Stacked

We all like to know how we compare to other people. Is our income above or below the national median? How does the level of compensation we pay our employees compare to similar positions at other area businesses? Is our company's profitability consistent with other GAWDA member companies? What is my golf handicap?

Gary's column gave you a report on “The State of the Association,” which highlights many new activities GAWDA has embarked upon this past year. All in all, it appears that GAWDA is doing well and is headed down the right track. But how does GAWDA compare to other trade associations? How do we stack up?

The American Society of Association Executives (ASAE) just published its 13th Operating Ratio Report, which allows us to compare data compiled from associations with similar revenue, tax status, membership type and industry interest against GAWDA's financial performance. Following are some of the highlights that will allow us to identify opportunities for improvement or let us pat ourselves on the back. All figures are for FY2007.

Profitability
One of the most basic performance measures among associations is the net profitability ratio. This ratio is the amount of revenue collected from all sources ($2,181,564) less total expenses ($2,109,222) divided by total revenue. For the past two years, GAWDA has operated with a surplus and has grown our reserves.

Operating Efficiency
This ratio is an indicator of total organization productivity. It tells us how many dollars in revenues ($2,181,564) are being generated by each dollar of assets employed in running the association ($2,308,469). This ratio is influenced by the fact that GAWDA has over one year of operating expenses in reserves.

Liquidity
What is GAWDA’s ability to meet short-term obligations out of currently available funds? The current ratio is current assets ($2,308,469) divided by current liabilities ($505,217). This ratio is again influenced by our large reserve and the use of short-term certificates of deposit to manage the uneven flow of revenue and expenses throughout our fiscal year.

Revenue Management: Membership Dues
In 1953, membership dues as a percent of total revenue for all U.S. associations were 95.7%. Today that number is 37.7%. Many associations have developed multiple sources of non-dues revenue, such as sponsorships and educational programs, while the percent of revenue generated from meetings and tradeshows has dramatically increased. Membership dues ($591,495 distributors/$363,578 suppliers) as a percent of total revenue ($2,181,564) is a measure of how dependent an association is on membership dues as compared to other possible revenue sources.

SMC and Convention registration fees ($872,954) plus Contact Booth fees ($131,725) as a percent of total revenue ($2,181,564). The SMCs, the Annual Convention and the Contact Booth Programs are a major part of GAWDA's total activities and hence a major source of revenue and the profit necessary to fund other member benefits such as the consultants.

Operating Expenses
The ASAE report does not separate out those associations that are managed by Association Management Companies such as Fernley & Fernley from those associations that are considered stand-alones. The management fees paid to Association Management Companies capture all of the operating and overhead expenses such as salaries/benefits, taxes, training, insurance, technology, equipment, rent, depreciation and general administration. In FY2007, GAWDA's management fee was $612,000, which represented 28% of total revenue. For similar stand-alone associations, the operating and overhead expenses represent 45% of total revenue.

Each association is as unique as the membership it serves. Different missions and strategic plans can result in a different allocation of resources. The above comparisons serve as a yardstick to help GAWDA identify those areas which might warrant further analysis.