Summary

  • LACNIC’s 2026 budget puts operating revenue at $11.766 million and operating expense at $12.156 million. A $303,000 financial-results line narrows the $390,000 operating gap to a planned accounting loss of $87,000.
  • The audited 2025 statements show why that last number is not a cash forecast: the financial result landed close to budget, the operating gap widened, and cash still rose. LACNIC should publish a budget-to-cash bridge that keeps those movements separate.

The most reassuring number in LACNIC’s 2026 budget is also the least explained. Operating revenue is put at $11.766 million. Operating expense is put at $12.156 million. The difference is a $390,000 operating gap. Then a line called “Financial Results” contributes $303,000, leaving a planned loss of $87,000.

Nothing in that arithmetic is improper. What is missing is the join.

The financial-results line is not self-describing. It may combine cash receipts, accounting gains, fees, foreign-exchange effects and valuation movements. The final loss is an accrual result, not a bank statement. An investment purchase may reduce cash without being an expense. Depreciation may reduce the accounting result without consuming cash in the year. A bond sale may increase cash while merely changing the form in which assets are held.

These distinctions can sound like an accountant’s footnote. For a regional Internet registry, they are a governance boundary. Members fund 96% of LACNIC’s budgeted operating revenue for 2026. They should be able to see how much of the institution’s recurring operating cost is covered by recurring operating income, how much depends on a market-sensitive financial assumption, and how the eventual accounting result reconciles to cash and investments.

The 2026 equation

The published 2026 budget is concise. Membership revenue is $11.248 million and other operating revenue is $518,000, for total operating revenue of $11.766 million. On the expense side, salaries and personnel account for $6.043 million, half of the $12.156 million operating total. The remaining lines include travel, fixed costs, outreach, professional services, cooperation, training, community projects, contingency and depreciation.

The budget therefore contains two different gaps. Before financial results, operating expense exceeds operating revenue by $390,000. After the $303,000 financial-results assumption, the planned loss is $87,000. Capital expenditure of $330,000 is shown separately.

That is already better than burying the whole calculation in one bottom line. It tells members that the operating engine does not quite fund itself in the plan. But it does not tell them what has to happen inside the $303,000 bridge, or which part of the bridge represents cash.

The phrase “financial results” is especially easy to misread. It is not necessarily synonymous with interest income. It is not necessarily a withdrawal from reserves. It is not a guaranteed return. It is not necessarily the amount by which cash will increase. LACNIC’s own audited 2025 statements provide the evidence.

The 2025 calibration

The 2025 budget used a similar structure. It put operating revenue at $11.292 million and operating expense at $11.666 million, a $374,000 operating gap. Financial results of $277,000 were expected to leave a $97,000 loss.

The audited outcome is instructive because one part of the plan was remarkably accurate and another was not. Net operating revenue came in at $11,079,646. Operating expense was $11,553,040. The actual operating gap was therefore $473,394—$99,394 wider than budgeted.

Net financial results were $277,600, only $600 above the budget line. After a small other loss of $131, the loss for the year was $195,925. The final loss was therefore almost twice the planned figure, but it would be misleading to say that the financial-results assumption failed. It did not. The larger variance was in the operating equation.

That distinction changes the question members should ask about 2026. “Will LACNIC earn $303,000 from its portfolio?” is too narrow. The stronger question is: what operating variance, financial components and cash movements must be reported separately so that an $87,000 plan can later be evaluated without assigning the difference to the wrong cause?

The financial basket

The audited 2025 financial statements decompose the $277,600 net financial result. The largest positive component was $508,867 recorded as result of investments. Against it stood $147,782 of collecting fees, $62,641 of bank expenses, a $48,347 foreign-currency loss and a $946 impairment loss. Other financial results contributed $28,449.

Those components do not share one risk or one cash timing. Bank and collection fees are recurring frictions attached to payment and treasury operations. Foreign exchange can reverse with currencies and exposure. Impairment is an accounting recognition of reduced value. Investment result may contain a different mix from the cash coupons, sales and purchases visible in the cash-flow statement.

The 2026 budget page publishes only the aggregate $303,000 figure. That does not prove there is no internal model. Treasury and finance staff may have detailed schedules. The public problem is narrower: a member cannot reproduce the headline bridge from the budget page itself.

A useful disclosure would separate the assumption into cash interest or coupons, realised gains and losses, valuation movements, impairment, foreign exchange, bank expenses, collection costs and other financial items. Each component should have an owner, a basis date and a variance threshold. The total could still be one number in the statutory budget. The supporting bridge would show what kind of number it is.

Loss is not burn

The 2025 cash-flow statement supplies the sharper warning. It begins with the $195,925 accounting loss. It then adds back depreciation and amortisation, removes the investment result, and incorporates changes in receivables, liabilities and other working-capital items. After that reconciliation, net cash provided by operating activities was positive $86,066.

Cash used in investing activities was $23,526. But that net figure sits on top of large movements: $3,711,656 of bond purchases, $3,497,053 from bond amortisations and sales, $529,027 of coupon collections, $199,984 of property and equipment purchases and $137,966 of intangible-asset acquisitions. Cash increased by $62,540 during the year, from $1,160,113 to $1,222,653.

The institution thus reported an accounting loss and an increase in cash in the same year. That is not a paradox. It is what different measurement systems are supposed to reveal.

Nor do the balance-sheet figures support a crisis narrative. At the end of 2025, LACNIC reported $2,697,480 in current investments and $8,980,431 in non-current investments, alongside the $1,222,653 cash balance. Total assets were $19,093,744, liabilities were $1,720,689 and equity was $17,373,055. Those numbers do not answer how much of the portfolio is available for any particular purpose, but they make “an accounting loss equals an imminent cash shortage” untenable.

The reverse mistake is also possible. A cash increase does not prove that recurring operations are fully funded. Cash can rise because working capital moves or an investment matures. The operating gap still matters. The point of the bridge is to prevent either measurement from borrowing authority from the other.

A budget-to-cash bridge

LACNIC does not need a longer budget essay. It needs a compact table that can survive from plan to audited outcome.

The first block should compare budgeted and actual operating revenue and expense using stable categories. It should show absolute and percentage variance and identify which threshold requires management explanation. Membership revenue, other revenue, personnel, travel, outreach, services, community contributions, contingency and depreciation should not drift into new labels without a reconciliation.

The second block should decompose financial results. Cash coupons and interest belong in one column. Realised sale gains or losses belong in another. Valuation and impairment belong in another. Foreign exchange, bank expenses and collection fees should remain visible rather than disappearing inside a favourable net figure.

The third block should reconcile the accounting result to operating cash. Non-cash depreciation and amortisation, investment-result adjustments and material working-capital changes should be shown. The fourth should explain investment cash flows: purchases, amortisations, sales and coupon receipts. The last block should join opening and closing cash to current and non-current investments.

Every number then receives one of three labels: budget, accrual result or cash movement. The labels do more work than a larger dashboard. They stop a planned gain being described as cash, a bond purchase being described as operating expense, and an accounting loss being described as burn.

The bridge should also record the decision trail. Who owns the $303,000 assumption? On what portfolio and exchange-rate snapshot was it based? When did the Board approve it? What variance calls for an explanation? If operating revenue falls short while financial results outperform, which condition is treated as structural? If the reverse occurs, what is permitted to change?

The budget-to-cash bridge is Theo March’s editorial recommendation, not an artifact LACNIC says it has adopted. It is not a proposal to manage the portfolio in public. It is a proposal to make the public arithmetic reproducible.

What the $87,000 does not decide

The planned loss is small beside LACNIC’s reported asset base. That fact should reduce theatrical claims, not reduce scrutiny. The institutional question is not whether $87,000 threatens continuity. It is whether the budget makes a recurring operating gap legible and whether the instrument used to close most of it can be evaluated after the year ends.

An organisation may rationally accept an operating gap for a period. It may be investing in staff, outreach or infrastructure. It may judge that accumulated resources exist to absorb volatility. Those are decisions. A clean bridge does not prejudge them. It reveals who made them and which evidence will later show whether the assumptions held.

The 2025 record gives LACNIC a useful baseline. The financial result was close to plan; the operating gap was not. Cash nevertheless increased. If those three facts are compressed into “the loss was worse than budget”, the institution learns too little. If they are separated, the next budget becomes testable.

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