SLA's Long-Range Financial Plan

Information Outlook, Dec, 2000

Over the past five years, the Finance Committee has developed and refined a long-range financial plan to ensure the long-term financial stability of the association. The plan is fully supported by a myriad of facts and figures as presented in recent Money Matters columns. The long-range financial plan is the association's ongoing five-year plan to fulfill its strategic objectives and to provide cutting-edge programs and services to its members at affordable rates, while maintaining a sound fiscal position. As demonstrated in the association's current five-year financial forecast, without an influx of additional net income, the association would run in a deficit position as early as 2003. Considering the program philosophies and program plans for FY 2001, this amount could increase to more than one-quarter million dollars by FY 2004.

Over the past few years, the association has made significant gains in the following areas due to the implementation of the long-range financial plan: promoting the value of the profession; providing significant new learning opportunities; providing access to many leading speakers, authors, and instructors; developing the virtual association and electronic commerce; and positioning the association as the leader in global information policy. We need to be fiscally responsible and plan for the continued successes in program development and new activities through the long-range financial planning process.

The Finance Committee has developed and revised the financial plan to support the goals and objectives of the association. The development and revision of this plan has been very logical and objective. The committee has balanced the priorities of the association with the related financial implications and abilities of the association. Throughout the development and revision of the financial plan, the committee's goal remained the association's ability to fulfill its strategic objectives and to provide cutting-edge programs and services to its members at affordable rates, while maintaining a sound fiscal position.

Without a strong financial base, this goal is not attainable. The committee's position with regard to defining a strong financial base includes incorporating excess funds into the annual planning process to provide for developing new activities and stimulating program growth. The committee has established five percent as a conservative benchmark for defining and recognizing operational residual earnings. From past experience, it is known that the funding of new activities and program enhancements is a costly proposition--typically a minimum investment of several hundred thousand dollars. In addition, the tax and regulatory activity surrounding the not-for-profit industry is increasing at an unprecedented rate. Therefore, many of the association's tax advantages are in constant question. This is a situation with the potential to erode our reserves and income-producing abilities should any current benefits be lost or diminished. This is why fiscal responsibility/planning is so very important. The committee seek s to protect what the members and leaders have worked so hard to develop over the past 90 years.

In creating the plan, the Finance Committee established the following principles to guide their decisions and plans for long-term financial stability: (1) In order to provide for prudent, consistent, and regular financial growth the Finance Committee has given the highest priority to options that support the long-term, ongoing impact as opposed to a short-term, one-time financial correction. (2.) The strategic plan and the established priorities have been given full consideration. (3.) Matters which protect or affect the association's investments and solvency have been given full consideration. (4.) The Finance Committee considered the long-term versus short-term expediency of all matters under consideration. The long-term financial goals and the strategic plan have been viewed in tandem. (5.) The Executive Director's objectives, as determined by the Board of Directors annually, have been given full consideration in all matters under consideration. (6.) Matters which protect SLA's dues/non-dues ratio have bee n given full consideration. During SLA's tax examination of the 1991 books and records, SLA was warned that it operates too much like a commercial operation. The IRS agent suggested that SLA look for a greater balance of member support to protect its tax exempt status. (7.) The Finance Committee has established five percent as a conservative benchmark for defining and recognizing operational residual earnings. On an $8 million budget, this would relate to $400,000 of residual earnings. This benchmark allows for the adequate, ongoing funding of contingencies (such as the IRS tax increases and assessments); program development, and technological advancements.

In updating the financial plan the Finance Committee reviewed an exhaustive set of options which included both expense reductions and increased income. The committee spent considerable time balancing the various options in relation to SLA's dues versus non-dues income ratio with findings from membership surveys and the IRS examination. The committee reduced expenditures where strategic priorities were not jeopardized. The committee, in examining all options, sought to narrow the gap in the dues/non-dues ratio.