An Open Letter from former National Treasurer Todd Hagopian
As a former National Treasurer, I am writing this open letter to the members of the LNC.
Please do your job.
We elected you to make the tough calls, when nobody is looking, not to pass CYA budgets that keep everyone quiet, while pushing the party to the brink of bankruptcy.
Your current National Treasurer is pleading with you to review this budget, have a healthy debate, and make the hard changes. Yet, the budget that is proposed is massively underfunded, and no serious discussion seems to be in the cards to get it back in line. I am hearing way too much of “we need to raise revenue” and “we can’t cut that”, and way too little about cash flow and “what if we start to miss?”
I had written a really long, boring analysis of this budget, and decided to pull back and just give a high-level overview. With that said, here are some suggestions, from the sidelines, on how to get this back on track.
Lesson #1 – Always Balance The Budget
It is not acceptable to pass a budget that is $238,000 out of balance. That would only be acceptable if you were making some enormous one-time expenses that would drive revenue increases for years, and that is not present here. You must either cut $238,000 in expenses, raise an extra $238,000 more revenue, or some combination between the two.
Lesson #2 – You Absolutely Need Month-by-Month Budgeting
The budget says that “there is no need to further break out monthly vs. annual.” I could not disagree more. When money is tight, and cash flow is variable, you need to do two things:
1) track revenue and expenses by month.
2) Have an accurate forecast of when revenue and expenses are going to come in, and go out.
Otherwise, you are going to run out of money. Period. You will have two bad months in a row where your expenses are up, and your revenue is down, and it will be too late to adjust the budget and recover by the time you figure it out. This is what happened to the LNC in 2022, when they ran out of money and had to take a loan. It is what happened to the LNC this year when they had to sell the building. This is a huge mistake.
Lesson #3: Show Your Budget 2026 vs. Forecast For 2025
The current budget shows the budgeted 2026 expenses vs. the budgeted 2025. This is immediately irrelevant because we massively under-fundraised the budget, and the expense line has fundamentally changed due to the sale of the building. The comparisons are not meaningful, at best, and are meant to distract people, at worst. Case in point, you are showing that membership revenue is being forecasted down 14% when you are really forecasting a revenue increase of about 4%. This causes different discussions. People could look at the 14% forecast reduction and say, “yep that makes sense”, but they won’t ask how we are going to increase this year’s results 4% over last year.
Lesson #4: Costs Are Still Way Too High
During the meeting, it was said that we need to increase revenue, not cut costs. That is like saying we need to increase taxes, rather than fixing the expense side of the budget first. It is a hope-based strategy that winds up with the LNC taking a loan, signing up for a highly-questionable fundraising scheme, or selling the building.
Here are some expense areas to tackle:
FEC Filing: This has cost us $2,000/month when we had over $2M of receipts/expenses, and now we have half. It is time to renegotiate this fee, or get secondary quotes to see what can be done to lower this expense. ($6K-$12K of savings)
Accounting: While I was proud to professionalize this accounting practice, and I think it was the right thing to do, the organization picked the most expensive accountants of the three we looked at. Again, our revenue has been cut in half, and there are far cheaper options out there. ($20K-$30K of savings)
Ballot Access Petitioning: This should be taken to $0 in a non-presidential year when our budget is so far out of whack ($50K of savings)
Campaign Candidate Support and Training: This should be taken to $0 in a non-presidential year when our budget is so far out of whack. Or, make states opt-in, and have it pay for itself, or subsidize the cost by half ($24K-$48K of savings)
Travel, Meetings and Meals: This should be cut to zero, and the LNC should have virtual-only meetings until the revenue line increases. This has always been a waste ($30K in savings)
Legal (ongoing): This really needs to be capped at $2K/month (maximum for an organization of this size), this has gotten way out of hand the past several years ($30K of savings)
Legal (New Mexico Trademark): This should be cut to zero – End this ($20K of savings)
Software/IT: We have always spent too much money on this for what we have gotten. If we are going to spend $66K/year, we need to see an ROI. And, don’t tell me we have seen one, as our revenue has been cut in half. Give yourself a modest budget of $3K-$4K/month and stick to it. $18K-$30K of savings)
Lesson #5: Everything In Life Is A Math Problem
Listen, don’t make this harder than it is. The cuts above represent a total savings of $198K to $250K in annual savings. You are forecasting a deficit of $238K. Make the $250K in cuts, and then revise the budget upwards if you figure out a way to boost your revenue. It is really that simple.
Elephant In The Room
The current budget also has you profiting over $100K on convention. This is certainly possible, and SHOULD be able to be done. However, I have serious concerns over whether or not we will hit these profitability numbers, and if you miss, that will be a HUGE hole in the budget very early in the year. It is FAR BETTER to cut the budget now, and revise it upwards later, if the convention revenue/expenses come in strong.
Conclusion
You folks were elected to make the hard decisions. Keeping the budget expenses similar year over year, while fundraising has been decimated, is not making the hard decisions.
Cut $238K from the budget at your next meeting, then revise the budget upwards if we get our act together. It is that easy.
Todd Hagopian
Former National Treasurer
[…] have already started this conversation. Todd Hagopian already wrote an article, which you can find here, about next year’s Libertarian Party budget. I agree with almost everything he wrote in that […]
The prior hire was nepotism. This was classic embezzlement IMHO. I was one of the members reporting, and don’t be so sure “nothing will be done Andy. I was told they were already looking her due to her invitation of Trump to our convention that it didn’t seem right. I was led to believe (though they are close to the chest are what they will do) that a DOJ/FEC referral might be made as part of a larger scheme of hers. The LNC should have filed criminal charges. Nekhaila is a coward and should never be on the LNC again. But, and of course I cannot guarantee anything, I believe that the chickens are coming home to roost for her, but it takes time. Not everything that is being done by members is public, and I am sure even the stuff I know is a fraction.
Well let’s see if law enforcement does anything about it. I know this got reported to multiple law enforcement agencies months ago, back around February (or so) right after news of the scandal broke. Since the incident already got reported to muktiple law enforcement agencies (and the law allows anyone to report the crime of embezzlement, so the person reporting it does not have to be an LNC member or even a party member) and so far NOTHING has happened.
Contrast this to what happened in 2020 when the Chairman of the LP of Iowa literally embezzled $10,000 or more from their state party. There was no nepotism hire, the state chair just flat out stole the money. Law enforcement was contacted and they did not stall on it. They begsn a criminal investigation and the LP of Iowa Chair knew he was going to get convicted and sentenced to prison for it so he drank himself to death, as in he drank so much alcohol he died via alcohol poisoning.
Every source I checked says that the law considers an organization rules violating nepotism hire to be a civil matter and not a criminal matter.
Here’s what happened when the State Chairman of the Libertarian Party of Iowa embezzled money from their state party. He did not engage in a neptism hire of a family member or a domestic partner, he just flat out stole money for his own personal use. It got reported to law enforcement and law enforcement did not do nothing about it. Click the link to find out more about what happened.
https://www.desmoinesregister.com/story/news/politics/2021/12/10/former-libertarian-party-iowa-chair-accused-stealing-party-funds-police/6461310001/
I get if the party lacks the funds to do anything, but keep in mind that the LP of Arkansas did most of their ballot access drive with funds they raised outside the LNC and with volunteer signatures. The petition is a party status petition which allows them to run candidates for all federal and state offices, and for a few local offices which are partisan. The only way to retain ballot access there is by getting 3% for President or for Governor. The LP of AR has never retained ballot access, however, it has come close to hitting 3% for Governor a couple of times. The LP of AR has a far better chance at hittimg 3% for Governor than for President, in part because Arkansas has an easier petition requirement for President only. The petition requirement to get on the ballot for Governor only is the same as it is for the party status petition (the party status petition allows for running candidates for all partisan offuce with no additional petition signatures required). So the Libertarian Party candidate for Governor is likely to be the only alternative candidate on the ballot to the Democrat and the Republicans, whereas in 2028 there will likely be multiple minor party and independent candidates on the ballot for President in Arkansas, thereby decreasing the odds of the LP presidential candidate hitting the 3% to retain recognized party status. So far Arkansas is the only state where the LNC has made any ballot access expenditures.
The LP of Maryland has been working on a ballot access drive with funds they raised outsude of the LNC and with volunteers. The petition in Maryland is also for recognized party status, and like Arkansas, it allows the party to run candidates for all federall and state offices as well as for some of the local offices (the ones that are partisan), without having to gather additional petition signatures. Unlike Arkansas, the petition in Maryland gets ballot access for two general elections. So the petition in Maryland guaranteed ballot access for 2026 and for 2028. The presidential candidate would need to get at least 1% of the vote in order to retain ballot access for 2030. Maryland also has a mechanism to gain ballot access by getting 1% of the electorate to register to vote under a political party’s name, but the LP of MD is not close to being able to achieve this realistically nor is the LNC in a position to realistically help them achieve this in the forseeable future, so for now they can only realistically utilize the petition methid to regain ballot access. The party status petition in Maryland is the same number of signatures as it is in Arkansas, 10,000 (note that Maryland has a higher population than Arkansas). If the party put off regaining ballot access in Maryland until 2028 this will mean no candidates there in 2026, and it will likely mean that the party will have to spend even more money there for 2028 since ballot access costs tend to go higher in presidential election cycles than in midterm elections as the market in presidential cycles is more competitive.
Inflation has driven up the cost of everything, including ballot access, and on top of the inflation, it has actually gradually on average gotten more difficult to gather petition signatures everywhere in the USA than it used to be. There are a variety of reasons for this, but the bottom line is that average petition turn in numbers per circulator have gone down everywhere. This does not mean it is impossible for anyone to gather a large number of signatures in a short time frame, but on average it is less likely to happen than it was say 10 or 15 or 20 or 25 plus years ago. I am pointing out the overall trend, not the exceptions as exceptions do not make norms. So we are hit with a double whammy in inflation driving up costs plus the average increased difficulty in gathering signatures for ballot access increasing the costs.
This is impacting Democrats and Republicans as well as there are states where they have to fufill petition requirements to get on primary ballots. The difference is that they have a lot more money to absorb the costs as compared to the Libertarian Party.
“Ballot Access Petitioning: This should be taken to $0 in a non-presidential year when our budget is so far out of whack ($50K of savings)”.
Wrong! We think strategically when it comes to ballot access, because we know we want all the ballots in 2028 and 2032 and so on. We look for ballot access opportunities between presidential elections because there’s another thing we know–there’s going to be a ballot access crisis in 2028. We just don’t know where. But if we can finish states early, we’ll be in a better position to handle that crisis when it comes (in terms of labor and finances) so we don’t blow a chance at 50 ballots and with that, a shot at the presidential debates.
Ballot Access is a state-driven activity, and responsibility. The National Party should help when, and if, they are able to. It is clear that they are not able to right now. They can help gather volunteers, or send out fundraising emails, but until revenue increases, there is not room in the budget for this.
The ballot access petition in Maryland is good for two general elections. This means if it is completed successfully for 2026 it also guarantees ballot access in 2028. Retaining ballot access for 2030 will be subject to a 1% vote test for President. If the party fails or abandons trying to get back on the ballot in Maryland for 2026 it will just end up paying more money for ballot access there in 2028 because ballot access costs tend to go higher in presidential years due to more competition.
Maryland has a recognized party status petition. Once a party get official recognition in Maryland it can nominate candidates to be on the ballot for all federal and state offices and for some of the local offices, the ones that are partisan, and candidates do not have to gather additional petition signatures for this.
Reality is that most LP affiliates are not in a position to obtain ballot access without LNC help. Even when states have their own ballot access fundraising efforts a lot of the donations often come from Libertarians in other states.
Also, keep in mind that some states have easier ballot access than others, and some states have easier ballot access retention than others (some states actually have no mechanism for retaining ballot access).
Alabama’s is damn near impossible because it is a very weird system here, with no partisan voter registration, so we don’t even know who our people are, major party status for county affiliates separate from the state party, petition requirements and vote percentages that are insane, and of course the deep red corruption coupled with the blue ineptitude and media blackouts.
Sometimes I think the LPAL ought to become the Crimson Tide Party…and not because of the dedicated people doing the thankless job of trying to make it work in spite of everything.
There are 19 other states which do not have partisan voter registration.
“Ballot Access is a state-driven activity’. Again–wrong. The national party has been the major driving force in LP ballot access since it’s inception–by far! The national party has been the largest contributor (in terms of labor, finances, and legal help) to LP ballot access–by far! The national party far outweighs the state parties in ballot access discipline and experience. Yes, the national party has a history of squeezing everything it can out of the state parties for ballot drives, on occasion to the point of having to spend more than it would have had to if it had just committed to doing the whole drive in the first place. This is somewhat understandable, because otherwise the national party would always have to pay for everything for ballot access, while some state parties would just sit back and collect their “ballot access welfare”.
The notion that having out Presidential candidate on the ballot will get him or her into the general-election Presidential debates has no merit. Having run for Congress, been in a dozen debates with my opponents, had front page headline press coverage ‘Libertarian Surprise Winner’, but had no resulting effect on my vote totals, I am disinclined to believe that such an appearance would be of significant benefit, certainly not enough to justify the effort we put into it.
It will take a lot more than ballot access in all 50 states plus DC for a Libertarian Party presidential candidate to get into the presidential debates with the Democratic and Republican party candidates. I do not expect it to ever happen.
Regardless of this, there is still great value in ballot access. Most people do not take candidates or political parties seriously unless they have ballot access. The same goes with the media. The Libertarian Party does not get fair media coverage, and likely never will, but the party does get SOME media coverage, and the less ballot access the party has the less media coverage it will get.
The highest percentage of the public who pays attention to politics pays attention to the presidential race. When people ask the question, “Who is your candidate?” to Libertarians what they almost always mean is who is your presidential candidate. Presidential candidates are the public face and standard bearer for a political party. Beyond presidential candidates, the next two offices below President to get the most attention from the general public, but not as much as for President, are Governor and US Senate. There is a big drop off in the percent of the public who pay attention for offices that are lower than Governor and US Senate. I am not saying that Libertarians should not run for other offices, but as far as getting the message out to the most people and building the party and the movement, the best office for this President, and then to a lesser extent, Governor and US Senate.
Local offices where Libertarians can win are nice, but most of the public does not pay attention to or care about these offices, and reality is that we do not have enough Libertarians in any local jurisdiction to take over a government council or board or commission, so Libertarians who get elected to local offices are pretty limited in what they can accomplish.
With all due respect, George, thank you for your service. I’ll admit that every time we qualify for the debates, they raise the bar. First, it was be on all 50 ballots. When we did that, they said you have to have all 50 ballots and qualify for federal matching funds. Harry Browne did that (he didn’t take the money–that was the first time that ever happened). Then it was be on all 50 ballots, qualify for federal matching funds and get 15% in a national poll. When Gary Johnson did that, they said it had to be certain polls. My point is that if we don’t have 50 ballots, they’ll simply use that to keep us out.
No matter what you do, the rules will be changed to keep you out. In addition I do not agree that having our candidate into debates run the way modern debates are run will be of positive value.
Having a Libertarian Party candidate in debates with Democratic and Republican party candidates, or any other candidates for that matter, is a good thing. The only way it would not be a good thing would be if the Libertarian Party candidate is unprincipled or not a good debater or otherwise makes themselves look foolish or bad.
I am skeptical that a Libertarian Party candidate will ever get into presidential debates against the Democratic and Republican party candidates, but in a few states Libertarian Party candidates have been able to get in some debates against Democratic and Republican party candidates for Governor, US Senate and some other offices.
And maybe the LNC should consider that, say, a $10,000 contributor to the Nolan Building may be preparing to file suit to recover the targeted contribution? And, in discovery, obtain the list of all the building contributors and invite them to join a class action suit? Doing the right thing and offering refunds to those who want them would then show the LNC how much of the building sale money will not be claimed and can stay in the organization and safely be used for budget balancing.
They have no case to sue over. The party did in fact use the donations for the office until it became clearly apparent that the office was obsolete and was a liability. The party should have sold the office a few years ago.
I would argue that donors were misled about the need for the office in Alexandria, VA in the first place and that the promises made for what having this office would do, as in it was claimed that it would bring more publicity and influence in DC, NEVER happened.
It made good sense to get rid of the useless and obsolete asset and to put the funds toward more useful functions.
Unfortunately, Todd is correct. The budget should be in balance.
As I said on a different post – Every month the LNC still is short from operations (per cash flow) taking money from the building sale. This is not how healthy organizations work. A healthy one would have a surplus from operations not needing to sell assets to pay the bills.
At the current / projected rate – the “David F. Nolan Building Slush Fund” will be depleted in 3 years. Perhaps less if the convention ends up being a bust.
Building donors should have been notified prior to the sale. They should have been allowed to express where they wanted their previously restricted donation to go to – ballot access, political activity, affiliate training, paying the bills, some other project (including the purchase of a future HQ), etc.
The LP will not grow back its depleted donor base unless donors can trust the LP again with their money.
The selling of the building – was one breach of that trust – because the donors that made it possible where not properly notified. The building was the number one fundraiser in the history of the party. The donors that gave to this project should have been allowed to have their voices heard.
The fact that the LNC still has not legally (both criminally & civilly) gone after the former Chair & her cohorts for the theft & misuse of donor funds is another breach of trust. The LNC used the excuse of not having the funds to pursue a legal avenue to make the donors right – but that excuse is moot given the sale of the building.
These are the two biggest issues that need to be addressed in order to regain members & donors.
Agreed on both counts.
I was never in favor of selling the building without a replacement, those funds should not be used to plug cash flow holes – absurd. And, McArdle should have been prosecuted 11 months ago when we figured out what was going on.
I looked up the law. I do not think that Angele could be prosecuted for embezzlement because the law considers what she did to be an organization rule violating nepotism hire and not embezzlement. The law regards it to be a civil matter and not a criminal matter. I know that at least one person already reported the matter to multiple law enforcement agencies months ago, shortly after news of it broke, and nothing has happened, and I do not think anything will happen because it is regarded as a civil matter and not a criminal matter. The LNC could sue her, and I think there’d be a good chance that the LNC could win that case, but whether or not it would collect the money is another issue as I have no idea what her ability to pay is.
I’ve looked into it extensively. Had the organization decided to file a police report, she would have likely been in trouble. This was not nepotism, it was fraud, in my opinion. But, the LNC was too afraid to push the issue, which is why I have stopped donating.
Here are some notes:
The prosecution would need to prove beyond a reasonable doubt:
A fiduciary relationship existed – meaning you were entrusted with managing or monitoring the non-profit’s assets due to your position
You acquired the non-profit’s property through that relationship
You took ownership of the property or transferred it to someone else
You acted intentionally and with fraudulent intent (meaning you knowingly and deliberately misappropriated the funds)
Some specific factors that could lead to conviction include:
Diverting organizational funds to personal accounts
Creating false invoices or financial records
Misusing the organization’s credit cards or expense accounts
Manipulating payroll or reimbursements