August 21, 1997
MEMORANDUM
To: 1997 PAA Board of Directors
From: Hallie J. Kintner
President Karen Oppenheim Mason asked me to prepare a formal proposal about long-term planning for your consideration. After reviewing the PAA's current situation to prepare this memo, I realized that both short-term and long-term planning were needed. This memo reviews the current situation, lays out requirements for a short-term (three year) plan, and discusses long-term planning.
Financial management for non-profit organizations like PAA focuses on meeting professional goals subject to the constraints of liquidity, solvency, and providing services at minimal cost....At this time, the PAA does not formally measure member services or solicit input on the mix of services provided. It does minimal planning; the major plan is next year's budget.
I developed measures for member services (based on data availability) and related them to financial data. Most measures are per member to control for fluctuations in membership. Analysis of trends from 1993 to 1996 indicates that the PAA has changed the mix of services provided to respond to the financial crisis in the early 1990s. Members receive a shorter Demography and pay for their own subscriptions to Population Index. Attendance is up at the annual meeting, but it is not clear whether increased attendance results from more paper sessions, the addition of poster sessions, the selection of popular cities or the interaction of location and weather.
It is apparent that PAA's financial crisis is not entirely over. Expenses per member are two to three times the annual dues, despite considerable volunteer labor. Administrative costs are nearly as high as dues. Publication costs continue to increase. The PAA's financial health has been restored largely because annual meetings are popular and profitable.
In view of the PAA's financial situation, I suggest that the Board formulate a three year financial plan, a long term plan for just the PAA Fund, and arrange for analyses of the membership. I chose the three year time frame because there are sufficient data to make financial forecasts under the new administrative arrangements (if 1997 data are included), and because Board members, Demography editors, Publication Committee members, the Secretary-Treasurer, and PAA Presidents all serve three year rotations. The PAA Fund requires a long term plan because it is outside the yearly budget. The proposed analyses will increase understanding of membership population dynamics and desired membership services.
A Three Year Plan. For the three year plan, I suggest that the PAA Board set goals for member services, administration, and finances. Membership services goals could include pages published in Demography or opportunities for participation in the annual meeting (sessions and posters) or increasing awareness of desired membership services. Administration goals could include developing spreadsheets for forecasting annual revenues and expenses over a three year horizon, and preparing a report to the Board that describes the seasonal pattern of staff activities, including workload for the annual meeting, processing dues, and daily activities like responding to inquiries about membership. Financial goals could include reducing administration costs, setting a rate of return for investments, and determining the size of a "rainy day fund" to help offset unexpected expenses more quickly than raising dues.
Here is an example of one possible goal: for the next three years, publish one more article per year in Demography. This member services goal is equivalent to holding administrative expenses at 2% less than their 1996 level for the next three years.
I suggest that the Board make the following assignments:
(1) Ask the Executive Administrator to work with the Secretary-Treasurer and Finance Committee to develop spreadsheets for three year forecasts of revenues and expenses, and to prepare a report describing staff activities and seasonal workloads.
(2) Ask the Finance Committee to identify three year goals in terms of expenses and revenues, and the size of a "rainy day fund" needed to delay a sizeable (more than 20%) dues increase.
(3) Ask the co-editors of PAA Affairs to communicate to the
membership that dues cover only a small portion of expenses and the importance, in terms of revenue, of annual meetings.
(4) Ask the Membership Committee to prepare proposals for (a) developing a model of membership population dynamics and (b) assessing how well PAA is currently serving member's needs and what services PAA members would like the organization to provide.
After these tasks have been completed, the Board would review staff workload and establish staffing to meet the workload, the proposed financial goals, and the proposals from the Membership Committee and decide on the appropriate level of funding. The Board would appoint a small Planning Task Force to establish a process to prepare an annual report that would set forth the plan and describe progress toward its goals. This report would then become part of the standard reports prepared by the appropriate committees and the Executive Administrator. The Board would then annually review progress to the goals.
Creating A Long-Term Plan. Strategic planning focuses beyond the immediate or short-term concerns of running an organization and emphasizes where the organization would like to be in five to ten years. Some organizations follow five or ten year planning cycles in which they develop a plan, annually review progress, and use the long term plan to prepare operational plans.
Typical strategic plans for professional associations establish strategic goals for the discipline, individual members, and for the internal workings of the association. Some examples of a strategic goal fall under the heading "Develop and Nurture an Efficient Organization." Examples of strategic goals under this heading are: make effective use of technology to serve members, organize the services, programs and activities that are central to retaining current members and attracting new members, and maintain optimal services to members and to the profession at reasonable cost. Examples of operational goals under the first strategic goal are: periodically review delivery of existing services to determine whether technology can make more efficient use of resources.
I'm not suggesting that the PAA develop a strategic plan at this time. Instead, I'm proposing that the Board develop a plan for the PAA Fund and consider the implications of the (apparently) aging membership. As a first step, I proposed previously that the Board ask the Membership Committee for a proposal to develop a model of membership population dynamics that could forecast, for instance, the rate of population aging.
Dues and the Dependency Ratio. The model of membership population dynamics could provide insights into the adequacy of the dues structure. The current dues structure provides discounts for emeritus and student members. As of July 1997, there were 123 emeritus and 522 students out of 2,904 members. These figures represent a "dependency ratio" of about 29%. As the membership ages, this ratio is likely to increase.
Bequests and the PAA Fund. As the membership ages, PAA can expect to receive more bequests. In light of the reductions in federal funding for research, perhaps these bequests could be in the form of an endowment for research funding rather than for prizes. Other professional societies, such as the American Sociological Association and Geological Society of America, have small grants programs.
I suggest that the Board appoint a committee to develop a plan for the PAA fund, including the nature of grants to be funded, a process for evaluating applications, and a process for accepting bequests to the fund.