State Leadership Conference
When Kirsten L. Singleton became executive director of the New Hampshire Psychological Association (NHPA) in 1994, the association offered a few continuing-education (CE) programs that generated several thousand dollars in income. But, like most state associations, most of NHPA's revenue came from membership dues.
Just eight years later, that's all changed. The association's CE program has become a major profit center, earning $80,000 in revenues last year--$30,000 more than the amount the 300-member organization brought in through member dues. "We're doing very well financially, even though we're small," said Singleton at the APA Practice Organization's State Leadership Conference (SLC) in March.
The lesson: "It doesn't matter what size you are, as long as you think creatively," she said.
At the session "How state and provincial psychological associations can face financial challenges and stay resilient," Singleton and other state association executives shared their strategies for making association activities more profitable and managing through financial challenges.
New Hampshire's success
Singleton didn't plan on making CE the association's profit center. She simply took a more entrepreneurial approach to managing NHPA and the CE arm took off. Among her suggestions for boosting the bottom line:
Don't think small. NHPA's CE programs often feature psychology's big names to attract more attendees. "There are a lot of famous psychologists out there, and we deal with them"--sometimes splitting the proceeds with speakers or offering honoraria tied to the number of attendees.
Offer your local experts a chance. Associations should also utilize their well-known local CE presenters who have become state favorites.
Lower your prices. There's a lot of competition in the CE market, so Singleton priced her programs lower to attract more attendees.
Consider pharmaceutical company funding. "Some of the drug companies will sponsor your workshops--and they're not telling you what you have to talk about," she said.
Tap campuses and hospitals. Instead of hosting CE events at hotels that charge exorbitant fees for space and food, negotiate with hospitals and colleges that might be able to offer free rooms and have much lower food costs.
Don't rent, buy. Why pay continuous rental fees for projectors and other video equipment when you can own your own? Buying equipment can save money in just a couple of years. NHPA saved more money by buying equipment on e-Bay at discount warehouses such as Sam's Club.
Build strong leadership committees. Singleton says her CE committee is very organized. "These folks only meet three or four times a year and work very well together," she said. "They have it down to a science." She also gets strong support from the NHPA finance chair and a board that closely watches NHPA's budget. "I don't think it's micromanaging at all," she noted. "It's their money and their association, and they are truly invested in it."
California's budget woes
When Wesley Apker, EdD, took over as interim executive director in 2000, he found that the California Psychological Association (CPA) was spending far more than it was taking in. The problem had been masked by one-time donations coming into CPA to support several specific programs and a lawsuit. While thousands of dollars were coming in, CPA was draining cash reserves by remodeling its headquarters and spending as much as 23 percent of its overall budget on governance activities, such as committee and board meetings, said Apker. (The average cost for governance activities is 4.9 percent, according to the American Society of Association Executives.)
At the same time, CPA had overestimated revenues from membership renewals. And upon a closer look, "the convention--which everyone believed was the association's biggest money-maker--when factoring staff costs, had lost money for several years," said Apker.
The bottom line was that by 2000, CPA was running a deficit of $70,000 over revenues of $1.7 million. Apker immediately advised the CPA finance committee and board. Their response included imposing a hiring freeze, severely restricting expenditures and closely examining how much each program generated and cost them. They revised their 2001 budget to reflect more realistic revenues and expenditures and developed a long-term strategic plan.
Since then, CPA has made substantial progress through $250,000 worth of cuts, which included reducing its staff from 20 to 13 positions, slashing the cost and frequency of their magazine, and hosting committee meetings via conference call and merging committees to cut travel and meeting costs.
In terms of rebuilding its cash reserves, "that's going to take us four or five years," said Apker. "It's very difficult to build your cash back up when in two years you've reduced your end-of-the-year cash from $762,133 to $401,365."
How can associations avoid such budget pitfalls? By diligently monitoring key data. "Most organizations don't just wake up one day and find they are in financial difficulty," Apker said. "There are all kinds of indications if you're looking at the right data that can tell you you're headed down a slippery slope."
In addition to constantly watching dues revenues, associations should look for such financial evils as:
Using next year's dues revenue to cover current year operating expenses--"an absolute no-no," said Apker.
Having a pattern of overstated revenues.
Having a pattern of understated expenditures.
Allowing core association programs--such as conventions--to cost more to produce than they generate, unless the board has defined the program or service as a membership benefit that should be subsidized by dues revenue.
"If the treasurer and finance committee had been provided this information on a regular basis, [the association] could have started making course corrections and staved off the wrenching process we went through," said Apker.
A crime in Alabama
Pat Gratz inherited an altogether different financial challenge when she became the executive director of the Alabama Psychological Association: Her well-respected, pillar-of-the-community predecessor had embezzled $138,000 from the association.
The former executive pocketed cash from Alabama's conferences. She got reimbursed twice for the same meetings. She took family on business trips. She wrote checks to herself from the political action committee's bank account.
"She even sold the same antique table to the association twice," said Gratz, who took over in 1994 to clean up the mess.
The fraud was accidentally discovered when the then-president found a check returned for insufficient funds and started to dig for an explanation. In the end, the previous executive director was convicted and ordered to pay back the funds in monthly installments.
"You can imagine how devastating it was for the association," Gratz said. But there was a silver lining: Members came together to rebuild their troubled association. "We never kept anything from the members and that helped keep us from losing members," she said. "In fact, we started gaining members."
Pulling together, members devised ways to save money and beef up income: They stopped giving away the membership directory and sold it instead. They beefed up advertising so that their newsletter paid for itself. They signed on with a service offered through Amazon.com: Anyone who goes to Amazon through Alabama's Web site and makes a purchase will generate 5 percent of the total order for the association.
The association also put safeguards into place to prevent future fraud: All checks must be signed by two people. Bank statements now go directly to a certified public accountant who prepares financial statements. The certified public accounting firm handles all the accounting and does a financial review each year. "I welcome any controls, because it protects me," said Gratz.
Today, the Alabama Psychological Association is maintaining a $25,000 reserve account, she said, "great for an association of 235 members."
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