Falling Apart and Coming Together --

Reflecting on our finances

By Richard Reoch

President of Shambhala

I’ll always remember the day the Mukpo Brothers said “Yes”. A tremendous weight was suddenly lifted when the Sakyong said he would run the New York marathon on 6 November for Shambhala and Gesar said he would lead the fund-raising campaign for it.

It took me back to the poignant moment when I was first told Shambhala was about to run out of money. It was early June 2003. Terry Rudderham, our comptroller, was on the phone. Although we had already done our best to deal in the previous weeks with Shambhala’s financial crisis, it was now clear that we could y no longer pay salaries by the end of the month.

Thus began a week of intensely difficult and painful decision making. The inescapable conclusion was that we needed to cut most of the central functions of Shambhala International and make fundamental changes.

Of the 25 people on staff at that time, all but a handful were laid off. That left only the Sakyong’s immediate staff, a severely reduced  finance office, and a part-time head of Practice and Education. That tiny team rose to the challenge with extraordinary warriorship. We have done our best to serve Shambhala in this way now for two and a half years.

Our hope was that all the operating debt would be paid off by the end of this year. We are almost two-thirds of the way there. In the last 27 months we have paid off $361,000 of the $611,000 we started with. That leaves us with $250,000 still to go.

              So the Sakyong’s decision to run the New York Marathon principally for Shambhala is a tremendous opportunity to wipe out most, if not all, of this remaining burden. Instead of the annual year-end appeal for donations that we always count on, we are putting all our effort into encouraging people to pull together to meet this much bigger target. We will also ensure that ten percent of what is raised goes towards the continuing reconstruction of the Surmang Shedra.

              Gesar Mukpo’s willingness to team up with the Sakyong for this big push has been a tremendous ray of sunlight. Perhaps it was the very outrageousness of raising a quarter of a million dollars in one day that fired his imagination.

Whatever lit the fire, the magic is working. I just spent the last three weeks visiting our growing Shambhala Community in Latin America. One morning in Sao Paulo, Brazil, one of the members said, suddenly: "I saw an email message that we are going to get completely rid of our debt when the Sakyong runs his next marathon.  I don't normally give to these marathons, but for this one I am definitely going to give maybe 108 dollars at least. You will definitely succeed with this!"

              I asked him what was different this time.

"Everyone will get behind this,” he said. I saw that the Sakyong's brother is going to help too. That is great news. I know who that person is, and I like him. He is very independent minded. The fact that he is doing this is tremendous..."

I want this enthusiasm to be backed up with understanding. So for those who want to know more about our finances, here is some background and an update.

In June 2003, Shambhala’s accumulated operating debt stood at a $611,000 (Canadian). Previous fund-raising efforts had simply not been able to keep pace with expenditure. Charitable giving throughout North America was severely affected by the shock wave of 9/11.  For a long time we had been relying on our credit line of $150,000 with the bank to help us with our growing cash flow problems. But by June 2003, our credit line with the bank was completely maxed out. On top of that, the value of the US dollar began to fall internationally. Since our central operations are based in Halifax, the decreasing value of US dollars to Canadian dollars hit us hard. In real terms, although the steady stream of donations from Shambhalians throughout the United States continued, the slide in the exchange rate meant we were facing additional losses of about $100,000 in income.

              All this was reported in major articles that we placed in The Dot so that the entire mandala could understand what was happening. We also spelled out our plan for getting rid of our operating debt.

              We hoped to be even further along in our repayments this year, but two main factors have slowed us down.

Income this year was lower than planned. The main disappointment was Shambhala Day. We had budgeted for gifts totalling $180,000 (almost a quarter of the total donations we planned to receive this year). In the end we received $100,000.  That was great in itself, but we were left about $80,000 short. 

At the same time, after two years of being at an almost complete standstill, there were initiatives that we simply had to support.

We enabled the Sakyong to attend the Mipham empowerments at Namdroling Monastery last Spring.

We gave last-minute support to prepare the Tenno House at Kalapa Valley where the Sakyong did the Scorpion Seal retreat before giving the Rigden Abhisheka.

We funded additional work and travel for the acharyas and the Office of Practice and Education. This was vital to start developing our new curriculum, and I am delighted to say that Carolyn Mandelker now works full time, assisted by Jill Scott and Bill Sutton.

We also started supporting meetings and telecommunications for the new Dorje Kasung Command Council.

We were able to provide modest support to help the archives in its huge task of preserving the Vidyadhara’s relics.

My own travel and communications costs were higher this year than originally planned (I get reimbursed for those costs, but do not receive a salary) because I have met and worked with so many more centres in our continuing efforts to strengthen communication throughout the mandala.

 Meeting these costs, and absorbing the shortfall from Shambhala Day, means we won’t clear our remaining debt this year without the special drive being led by the Sakyong and Gesar around the New York Marathon.

              Since we live in a culture that encourages debt, I’ve found that a lot of people aren’t motivated by the idea of getting Shambhala out of debt. They want to know what we’re doing to move forward with projects they care passionately about.

              The two are linked. If we can stop servicing our operating debt, then we can use the constant stream of donations to get on with the things we all want to do. The 2006 budget is being drawn up with exactly that goal in mind.

As a result of the two Shambhala Congresses we now have a completely new budgeting system that begins with informing the new Mandala Council (on which every Shambhala Centre has a seat) about our global finances and consulting the council on priorities. That process is now underway and the recent meeting of the Mandala Council at the end of August was a milestone.

              We are drawing up a budget that will include projects given high priority at the most recent Shambhala Congress and by the Mandala Council. These include:

-- increased support for Practice and Education, including curriculum development,

-- support for new families and children initiatives (a much-needed manual and a conference on the needs of children and families in our mandala),

-- a major redesign of the Shambhala website with  a free website template for all Shambhala Centres,

-- a mandala-wide membership data base and membership services.

              Not everyone gets enthusiastic about building long-term infrastructure, but one member of the Mandala Council wrote to me last week to say:  “This is all related to our being a family, since sangha IS a family. These are steps we can  take to strengthen our connections to each other, going further with developing our process of relating to conflict – and increasing trust – like this marathon with the Sakyong and Gesar working together, a GREAT idea!”

I am also happy to report that, despite the tremendous workload on our reduced finance team, we were able to present to the Mandala Council this summer complete consolidated financial reports for Shambhala for the year 2004. I am told this was the first time in many years, if ever, that a complete report on this scale was ready within the following year.

The amount of work done by Terry Rudderham and her team to complete this was staggering since it involves consolidating reports from all Shambhala Centres in North America, Europe and elsewhere, plus ten separate structures operating under the umbrella of Shambhala. This was possible thanks to the increased cooperation on financial reporting throughout the mandala. This information is to be posted soon, for the benefit of all our members, on the Shambhala website.

              Naturally, I include in my practice the aspiration that support from the Shambhala community at the time of the New York marathon will wipe out our remaining operating debt. We all want to move forward with a fresh surge of economic energy. Even without that aspiration, I realised in the course of putting all this information together, that we have come a long, long way from the anguish of June 2003. As a centre director put it recently, “We are giving birth: we have seen how things fell apart and we are seeing now how they are coming together!”

Note: if you are inspired to make a donation, you can do it online on this website. Please click here. Or you can give at your local Shambhala Centre. Or you can use the reply card enclosed with the letter to  Shambhalians from Gesar Mukpo.

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Tackling the operating debt

Shambhala's operating debt accumulated over a period of time as income failed to keep pace with expenditure. This worsened noticeably after the downturn in philanthropic giving throughout North America after the attacks of 9/11. In early 2003 major changes took place with a cut in services and salaries. But by June that year, it became clear that far more drastic action was needed.  Most staff and services were cut. A plan was announced to pay off the entire accumulated debt over the coming years. This was announced by the Shambhala News Service on 20 June 2003. The full text of that message from President Reoch is reproduced below. Since then there have been further articles in the Dot, informing the community of the steps being taken. After the announcement below, we reproduced the hand-drawn message he sent to Shambhalians for Shambhala Day this year, outlining progress to date and the challenges ahead.

President Reoch's message to the community- June 2003

Dear friends,

At the beginning of this week I alerted our entire community that I would be consulting with the Sakyong and others about major changes needed to the way our mandala is structured, governed and financed. It has been a week of intensely difficult and painful decision making.

It is no longer possible for Shambhala International to continue as we have known it. We know that we need a unified mandala and we all share a profound longing for this unity. But to get there we need far better communication, a more coherent structure and clearly transparent finances.

These changes are needed if we are to focus our energies effectively on making our precious teachings more fully accessible within our own community and to the world. Without that, we won't get beyond the confusion, disorganization and mistrust that so many people have talked to me about.

Shambhala International already had one major financial crisis this year. Now we face another. We are staring at a shortfall of $200,000 (CAN). This has been triggered by the sharp fall in value of the US dollar, the delay in selling the Casa Werma property in Mexico and revised expectations of other income this year.

This crisis, however, is not about lack of money. It is taking place within a mandala that has assets estimated at $25 million and cash held by various parts of the mandala totalling well over $1 million. But precious little exists to support the centre of our mandala. In fact there is no mandala-wide framework for planning the use of our resources for agreed goals and objectives.

Some of our most basic structures and systems need to change fundamentally. If we stick doggedly to the survival plan we adopted at the beginning of this year - and also try to absorb the latest massive shortfall -- we face nothing but three years or more of paying off debts and bumping along from one cashflow crisis to the next.

On the other hand, if we cut right back to the bone now, and use the coming months to make essential changes, we can start to emerge by next summer having paid off most of our debts, with a healthy set of books. We will be a much smaller central organization as a result, but with a stronger base from which to build an integrated mandala.

The inescapable conclusion is that we need to pull back most of the functions of Shambhala International now, so that we can make the fundamental changes we need.

Of the 25 people who currently serve the mandala through Shambhala International, 17 will be laid off, most in the middle of July. That will leave only the core staff that directly serve the Sakyong; a tiny team in our finance department to continue receiving donations over the months ahead; and a part-time head of Practice and Education.

We will do our best to keep people's jobs open for them once we have undergone major reconstruction of the mandala. We hope to compensate anyone who loses their job because their position is restructured. Right now, we are doing our best to provide assistance, advice and support for all those who need to start receiving unemployment insurance.

I am sending this message now as a basis for a series of conference calls that will take place for centre directors, other leaders and anyone else who wishes to join in them early next week. The times of the calls will be announced on sangha-announce as soon as possible.

I will be able to describe the implications of these cutbacks in those calls. I will give a preliminary assessment later in this message

First, however, I want to report the outcome of a meeting I had with Rinpoche to discuss this entire situation. At the conclusion of that meeting, he asked me to include these words in this message.

Message from the Sakyong:

Shambhala stands at a real crossroads now. This is a moment I could feel coming. With the recent financial realities, it seems very important that we look deeply at how we have conducted our business and administration. Now, having looked, we realize that fundamental changes are needed. Even though these changes are difficult, it is also a great opportunity to restructure for the future.

I have asked Richard to seriously look in detail at our structure and administration because there seems to be a discrepancy. The community in many ways is inspired and in good health. Yet there is always a continual financial and administrative friction. The habitual rubbing of the two together should be a clear message that something isn't quite working and that we need to change.

Despite the incredibly difficult decision that needs to be made now, the staff, along with Richard, has been very courageous in reducing everything down to the bare minimum and in seeing this moment as a true opportunity for our mandala.

We have the reality of the world economy looking at us. These decisions and changes can, I believe, be the beginning of reorganizing ourselves to be more socially, spiritually and financially responsive to the actual needs of our community and the times we live in.

I fully support Richard's difficult decision, as I feel we all should, because he is looking to the future health of our whole community. I am personally very grateful that we are not just going to make do.

Our community is strong. People are generous and committed. Somehow we should be in a better structural and financial situation. This is the opportunity to make that a reality.

-Sakyong Mipham Rinpoche

The Sakyong also pointed out that the Shambhala Congress in November will take on a new significance in light of these vital issues.

What appears at first glance to be a problem of money, is in reality a question of view. How do we achieve a common understanding of sacred mandala? How do we develop an understanding of what it means to create such a mandala, be part of one and protect it? From the very core of our mandala outwards, how do we establish the common ground on which we respect, nourish and serve each other?

These are the questions we need to answer together in the coming months.

Let me turn to the immediate effects of this cut back. All of us are working to figure this out now. This summer's programs at practice centres will still take place, as will Kalapa Assembly, the Vajrayana Assembly and the Shambhala Congress this year.

However from mid-July most of the services from the Shambhala International office will have to cease. We will be able to send out the rest of the curriculum for the Shambhala School of Buddhist Studies in draft form, but we will not be able to provide follow-up support and guidance. The planned international level training for Meditation Instructors will have to be put on hold, as will the international program planning that we do.

On the financial side of things, we will continue to provide the insurance coverage for that all Shambhala Centres in North America. We will continue to receive donations from all parts of the mandala -- which are crucial to get us through this period -- and we will continue to issue tax receipts.

One of the most painful aspects for us is that we will not be able to reply to the huge volume of email messages we receive every day. We estimate that we handle about a quarter of a million a year, answering all sorts of questions about practice and study, putting people in touch with each other, helping them find the resources they and their centres need, and providing the matrix for the thousands of communications that still bind our community together.

We have been forced to take this drastic step because we cannot afford to continue as we are now. But it is equally important to focus on what we are going to achieve in the months ahead.    I have identified the following nine goals, many of which will be discussed at the Shambala Congress:

1. Integrate our global Shambhala community into a single mandala. We do not have this now.

2. Develop a new system of governance based on mandala principle. We need to establish a framework for a genuine partnership that meets the needs of all our regional and local structures and also supports the centre of our mandala.

3. Agree on a mandala-wide membership policy. This needs to meet the needs of Shambhala Centres and Groups as well as individuals worldwide who want to be part of Shambhala Society.

4. Clearly define the role and responsibilities of all Shambhala Meditation Centres. This needs to reflect a coherent view of the Shambhala Buddhist teachings, the Dorje Kasung, and the importance of arts and culture in the development of Shambhala Society.

5. Continue developing our entire education system that offers a coherent view of the Shambhala Buddhist path.

6. Establish a new economic model for the mandala. This needs to include a system that increasingly supports the teachers within our mandala.

7. Overhaul, simplify and speed transaction processing and reporting from up our central financial systems.

8. Establish the basis of funding and financial planning for the Sakyong and the support provided by the Shambhala Mandala to members of the Mukpo family.

9. Lay the basis for a mandala-wide system of compatible computer records needed for program planning, publicity, communications and financial data.

With your thoughtfulness, generosity and strength of practice, I am confident we will be able to work together through this period of reconstruction and emerge from it with far greater clarity and confidence.

Yours in the Vision of The Great Eastern Sun,
Richard Reoch
President