The association provides a solid model for business planning and financial operations. SLA's operational planning cycle stems from the strategic direction set by the elected leadership. The board of directors in concert with members, volunteer leaders, and staff defines the organizational strategy and vision. The operational plans are designed to fulfill the association's strategic goals and objectives.
As treasurer, I find it important for members to understand how the annual business and financial plans are determined. This column is dedicated to highlighting the 2001 Association Program Plan and Budget.
The Association Program Plan
The Association Program Plan is the annual business plan of the association. It outlines the core purposes and functions that SLA's leadership has chosen to implement for its members and other constituents. The plan is based on the strategic direction as established by the board of directors as well as staff's five operating principles of: boundaryless behavior, speed of change, stretch, simplification, and competitiveness. The executive director's objectives are also considered.
The business plan includes some risks in exploring new ideas and directions for the programs and services offered to the membership. A certain level of risk is encouraged as a means to keep SLA in the forefront and on the leading edge. True, some risks may not prove to be as successful as others, but it is more desirable that the leaders and staff be challenged and innovative rather than staying the course and not moving the association ahead.
The Association Program Plan considers the following:
What new standards of performance will our members and customers expect from the association and other providers of information-related products, services, and experiences?
How can the association turn existing products and initiatives, as well as new products ideas, into expeditionary, adaptive product platforms that will drive tomorrow's business?
How does the association's culture need to change in order to engage the development of high performance products, services, and experiences? What new competencies do we need and how will we acquire them?
Due to rapid change, the future can seem out of reach at times. However, in order to succeed we must raise our planning sights in order to comprehend new possibilities. We must plan from the future, backward. Extrapolation of current trends from today's plane of operation will not yield the desired breakthrough insights. We must assume that e-commerce will drive our business, despite how many, or how few, currently utilize technology to interact in relation to SLA's products, services, and experiences. However, we are not leaving the "paper members" behind. The 2001 Association Program Plan balances digital and print delivery systems and contains activities for the further development/transition of members to accept e-commerce.
The association has learned several valuable lessons in relation to e-commerce that will help shape our future:
Simply automating existing processes is a rather expensive proposition and produces a minimal return on investment. Rather than digitizing existing products, we must innovate and create new ways of conducting business.
Discovering, enlisting, and encouraging our members and other key customers is essential and provides rich and invaluable insights for future projects.
The challenge is not in the technology but rather the psychology of how we do things. Changing the organizational culture and communicating such change is key. The success of our future endeavors is contingent on the cooperation and commitment from all stakeholders of our particular products and services.
To define the potential for tomorrow's high performance products, we must begin by examining how the Knowledge Age will be different from the current operating environment. Today's products will be succeeded by a new breed of products, services, and experiences based on indispensability and previously unattained levels of customer intimacy. The 2001 Association Program Plan lays the groundwork for moving SLA into the Knowledge Age.
The program plan also includes the basic direction as set forth with the recently created strategic taskforces. Due to the timing of the taskforces in relation to the planning cycle, we realize that new directions and initiatives will be introduced. Adaptability and change management are recognized as inherent components of our planning process.
The Budget
The budget is the association program plan stated in financial terms. A flexible budgeting method—shadow budgeting—was implemented in the mid-90s in order to maximize on staff's basic operating principles and has been continued with the FY 2001 budget. Shadow budgeting entails the development of multiple budgets for each program area.
Current Reality Budget: How we typically budget—using up-to-date financial information and program plans to develop a well-thought, realistic budget based on specific goals and objectives.
Best Case Scenario Budget: Incorporates our basic operating principle of stretch. This is where we dream if there were additional funds (i.e. promotions, technology, etc.). There must be a direct benefit in allocating additional funds (i.e. increased income, or x% more product to benefit the members). We also examine the impact the dreaming will have on the organization as a whole.
Worst Case Budget Scenario: The contingency plan for the times when income is down and/or there is an unforeseen major expenditure in a program area or activity.
2001 Budget Highlights
The total income for the FY 2001 Budget is $8.1 million—a 9% decrease over the 2000 total budgeted income. The decrease is due to the loss of the $1,200,000 revenue stream from Global 2000. If we were to back out the Global 2000 income, we would have a $400,000, or 5%, increase in income for FY 2001 over FY 2000.
The total net income from programs (prior to general administration) is down from 2000 due largely in part to a greater allocation of salaries, benefits, and overhead to programs and services; a flat membership growth projection; and the development of new products and services in accordance with the 2001 Association Program Plan.
The FY 2001 Budget includes the strategic priorities in accordance with the 1999 dues increase and the priorities established by the board of directors primarily in the following areas: technology, strategic learning and development, public communications, leadership services, governance, and research.
The ratio of dues to non-dues income for FY 2001 is 24 to 76, as reflected in the budget (versus 22 to 78 in 2000). The 2% change for 2001 is representative of the decrease in non-dues revenue as a result of the loss of the Global 2000 revenue stream. As stated in our association benchmarking reports, the dues ratio may be cause for concern in relation to IRS scrutiny although many associations are looking for non-dues revenue to support the delivery of critical products and services. The Finance Committee will continue to examine the revenue ratios as part of its routine fiscal monitoring and long-range planning.
The cost per member statistics indicate that the average membership income collected per member is $122.85. The income per member increases between 2000 and 2001 even though the total number of members remains the same. This is accounted for by the increased number of projected full members and a declining projected number of student and retired members. The average cost to service one member is $229.30, including both program and administrative costs. Therefore, for each SLA member an additional $106.45 must be generated to provide SLA's current levels of products and services. This remains a concern of management in terms of the long-term financial stability of the association.
According to the Board Reporter™ and Association Information Management Service (AIMS) benchmarking reports, associations with external professional services which are a higher percentage of total expenses usually have a higher level of productivity. Utilizing external professional services is a good way to stretch the capabilities of staff and to meet the special and/or episodic needs of the association without a long-term staffing commitment. The FY2001 Budget incorporates outsourcing in the following areas: advertising and list sales, staff recruiting, insurance, payroll, investments, technology, membership recruitment and retention, educational development, logistics, travel, media placement, editing and design, etc.
Summary
In summary, our financial outlook continues to be healthy. Our operational plans are innovative and forward thinking, yet grounded in reality, providing the products, services, and experiences that our members and other customers seek and need.
To receive copies of the program plan or budget, please contact Lynn Woodbury at headquarters.
For more information, contact Richard Geiger, SLA Treasurer (geigerr@sfgate.com)
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