One of the things I try to do with this column each month is highlight some of the ways that APA is working to fulfill its mission to advance the creation, communication and application of psychological knowledge to improve people's lives. And although APA has had many successes related to our mission, we, like many membership associations, are experiencing both rewarding and challenging times. For example, while our association's impact on the discipline and public policy continues to be strong, and the reach of our publishing program and public education activities are at all-time highs, our membership numbers are declining — a trend we are seeking to reverse (more about that later in the column). And while our financial status is solid, there are many opportunities to fulfill our mission that we cannot pursue since our resources are not unlimited.
The question for me, as the association's chief executive, and our Board of Directors and Finance Committee, is how to find the right balance between using our financial resources to pursue new opportunities for the field and ensuring APA's long-term financial strength. Toward that end, our chief financial officer, Archie Turner, and the Finance Committee spent about a year studying the concept of spending a small percentage of our investment portfolio annually to support current needs. This draw-down model is similar to the university endowment model, but differs in that it is not necessarily permanent; that is, based on future financial scenarios the draw-down program could be changed.
Through this model, we will draw a predetermined amount of money from the association's long-term investment portfolio on an annual basis. The Finance Committee and the Board of Directors have determined that the annual draw-down rate will be up to 3 percent of the portfolio, which, in a typical year, is between $2.5 million and $3 million. The 3 percent rate was determined with input from our investment advisor, Merrill Lynch/Bank of America, which ran hundreds of simulations of potential market outcomes for our portfolio and concluded that an annual draw down of 3 to 5 percent would allow our portfolio to maintain its strength in the face of inflation over the long term. APA has chosen to apply the conservative (low) end of that range. Also, to smooth out the effect of market fluctuations, the annual spending calculation is based on the average of the market values for the most recent three years.
This new annual draw-down plan allows APA to benefit from our financial strength by funding mission-centric projects and activities, while also protecting our long-term financial health. This year, the first of the program, draw-down funds of nearly $2.4 million will support nine projects, funding for the work of the Council Leadership Team and a working budget for the Council of Representatives. The funded projects include support for APA's Center for Psychology and Health; continuing work to create clinical practice guidelines; the creation of an online accreditation training platform; support for APA's international engagement through the association's international memorandums of understanding; funding for an APA-International Union of Psychological Science Global Mental Health Fellowship with the World Health Organization; a round table on physical discipline coordinated by the Public Interest Directorate; a Public Interest Leadership Conference; and an Office of Publications and Databases project to use social media to promote and build interest communities around research published in APA's journals.
As I mentioned above, APA membership totals have declined over the past three years. There are numerous reasons for this decline, including the aging of our membership and competition from other psychology organizations. We have to do a better job communicating with members and delivering information and products that are relevant to your particular work setting or subfield. We are committed to doing so. Last month, we began recruiting for a new position — executive director for membership recruitment and engagement — which will report directly to me and will head a new Office of Membership Recruitment and Engagement. Unlike our current staffing model in which our membership staff has lots of other duties, this new office will be focused exclusively on members' needs. Chief among the new executive director's duties will be to use data analytics and new communications technologies to personalize the APA membership experience.