The OCLC cooperative is not owned by anyone. A nonprofit, library cooperative, OCLC is a membership organization whose public purposes are to further access to the world's information and reduce the rate of rise of library costs. Librarians guide the OCLC cooperative and help shape its services and direction. In contrast to a for-profit corporation, there are no shareholders.

The cooperative is governed by a 16-member Board of Trustees, more than half of whom are librarians. A 48-delegate Global Council, all of whom are elected by member libraries, meet at least once a year in person to articulate the interests and concerns of OCLC member libraries. Global Council delegates elect six Board members and ratify amendments to the OCLC Code of Regulations and Articles of Incorporation.

Yes. In November, OCLC issues an annual report, which is distributed to the director of each member library. The report reviews progress toward the cooperative’s strategic plan and includes key financial data. A financial review and management commentary accompanies the financial statements and provides a narrative of the financial activity during the year with some comparisons to prior years. A Report of the Audit Committee, similar to SEC reporting companies, discusses the responsibilities of the Audit Committee and Management related to the audited consolidated financial statements. Annual reports are available online.

Deloitte & Touche, an international public accounting firm appointed by the OCLC Board of Trustees, audits the financial statements of OCLC. The audited financial statements are available online.

Yes, the OCLC cooperative is tax-exempt under U.S. tax laws, which define "charitable activities" to include advancement of education.

The cooperative does pay sales tax in certain states and real estate taxes in the U.S. OCLC also pays income taxes in China and through its for-profit subsidiaries in Europe and Australia.

Each year, OCLC files a U.S. Federal Form 990 (a Return of Organization Exempt from Income Tax form), which includes information about officer and Trustee pay and policies as well as detailed data on revenues and expenditures. The form does not include the for-profit subsidiaries in the financial information presented.

The European for-profit subsidiaries (companies owned by OCLC) provide computer library services to libraries similar to OCLC. However, under European law they do not qualify as "charities" and no other nonprofit legal organization type is available. Only "charities" are exempt from taxes in Europe. OCLC is not a "charity" but a library membership organization. Australian offices are taxable as well.

In the United States, OCLC is tax-exempt under rules that state an organization must be organized and operated exclusively for exempt purposes and none of its earnings may be paid to any private shareholder or individual. The exempt purposes set forth in the U.S. IRS Code Section 501(c)(3) are charitable, religious, educational, scientific, literary and other public purpose organizations.

OCLC, Inc. has offices in Canada and Mexico and their operations are exempt from taxes due to OCLC's nonprofit status in the United States. The Beijing office is taxable under Chinese law.

Yes, the investment portfolio provides a reserve operating fund that potentially would cover approximately 65% of operating expenses.

A significant portion of the investment portfolio secures library deposits under the subscription deposit program and unearned subscription revenue for library services of $53.7 million as of June 30, 2010. In addition, about $5 million in annual interest and dividends from the portfolio and other investments support the operations of OCLC, which reduces the cost-share prices to the cooperative.

Yes. With the concurrence of the Board of Trustees, the OCLC cooperative strives to operate in a financially responsible manner with cost-sharing revenues that slightly exceed expenses. The goal is to have an annual contribution, including income from the investment portfolio, on a five-year rolling average of 4 to 6 percent to maintain long-term financial viability in pursuing the cooperative's public purposes. OCLC recognizes that in some years it will meet or exceed that objective, while in others it will not.

Under U.S. law for tax-exempt organizations, no dividends can be paid to members of the cooperative. In the event of OCLC's dissolution, the Board of Trustees would adopt a plan to distribute the cooperative's assets in a way that is consistent with the purpose of OCLC.

Yes, as a prudent part of its financial strategy, OCLC has publicly traded bonds that have been rated. Standard & Poor's released their latest rating on December 1, 2010 with a long-term rating of A/Stable. This rating enables OCLC to achieve favorable interest rates on its bonds and other financing.

Over the last five years, the OCLC cooperative has spent between $20 to $38 million annually on research and development. This includes the activities of OCLC Research and The Research Libraries Group (RLG) that joined OCLC in 2006.

An explanation of the Trustees Compensation policy is available online.

An explanation of the Executive compensation policy is available online.

A financial update for fiscal 2010 is available online. Please share your comments and suggestions. In addition to contributing to the blog, you may also contact Rick Schwieterman, Jay Jordan or any OCLC Trustee to ask questions or make suggestions.