If a management unit such as a bureaux, a Continental Liaison Office, an OT Liaison Office or any agent thereof such as a Guardian or FBO or Flag Rep is any good, THE NEAREST SERVICE ORG WILL MAKE AMPLE MONEY TO PAY the managing unit and HAVE LOTS LEFT OVER TO SWELL Sea Org reserves.

Therefore if the managing unit or activity next to a Central Org or service org is “in funds” or “without funds,” it is a direct index of management quality as expressed in the stats of the nearest service org.

For an OTL, the term CENTRAL ORG must have active use as applied to their nearest major org.

For a CLO, an AOLA or AOSH is the nearest org, therefore its major org.

For Flag and top management, the Flag Service Org is the nearest service org when considering financial support.

An OTL or CLO or bureaux must manage lesser orgs so they build up a public that (1) services locally with these lesser orgs and (2) FLOWS CUSTOMERS TO THE MAJOR ORG.

Thus field auditors — missions — small orgs — CENTRAL ORGS — SHs — AOs is THE FLOW LINE without which the Central Org or top org will go broke.

If these lesser activities are kept prosperous and flowing persons upward via the FSM system and other systems, THE LOCAL, CONTINENTAL and INTERNATIONAL management units WILL BE IN CLOVER.

If this flow line is not made to operate that way, all will be awful. If it does operate that way, all will be well.

A CENTRAL ORG, THEREFORE, MUST GIVE HIGHER (IN TYPE) AND BETTER SERVICES THAN FEEDER ORGS.

An AO must give higher, better services than an SH.

Flag services must be higher in class than an AO’s.

Lack of precise definition as to what is income and what is “reserves” has caused trouble in identifying activities and in this flow line of management and income.

The main trouble it has caused is that a management unit, not having precise definitions and not knowing the flow lines (as above), reaches out to the wrong “finance pools” for their support.

(Examples: A Continental CLO tried to live on management 10%s which were not theirs [UKLO ’71]. A CLO let the nearby AOSH go down and tried to live off Flag [USLO ’71], A CLO let an AO go down, ignoring it completely while building up only its most distant org [USLO ’71]. A Div III would not collect actively on huge debts because it could borrow from reserves [Flag Admin Org ’71]. An OTL ignored its nearby CENTRAL ORG and kept trying to get its support from its CLO [ANZO ’71]. The earliest example was a navy admiral [Scoles] running the LA Foundation into the ground in 1950 because he thought it should be supported by Elizabeth, New Jersey.) The WHY of all these was lack of understanding of flow lines, and lack of definition of income, expenses and reserves as different, precise money pools and different types of orgs.

The following is a summary of key terms used regarding Church of Scientology finances. They refer to ecclesiastical management matters as they relate to finances of types of activities or areas. They are not intended to define the corporate structure of the Church.

THE SEA ORG: The elite religious fellowship within the Church of Scientology. The Sea Org is not incorporated and is not part of any corporation. Its membership is involved in Church management and the delivery of the higher level services of the Church.

INTERNATIONAL MANAGEMENT: Consists of the International Watchdog Committee and the International Management Executives (Exec Strata) and those units DIRECTLY attached to them such as the international office of the Finance Network. WDC covers SECTORS (entities such as Scientology Missions International, Sea Org Orgs, Class IV Orgs, FSO, etc.) and is essentially a policing and inspection organization which makes sure things get MANAGED. The Executive Strata (and ED International) does not run orgs; it handles the FUNCTIONS that orgs do. without regard to entities but coordinates the functions in them.

FLAG: The main vessel of the Sea Org. Historically, the word “Flag” means the Flotilla Commanding Officer and his personal staff and is of timeless usage and is not new. When the operations and crew of Flag are stationed on land, the term is sometimes modified to “Flag Land Base.” It consists primarily of a management organization (Flag Bureaux), a public service organization giving the highest levels of services (Flag Service Org) and an estates organization servicing public and crew.

FLAG SER VICE ORG: The main public service organization located at the Flag Land Base. It is part of the corporation known as Church of Scientology Flag Service Org.

FLAG BUREAUX: The management body located at the Flag Land Base which is responsible for the management of the Flag Service Org (FSO), Sea Org Orgs and Class IV service orgs. It is basically a tactical unit running orgs on evals done under upper echelons and is an execution arm for top level management. It operates through FOLOs (Flag Operations Liaison Offices). It is part of the Mother Church, i.e., the Church of Scientology International.

CONTINENTAL LIAISON OFFICE (CLO): The SO office of a continent that manages that continent. A CLO contains combined representatives of all management entities (e.g., SMI, GO, etc.) represented as departments on the org board and has a department which is a FOLO acting as the management link between the FB (Flag Bureaux) and the orgs managed by the FB. A CLO would coordinate all management units for that continental area. Continental Liaison Offices are themselves put there and made to run in a coordinated manner by WDC.

FLAG OPERATIONS LIAISON OFFICE (FOLO): A department in a CLO which deals with the execution of planning and programs issued to it by or through the Flag Bureaux. Their major purpose is to see that Flag planning becomes an actuality in orgs in their zone of responsibility. The FOLO sees that orgs are put there and manages them.

OPERATION-TRANSPORT LIAISON OFFICE (OTL): The branch office of a CLO managing the area or orgs assigned to it.

SCIENTOLOGY MISSIONS INTERNATIONAL (SMI): Scientology Missions International is a church which acts as the Mother Church for missions and is responsible for the direct management of the mission network. SMI missions pay tithes, a portion of which is used for SMI expenses. SMI reserves are part of SO reserves.

INTERNATIONAL FINANCE NETWORK: The International Finance Network is located directly under WDC. This network is responsible for seeing that finance policy in the Church is adhered to; that organization assets such as marketing, meters, books, tapes, cassettes, insignia and films are safeguarded and utilized to drive business down on the orgs; seeing that org staff are well paid; seeing that as a result of making orgs prosperous, management is well paid, and is entrusted with safeguarding and increasing Church reserves. It has representatives in continental areas and orgs. Its overall objective is to see that there is an abundance of SO reserves.

THE CONTINENTAL FBO: The Flag Banking Officer and office engaged in the financial management of a continental area. He is part of the Continental Finance Office headed by the Continental Finance Director.

ORG FLAG BANKING OFFICER: The FBO attached to an org to help manage it financially. He is under the Continental FBO.

SO RESERVES: Often miscalled “Flag reserves” or “management reserves” which they are NOT. SO reserves are the amount of money collected over and above expenses that is sent by various units (via FBOs and the Finance Network) to central reserves bank accounts of Scientology corporations and trusts. It is used for purposes assigned by the boards of directors or trustees of such corporations and trusts and for NO OTHER PURPOSE. These are normally employed for periods of stress or to handle situations. They are NOT profit. It is not support money for “Flag” or “management.” It is not operating money (Examples: Huge sums were required to cover WW when under attack and to catch the PUBS 1970 crash.)

CENTRAL RESERVES: Funds collected over and above expenses that are held in reserve in bank accounts of Scientology corporations and trusts. Often called SO reserves.

INTERNATIONAL MANAGEMENT INCOME: The total money collected for international management and Flag Bureaux management services and products whether paid directly or to Scientology reserves trusts. It includes funds collected for training and processing delivered by international training orgs and billings for missions, promo, etc. A portion of this goes to support management operations and the remainder, and major portion, goes to central reserves.

INTERNATIONAL MANAGEMENT EXPENSES: Total of all expenses for international management and Flag Bureaux activities including comm, missions, training programs, promo, crew welfare plus any other costs of units connected to and supported by international management bodies.

CLO INCOME: A CLO is supported by funds from its nearest major service org, by tours and Flag Service Consultant commissions and by such services to orgs and other activities as training and packs. A maximum of 10% of the CGI of the major org should be more than adequate to support the CLO, as it should be making far more from its other income sources; and since if the CLO is any good at management at all, the income will be high in that major org. A CLO is expected to send far more to SO reserves than it consumes.

CLO EXPENSE: The total of all expenses for the operation of the CLO and any units attached to it including mission expenses and comm.

OTL INCOME: The same as for a CLO. It should be supported by a maximum of 10% of the CGI of its nearest major org plus tours and Flag Service Consultant commissions and income for other services provided to the orgs in its area of responsibility. If it is any good, it will boom the nearest major org and others as well. It has to boom others so they will feed the nearest major org. It is expected to send far more to SO reserves than it consumes.

OTL EXPENSES: The same as a CLO but for its own and attached units’ expenses only.

CLO/OTL RESERVES: Any reserves that may be built up locally through salvage of former allocations or from current allocations.

CONTINENTAL FINANCE OFFICE EXPENSE: The Continental Finance Office expense is paid by the CLO to which it is attached. Thus it must make lines flow. It collects for SO reserves and management units.

FBO LOCAL EXPENSE: Paid by the org to which the FBO is attached. The org FBO collects for SO reserves and management units.

LOCAL ORG RESER VES: The reserves built up by an org through salvage of former allocations or from current allocations.

The governing policy of finance is to

A. MAKE MONEY.

B. Buy more money made with allocations for expense (bean theory).

C. Do not commit expense beyond future ability to pay.

D. Don’t ever borrow.

E. Know different types of orgs and what they do.

F. Understand money flow lines not only in an org but org to org as customers flow upward.

G. Understand EXCHANGE of valuables or service for money (PL Exec Series 3 and 4).

H. Know the correct money pools for any given activity.

I. Police all lines constantly.

J. MAKE MONEY.

K. MAKE MORE MONEY.

L. MAKE OTHER PEOPLE PRODUCE SO AS TO MAKE MONEY.

A small sack of beans will produce a whole field of beans. Allocate only with that in mind and demand money be made.

A finance management which does not understand and USE these principles will be like a driver who hasn’t the tech to drive a car. He’ll wreck it, or not driving it at all will have no transport.

Money is a tech. IT FLOWS. Although one dollar looks like another dollar, they may be from completely different places and mean completely different things.