting where the board votes to dissolve the organization. Record that decision in the board minutes.
- Document Free Geek's existence. Write down what we have done, our history, our research, the knowledge we have gained. Give the documentation to the Oregon Historical Society and the Nonprofit Association of Oregon.
- Inventory all assets, such as money, furniture, web domains, property, mailing lists, etc. Then pass them on to another nonprofit, sell them and use the proceeds to pay our bills, or return them if appropriate.
- Day 30
- Target date for an empty building.
- Shut down all line operations. Lay off all workers not needed for final dissolution and clearing out.
- Tax and other regulations
- File a formal intent to close with all applicable state and federal agencies ([]).
- File a final Form 990 tax return with the IRS within 4 months and 15 days of terminating your organization.
- Tasks to enter into timeline
- Press releases.
- Inform staff of details of layoff procedure (returning keys, receiving final paychecks, etc.).
- Date by which we cancel future classes (I recommend we start this process immediately and cancel classes two weeks after timeline starts). Inform students of canceled class status.
- Inform interns of Free Geek's status.
- Disburse computers to volunteers who are past a certain number of Adoption or Build points?
- Secure all records, hard copy and electronic.
- Do something about the wiki.
- Trigger decision-making process that can't be deadlocked by blocks.
- Announce list of workers needed for final dissolution and clearing out.
- Discuss COBRA, IRA rollovers, other options etc. with staff.
- Get FSA balance or equivalent to all staff who have made contributions during the affected year.
- Trigger end-of-life beer budget emergency fund.
- Do something about Free Geek affiliates (FG Intergalactic) present and future.
- Figure out how to provide verification of employment history for laid-off employees after closure.
- Close Tech Support and clear out machines held
- Dissolve corporation and notify creditors.
6 Weeks operating expenses
- 2013 Expenses (including COGS and excluding non-cash expenses)
- $1,505,005 + 6,465 - 25,154 = 1,486,316
- Cash on hand as of the end of 2013 (current assets excluding inventory)
- $590,785 - 55,743 = 535,042
- 42 day (6 week) period
- Outstanding financial commitment
- $31,820 (estimated)*
- (as operating days)
- Days cash on hand
- Less financial commitment
* (needs updating)
Outstanding financial commitment breakdown
(month-to-month commitments, including anything requiring 30 days notice or less are not included).
- McGuire Bros.
- Lease (including truck parking). 4 months notice to terminate @ $7,595/month = $30,380
Need to check for other commitments.
- $30,380 (estimated)