2013 Report of SAA Treasurer Mark Duffy

2013 SAA Annual Membership Meeting
August 17, 2013

Report of Treasurer Mark Duffy

Good morning.

[Slide 1]
Thank you for being here at the Annual Business Meeting.  We are trying something a little different this year by giving a little more information than what is contained in the reports you’ve received.  We’ll see how this works…

I am delighted to report that the Society’s finances are in good shape, and we have every reason to believe that the trend will continue in the coming year.  Our good financial situation compares favorably to the experience of some of our allied associations.  We can attribute being “top dog” in the financial strength category to SAA’s attraction, participation, and retention of members, across the range of professional experience.

You have received today by distribution copies of SAA’s two most important financial statements: the Balance Sheet and the Income Statement.  Both of these reports comply with industry standards and have been reviewed by the Society’s independent external auditors, MW&A of Deerfield, Illinois. The Audit was received by the Council on August 6 and shows no outstanding issues for the Society or the SAA Foundation.  In other words, we received a “clean audit.”  The ultimate measure of a good financial operation is to have an unremarkable audit.  (Thank you, Tom, for making that happen.)

[Slide 2 – Balance Sheet] 
Turning to the first report, we have the Balance Sheet.  The Balance Sheet gives us the broadest view of our financial position with a comparison to previous years.   It compares our cash, current accounts, and fixed assets against our liabilities: debts and deferred revenue.  As of the end of June 30, 2013, our Net Assets were $764,400, a sum that gives us a six-month cushion of support for SAA’s operations against unforeseen contingencies.   The strength of our Balance Sheet is demonstrated in our Liabilities by the $43,000 increase in Deferred Revenues from 2012 to 2013, which signifies an optimistic forecast of membership growth.

[Slide 3 – Income Statement]
The Income Statement (which is the other report you have received) is a performance indicator of SAA’s programs, represented in terms of where we generate revenue and where we spend money in benefits and member services. 

Note that the statement separates SAA’s operational funds and SAA’s invested funds, which are held by The Foundation (more later on that). 

Reconciling our cash intake against our business and program expenses, we arrive at a Net Gain for the year -- which makes for two in a row.   FY2013 was a very good year for the Society in generating a Net Gain of $62,287. 

This is a nice chunk of money, and a very good place to be, financially, as we try to identify the activities that will bring success to our new 5-year strategic plan.  Several factors led to these good results.  

[Slide 4:  Favorable Trends -- Revenues by Cost Center]

(Membership Increase)  Membership drives the financial health of SAA, and we continue to bring in new members, adding nearly 2% to our total in FY2013.  Although we are reaching a plateau in growth, this steady addition, in a lackluster economy, is a good sign -- and when you have 6,200 members, a 2% growth rate is a strong indicator of the relevance of SAA’s message and offerings.

(Member Dues) We are in the second year of the 3-yr. dues increase cycle, and -- as projected by our Finance Director Tom Jurczak -- this input has led to a more predictable revenue stream, contributing to a nonprofit industry standard 35% of our annual cash flow.  The very good news is that we are adding members across the salary range of tiered membership categories, with 112 members enrolling above $40K and 137 below that threshold number. As we add members in the categories above $40K, we add significantly to our non-break even income, which gives us an extra margin to take risks and be innovative in such areas as the Annual Meeting and Communications.

(Annual Meeting)  The Annual Meeting is the second most important source of income for SAA.  We had a very successful meeting in San Diego compared to budget expectations and that has helped us keep a positive balance sheet.

(Education)  Our educational program has gone from a loss leader to a very bright spot on our financials -- able to generate revenues that justify new resources, mainly on the strength of our investment in the DAS workshops, but also because we’ve realized a solid performance in most all of our other educational offerings. (Good work from Solveig and the Education Committee in targeting areas of professional need.)

[Slide 5:  Prudent Management -- Revenues by Cost Center]
The SAA Program Managers and staff in general have done an excellent job of Prudently Managing their areas of expertise.
We note in particular a Transition in Staffing that allowed management to re-examine the skills that SAA most needed to move forward with our technology planning and services – a process that put off an immediate hire for several months.  SAA’s goals in the technology area will call for higher investments in the future, but in the short-term, we have used some of the savings from the transition to add to the technology reserve through the net gain.

(Administrative Controls) Staff exercised prudent spending restraints, staying within 1% of budgeted expenses.  Across the budget, in the administrative services area – a large part of the operational budget (about 50%), the finance director and program managers closely monitored and exercised commendable discretionary controls.

[Slide 6: Cost Center Revenues vs. Expenses]

We still have some Planning Challenges.
The SAA Publications program is managing its way from being our loss leader to a position of balance.  This is an area of activity that we believe isn’t primarily about generating cash, but informing and educating our members and equipping the profession with a deep knowledge base. We experienced continued adjustments and challenges in publications, with a revenue drop of almost 14% from FY2012.  We absorb a lot of variability in this area due to the timing and reception of our products before reaching the point of sale; and we also try to keep costs low for our members in pricing and shipping.  Nancy has spoken to our new efforts and workarounds as we catch up to technological changes in the e-publishing environment.  The good news is that we are seeing a trend towards lowered expenses as we explore the efficiencies of technology infrastructure and workflow design.  

(Governance and G&A) Overhead costs associated with supporting the work of the Council and the governing bodies substantially exceeded FY2013 budget by 20%, and rose 15.5% over FY2012.  Major accomplishments coming out of this expense include the Strategic Plan and an updated and accurate Governance Manual.  We look to bringing these costs under control, however, in the new Fiscal Year.

[Slide 7— FY2014 SAA Budget]

Speaking of the new Fiscal Year, Council adopted an ambitious Budget for FY2014 at its May meeting that anticipates continued financial growth.  The Budget is developed from detailed programming worksheets that every Area Director formulates and reviews with each other, and which is then reviewed by the Finance Committee and Council.  You will notice that if we meet our budget projections for FY2014, we will realize a modest gain of $35,000.   Why the ambitious projections and optimistic budget?

[Slide 8 – Budget Highlights]

The Budget has some growth built into it by virtue of the third and final year of the 3-yr. dues increase.  We project that the added dues will raise revenues by 8%.  Having small incremental increases every year has been a really great way to plan for the future.

The FY2014 Budget anticipates funding key aspects of the new Strategic Plan, especially in Advocacy, which will see a 30% increase in funding.

SAA will invest heavily in Technology, with our full-time staff member on board, and budget gains (of $35K in FY2014) that Council has already set aside to add to our accumulating Technology reserve (which will have over $100,000 by next year).  These funds elevate all the areas of our program.

Trends and design innovations in our Educational offerings speak to a solid interest in SAA’s workshops and specialized curricula. We’re projecting a robust growth of 12% in revenue, with added expenses to reflect investments we need to make to maintain momentum in this area.

Investment in Publications to re-build with new content and publication channels will continue.  Nonetheless, we’ve projected 13% less in revenue, even as we endeavor to keep our sales margins tight and take losses in other service areas to keep the price of our publications within most members’ reach.

Every indication is that we will surpass an ambitious budget projection for this New Orleans Annual Meeting.  You should know that your presence here carries benefit for the Society and our members far beyond this hotel -- into all other areas of the budget and to those who cannot be here with us.

I am happy to report that the Council’s budget also invests in our most important asset, the Staff, by allocating a 3% merit increase in salaries and an anticipated 9% increase in benefits costs.

[Slide 9 -- The SAA Foundation]

I want to end on an even happier note.  We have just completed a year of finalizing some relentlessly annoying, but necessary governance issues for the SAA Foundation, which is the separately incorporated body that holds SAA’s investments for the benefit of our members.  Here’s the good news:
 
At the end of FY2013, our Restricted ($156,154) and Unrestricted ($1,096,382) Investment Funds totaled $1,252,536. 

Performance of the portfolio in total was outstanding for a blended investment strategy, returning $127,573 of dividends and earnings, for an overall 10% rate of return.  (Not too shabby!)

This kind of annual jump in income – $127K – is a result of the compounding power of a growing investment pool, greatly augmented in SAA’s case by the Linda Henry Bequest, from which archivists will benefit far into the future.  

I can report with relief and optimism that the Foundation Board has taken the first solid steps to invest in developing a professional fund raising plan and activities agenda for the Foundation in FY2014.  Big Yeah! for that.

Now listen up:  The Foundation’s Annual Giving Appeal is a way for each of us to be part of that compounding interest in stretching the Society and the profession with future possibility!  Last year we received 250 member donations.  Surely, we can bump that up by 20% to 300.  Maybe more.  We value you out there, those who make up that faithful crowd of annual donors.  Thank you – stay loyal!  Even at 300 members, I promise we won’t apply for SAA Roundtable status. 

And if you’ve never given before, see if you can find your way to sending the Foundation a vote of confidence: start with $10.00, if that’s what you can do. That might seem like a small amount, but with a bunch of others it creates a compounding pile for future interest, and a let’s-get-serious expression of interest in our organization’s future.

I conclude by thanking the members of the Finance Committee of SAA for their counsel and watchfulness, and the Foundation Board members for their enthusiasm and leadership (Fynnette Eaton is a thrilling taskmaster).  And I note that all of this is possible because SAA is very privileged to have the staff we have to steer this ship in choppy and calm waters alike with appropriate doses of equanimity and passion.  Special thanks to Finance Director Tom Jurczak, of course, but to all the program directors and technical support experts as well -- for the care and duty they show in using our dollars carefully and creatively.