8.

Summary of Financial History and Financial Facts

8.1.Overview

Red ADvenir as a non-profit organization is sustained exclusively by donations. The financial

strategy differs from other institutions. We have a great trust that money will come at the right time

for the right need. We are acutely aware of the necessity to maximize the use of every dollar.

Increase in efficiency means, we will have more funds to spread the Gospel. It also means we will

prove even more faithful to the trust granted us by donors.

As a Satellite TV Network our operations´ costs are among the lowest across the Americas and

possibly across the world. Currently, 57% of our staff is working on a volunteer basis. By the end of

June, 2009, we had a staff of 54 persons, 25 volunteers and 19 with a fixed salary. Employee salary

is capped at US$300 per month, in this is in most cases only for employees with families. This is

little, even by Bolivian standards. Volunteers receive a small stipend (of US$100 a month) or they

work for free, depending on their financial basis (some volunteers, especially those from North

America or Western countries have a stronger economic base than volunteers coming from Latin

America). Volunteers are normally provided with living quarters.

Both volunteers and employees have accepted the call to work under challenging economical

circumstances. Thanks to their sacrifice, personnel costs are kept to 11% of total expenses.

Our greatest expense is for the payment of satellite fees. These expenses are covered directly

by GMI’s head quarters. Red ADvenir manages the rest of the expenses, which include all operations

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in Bolivia. However, these expenses are only a fraction of what is paid for satellite (about 20% of

total costs).

Detail of monthly expenses (US$) 2008 average:

CATEGORY

IN US$

ADMINISTRATION

294

LEGAL

76

MAINTENANCE

523

PERSONNEL

7,211

PRODUCTION

310

RUNNING_COSTS

1,897

TAX

223

TECHNICAL

256

TRANSMITTER

2,160

MISCELLANEOUS

656

PROJECT

10

SATELLITE

53,130

TOTAL

66,746

8.2.Detailed discussion of expenses

In this section we look at our expenses in detail. Efficient use of our funds is our aim. And we

believe that God in His providence has seen that costs be kept very low in comparison to the same

work carried in other countries.

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Satellite expenses are by far the greatest expense Red AD Venir faces. 80% of total budget

goes for this expense. Satellite is what brings Red AD Venir to the world, it connects us with all the

communities that are downlinking the signal to rebroadcast locally. Every other expense is small in

comparison with this cost. This is what drives the personnel often to their knees, requiring God’s

providence in covering expenses. Below is a discussion of these expenses and of our efforts in the

past years to increase our efficiency.

After satellite fees, the highest expense in the budget of Red ADvenir are personnel costs that

are now around 7,200 US$ monthly (as per 2008) and Transmitter related costs (are also at about

2,000 US$). Transmitters around Bolivia are also paid by Red ADvenir and their energy costs

constitute the biggest part this expense.

The graph below shows that these local costs have remained capped over 2006-2008. In

fact, once we exclude costs related to special events (restructuring, legal fees, etc), we actually see

that we have reduced our total cost. As per second half of 2008-present costs have started to

increase mainly in the areas of utilities and personnel costs due to the expansion of the channel.

However, considering that while the number of personnel is the same as in the years 2005-

2006, our production has dramatically increased to include two TV channels (Spanish &

Portuguese), and administering programming or uplink for a total of four TV channels. Productivity

over the last 4 years (2006-2009), has increased by a factor of 2.5 times. We praise God for this!

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ADM INISTRACION

120,000

M AINTENANCE

100,000

M ISCELLANEAOUS

80,000

PRODUCTION_TRANS

M ITTER

60,000

TECHNICAL

40,000

RUNNING_COSTS

20,000

PERSONNEL

0

DONATION

jun_06 dec_06 jun_07

dec_07

jun_8

dec_08

8.3.

Allocation of local budget costs.

Personnel expenses, running costs, and transmitter related costs comprise 80 % of our local

expenses. These costs and the rest of expenses are discussed in detail below.

ADMIN; 2.08%

PROJECT; 0.88%

LEGAL; 1.45%

MISCELLANEOUS; 5.42%

MAINTENANCE; 3.57%

TRANSMITTER; 15.72%

TECHNICAL; 1.09%

TAX; 2.63%

RUNNING_COSTS; 11.28%

PERSONNEL; 53.58%

PRODUCTION; 2.29%

8.4.

Personnel Expenses, Transmitter and Running Costs

8.4.1. Personnel Costs

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The graph below shows the progress of personnel costs over 2006-2008. The graph clearly

shows that most costs for 2007 were slightly above US$5,000 per month. In 2008, costs increased

(especially towards the second part of the year) and have stabilized at around US$7,200 a month.

This is due to the expansion of operations started from the second half of 2008 onwards, including

the addition of a radio station with fixed personnel.

Costs are always double in December since employees receive a 13th pay (this is standard in

Bolivia). Despite the increase in costs over 2008, the majority of our workers are on a volunteer

basis; this is why the personnel expenses have not picked dramatically even though production has.

Operation’s output due to changes in technology and increase in services offered, has nearly

doubled by mid 2009.

The months that show reduced costs are those months when salaries were not paid because

there were no funds available. Thus, the limited funds paid out (a few hundred dollars monthly)

were “survival” money, to allow personnel to pay for their living expenses (food, emergency bills).

The amounts for November, 2006, and May, 2007, need to be explained. In November, 2006,

there was a restructuring where approximately 40% of the personnel were terminated. The high

amount paid out was for severance pay (a legal requirement in Bolivia).

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In May, 2007, due to legal reasons, new work contracts were issued starting in 2007. Thus,

the employees were given an indemnity (required by law) for the years they had worked prior to

2007. This was paid in May, 2007.

The other peaks in the graph are for payment of skipped salaries (due to shortage of funds).

Personnel Costs 2006-2008 with moving average (3 months)

$30,000

2006

2007

2008

$25,000

$20,000

$15,000

$10,000

$5,000

$0

8.4.2. Transmitter Costs

Antennas are the means by which most people view Red ADvenir in Bolivia. The market

share of cable companies is limited, so most people use air antennas to view TV. We broadcast to

most major cities in Bolivia.

The costs for transmitters include electricity (our higher cost), personnel (guards for towers),

and rental costs for the towers from where we transmit. There are other costs related to broadcasting

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our signal. These are licenses and maintenance (which can be repairs and traveling expenses). These

costs are not included in this graph. Maintenance is discussed in a next graph.

Costs have averaged about US$2,000 for 2006-2007. Costs are shown as erratic in 2006,

because not enough funds were available for prompt payment. This was accepted by our suppliers

and they waited until the total payment was made. The Lord has provided funds every time, even if

at times with some delay. That keeps us on our knees.

In the middle of 2008, we were able to reduce costs by moving one transmitter to our own

tower in Santa Cruz (instead of renting one), this saved us US$500 per month and so our costs for

the second half of 2008 dropped to about US$1,500 a month.

Transmitter Costs 2006-2008 with moving average (3 months)

$4,500

2006

2007

2008

$4,000

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

$500

$0

If one adds the maintenance or expansion costs related to transmitters, the costs increase, but

not significantly. Disparities in the graph are due to technical purchases, most of these towards the

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end of the period. These purchases responded to expansion needs and not repairs. (See January, July,

September and November, 2006. March, July, and September, 2007. April, July, November, and

December, 2008). The large expenses in 2006 (almost US$4,000 each), were for a transmitter and

broadcasting equipment and repairs. In June, 2007, new equipment was purchased. In 2008, we

moved the transmitter to our tower and in April and July there were costs associated to this move

(cost reduction). In December, 2008, a down payment for a new transmitter was made (expansion).

Considering the years 2006-2008, we can be thankful that comparatively little has been

spent on repairs and maintenance for the several transmitters around the country. We are also

thankful that weather related damages have been small and we have been able to find components

in China for our legacy equipment, that are priced at a fraction of the sale price anywhere else.

TRANSMITTER

TECHNICAL TV EQUIP

$4,500

2006

2007

2008

$4,000

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

$500

$0

8.4.3. Running Costs

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Overhead expenses for studio operations are about US$ 2,500 per month. This includes

utilities (water, electricity), phone and internet connections. The gaps in the graph, are once again,

due to lack of funds (expenses were paid later).

Our costs have somewhat shifted. They averaged about US$1,500-1,600 in 2006, they

decreased in 2007 (after the reduction of personnel), and have picked up on the 2nd half of 2008 to

about US$2,000 a month (due to an increase in personnel). The largest portion of these costs

correspond to a higher electrical bill.

Our phone bills have significantly been reduced, due to higher competition among

telecommunication companies in Bolivia.

Running Costs 2006-2008 with moving average (3 months)

$4,000

2006

2007

2008

$3,500

$3,000

$2,500

$2,000

$1,500

$1,000

$500

$0

8.4.4. Miscellaneous

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The remaining 20% of the expenditure is miscellaneous. Peaks in the following graph are

always attributed to some special event. Normal costs seem to average around US$ 2,000 - 2,300 per

month. The peaks in taxation are absent in 2008. They occurred in July, 2006, and April, 2007, due

to fluctuating broadcasting license costs in Bolivia.

The peak in July, 2007, for miscellaneous, is due to volunteers’ costs for their participation as

representatives of Red ADvenir at a youth congress in Colombia. The peak in October, 2008, were

the covering of legal fees in an effort to receive a tax exemption status for import duties. Other

expenses under miscellaneous in 2008, are due to higher expenditure for volunteers.

Maintenance costs – special repairs were done on the building at the end of 2008, including

air conditioning fittings – these are also under miscellaneous.

Also under miscellaneous are: office supplies, and a few technical and legal costs.

Our production costs remain at a low level due to our use of printed sets, which are

significantly less expensive than built sets. Costs for a printed set range from US$150-300. We have

started to provide sets for other GMI productions, so that they can also benefit from these low prices.

We also air programs from other networks, free of cost which further reduces production

costs.

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$7,000

2006

2007

2008

$6,000

PROJECT

$5,000

MISCELLANEOUS

TECHNICAL

$4,000

TAX

PRODUCTION

$3,000

MAINTENANCE

LEGAL

$2,000

ADMIN

$1,000

$0

8.5.

Concluding remarks on costs

The analysis of our main expenditures shows that as per mid 2008 we started increasing

costs for personnel and some running utilities. All other costs have been kept stable in the last three

years. We have also seen that, despite lack of funds at times, we were able to keep up with all

expenses during this period. Also, efficiency has nearly doubled, but costs have been capped in most

areas.

To bring our signal to the viewer, GMI assumes most of the cost (about 80% of our budget for

satellite fees). We assume another 16% locally to produce and air programs. And in Bolivia, we

assume a further 3.5 % to broadcast the signal in various cities.

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Since we are able to share productions from other networks we can save on production costs.

Also, many international communities help to defray the cost of broadcasting our signal, including

costs for licenses, electricity, and human resources.

Considering the data here shared, we believe that in comparison to other networks in Latin

America, we cover operational costs on a significantly smaller budget.

We are thankful to God that with little, He has helped us to accomplish much. We pray for

wisdom to responsibly manage all the resources allocated to this ministry and for continued growth,

as the work of preaching the gospel expands.

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