Behind the numbers: What PRSA’s 2010 financial results tell us

April 1, 2011

The recently concluded audit of PRSA’s 2010 financial statements tells the story of a challenging year.

By tightly controlling expenses, PRSA realized a net surplus of $73,000.  We were fortunate that investment returns added $197,000 to our financial reserves (otherwise known as our net asset balance or “rainy day” fund).  As a result, PRSA was able to meet its ultimate financial goal of returning 1 percent of budgeted expenses to its reserves.

When you benchmark our 2010 financial performance against that of other, similarly sized organizations, you can appreciate just how significant this accomplishment was.  As I mentioned in last month’s column, nearly 50 percent of associations withdrew money from — rather than contributed money to — their financial reserves last year;  from that perspective, PRSA clearly did better than most.

But having already made significant cuts in expenses and exhausted potential new sources of revenue, the question now becomes, “Where do we go from here?”

Looking back over the past several years, PRSA has cut $1.5 million from its operating expenses.  We rebid contracts, reduced staff, froze salaries and implemented more cost-efficient technologies.

At the same time, we’ve increased the scope and number of benefits that we deliver to PRSA members, which has kept member satisfaction metrics like retention and “intent to recommend” strong.

For example, we’re now providing a greater number of free webinars; a hardship program for out-of-work professionals; more business service discounts; additional Jobcenter features; “Find-a-Firm” functionality on our website; a retooled industry advocacy campaign, including “The Business Case for Public Relations”; and improved online discussion forums, among other benefits.

All the while, PRSA has kept the price of membership constant. In fact, we haven’t increased member dues since 2002, despite a more than 21 percent rise in the Consumer Price Index (CPI) over the same time period.

What’s in store for 2011
The Society currently is forecasting that it will meet its net financial goals for 2011. However, for the first time in recent memory, these financial goals do not include making a minimum 1 percent contribution to our financial reserves.

This is the reason why the Board of Directors has engaged a Business Model Task Force to evaluate the Society’s 2011 financial forecast and to recommend changes that will best maintain the Society’s future financial health.

Next month, I hope to update you on the Task Force’s work and recommendations.

For anyone wanting more information on PRSA’s audited financial statements or member benefits, please visit the “MyPRSA” section of www.prsa.org.

A note about PRSA’s financial statements
PRSA’s certified public accounting firm, PKF,  issued an “unqualified opinion” on PRSA’s financial statements, the most-favorable finding an external auditor can issue. It means that our financial condition and operations were presented fairly, without “material misstatement” and in keeping with Generally Accepted Accounting Principles (GAAP).

Notes to our 2010 financial statements explain that PRSA recognizes its member dues in accordance with U.S. GAAP, which is further supported by the American Institute of Certified Public Accountants (AICPA) Audit and Accounting Guide for Not-for-Profit Organizations.

The notes also make clear that PRSA records its investments at fair market value, with related gains and losses reflected as increases or decreases in unrestricted net assets, in accordance with provisions of the Finance Accounting Standards Board (FASB) ASC Topic 958-320 (Investments in Debt & Equity Securities).

PRSA’s financials will be considered “official” when reviewed and accepted by the Board of Directors on April 5.
 

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