June 1, 2012
Certified public accounting firm PKF recently concluded its audit of PRSA’s 2011 financial statements.
Those statements, which you may view in the MyPRSA section of the PRSA website, show that PRSA ended its fiscal year with a modest surplus of $96,000.
While last year proved to be nominally gainful for the Society, PRSA was at a financial crossroads in 2011. We exceeded our annual forecast and budgeted goals by about two-thirds of 1 percent, but — as expected — fell slightly short of achieving our long-term fiscal objective. A look at the larger financial picture helps to put this in perspective.
Years ago, in an effort to strengthen PRSA’s long-term financial health, the Board of Directors concluded that we should put an amount equal to 1 percent of budgeted expenses into an asset reserve each year.
The long-term goal is to save an amount equal to 50 percent of PRSA’s annual operating costs, which is considered a “best practice” for membership organizations. These funds insulate PRSA against economic cyclicality, and we use them for research and capital investment.
We prepared our 2011 budget amid the worst economic downturn since the Great Depression. During the course of the recession, PRSA membership declined by approximately 7 percent though, by comparison, we fared much better than organizations of similar sizes. At the same time, the cost of doing business was increasing, our competition was greater and we were trying to do more with fewer resources.
To balance our budget, we faced a tough decision: Do we raise dues or cut benefits? While we had reduced our expenses by $1.5 million, diversified our income streams and adjusted our business lines in 2009 and 2010, we still would have to forgo the full 1 percent contribution to our financial reserves in 2011, just to continue delivering all of the benefits that our members expect.
Given that member dues had remained steady throughout a 10-year period, an increase in the cost of membership seemed to be a reasonable option.
The most compelling budget scenario was to raise dues by $30, which, in addition to improving our financial footing, would allow us to provide all of our professional development webinars for free to members. PRSA members agreed, and approved the dues increase.
Today, our membership acquisition and renewal have returned to healthy trends, even as the country continues to emerge from the recession. We appear to be on solid financial ground for years to come.
Our financial position, though, is only a means to an end. It allows us to advocate more strongly for the profession, provide more benefits and strengthen our communities. It also helps to ensure that member satisfaction will remain high — which, more than our finances — is the true determinant of our success.
And, we’re estimating that more than 3,000 members will have participated in our webinars by the end of June now that they are free — up from about 1,000 over the first six months last year. This increase demonstrates that our new model is making our benefits more accessible to members.
It’s important to note that PKF issued an “unqualified opinion” on PRSA’s financial statements. That is the most favorable report that an external auditor can issue. It means that we presented our financial condition, position and operations fairly, without “material misstatements” and in keeping with Generally Accepted Accounting Principles (GAAP).
Notes to our 2011 financial statements describe the way that PRSA recognizes its member dues, which we do in accordance with GAAP and the American Institute of Certified Public Accountants (AICPA) “Audit and Accounting Guide for Not-For-Profit Organizations.”
The notes also state that PRSA records its investments at fair market values, with related gains and losses reflected as increases or decreases in unrestricted net assets in the statements of activities.